The Voice of Public Choice

The Voice of Public Choice

In this article from The Economist, the theories practiced by James Buchanan, who passed away on January 9th, are discussed and analyzed in respect to our current economic situation. Buchanan was the mastermind behind the "public-choice theory" which discusses how economic tools can help us deal with political problems. He was very much interested in the fact that the state had a growing importance in the field of economics due to national security concerns, corrupt business making, and national traumas like the Great Depression. This growing made it essential that we understand state decision making since its impact on the economy was growing as well. The main concern is that political figures are flawed people who are motivated by self-interest, not the interest of the state. They are no longer pressured to pair new spending with higher taxes, and they do a lot to increase the economy through government contracts. The fiscal cliff can be seen as an application of public-choice theory because the hard choice put on the government by the economy made policymakers confront these controversial issues because there was no alternative. There are two types of decision making applied by the government: a constitutional stage where ideals are upheld and then a politics-as-usual stage. What this article is basically saying is that as our government and economy are growing, they are becoming more intertwined and convoluted. This means that economists need to not only concentrate on the economy but also how state decisions impact it as well. The line between these two entities is being blurred and we should take note of this phenomenon to accurately understand our economy.