Where do big deficits come from? James M. Buchanan had an idea.
James M. Buchanan, who died Wednesday, concluded that a government's rules often favor its own expansion. He furthered 'public choice theory,' which says that politicians and others tend to act in self-interest.
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His conclusion was that the rules of the game often favored just such an expansion. Once constitutions established how such governments were to be run, everyone tried to maximize his or her own gains within that system. But even if individuals got what they wanted, this would inevitably produce results that were less than optimal for society at large.Skip to next paragraph
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In this view, politicians tend to not choose between spending and lower taxes; they often opt for both. Buchanan also felt that traditional Keynesian economics, which holds that deficit spending can boost a slumping economy, aided and abetted spiraling debt. The Keynesian theory allowed politicians to comfort themselves that they were doing the right thing at the moment and would surely do better in the long run. They seldom did.
A Tennessee native, Buchanan got his undergraduate degree at Middle Tennessee State Teachers College. He earned his doctorate in 1948 at the University of Chicago after serving as an officer on the staff of renowned Adm. Chester Nimitz during World War II.
Much of his teaching career was spent in Virginia. He led the economics department at the University of Virginia, moved to Virginia Polytechnic Institute in 1969, and then took his Center for Study of Public Choice to George Mason University in 1983.
His work was not to every economist’s taste. Some called his ideas unremarkable, even banal. Others felt they did not explain differences in political systems – why one country has a better fiscal balance sheet than another, for instance. Even at his passing, some economic commentators wondered what all the fuss was about.
“I have to say he really stands out for such a highly regarded scholar as someone [whose] work I feel like I don’t understand or appreciate,” wrote Slate economic correspondent Matthew Yglesias on Friday.