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Questo articolo è stato pubblicato il 27 gennaio 2013 alle ore 18:59.


STANFORD – A successful society needs effective, affordable government to perform its necessary functions well, and that includes sufficient revenue to fund those functions. But a government that grows too large, centralized, bureaucratic, and expensive substantially impairs the private economy by eroding individual initiative and responsibility; crowding out private investment, consumption, and charity; and damaging incentives with high tax rates. It also risks crowding out necessary government functions such as defense. That is today’s Europe in a nutshell, with America not far behind.

The recent death of James M. Buchanan, the father of public-choice economics, is reason to reflect on his sage warnings. Buchanan was awarded the Nobel Prize in 1986 for bringing to the study of government and the behavior of government officials the same rigorous analysis that economists had long applied to private economic decision-making. Buchanan concluded that politicians’ pursuit of self-interest inevitably leads to poor outcomes.

Buchanan’s analysis stood in marked contrast not only to Adam Smith’s dictum that the pursuit of self-interest leads, as if by an invisible hand, to desirable social outcomes, but also to the prevailing approach to policy analysis, which views government as a benevolent planner, implementing textbook solutions to market failures.

According to this view, if markets do not fully internalize all of the costs of private action – environmental pollution is a classic example – some optimal tax or subsidy supposedly can correct the problem. So, if a monopoly is restricting output and raising prices, regulate firms and industries. When weak demand leads to recession, increase government spending and/or cut taxes by just the right amount, determined by a Keynesian multiplier, and – presto! – the economy rebounds quickly.

Buchanan considered such analysis romantic. He showed that public officials, like everyone else, are driven by self-interest and governed by the rules and constraints operating in their economic environment. Households have a budget constraint. Firms have technological, competitive, and bottom-line constraints. For politicians, the ability to exercise power – for their own interests or those of vested interests – is constrained by the need to get elected.

Buchanan predicted that, by hiding the full costs, the ability to finance public spending through deficits would lead to higher spending and lower taxes at the expense of future generations, whose members were not directly represented in current voting. He predicted ever-larger deficits and debt – and ever-larger government as a result.

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