A Conversation with James M. Buchanan (1/2)


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.

Gordon Tullock on avoiding difficult decisions about saving lives – updated

Gordon Tullock wrote a 1979 New York Law Review book about avoiding difficult choices. His review was of a book by Guido Calabresi and Philip Bobbitt called Tragic Choices which was about the rationing: the allocation of kidney dialysis machines (a “good”), military service in wartime (a “bad”), and entitlements to have children (a mixed blessing).

Front Cover

Tullock argued that we make a decision about how to allocate resources, how to distribute the resources, and then how to think about the previous two choices. People do not want to face up to the fact resources are scarce and they face limits on their powers.

To reduce the personal distress of making these tragic choices, Tullock observed that people often allocate and distribute resources in a different way so as to better conceal from themselves the unhappy choices they had to make even if this means the recipients of these choices are worse off and more lives are lost than if more open and honest choices were made up about there only being so much that can be done.

The Left over Left and union movement spends a lot of time pontificating about how we must not let economics influence health and safety policy rather than help frame public policy guidance on what must be done because scarcity of resources requires the valuation of life in everything from health, safety, and environmental regulations to road building. health budgeting is full of tragic choices about how much is spend to save so lives and where and for how long.

The Left over Left and the union movement deceive themselves and others into make futile gestures to make themselves feel good. These dilettantes cannot assume that they are safely behind a veil of insignificance. They have real influence on how public policy on health and safety are made.

A major driver of the opposition among the Left over Left and the union movement to the use of cost-benefit analysis and the valuation of statistical lives is its adoption makes people confront the tragic consequence of any of the choices available to them.

By saying how dare you value a statistical life does not change the fact that choices made without this knowledge will still have tragic consequences, and more lives may be lost because people want to conceal from themselves the difficult choices that they are making about others as voters and as policy-makers.

One of the purposes of John Rawls’ veil of ignorance and Buchanan and Tullock’s veil of uncertainty is that the basic social institutions be designed and agreed when we have abstracted from the grubby particulars of our own self-interest.   Buchanan and Tullock explain the thought experiment this way

Agreement seems more likely on general rules for collective choice than on the later choices to be made within the confines of certain agreed-upon rules. …

Essential to the analysis is the presumption that the individual is uncertain as to what his own precise role will be in any one of the whole chain of later collective choices that will actually have to be made.

For this reason he is considered not to have a particular and distinguishable interest separate and apart from his fellows.

This is not to suggest that he will act contrary to own interest; but the individual will not find it advantageous to vote for rules that may promote sectional, class, or group interests because, by supposition, he is unable to predict the role that he will be playing in the actual collective decision-making process at any particular time in the future.

He cannot predict with any degree of certainty whether he is more likely to be in a winning or a losing coalition on any specific issue. Therefore, he will assume that occasionally he will be in one group and occasionally in the other.

His own self-interest will lead him to choose rules that will maximize the utility of an individual in a series of collective decisions with his own preferences on the separate issues being more or less randomly distributed.

Behind the veil of ignorance and the veil of uncertainty, we would all agree that resources are limited, including in the health sector and some drugs can’t be funded – choices must be made.

Once we go in front of the veil of ignorance and find out that we are the one missing out on that drug, naturally, our views will change.  We agreed to these rules  as fair for the distribution of basic social resources when, as John Rawls put it:

…no one knows his place in society, his class position or social status; nor does he know his fortune in the distribution of natural assets and abilities, his intelligence and strength, and the like.

Is always the case that someone just falls on the other side of any line in the sand. If you move that line, there is always another set of people who are just on the other side.

Constitutions are brakes, not accelerators

Much of constitutional design is about checks and balances. This division of power slows the impassioned majority down.


Constitutional constraints are basically messages from the past to the present that you must think really hard, and go through extra hurdles before you do certain things.

The 18th and 19th century classical liberals were highly sceptical about the capability and willingness of politics and politicians to further the interests of the ordinary citizen, and were of the view that 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 to constrain collective authority.

The problem of constitutional design was ensuring that government powers would be effectively limited. The 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 of the classical liberals was never one of making government work better or even of insuring that all interests were more fully represented. Built in conflict and institutional tensions were to act as constraints on the power and the size of government.

Unfettered power loses its shine when it must be shared with your opponents for more than a brief time

The rotation of power is common in democracies, and the worst rise to the top, so it is wise to design constitutional safeguards to minimise the damage done when those crazies to the right or left of you get their chance in office, as they will.

Too many policies and ideas of the Left assume that they are the face of the future, rather than just another political party that will hold power as often as not.

Privatisation and deregulation is a lot slower in a federal system with an effective upper house elected by proportional representation. Regulatory powers and public asset ownership is spread over different levels of federations, with different parties always in power at various levels at the same time, all worried about losing office by going to far away from what the majority wants.

