Schools of Thought in Classical Liberalism, Part 3: Public Choice

So letís look at James Buchanan, Gordon Tullock,
and the public choice school. James Buchanan, a Nobel Prize winner. Buchanan and Tullock
wrote a lot of works together, probably the most famous one is The Limits of Liberty.
Their approach to the question, how do we decide what the role of government, is they
look for social contract. They say, supposing youíve got rational individuals together
and they had to decide what they would do, how would they set up a form of government,
what would they universally agree? The American Constitution is an example of something like
a social contract. They start with the questions what would happen if we had no state at all,
there was no government? They believe it would be the Hobbesian state of nature after the
ideas of the English philosopher Thomas Hobbes. Hobbes said that life without a government
is ìnasty, brutish, and short,î and not as one student wrote, ìnasty, British, and
short.î Nasty, brutish, and short. It wouldnít be very pleasant to live in such a society.
So if we donít have a government, there are three things we can do: we can produce things,
we can steal other peopleís things, or we can spend time protecting our own things.
Suppose if we got together, it would be in the self-interest of everyone to create a
body that would protect the things that we produce. Because we didnít have to worry
about things being stolen from us, we didnít have to worry about protecting our own property,
we can spend a lot more energy producing things. We would be wealthier; we could give some
of that wealth to government, which would then prevent stealing. We wouldnít need to
spend so much resources into protecting ourselves; everyone in that society would be better.
So itís argued that rational individuals thinking about what sort of government they
would want would agree on creating a government whose responsibility was to protect our life
and property. Why should government be limited? Well, they
say that when we try and understand what goes on in economics, we assume that people are
motivated by their own self-interest. That they are, to use economist language, utility
maximizers. The public choice school people say people behave exactly the same way in
the political realm as they do in the economic realm. Theyíre the same human beings. What
their self-interest may be may not be the same. In economics, we tend to look for income
and wealth to identify peopleís self-interest. Self-interest in the political realm may be
somewhat different. So, for example, if youíre a politician, your self-interest is getting
elected, getting reelected, being in public office. How do you do that? Well you do that
by promising goodies to particular groups. Vote for me; I will protect your Social Security.
Vote for me; I will reduce your student loans. Vote for me; I will support your farms. So
itís in the vested self-interest of politicians to promise goodies to particular groups within
society. Bureaucrats, which I think is an underresearched
area in terms of explaining what happens to government, itís in the interest of bureaucrats
to have a bigger government. The more government there is, the more income they probably have,
the more power they have, the bigger their offices there are. Itís better for bureaucrats
to have a bigger government than a smaller government. And for most interest groups,
the way they look to government is, how can we manipulate government to work to our benefit?
They are, again to use an economic term, rent-seekers. How do we get the rules written in such a
way that prevents it more difficult, for example, to a competitor to enter into the market and
compete with us? So it makes it more difficult to import goods from abroad. So the problem
for the public choice school is that most political actors have a vested interest in
growing government well beyond what people agree on in the social contract. So thatís
why they think government needs to be limited, to prevent it going well beyond what the proper
role of government should be. So what should be the role of government in
that context? Itís often described as the public goods state, that the state and the
public choice has two responsibilities. The protective state: it should protect individual
rights, especially our property. And it should be a productive state: it needs to provide
the public goods, deal with the sorts of externalities that weíve talked about before. It is not
the responsibilityópublic choice arguesóto have any form of welfare state; that goes
well beyond the social contract. So a lot of public choice is interested in the question
how do we limit the role of government? For example, should we amend the U.S. Constitution
to ensure that there would be a balanced budget? So why does government grow far beyond that
which people would reasonably agree under the social contract? For example, why does
the federal government in the United States do so many more things than the limited and
enumerated powers that was established in the U.S. Constitution? The public choice school
explains this by the concept of concentrated benefits and disbursed cost. That is, the
benefits of a government program concentrate in the hands of a relatively small number
of people while the costs of those programs are spread much among the larger group of
people. Letís take agricultural policy for example. Agricultural subsidies, agricultural
tariffs that make it difficult to import food from outside the United States. Only about 3 percent of the population in
the United States is engaged in agriculture. And 97 percent, weíre not. But when it comes
to deciding agricultural policy, these 3 percent, they really, really care about it. It would
determine who they vote for. It would determine who they campaign for. It would determine
who they will give money for. They will throw cow manure over politicians
who donít support these agriculture subsidies and tariffs. How about the rest of us? The
97 percent of us? Well, we all lose by this. We lose because we pay higher taxes to subsidize
this. We lose because of the tariffs, that means we pay more for the food we buy in the
supermarkets. So you would think, in a democracy, here is a policy, it is in the interest of
3 percent and against the interest of 97 percent. Obviously you would think in a democracy a
policy would fail, and every attempt to do away with these agriculture supports have
failed. How do we explain that? Well, those who really care about it, they really care
about it. Theyíre active on the issue. The rest of us, the population who loses by
it, for us, we donít even think about agricultural policy. But even if we did think about it,
for each one of us, itís only a couple of dollars a week. Weíre not going to get politically
active on that issue. So when it comes to debating agricultural policy, itís the small
3 percent that determine what those policies should be. According to public choice, this
is true of most government laws and programs. It is driven by the small number of people,
concentrated beneficiaries of that policy, and almost no influence from those who pay
the costsóconsumers and tax payers. Thatís public choice.

