Channels, Spring 2018

Page 32 Schwartz • Public Principles and Economic Legacy simple. 103 Even the counter-argument that government spending is not, in the period of incidence, necessarily wasteful, is answered by resorting to an analogy to the drunken spree of an individual who saw the benefits in the moment as worthwhile, but must still objectively face the burden of his actions in the future term. 104 The government officials who weigh costs and benefits in setting policy might not appreciate the comparison, but Buchanan is applying the same economic motivations to them as an economist would to individual behavior in the marketplace, which is the core of public choice. Buchanan does not merely refer to the politicians’ “natural proclivities to spend without taxing,” but also relies upon constitutional remedies rather than advocating recourse to more efficient policy. The chapter, published in the year Buchanan won the Nobel Prize, demonstrates the peak of his public choice analysis uniquely applied to the field of public debt when most of his opponents, contemporary and historical, focus solely on macroeconomic theory. This is not to say that Buchanan moved away from his initial theoretical contributions to public debt in Public Principles of Public Debt . On the contrary, this chapter contains substantial critiques of Keynesian economics, considers the analogy between private and public debt legitimate, and presents debt as leading to a future burden. 105 By the late 1980’s however, Buchanan’s view of public finance in the specific area of debt issue had become methodologically and theoretically diverse, marking his contributions as stronger than his opponents. The Nobel Prize for Economics in 1986 brought the recognition of the field that this was the case. The Modern Turn Away from Buchanan Nevertheless, only a few years after Buchanan’s completed exposition in the public debt debate, he received little deference from economists in the public choice tradition. The success of Buchanan’s ideas had generated a school that followed in his footsteps and found his arguments wanting. One of his former graduate students saw Buchanan’s work as in need of “a rational reconstruction.” 106 A similarly oriented article came from Karen Vaughn and Richard Wagner in 1992. There, they argue that the earlier debate “is more a matter of analytical incompleteness than an expression of underlying analytical antagonisms. All sides to this controversy represent different incomplete descriptions of the same analytical elephant, so to speak, and do not represent conflicting portraits of three different animals.” 107 When even economists from George Mason argue that Buchanan was only correct in “a sense,” just as Barro and the Keynesian Lerner were, Buchanan’s arguments have fallen out of favor. 108 The article in question criticizes Buchanan for over-aggregation in reference to generations, arguing that his distinctions are too sharp between one 103 Ibid, 368. 104 Ibid, 370. 105 Ibid, 372-374. 106 R.E. Wagner, “James Buchanan’s public debt theory: a rational reconstruction,” Constitutional Political Economy , (2014) 25: 253. https://doi.org/10.1007/s10602-014-9161-3 107 Karen I. Vaughn and Richard E. Wagner, “Public Debt Controversies: An Essay in Reconciliation,” Kyklos 45, no. 1, (1992), 38. 108 Ibid, 38.