The will of the people is constantly tested and measured in a federal system with elections at one level or another every year or so contested on a mix of local and national issues. Any failings of privatisation or deregulation in pioneering jurisdictions would quickly become apparent and would not be copied by the rest of the country. These errors could be undone where they originated by incoming progressive governments.

The Left may want to protect the rights of the unpopular and the unpleasant, and to want constitutional safeguards to slow an impassioned majority down is, in part, because they could be next if they lose the next election to the latest right-wing populist.

In a unitary unicameral parliament, those crazies to the right or left of you are tempered by an occasional general election only every 3 to 5 years. Little wonder that UK Labor reconsidered devolution, an assembly for London, and regional government after 15 years of Maggie Thatcher, good and hard, with her unfettered right to ask the house of commons to make or unmake any law whatsoever.

Developing positive alternatives on the Left includes what to do about the rotation of power and fettered versus unfettered parliamentary and executive power. The failure of the Left to develop its own constitutional political economy is a major strategic shortcoming. Frequenting wine bars, cafes and blogs muttering to each other ‘our day will come, our day will come’ is not enough.

State power was something that the classical liberals feared, and the problem of constitutional design is insuring that such power would be effectively limited.

Sovereignty must be split among several levels of collective authority; federalism was designed to allow for a decentralization of coercive state power.

At each level of authority, separate functional branches of government were deliberately placed in continued tension, one with the other. The legislative branch is further restricted by the establishment of two strong houses, each of which organised on a separate principle of representation

The system is working at last: The House And Senate Are the Most Divided in Our Lifetimes


One of the lessons of public choice for constitutional design is there should be two Houses of Parliament and each should be elected by a different method and different geographical basis.

Lower houses tend to be elected in single member constituencies; upper houses tend to be elected in larger multi-member, state-wide or national constituencies by proportional representation.

This diversity in legislative arrangements ensures that more people are participating in decision-making and it is harder to pass new laws without majority support.

The two elected chambers will clash as each exerts its mandate to represent the will of the people who elected it. The laws that pass these two chambers elected by different methods must have substantial popular support.

When upper and lower houses are elected by similar methods, it is much easier to assemble a majority through vote trading and lobbying.

Data via fivethirtyeight.com

Neoclassical economists think the economy is freestanding and ignore institutions!

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1991 was awarded to Ronald H. Coase:

for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2009 to

Elinor Ostrom “for her analysis of economic governance, especially the commons” and Oliver E. Williamson “for his analysis of economic governance, especially the boundaries of the firm”

The Royal Swedish Academy of Sciences has decided to award the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel for 1993 jointly to Robert W. Fogel and Douglass C. North

for having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change.

The Royal Swedish Academy of Sciences has decided to award the1986 Alfred Nobel Memorial Prize in Economic Sciences to Professor James McGill Buchanan for

his development of the contractual and constitutional bases for the theory of economic and political decision-making.

The Greens want to ban… | Kiwiblog

I cannot stand political correctness. It serves no purpose other than to restrict freedom of speech. Yes, some language can offend someone, but we all have the right to offend. It doesn’t mean we should, but we can. 
Without the freedom to offend, we do not have the freedom of expression. When we restrict the use of language, we risk entering the George Orwell 1984 dystopia - “ungood”, “goodest”, “plusgood”, “doubleplusgood” - that’s where we’re heading every time someone starts sobbing like a child because they were offended. 
You taking offence doesn’t make you special. You don’t get some new right when you’re offended. No one’s going to run over and kiss your feet. You will be offended by many people, many times, throughout the rest of your life and you pointing and screaming to tell them not to use “those words” or “that language” is just so unbelievably childish. 
Of course people can take things too far, but we can take anything too far. We can take violence too far by starting meaningless wars, we can take rights movements too far by not stopping at equality and desiring dominance. What words people use, really is the last of your concerns. 