27 thoughts on “Schools of Thought in Classical Liberalism, Part 3: Public Choice

  • I agree… It would probably be a bad idea to write "watches a lot of Youtube videos" on your resumé.

  • Well, the internet will forever be better than any university, but learning still requires discipline.

  • His argument is based on the assumption that government can protect your property, which is false. Besides the fact that the state is the greatest thief in world history (eminent domain, income taxes, etc.), it has an abysmal track record of preventing property crimes.

  • economists and commentators should realize that one's desire is not the same as self-interest. Different people may act towards different goals depending upon their values, wishes, desires, etc but this is not always in their self-interest. Normatively speaking ppl should be self-interested but are usually not. Self-interest means acting in ur long term rational interests to achieve rational values based on the nature of man. Very dense sentence, read Ayn Rand to flesh out

  • Won't the philosophy of addressing externalities always inevitably lead to a welfare state @4:50 and thus subsequent

  • almost, maybe youtube should employ teachers to create courses mostly based on youtube video's
    maybe people would finally get a sastifactory education in monetary policy

  • I do not think society truly comprehends the impact that the internet, and in particular sites like YouTube and wikipedia, will have on society in the coming years. Encyclopedias were always limited in what they could contain, and you can only check so many books out from the library at a time. These days, if you can afford internet service and a basic computer, the knowledge you have access to is virtually limitless. Hooray for the progression of technology and human intelligence.

  • If you were to honestly look at what liberals really want, you would find that modern social liberals are much more reasonable than you have been indoctrinated to believe. Liberals have much in common with libertarians in that liberals would like to get rid of many govt institutions that limit freedom such as the police state, the war on drugs, excessive govt regulation at the local and state level, the complicity between large corporations and govt, etc.

  • It is sad to see that so called clasical liberals (CL) suffer from the same delusions as the big government progressives.  Just as the progressives now want "free" healthcare the CLs want "free" security.  Sorry it is not free, and it never will be.  You are far better served by an interested individual supplying you your security then a disinterested far removed government.  If the argument works for health care, welfare, education, energy and food suply and everything else the CL claim the government should not be involved in then it also must apply to security.

  • Agriculture is probably a poor sector to take as an example.  The agricultural sector is directly related to security and local production promotes security, thus some added expense is naturally desirable to the public.  Agriculture benefits from personal ownership stability.  There seems to be a wide agreement on this concept, and much history indicates that instability in this area has terrific consequences. and we can and do avoid these down sides through the use of government.  Downsides must be identified, confronted, and neutralized as possible, and we should avoid tyranny…  There is some pressure on this right now due to property values and farm land ROR.

  • Well obviously these public choice people are just violent statists, with all that "social contract" BS to justify "limited rape"

  • I think this school of thought is the most practical and calculated approach to desiring freedom while understanding the necessity for government.

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