 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 FA 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. That was my pleasure. You bring up this issue that it is dangerous to compare the real world version of one system with the fictionalized or idealized version of a different type of system. What are some examples in your mind, historical or contemporary of some issue that an economist might get wrong if they fail to take some of these public choice questions into account? And well, we don't have enough videotape to allow me to list them all. A couple of examples. One is one that I'm familiar with in my own research, and that's antitrust. So if you look at the theory of antitrust in the United States, markets aren't perfectly competitive, and they're not. And so in order to correct this problem, we'll call in the antitrust administrators, and they'll fix things. Well, the antitrust administrators have their own incentives. The antitrust administrators are not perfectly informed. They do not have ideal incentives to satisfy consumers. Their incentives are to satisfy political constituencies. And when you look at the actual history of antitrust, as opposed to the idealized theory of what antitrust was supposed to be, what you find is that antitrust has largely been used not to promote competition, but to stymie it. This is a conclusion that the vast majority of people who have studied the actual history of antitrust come to. It's a surprisingly widely accepted conclusion among antitrust scholars. A more recent example, I'm just picking them almost at random, is the carbon tax issue. So there's this alleged problem with too much carbon being emitted into the atmosphere. Let's assume, for argument's sake, that that is, in fact, a real problem. It does not follow from that. That therefore, we should empower government to solve the problem, because although economists, many economists lead to that conclusion, because the same poor incentives, the same flawed institutional structure that might be at work causing carbon emissions to be excessive, are also in play in the public sector. So we get these imperfect decisions made in the public sector. So we can't assume that just even if there is, in principle, some idealized solution to how much carbon emissions ought to be reduced, we can't assume that if we give power to government officials to bring that solution about, that they, in fact, will do it. They may get it wrong, just out of pure intellectual error. More likely, says the public choice scholar, is these officials will have strong incentives to satisfy powerful constituencies. And so the actual way in which government will deal with the carbon emissions problem is not to bring about a solution in an apolitical way that satisfies some scientist sitting in a laboratory, but instead, in a way to enrich politically powerful constituencies, probably at the expense of the general public. When Buchanan won the Nobel Prize, how did that change what it was like to be a public choice scholar? Was there a difference in kind of interest, attention? At first, yeah. So back in, he won the Nobel Prize in October of 86. And I mean, and I was a young assistant professor back then, so my perceptions, no doubt, different from what it would have been had I been a more senior scholar then. But my perception back then was that public choice did get more attention, certainly in the public media. You saw Jim Buchanan and public choice being mentioned more frequently in a national column, such as George Will and William Sapphire. I think, well, I know it had an effect on the economics profession. The prize did not have the effect that I thought it would have, that I know Buchanan thought it would have, and that we all hoped it would have. The too many economists today remain ignorant of public choice. Not by ignorant, I mean, it's not that they've read it and said, no, I don't think it's right. They just remain ignorant of it. They just slip into this still old fashioned mode of being very clever and adept at identifying market imperfections. And then assuming that there is available this angelic, transcendent agency called the government that, as long as it's democratic, will solve these problems, that's how too many economists today reason. And it is shockingly unscientific. And it's such a shame that public choice remains as out of the mainstream as it is, although it is more in the mainstream now than it was 35 or 40 years ago. If you have to summarize public choice in just a few short words, that's as good a summary as you can get. Follow the money. But having said that, I don't want to leave people with the impression that public choice scholars deny that ideas matter. Sometimes a handful of public choice scholars, I think, take it too far and will insist that ideas don't matter. The only thing that matters is the alignment of special interest groups and the narrow political incentives that government decision makers face. I don't think that's true. I think ideas, in fact, do matter. I do not doubt that public officials, their chief motivation, is to get elected and to remain in office. But because ideas do matter to the general public, the elected officials are interested in using that fact also as a means to getting votes. So ideas do matter. There are certain things government officials simply cannot do no matter how profitable it would be for a special interest group, simply because the general public won't tolerate it. But within the broad confines of what the public will tolerate government doing, that's when public choice is really at its most explanatory. It helps us understand why tariffs still exist. It helps us understand why American sugar farmers have been coddled by the government now going on 32 years. It helps us understand why we have minimum wage legislation. It helps us understand, indeed, a lot of the details of environmental regulation. Environmentalists and people who don't look at these things carefully, they assume that, well, the Clean Water Act and the Clean Air Act and the EPA, these are all good environmental stewards out there to protect the world against the rapacious and polluting capitalists. And the story is a lot more complicated than that. There are some noble ideas behind it. But the details of it are very, very gritty and public choicey, we might say, the skill of politicians to adjust the ways that these programs are carried out in ways in order to line the pockets of their cronies is really quite something. These kinds of rents are created and distributed quite frequently, again, all under the guise of promoting the public good.