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James Buchanan, RIP

James Buchanan

I’m late in offering notice of the passing on Wednesday of James Buchanan, who won the Nobel Prize in economics for his development of public choice theory.  I was fortunate to meet Buchanan on a couple of occasions (usually Mont Pelerin Society meetings overseas), and long profited from deploying public choice analysis of nanny state madness.

Public choice theory can be summarized in a number of fairly simple ways, such as the less-than-difficult-to-grasp notion that “public servants” are just as self-interested as the private interests they tax or regulate.  Or the derivative, known as “rent-seeking,” whereby private interests use the cloak of “public interest” to extract a profit by securing subsidies (wind power) or supporting regulatory barriers against competition (like the taxi industry’s crusade against Ubercars).  I’ve written before here about the “bootleggers and Baptists” analogy for understanding public choice.  The main point is, public choice explains powerfully how “government failure” is likely to be more pervasive and difficult to correct than “market failure.”  Indeed, look how hard it is to get rid of completely indefensible wind power subsidies.

Yet somehow liberals have a hard time grasping public choice.  Matt Yglesias of Slate.com confesses that “Buchanan is responsible for some deep, hard to understand, and relatively inaccessible ideas and I am not understanding them or appreciating their depth.”  The irony here is that Yglesias is one liberal who got the outrage of the Ubercar story, and attacked it on grounds drawn directly from Buchanan.  So perhaps there’s hope for him.

Less clear is whether many high-octane libertarians appreciate some of the limits to Buchanan’s teaching.  A flaw in public choice is that for some of its adherents, that fact that it explains many political phenomena very well gets pushed to the extreme of thinking it can explain all political phenomena, thus making it another species of social science reductionism—usually a mistake of the Left.  And sometimes this gives rise to bad remedies; in Buchanan’s case, I heard him give papers more than once advocating the legitimization of secession.  Clearly he had moved beyond the realm of economics, and too often when this happens it displays the severe limitations of economics as a window to the essential questions of political philosophy.

Allan Bloom

This problem was never more on display than in one of the most extraordinary intellectual clashes I was ever lucky enough to witness: In 1988 (I think it was ’88), Buchanan, fresh off his Nobel Prize, came to Claremont, where he appeared on a panel with Allan Bloom, fresh off the blockbuster publication of The Closing of the American Mind.   Although it was a very gentlemanly and polite disputation, I thought the flamboyant Bloom ran circles around Buchanan, in substance as well as style.  I have an edited version of Bloom’s presentation, which doesn’t capture the impression he made in person.  So I’ll interpolate a little.  Part of Bloom’s opening went such:

“Abundant modesty aside, I would like to offer my credentials, theoretical and practical, to comment on political economy.  The economists I’ve known at the University of Chicago have always liked to ask me the question—which is the American question—‘If you’re so smart, how come you’re not rich?’’’

At this point Bloom paused and took a big drag on his ever-present cigarette (those were the good old days) and with perfect comic timing and delivery answered:

“Well, I am now.”

It’s not possible to summarize Bloom’s argument very well in a short blog post.  Suffice it to say he made a respectful and subtle critique of economics as an impressive and important social science but whose methodology had severed it from being able to speak to the deepest issues of human nature and justice.  Maybe this one line conveys the flavor: “It seems to me that the willingness to die for something always mucks up rational-choice theory.”  Boom!  Buchanan was helpless in the face of this.

Buchanan’s work will live on and deepen our understanding of the dysfunctions of modern government.  It gives us the tools to aid in serious reform.  But as the Bloom critique shows, we must always beware of mistaking the larger or bright part of something for the whole of something.

For more, see Amity Shlaes’s fine Bloomberg column about Buchanan.

Recommend this Power Line article to your Facebook friends.

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