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James M. Buchanan

James M. Buchanan Books

Economist

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“Building on the public's unwillingness to act on principle in support of market solutions to apparent problems, whether real or imagined, these interest groups secure arbitrary restrictions on voluntary exchanges and, in the process, secure rents for their members while reducing both the liberties and economic well being of other members of the economic nexus, both domestically and internationally.”

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“If you create an artificial scarcity through public policy, artificial rent so to speak - setting up a new import quota or giving out a particular office that is very beneficial - people are going to invest money, time and resources in trying to secure that opportunity. If the value is created independently of the search for it, the search for it is wasted.”

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“Imagine that Queen Elizabeth I, in her time, had the opportunity to give out a monopoly for playing cards within the kingdom. She knew she was going to give it to one of her courtiers. These courtiers would then all try to curry her favour. Meanwhile, they would not contribute anything to the product of the kingdom, in fact, they were wasting resources trying to secure a single prize. That, more or less, is rent seeking.”

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“We try to prevent the creation of artificial rents. Rather than setting up quotas to stop imports we levy a tariff, that would be better. Or we pay wages in the public sector which are roughly equivalent to the productivity in the private sector and we don't therefore make it a special benefit to get a bureaucratic position.”

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“I have long been in favor of a balanced budget restriction at the level of the federal government of the United States. Because the federal government has money-creating powers it can, in fact, be very damaging if it runs a series of budget deficits. With the state government in the United States, they don't have money-creating powers. The automatic discipline imposed by the fact that they are in a common monetary unit and don't have control over the money power means that the balanced budget restriction is less needed.”

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“Once you have an equalization instrument in place, as you have in Canada, there arise tremendous bureaucratic values - bureaucratic rent so to speak - in maintaining the system that you have. To shift to a system that paid the transfers directly to individuals, by having differential rates of federal income tax levied to adjust to provincial fiscal capacities, which would be my preference, you would have huge bureaucratic opposition. People would try to protect the rents they have in the current system of institutions.”

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“If you have an area where high-income receivers concentrate, you have a higher fiscal capacity. That fiscal capacity is a valuable resource and will create rent-seeking. People will trying to get that resource one way or the other, including immigration. It is very much like the medieval peasants putting their sheep on the commons pasture. It is better than the open range, and if you let them have open access they will, in fact, put too many sheep on the pasture and waste the value that the pasture has.”

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“You can get a coalition of senators from particular states in America, for example, who want to construct highways or dams or ports which may well be very inefficient. The taxes would be paid by the people over the whole country, but the benefits would go to the few people in those particular locations. This type of spending is a rather gross waste of resources that worsened over the years as the government has been allowed to do more particularized things.”

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“You have to have a government to provide you with legal order, with stability, enforcement of property rights, enforcement of contracts, definition of rules and regulations - the rules of the game, so to speak - and to provide certain shared goods and services, public services. Several people have tried to estimate this and they come out with figures like government spending at 15% of GDP. In the modern world it has gone to 40% or above. So we are way beyond the optimal, and that is easier to say than what the optimum is.”

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“Rent control is one policy that economists universally would oppose. It is a grossly inefficient way of allocating housing space and, of course, it inhibits construction and creates the very thing it is supposed to alleviate. It is one of those things where people simply don't understand simple economics and, therefore, put in for political reasons what will damage the very people that it is designed to help. Minimum wage levels are another classic example.”

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“Politically, sometimes you get situations where rent control will go through. It is especially true in an emergency, where there is a sudden, sharp increase in demand for housing or a cut back in supply. People will simply not allow the marketplace to allocate housing resources and so you get pressures for rent control. Once you have it, it is hard to eliminate.”

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