What should public service economists do?

Good summary

Friedrich von Hayek and James Buchanan Part II (S1010) – Full Video

James M. Buchanan: Antitrust and Politics as a Process

Gordon Tullock and James Buchanan: The Calculus of Consent After 25 Years

PRC Forum: James Buchanan (U1026) – Full Video

More reversing gender gaps

Nancy MacLean: The GOP’s Long Game |also #OTD 3rd US libertarian elected (a town mayor)

James Buchanan couldn’t lead a political revolution because he was such a dry writer and boring speaker.

Deirdre McCloskey summarises Rawls and Nozick on unequal incomes


Source: Review of Michael J. Sandel’s What Money Can’t Buy: The Moral Limit of Markets by Deirdre McCloskey August 1, 2012. Shorter version published in the Claremont Review of Books XII(4), Fall 2012 via Deirdre McCloskey: editorials.

Who do members of parliament represent?

Delegate - selected for perfect obedience

The theoretical literature on political representation focused on whether representatives should act as delegates or as trustees. James Madison articulated a delegate conception of representation. Representatives who are delegates simply follow the expressed preferences of their constituents.

The classical liberals of the 18th century were highly sceptical about the capability and willingness of politics and politicians to further the interests of the ordinary citizen, and thought the political direction of resource allocation retards rather than facilitates economic progress.

Governments were considered to be institutions to be protected from but made necessary by the elementary fact that all persons are not angels. Constitutions were a means to constrain collective authority. The problem of constitutional design was ensuring that government powers would be effectively limited.

  • Sovereignty was split among several levels of collective authority; federalism was designed to allow for a deconcentration or decentralization of coercive state power.
  • At each level of authority, separate branches of government were deliberately placed in continued tension, one with another.
  • The dominant legislative branch was further restricted by the constitutional establishment of two houses bodies, each of which was elected on a separate principle of representation.

These constitutions were designed and put in place by the classical liberals to check or constrain the power of the state over individuals. The motivating force was never one of making government work better or even of insuring that all interests were more fully represented.

Members of parliament as trustees are representatives who follow their own understanding of the best action to pursue in another view. As Edmund Burke wrote:

Parliament is not a congress of ambassadors from different and hostile interests; which interests each must maintain, as an agent and advocate, against other agents and advocates; but parliament is a deliberative assembly of one nation, with one interest, that of the whole; where, not local purposes, not local prejudices ought to guide, but the general good, resulting from the general reason of the whole.

You choose a member indeed; but when you have chosen him, he is not a member of Bristol, but he is a member of parliament. …

Our representative owes you, not his industry only, but his judgment; and he betrays instead of serving you if he sacrifices it to your opinion.

Burke does not seem to be a fan of federalism and vote trading to protect minorities. Madison liked conflict and tension as a constraint of power and the size of government.

Schumpeter disputed that democracy was a process by which the electorate identified the common good, and that politicians carried this out:

• The people’s ignorance and superficiality meant that they were manipulated by politicians who set the agenda.

• Democracy is the mechanism for competition between leaders.

• Although periodic votes legitimise governments and keep them accountable, the policy program is very much seen as their own and not that of the people, and the participatory role for individuals is usually severely limited.

Modern democracy is government subject to electoral checks. John Stuart Mill had sympathy for this view that parliaments are best suited to be places of public debate on the various opinions held by the population and to act as watchdogs of the professionals who create and administer laws and policy:

Their part is to indicate wants, to be an organ for popular demands, and a place of adverse discussion for all opinions relating to public matters, both great and small; and, along with this, to check by criticism, and eventually by withdrawing their support, those high public officers who really conduct the public business, or who appoint those by whom it is conducted

Representative democracy has the advantage of allowing the community to rely in its decision-making on the contributions of individuals with special qualifications of intelligence or character. Representative democracy makes a more effective use of resources within the citizenry to advance the common good.

Politics without romance


Machiavelli, Mises, Milton Friedman, W.H. Hutt and Walsingham’s Manual on practical public policy advising

File:Santi di Tito - Niccolo Machiavelli's portrait headcrop.jpg

Ludwig Von Mises worked as an economic-policy advisor to the Vienna Chamber of Commerce from 1909 to 1934. As Richard Ebeling notes:

What comes out from reading Mises’s policy writings from this period of his European career is that if you had asked him a fiscal, or monetary, or regulatory-policy question in the context of his role as analyst at the Chamber of Commerce, he would not have said, and did not simply say, "laissez-faire" — abolish the central bank, deregulate the economy, and eliminate taxes.

Mises accepted the context of which his policy options must be worked out. Ebeling went on to note that Mises seemed to think in three policy horizons:

  1. The most optimal institutional and policy arrangements in society for the fostering of the classical-liberal ideal of freedom and prosperity, based on the knowledge that he thought sound economic theory could provide;
  2. the actual circumstances of the present, but focused on the intermediary goals that would be leading in the direction of that more distant, "optimal" horizon; and
  3. current situation and the immediate future

In the 1970s, Rothbard criticised Milton Friedman for advocating indexation of prices and wages as a method to reduce some of the negative effects from an on-going inflation. Rothbard regarded this as a sell-out.

