Political economy Two posts by

Political economy

Two posts by Lynne Kiesling at her blog The Knowledge Problem link to public choice materials.

First, her post "TWO MORE INTERESTING ECONOMICS BITS" links to an article by James Buchanan ("Public Choice: Politics Without Romance" from Policy magazine, a journal of the Centre for Independent Studies) on the origins and significance of public choice theory. Buchanan was "present at the creation." He talks about the ideas that piqued his interest, the origins and significance of his book (co-authored with Gordon Tullock) The Calculus of Consent, the charge that public choice theory is ideologically motivated, the charge that public choice theory is immoral, and the contemporary significance of public choice theory. A lot of good stuff in six - non-technical - pages. Is public choice theory ideologically biased? An answer depends on an appreciation of

"...the prevailing mindset of social scientists and philosophers at the midpoint of the 20th century when public choice arose. The socialist ideology was pervasive, and was supported by the allegedly neutral research programme called 'theoretical welfare economics', which concentrated on identifying the failures of observed markets to meet idealised standards. In sum, this branch of inquiry offered theories of market failure. But failure in comparison with what? The implicit presumption was always that politicised corrections for market failures would work perfectly. In other words, market failures were set against an idealised politics.

"Public choice then came along and provided analyses of the behavior of persons acting politically, whether voters, politicians or bureaucrats. These analyses exposed the essentially false comparisons that were then informing so much of both scientific and public opinion. In a very real sense, public choice became a set of theories of governmental failures, as an offset to the theories of market failures that had previously emerged from theoretical welfare economics. Or, as I put it in the title of a lecture in Vienna in 1978, public choice may be summarised by the three-word description, 'politics without romance'.

"The public choice research programme is better seen as a correction of the scientific record than as the introduction of an anti-governmental ideology. Regardless of any ideological bias, exposure to public choice analysis necessarily brings a more critical attitude toward politicised nostrums to alleged socioeconomic problems. Public choice almost literally forces the critic to be pragmatic in comparing alternative constitutional arrangements, disallowing any presumption that bureaucratic corrections for market failures will accomplish the desired objectives..."

Buchanan treats rent seeking behavior in a couple of paragraphs midway through. When you've finished Buchanan's article, turn to the links in a second Kiesling post: "OTHER INTERESTING NEW BITS". Kiesling has linked to, and provided commentary on, several posts on rent seeking behavior: Robert Prather discussing rent seeking at the state level, Gordon Tullock on "The Fundamentals of Rent Seeking," commentary on Tullock's essay by Steve Verdon, and Kiesling herself applying Mancur Olson's group model applied to negotiations on the current energy bill. Tullock covers the evolution of rent seeking behavior from 1967 when he came up with the idea, to 1974 when Anne Kreuger coined the phrase. Where do good ideas come from? In Tullock's case:

"...The point of departure for my 1967 paper was the conventional welfare loss to monopoly associated with tariffs, monopoly and theft. In this short essay, I shall focus almost entirely on the monopoly example. Original contributions very often occur when a scholar looks at a well-established theory with his eyes open, and not closed as so many of us do for so much of our existence. Such was the nature of my 1967 insight. I simply shifted attention from the welfare triangle to the profit rectangle and asked what self-seeking entrepreneurs would do to access such a profit rectangle from the zero profit environment of a competitive market..."