"Buchanan was an important figure in my intellectual development. I remember how I studied his Cost and Choice when it first came out during my senior year in college. I was so overjoyed that an economist of his stature in the profession would see merit in LSE-Austrian subjectivism. As the years went, I became very interested in the political philosophy of David Hume and the role of rules in society. Buchanan led the way here. I will miss him."I do need to read Cost and Choice this spring I think. I've read bits that people point me to as a re-education effort for my errant ways in thinking that externalities are quite important, but with a book that short you can't really justify reading bits but not read the whole thing. It's just so far from my day-in-day-out work that I haven't gotten around to it (for those of you who think the Urban Institute is some kind of knee-jerk lefty organization with a big lefty library, I actually got my copy of Cost and Choice from the library when it was shutting down and getting rid of its books).
Another part of my reluctance to pick it up has been that it's always been pushed on me (usually in the comment sections of blogs) as Buchanan showing that you have to think about subjectivism and opportunity cost when you think about externalities! That sort of promotional effort always pushes me into filing it under "probably overrated" (since that word has been floating around - although I don't attach the term to Buchanan's whole body of work). After all, I am on board with subjectivism. I am on board with the importance of opportunity cost. I am on board with the concerns about government failure. If these are the arguments I doubt my view will change much because I am on board with all that. Like Bryan Caplan responded to Peter Boettke in his debate over Austrian economics, when we say "we are subjectivists" and Austrians respond "well then we are radical subjectivists", people like Bryan and me tend to roll our eyes and start to lose interest.
Anyway, I am rambling now. My point is: (1.) thanks for taking the time to share your thoughts, Mario, (2.) I really should just read the damn thing, and (3.) I think my reasons for putting it off have been rational, even if they may not be right in the end.
Posts
Urban Institute is some kind of knee-jerk lefty organization with a big lefty library, I actually got my copy of Cost and Choice from the library when it was shutting down and getting rid of its books).
ReplyDeleteUrban Institute was going to throw Buchanan in the trash!!
:)
DeleteI was impressed how many economic classics they had. It's a policy research organization so you'd think the library would be more practically focused. It was, of course, but I got a lot of good classic texts too. My hard copy Monetary History is from there too.
"I am on board with the importance of opportunity cost."
ReplyDeleteNot sure why...but for some reason that reminds of John Quiggin saying, "Opportunity cost is what matters"
What's opportunity cost?
A. One king spending the country's money
B. 500+ congresspeople spending the country's money
C. Each person spending their own money
Opportunity cost isn't considering the alternative uses of other people's money...it's considering the alternative uses of YOUR own money. It has to be your money because you exchanged YOUR life for it. What have you had to sacrifice in order to earn your money? How much value do you attach to those sacrifices? You're the only person who can truly know that.
Opportunity cost means that your preferences matter. Again, with gusto this time...opportunity cost means that your preferences matter.
The definitive theoretical justification for our tax system isn't based on the idea that your preferences do not matter...it's based on the idea that when it comes to public goods...you'll lie about your true preferences in order to pay less money for the public goods that you benefit from. This is the preference revelation problem which Samuelson discussed in his paper...The Pure Theory of Public Expenditure...which has been cited over 5,000 times.
Samuelson agreed that your preferences matter and that they are absolutely necessary to determine optimal public expenditures. But, given that people would have the incentive to under report their values, he voted for the alternative: coercion and allowing government planners to guesstimate our true preferences.
The solution to the preference revelation problem is simple...tax choice. If people had to pay taxes anyways, but they could choose where their taxes go, then they would have absolutely no incentive to lie about their true preferences. How would it benefit them to lie? It wouldn't...it would decrease the amount of benefit they derived from their public spending decisions.
Here's the Wikipedia entry that I recently created for the benefit principle and here's a thread where I give an overview...Voluntary Exchange Theory.
Buchanan was there...he was RIGHT there...he was far closer to the actual problem and actual solution than any other economist.