 Hello, I'm Jamie Lemke, I'm a senior research fellow and associate director of academic and student programs here at the Mercatus Center at George Mason University. I'm here with Don Boudreau. Don is a professor of economics at George Mason University. He's also a senior fellow with the F.A. Hayek program for advanced study in philosophy, politics and economics. And the Martha and Nelson Getchell chair for the study of free market capitalism at the Mercatus Center. His most recent book is The Essential Hayek. And Don is here to talk with me today about public choice economics. So thanks so much for coming in, Don. Oh, it's my pleasure. So can you just start by telling us what is public choice economics? It's the use of the economic way of thinking applied to politics. It looks at politics realistically and not romantically. So what makes public choice unique relative to other ways of trying to think about political questions? It gets rid of the romance that infects so much political science and thinking about politics. It looks at people as they are, as flesh and blood human beings with the same flaws, the same self-interest that human beings are rightly assumed to have when they act in the private sector. And amazingly, that connection between the use of the realistic assumptions that are used when we analyze the private sector wasn't made for the public sector until just after World War II when Jim Buchanan and Gordon Tullock and Kenneth Arrow and a few other people launched the public choice revolution. Now, where does this idea come from in the first place that we should think about the political actor differently instead of applying these same rules? Jim Buchanan often gave credit to the America's founding generation, particularly James Madison. Madison was one of his great heroes. And Buchanan and Tullock often said, they said in the print, I heard him say it privately quite often, they said that somewhere along the way from 1787 until the mid-20th century, people forgot that government is not manned by angels to use Madison's term. It came to be viewed as something that's above humanity, it's something that transcends ordinary human normalcy. And Buchanan and Tullock simply sought to return political science to the state that it was in when James Madison was writing, but in doing so using the tools of modern economics which have proved so successful in improving our understanding of private markets. What makes this particular approach to politics, studying political questions that was developed by Buchanan and Tullock and some of these others, what makes it different from the way economists have traditionally thought about public or maybe even still think about political questions today? Still too often think about political questions in this unfortunately mistaken way, do most economists today. The difference is the way economists, not so much Adam Smith, and there were exceptions along the way, but by the time the mid-20th century rolled around, the Western powers had just defeated the totalitarian Nazis and now the Western powers were involved in this Cold War with a non-democratic Soviet bloc. So democracy is riding high and people, including economists, very prominent economists, insensibly slipped into the assumption that politics somehow elevates human beings into something superhuman. If not voters, at least politicians to the extent that they respond to the democratic will, they act in the interest not of themselves, they act in the interest not of special interest groups, they act in the interest of the general good. And Buchanan and Tullock quite simply looked around and said, well, on this assumption we can't explain much of what we see. We can't explain the predominance and persistence of tariffs. We can't explain the manner in which regulations by government bureaucracies are actually carried out as opposed to what's written in the statute to describe how they'll be carried out. And so Buchanan and Tullock, I say Buchanan and Tullock, by the way, because they are the two most prominent founders of public choice. There were many other people along the way who helped to found it and contributed to its development. Buchanan and Tullock in essence said, look, in order to better understand reality, we have to look more realistically at the political process, at voters, at politicians, at government administrators, and at judges. We have to look more realistically at them. These are people who have self-interest, just like private sector business people and consumers do. These people do not have perfect knowledge, just as people in the private sector are rightly understood to not have perfect knowledge. Economists, until that time, and again still too many today do, economists had this bizarre duality where they were very good at pointing out market failures and market imperfections, bad incentives, imperfect knowledge, greed. And then the economists said, well, let's turn it over to the government and they'll solve it. Not thinking to ask, well, wait a minute, we're turning it over to the same human beings who we identify in the private sector as having all these imperfections. And never was the connection made, or too rarely was the connection made, between the flaws that people have in the private sector and the way that the public sector should operate. To this day, Jamie, as you know, you can pick up a newspaper and you can read many prominent economists, identify a problem, be it real or imaginary, and they'll just slip into the conclusion. Therefore, we need government to solve it. Well, maybe we need government to solve it, but they never bother asking the critical question. How will government solve it? Will government, with its imperfect people who man it and who go into the voting booths to vote for the people who man it, will government do a better job in all of its imperfection than the market will do in all of its imperfection? And Buchanan was very clear to always point out, he said, look, because the ultimate question really that economics always boils down to is what is the proper rule of the state versus the proper rule of the private sector? When we want to compare the performance of the state to the performance of the private sector, we have to compare like to like. We cannot compare an idealized, unrealizable public sector to the actual real-world private sector. The actual real-world private sector will always be inferior to the public sector. And so if you do that comparison as it was done almost exclusively prior to the public choice revolution, then there's this great demand for government services, a great demand for the expansion of government, because people say, oh, look, the government always works better than the market. And Buchanan says, no, no, no, the market is indeed not perfect, but nor is the government. And when we look at the government sector using public choice analysis, we see that it fails in a lot of the similar ways, in a lot of ways similar to how the market fails. Indeed, in some ways it fails even worse, because in many ways the incentives they face in the public sector are worse than the incentives that they face in the private sector. So you get worse outcomes. But either way, it's not a conclusion-driven science. It's a science that simply says, when we want to understand the proper respective roles of the state versus the market, we have to compare the two in a way that uses the same assumptions about human motivations in one as is used in another.