Quotation of the Day…

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… is from pages 70-71 of James M. Buchanan’s and Richard E. Wagner’s insightful 1977 book, Democracy in Deficit: The Political Legacy of Lord Keynes (original emphasis):

An increasingly disproportionate public sector, quite apart from its inflationary consequences, carries with it the familiar, but always important, implications for individual liberty. The governmental bureaucracy, at least indirectly supported by the biased, if well-intentioned, notions Keynesian origin, comes to have a momentum and a power of its own. Keynesian norms may suggest, rightly or wrongly, an expansion in aggregate spending. But aggregates are made up of component parts; an expansion in overall budget size is reflected in increases in particular spending programs, each one of which will quickly come to develop its own beneficiary constituency, within both the bureaucracy itself and the clientele groups being served. To justify its continued existence, the particular bureaucracy of each spending program must increase the apparent “needs” of the services it supplies. Too often these activities by bureaucrats take the form of increasingly costly intrusions into the lives of ordinary citizens, and especially in their capacities as business decision makers.

DBx: So true.

Here again we see the expansion of government – itself often an instance of the sort of free-rider problems that many economists are quick to identify in the private sector (Jones seizes benefits at the expense of Smith) – also creating further opportunities for inefficiencies in the form of perspectives that are biased by the ability of the government to take money to support members of interest groups, as opposed to what would occur were members of interest groups required to earn incomes by operating in private-property markets.

Attempting to protect private markets from externalities by calling in politicians is akin to attempting to protect forests and pastures from fire by calling in pyromaniacs.

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