A short tribute from Mario Rizzo, Austrian economist.
Buchanan won the Nobel prize in Economics in 1986. But even this does not capture his greatness. There have been many Nobel prizes in Economics since 1969, the year they were initiated. (In my view there have been too many.) Many of these prize winners will be long forgotten and even viewed with puzzlement by future generations, but this prize will stand out.
It is true that in recent years I have come across graduate students at “top tier” departments who barely know who Buchanan is – or even worse confuse him with President Buchanan. This is a consequence of their deficient education and narrowness of perspective.
As an Austrian economist, I appreciate Buchanan for the enormous esteem in which he held F.A. Hayek and the Austrian tradition in general. As a college student, I recall the joy that I experienced when Buchanan’s Cost and Choice was first published in 1969. It seemed to me that, at last, an economist of international fame was led to an appreciation of the subjectivist tradition, which had so long been derided by the mainstream profession.
An interview when he won the Economics Nobel Prize.
People do sometimes interpret my work as always being a defense of liberty. But it is less a preconceived notion and more a result of my methodology. It’s analogous to an artist that only knows and uses red paint. You should not be surprised when his paintings come out in various shades of red. Methodological individualism characterizes everything that I’ve done because I simply don’t know how to proceed with anything else, as if I only had red paint. Another artist might consciously decide to create a red painting so he goes out and buys red paint. But this is an entirely different approach.
AEN: You have made several important contributions in the area of government deficit finance. What do you think of Robert Eisner’s (recently elected President of the American Economic Association) recent work on government deficits?
BUCHANAN: The work itself is rather confusing. What is clear, however, is that he is an unreconstructed Keynesian and starts from a position of Keynesian advocacy of government deficit financing. He argues that deficits are not really so enourmous, if we use his measure. This is a very good example of how data can be manipulated to support and prove anything. And it’s also very good evidence that econometrics doesn’t mean much.
Professors Leland Yeager and Roger Garrison have pointed out that it is insidious to use inflation as a means to argue that the deficit is not very high. You can always totally eliminate the deficit by printing enough money. By confiscating the value of assets from people who hold dollar claims you could argue that inflation has lowered the ‘real’ value of the deficit, but it seems to me just perverse and extreme to do so.
Sen states that Buchanan has done more than most to introduce ethics, legal political thinking, and indeed social thinking into economics. Crucial to understanding Buchanan’s system of thought is the distinction he made between politics and policy. Politics is about the rules of the game, where policy is focused on strategies that players adopt within a given set of rules. “Questions about what are good rules of the game are in the domain of social philosophy, whereas questions about the strategies that players will adopt given those rules is the domain of economics, and it is the play between the rules (social philosophy) and the strategies (economics) that constitutes what Buchanan refers to as constitutional political economy”.[