James Buchanan took no interest in political activism. Few have ever heard of him in part because he is a very difficult writer to read and made few specific policy recommendations. Those that he did which range from 100% inheritance tax to everyone gets a universal basic income were not very practical.
I’ve been thinking about James Buchanan again in light of Jennifer Burns’ new critical review of Nancy MacLean’s Democracy in Chains. (Steve Teles and Henry Farrell both defend their own positions — and their independence from Charles Koch — one last time as well.)
I’m done talking about Democracy in Chains, but Buchanan was on my mind today. I don’t know how much direct influence he had on public policy. He hasn’t come up that much in my work, although obviously public choice arguments bolstered the case for deregulation.
Recently, though, I’ve been trying to wrap my head around health policy a little bit, in part to test whether arguments I’ve worked out looking at other social policy domains apply there as well. And here Buchanan plays an interesting — though quite indirect — role.
Health economics as a field only emerged in the 1960s. After federal health…
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He reviews the history of macro thought and says New Keynesians miss a basic point from Keynesian view:
The program that Hicks initiated was to understand the connection between Keynesian economics and general equilibrium theory. But, it was not a complete theory of the macroeconomy because the IS- LM model does not explain how the price level is set. The IS- LM model determines the unemployment rate, the interest rate, and the real value of GDP, but it has nothing to say about the general level of prices or the rate of inflation of prices from one week to the next.
To complete the reconciliation of Keynesian economics with general equilibrium theory, Paul Samuelson introduced the neoclassical synthesis in 1955. According to this theory…
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