  1. Ban fizzy drinks from schools
  2. Ban fuel inefficient vehicles
  3. Ban all gaming machines in pubs
  4. Ban the GCSB
  5. Ban violent TV programmes until after 10 pm
  6. Ban feeding of antibiotics to animals that are not sick
  7. Ban companies that do not comply with a Code of Corporate Responsibility
  8. Ban ACC from investing in enterprises that provide products or services that significantly increase rates of injury or illness or otherwise have significant adverse social or environmental effects
  9. Ban commercial Genetic Engineering trials
  10. Ban field testing on production of GE food
  11. Ban import of GE food
  12. Ban Urban Sprawl
  13. Ban non citizens/residents from owning land
  14. Ban further corporate farming
  15. Ban sale of high country farms to NZers who do not live in NZ at least 185 days a year
  16. Ban the transport by sea of farm animals, for more than 24 hours
  17. Ban crates for sows
  18. Ban battery cages for hens
  19. Ban factory farming of animals
  20. Ban the use of mechanically recovered meat in the food chain
  21. Ban the use of the ground-up remains of sheep and cows as stock feed
  22. Ban animal testing where animals suffer, even if of benefit to humans
  23. Ban cloning of animals
  24. Ban use of animals in GE
  25. Ban GE animal food
  26. Ban docking of dogs tails
  27. Ban intrusive animal experimentation as a teaching method in all educational institutions
  28. Ban smacking
  29. Ban advertising during children’s programmes
  30. Ban alcohol advertising on TV and radio
  31. Ban coal mining
  32. Ban the export of indigenous logs and chips
  33. Ban the use of bio-accumulative and persistent poisons
  34. Ban the establishment of mustelid farms
  35. Ban new exploration, prospecting and mining on conservation land and reserves
  36. Ban mining activities when rare and endemic species are found to present on the mining site
  37. Ban the trading conservation land for other land to facilitate extractive activities on.
  38. Ban the further holding of marine mammals in captivity except as part of an approved threatened species recovery strategy
  39. Ban the direct to consumer advertising of pharmaceuticals
  40. Ban sale of chips and lollies on school property
  41. Ban any additional use of coal for energy
  42. Ban fixed electricity charges
  43. Ban further large hydro plants
  44. Ban nuclear power
  45. Ban further thermal generation
  46. Ban private water management
  47. Ban imported vehicles over seven years old
  48. Ban the disposal of recyclable materials at landfills
  49. Ban the export of hazardous waste to non OECD countries
  50. Ban funding of health services by companies that sell unhealthy food (so McDonalds could not fund services for young cancer sufferers)
  51. Ban healthcare organizations from selling unhealthy food or drink
  52. Ban advertising of unhealthy food until after 8.30 pm
  53. Ban all food and drink advertisements on TV if they do not meet criteria for nutritious food
  54. Ban the use of antibiotics as sprays on crops
  55. Ban food irradiation within NZ
  56. Ban irradiated food imports
  57. Ban growth hormones for animals
  58. Ban crown agency investments in any entity that denies climate change!!
  59. Ban crown agency investments in any entity that is involved in tobacco
  60. Ban crown agency investments in any entity that is involved in environmentally damaging oil extraction or gold mining
  61. Ban non UN sanctioned military involvement (so China and Russia gets to veto all NZ engagements)
  62. Ban NZ from military treaties which are based on the right to self defence
  63. Ban NZers from serving as mercenaries
  64. Ban new casinos
  65. Allow existing casinos to be banned
  66. Ban promotion of Internet gambling
  67. Ban advertising of unhealthy food to children
  68. Ban cellphone towers within 300 metres of homes
  69. Ban new buildings that do not confirm to sustainable building principles
  70. Ban migrants who do not undertake Treaty of Waitangi education programmes
  71. Ban new prisons
  72. Ban semi-automatic weapons
  73. Ban genetic mixing between species
  74. Ban ocean mineral extractions within the EEZ
  75. Ban limited liability companies by making owners responsible for liability of products
  76. Ban funding of PTEs that compete with public tertiary institutes
  77. Ban the importation of goods and services that do not meet quality and environmental certification standards in production, lifecycle analysis, and eco-labelling
  78. Ban goods that do not meet quality and sustainability standards for goods which are produced and/or sold in Aotearoa/New Zealand
  79. Ban new urban highways or motorways
  80. Ban private toll roads
  81. Ban import of vehicles more than seven years old unless they meet emission standards
  82. Ban imported goods that do not meet standards for durability and ease of recycling
  83. Ban landfills
  84. Ban new houses without water saving measures
  85. Ban programmes on TVNZ with gratuitous violence

Political correctness is the natural continuum from the party line. What we are seeing once again is a self-appointed group of vigilantes imposing their views on others. It is a heritage of communism, but they don't seem to see this.  - Doris Lessing

via Kiwiblog

Do monopoly concessions increase or decrease gambling?

Do monopoly concessions such as for casinos and the TAB increase or decrease gambling? Is the under-supply of output by a monopoly a good or a bad thing when the good itself is seen as a bad.

James Buchanan started his 1973 paper ‘A defence of organised crime?’ quoting Samuel Butler:

… we should try to make the self-interest of cads a little more coincident with that of decent people

Buchanan’s simple idea is that if a monopoly restricts the output of goods, a standard analytical result, then it must also restrict the output of bads! Buchanan end’s his paper with:

It is not from the public-spiritedness of the leaders of the Cosa Nostra that we should expect to get a reduction in the crime rate but from their regard for their own self-interests

The Cosa Nostra did have a reputation for running honest casinos and keeping crime down nearby.

If an illegal monopoly or cartel becomes competitive and barriers to entry are eliminated, in the long run, more illegal goods will be traded at the new equilibrium.

Should gambling outlets be public monopolies because they would be smaller, badly run and slow to innovate? The monopolisation of bads may shift us in the direction of social optimality. Buchanan, of course, adds that:

The analysis does nothing toward suggesting that enforcement agencies should not take maximum advantage of all technological developments in crime prevention, detection and control.