Richard Nixon’s responses to Milton Friedman were rather more flattering in terms of his policy purity:

I don’t care what Milton Friedman says, he’s not running for re-election.

In 1922, during the worsening Great Austrian Inflation, Mises proposed indexation of wages and prices. Ebeling explained Mises as follows:

  • what was inefficient and unnecessary in the three-tiered Austrian bureaucratic system of federal, provincial, and municipal regulators and taxing authorities;
  • what specific reforms should be introduced, how they could be experimented with in smaller regions of Austria; and
  • how best to overcome the resistance of those in the bureaucracy fearful of losing their jobs

Milton Friedman was purer than this – always the first best advice:

The role of the economist in discussions of public policy seems to me to be to prescribe what should be done in the light of what can be done, politics aside, and not to predict what is ‘politically feasible’ and then recommend it.

Little wonder that Friedman had little time for those economists who promised more than they could deliver and warned less than they should of the hazards and difficulties that may lie ahead the particular policies that were being considered:

A major problem of our time is that people have come to expect policies to produce results that they are incapable of producing. …

we economists in recent years have done vast harm—to society at large and to our profession in particular—by claiming more than we can deliver.

We have thereby encouraged politicians to make extravagant promises, inculcate unrealistic expectations in the public at large, and promote discontent with reasonably satisfactory results because they fall short of the economists’ promised land.

W.H. Hutt steered the middle course that I favour:

In our judgment, the best you will be able to get away with is programme A along the following lines; but if you could find a convincing way of really explaining the issue to the electorate, our advice would have to be quite different.

We should have to recommend programme B, along the following lines.

James Buchanan emphases political realities in a similar way:

We start from here, from where we are, and not from some idealized world peopled by beings with a different history and with utopian institutions. Some appreciation of the status quo is essential before discussion can begin about prospects for improvement.

Ebeling ends by saying:

Even as that uncompromising and principled proponent of individual liberty and the free market, Mises was called upon in his role as policy analyst and advocate to sometimes devise "second-" and "third-best" policy proposals in an imperfect world dominated by collectivist and interventionist ideas and practices.

for those who have sometimes asked, "Well, but how do you apply Austrian Economics to the ‘real world’ of public policy?" here is the answer by the economist who has been considered the most original, thoroughgoing, and uncompromising member of the Austrian School over the last one hundred years! His policy analyses provide us with warning signs and guideposts to assist us in thinking about and designing better policies for our own time.

In The Prince, Machiavelli said in a chapter on how to choose wise advisors and avoid flatterers.

Therefore a wise prince ought to hold a third course by choosing the wise men in his state, and giving to them only the liberty of speaking the truth to him, and then only of those things of which he inquires, and of none others; but he ought to question them upon everything, and listen to their opinions, and afterwards form his own conclusions.

With these councillors, separately and collectively, he ought to carry himself in such a way that each of them should know that, the more freely he shall speak, the more he shall be preferred; outside of these, he should listen to no one, pursue the thing resolved on, and be steadfast in his resolutions. He who does otherwise is either overthrown by flatterers, or is so often changed by varying opinions that he falls into contempt…

A prince, therefore, ought always to take counsel, but only when he wishes and not when others wish; he ought rather to discourage every one from offering advice unless he asks it; but, however, he ought to be a constant inquirer, and afterwards a patient listener concerning the things of which he inquired; also, on learning that any one, on any consideration, has not told him the truth, he should let his anger be felt.

I think Mises read less of Machiavelli and more of the now 400 year old book written by an French courter called  not to A Practical Guide for Ambitious Politicians, or Walsingham’s Manual which Gordon Tullock republished in 1961.

I have a copy of this rare book republished in 1961 which was translated again in 2007 under the title Treatise on the Court. The Early Modern Management Classic on Organizational Behaviour.

For Mises to survive and prosper as a policy advisor as he struggled for position within a small elite group amidst fierce competition, he had to know how organisations worked, how to find the levers of power and press them. That is why is pitched his advice in light of the immediate,medium term or long term policy horizon horizon as set out in the dot points above.

Walsingham’s Manual has a whole chapter on when the courtier should warn of the hazards and difficulties that may lay ahead and when he should humour the prince in his inclinations that mesh well with what Mises did. There is another chapter on how to deal with rival courtiers that made Sir Humphrey proud:

Those who feel compelled to compete with you will not be won over by shows of respect or veneration. You can, however, coax them onto a different path by

  • encouraging them to aim for a goal more ambitious than yours,
  • helping them achieve this goal,
  • offering to help advance their ambitions, and
  • playing down your own goal as being too insignificant for them to aspire to.

Imply that you have no choice but to pursue your goal because you aren’t capable of competing (as they are) for any­thing better. By way of contrast, praise your competitors’ reputation, power, abilities and merit: suggest that they can do far better than you and should set their sights higher.

