James Buchanan, who has died aged 93, was a distinctive and controversial economist who, with his collaborator Gordon Tullock, founded what became known as the “Virginia school” of public choice.
For them it was inconsistent to analyse market decisions on a working assumption that economic agents are self-interested yet examine political decisions on the basis that political agents are altruistic. They were the inspiration for Ronald Reagan’s remark: “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help’.”
That Buchanan, who won the 1986 Nobel Prize for economics, was right is confirmed by observing the politics of protectionism or farm subsidies. Why, then, the controversy? Much of it is due to confusing Buchanan’s subtleties with the brasher views expressed by other, more Chicago-oriented economists who pretend everyone is always selfish.