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Quotation of the Day…

… is from page 140 of the original edition of James M. Buchanan’s 1960 textbook, The Public Finances (a volume not included in Buchanan’s Collected Works):

In a democracy, however, collective decision making is a complex process. Final decisions are the result of a whole chain of individual voting procedures, the debates and choices of representative assemblies, the exercise of executive leadership, the partisan activity of political parties, the conflicts of pressure group interest, and the intricacies of bureaucratic administration. At no place in this decision-making process can over-all “efficiency” in the private economy be taken as the overriding aim, and fiscal devices cannot readily be geared to accomplish such “efficiency.” Instead, if the efficiency-promoting purpose of the fiscal system is admitted as legitimate, there will likely arise a rather irresponsible and arbitrary set of fiscal devices, presented under the guise of “efficiency,” which serve to restrict the reasonably free operation of the market economy. In other words, the decision process represented, say, in the United States federal government, seems likely to be unable to distinguish “efficient” from “inefficient” changes, even in the broadest possible sense.

DBx: Relatively few people understand the first thing about the logic of markets, and, thus, relatively few people are disposed to trust markets. In contrast, everyone can imagine the existence of a superhuman creature being both superhumanly benevolent and superhumanly informed. There is, therefore, a bias in the public toward assuming that the state can and will improve upon any perceived shortcomings or “failures” in markets.

After all, market prices seem, to the economically uninformed, to be arbitrary numbers set by powerful sellers, market wages seem to be arbitrary numbers set by powerful employers, and self-interest rather than altruism governs each market transaction. Given the widely held if wholly mistakenly belief that order – or, at least, good order – in human affairs must be arranged consciously, the objective of political activity is presumed to consist in stopping the bad guys and gals from gaining hold of state power and ensuring that that order-creating power is exercised only by the good guys and gals.

And there are, of course, good guys and gals; thank goodness! We know of the existence of these miracle-working saints because politicians are forever proclaiming their unusual love of their fellows, their excellent intentions, and their spectacular abilities. Furthermore, economics textbooks and journals are filled with detailed descriptions of how these god-like guys and gals can indeed use their power to create better economic outcomes. What more proof is needed of the advisability of giving good guys and gals a great deal of discretionary power to superintended, “regulate,” and override the measly, selfish, blind choices of ordinary men and women?


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