If ever you come to fear that a competitor may get ahead of you, raise doubts and insecurities in his mind about what he wants to do. Discuss the pros and cons of the matter, but always in a way that reinforces why he should give up and look elsewhere.

Your best and quickest course, though, is to disguise or hide your objective until it’s too late for anyone to compete with you or block you.

Pushing an ambitious plan too openly may repel the very people who would have helped you if you’d been more discreet, making your task more difficult and damaging your chances of success.

Then, if you do prevail, you’ll attract more envy than you would have otherwise, and if you fail, you’ll look that much more foolish. Your safest course is to do as rowers do, turning your back on your objective and showing every sign of having some other destination.

James Buchanan and a non-discriminatory democracy?

James Buchanan was a classical liberal who admired the Swedish welfare state because it was based on the principle of generality.
Under Buchanan’s generality norm, governments impose uniform regulation and use flat rate taxes on uniform tax bases to fund an equal-per-head demogrant (or a guaranteed minimum income) to replace all existing government cash transfers. Such a government would account for a large share of GDP. That did not bother him:

It seems to me that far too much of our politics is favourable treatment or unfavourable treatment for particularised groups. If we could somehow introduce into politics the requirement that would be analogous to the rule of law, that is, don’t treat one group differently from another group.

That has a lot of implications. That would not necessarily mean we’d have much smaller politics or government. It would mean there’d be a quite different characteristic of government…

The normative thrust of my current work is to try to push the generalization principle to the maximum extent possible, that is, so you don’t have particularised exemptions. One person gets it, everybody gets it. It cuts in favour of something like a flat tax. It cuts against means testing.

Buchanan has said that all successful welfare states (such as Sweden) apply a generality norm in some form or another.

For Buchanan, the very logic of majority rule implies unequal treatment or discrimination. If left unconstrained, majority coalitions will promote the interests of their own members at the expense of others.

Buchanan proposed a non-discriminatory democracy through the principle of generality:

  1. If extended to any single industry, tariff or quota protection also be extended and on equal terms to all industries.
  2. Tax structures would necessarily become simple, since the same tax rate would have to apply across-the-board on all sources or uses of tax base. Flat rate or proportional taxes on all incomes would broadly meet the generality norm.
  3. On the transfer side of the budget account, payments would have to be made in demogrants, equally available to all persons.

This is equivalent to Rawls’ veil of ignorance: choices must be without knowing where you lie in society so you make choices that are to the benefit of all.

Buchanan argued that if politics generates undesirable results, it is better to examine the rules than to argue about different policies or to elect different representatives. He build on Hayek who called a constitutional amendment that should read:

Congress shall make no law authorizing government to take any discriminatory measures of coercion.

Hayek went on say that, with such an amendment, all of the other rights would be unnecessary. In a non-discriminatory democracy, government choices are limited to those that benefit all.

Austrian Political Economy

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Peter Winsley

Economics, and such stuff as dreams are made on


Reading lists

Climate Audit

by Steve McIntyre

Green Jihad

Your source that tells the truth about the environmentalist movement's holy war against mankind

Bowalley Road

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History of Sorts


Notes On Liberty

Spontaneous thoughts on a humble creed

Tudor Chronicles

News, reviews and talk all about the Tudors

The Logical Place

Tim Harding's writings on rationality, informal logic and skepticism

Karl du Fresne

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

Great Books Guy

Reading The Classics

Velvet Glove, Iron Fist

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

@STILLTish. Gender Abolition

Examining Gender Identity ideology and its impact on Women's Sex based rights and Gay Rights. d protections. Exploring how this has taken such firm root in Western societies (Cognitive & Regulatory Capture).

200-Proof Liberals

Celebrating humanity's flourishing through the spread of capitalism and the rule of law

What Paul Gregory is Writing About

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Kids Prefer Cheese

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Offsetting Behaviour

Celebrating humanity's flourishing through the spread of capitalism and the rule of law


Res ipsa loquitur - The thing itself speaks

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Weapons and Warfare

History and Hardware of Warfare

Conversable Economist

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The Victorian Commons

Researching the House of Commons, 1832-1868

Coyote Blog

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The History of Parliament

Blogging on parliament, politics and people, from the History of Parliament

Catallaxy Files

Australia's leading libertarian and centre-right blog

Books & Boots

reflections on books and art

Legal History Miscellany

Posts on the History of Law, Crime, and Justice

Sex, Drugs and Economics

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Vincent Geloso

Economics, History, Lots of Data and French Stuff


Tracking Anthropogenic Climate Alarmism

Point of Order

Politics and the economy


Libertarian environmentalism

Doc's Books

A window into Doc Freiberger's library

Newmark's Door

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Media Myth Alert

Calling out media myths

Uneasy Money

Commentary on monetary policy in the spirit of R. G. Hawtrey

European Royal History

Exploring the History of European Royalty

Tallbloke's Talkshop

Cutting edge science you can dice with


Small Steps Toward A Much Better World

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