Public Choice, Social Security, The Crisis of Interventionism

The Public Choice school was founded mainly by two economists: Gordon Tullock and, especially, my friend James Buchanan. Buchanan takes the following approach: He says, “So, you equilibrium economists believe you perceive failures in the market? Well, for the sake of argument, we will assume that is true. And you believe that, prima facie (that is, from the start and automatically), these market failures justify the intervention of the state? This is where I call your position into question. We will take a look at how the democratic state functions. We will examine, in analytical terms, the political framework in which authorities (that is, democratically elected politicians), voters who vote for them, and bureaucrats or civil servants in charge of implementing the corresponding laws act in an interrelated manner.” So, Public Choice theorists carried out an analytical study of the ways in which such groups and processes operate, and the theorists concluded that regardless of what happens in the private sector, the democratic public sector is beset with failures that are far more serious than those which may occasionally arise in the private sector (although as we have already seen, from the dynamic perspective of the Austrian school, there is a tendency to constantly avoid, detect, and correct errors—with no systematic failures—in the private sector).