There have been many tributes to the life and career of James Buchanan (a selection can be found here, here, here and here), all richly justified, in my view, given the substantial intellectual contributions Buchanan made to classical liberal political economy.
One strand of Buchanan’s intellectual menu which, in my view, hasn’t received appropriate reflective attention over the past week were his many contributions to the theory of federalism. To perhaps rectify this gap a little, an opinion piece of mine was published today in The Australian newspaper (subcription required for online viewing). I identify three key elements of Buchanan’s federalist theories (radical fiscal decentralisation, secession, fiscal equalisation), and relate these issues to the contemporary Australian debates on federalism. With regard to the latter, I have this to say:
Given our emaciated federalism, in which the federal government keeps the power of the purse and runs policy roughshod over the service-delivering states, calls to allocate at least the most important governmental functions to Canberra regrettably have widespread, albeit superficial, appeal.
But instead of surrendering everything of consequence to the likes of the Gillard government, Australia should take a leaf out of James Buchanan’s book and decentralise, placing the centres of political powers and responsibilities as close to the people as possible.
On a quick final note if I had a little more space I would’ve referred, in some way, to two additional matters: (a) Buchanan saw intimate links between the economics of decentralised public sector taxing, regulating and spending arrangements and the maintenance of liberty more generally; and (b) on a more technical note, in Buchanan’s 1950 paper he pointed out that fiscal equalisation between geographically monopolistic state/local governments were strictly a “second best” solution in the presence of informational compexities concerning calculation of the “fiscal residuum” among individuals.