 My name is Jamie Lunkie. I'm a senior fellow in the FA Hayek program for Advanced Study and Philosophy, Politics and Economics. I'm here with my colleague, Dick Wagner, the author of a book we're going to be discussing today, James M Buchanan and Liberal Political Economy, A Rational Reconstruction. Thank you for joining me here today. Well thank you for inviting me and looking forward to our conversation. He did his dissertation in the subject matter of his public finance. He disliked the way public finance was presented throughout the world and at the University of Chicago at that time. He wanted to do public finance differently. The way public finance had been done and is still the dominant way today is to treat government or what we call the state as some kind of external entity, kind of a lord of the manner that's in charge of running the place. So a president becomes the chief executive of the nation. Buchanan wanted, he was a thoroughgoing democrat and he wanted to ask, how could you write and develop a theory of public finance when you take seriously, really seriously, the idea that democracy is a system where people govern themselves rather than being a system where someone governs you. I think Buchanan really, he didn't want to be bossed and he thought no one should really want to be bossed and so but yet you have problems of governance and so it's people coming together to govern and to regulate their activities and that was how he wanted to do public finance. But that concern with trying to explain how it is that you could genuinely have a social and political system organized on the principles of self-governing people in turn led him into a whole variety of lines of thought. I described in the book that Buchanan was like a gigantic oak tree where a sapling was planted 64 years before his death and that trunk of that sapling was then, how do you think about public finance in a self-governing, among a self-governing set of people. But that in turn led into some, what I call six different branches that were nonetheless there in that very initial questioning to think about it. For instance, how can a set of people govern themselves? Suppose you have just a small group, 500 people. 500 people can't govern themselves, they're just a mob. In order for 500 people to govern you have to have conversations, 500 people can't converse without some kind of procedures or orders. That gets into Buchanan's lifelong interest in constitutional political economy because large groups just by themselves masses are just mobs. In order to become a governing kind of entity you have to have some kind of constitutional structure that governs relationships, positions of authority, responsibility and so forth. So that was one huge branch that followed from that. If you're going to do a theory of public finance for self-governing people you have to get into these questions of how groups or people are put together. Then another branch that follows from that is questions of what processes lead to the generation of groups of people? What are the principal groups of people or associations among people that in turn led Buchanan to have a lifelong interest in federalism and federal forms of the government as an instance of how to have an association of people where with federalism what you have is not one government over a whole set of people but associations of higher and lower governments and that stems from his interest as well. Then continuing on with that trig going up, when we're talking about politics you're talking about settings where relations and interactions among people are not governed by what we recognize as the principles of private property but our actions undertaken by a collection of people. Now this creates a number of particular problems. Even my age I could conceivably go out and invest in a hickory forest, the set of hickory trees to make hickory saplings to make furniture. Now when those trees mature and are harvested 40 years from now I'm probably not going to be around to harvest the gain but I can still rationally make the investment because within the principles of private property I'm liable for the value consequences of my actions. If I manage the forest poorly it's my estate, my children, my grandchildren are going to suffer for that. Whereas when you get into public political situations that kind of responsibility weakens because politicians need to be reelected every two years, four years or six years and so there isn't that same kind of summing up where you can make decisions today to bear costs because you determine that the future benefits make it worthwhile. That plays out differently in democracies. It plays out among other things in a strong tendency to issue debt rather than to finance things by taxation because if you issue debt the costs are shifted much more into the future rather than born in the present and so that was again a lifelong interest of his that sprang as well from his initial recognition that he wanted to rewrite the whole body of public finance in a way that speaks to the problems that a self-governing Republic of people face. And then another one of the branches in that big oak tree that you can and end up being has to do, he was certainly very much of a classical liberal type of fellow who believed in the widest possible range of individual action, but he also recognized that individuals must be responsible as well for maintaining the system. There was a famous story then repeated thousands of times as far as I know that it was at the end of the American Constitutional Convention when a woman outside the convention asked Benjamin Franklin, hey, then what kind of a government that you folks create in there? And Franklin responded, a Republic, if you can keep it. Now implicit in Franklin's response was recognition that to keep that kind of a liberal form of governance is going to require people to undertake actions to preserve it, that we have that saying, I don't know from whom it comes, but eternal vigilance is the price of liberty. Now, how high is the price of liberty? Well, that's a question that comes naturally to someone who is interested in self-governing republics as Buchanan was. And then the final branch of Buchanan's big oak tree was, see this all began, Buchanan's initial interest began with, to my call, in the realm of positive or explanatory economics. It started from an interest just trying to understand better how a world of self-governing people could actually operate, could actually be put together, what its problems would be. But they're also behind that since we're all creatures who occupy geographical space that we live together in close proximity to one another, we realize that in one end, we get advantages from one another, we can trade with one another. But we also, you know, we get in people's nerves. We irritate one another too. That's all part of the deal of living together. And so the question of how we do conduct our living together is his lifelong interest in the goodness or the badness of alternative arrangements by which this does. And so in that sense, looking back in his work from the time of his death, it just occurred to me, hey, there is just a very strong logic that as if everything he wrote was there. It starts like, you probably heard that story of Michelangelo and a sculpture and, oh, how beautiful. And Michelangelo responded, does that recall the story? No, I didn't make that. I just released it. And that's what I think it was with Buchanan. He released what was in Coit and his very foundational dislike of what he thought passed for public finance at the time he was a student. It's always a pleasure talking to you, Dick. And today was no exception. So thank you so much. Thank you so very much. I always love talking to you too.