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.
James M. BuchananAmerica is perhaps excessively mobile in the sense that there is sometimes not enough stability in communities. Dynamism in the economy is not necessarily the "be all and end all".
James M. BuchananIf 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.
James M. BuchananWe want to limit the exploitation of the fiscal capacity of the richer regions by keeping down the rate of immigration to a level that would be meaningful and efficient. One way to do that is to have a scheme of equalization which essential bribes people to stay in the poorer regions.
James M. BuchananIf politicians get money to spend and don't have to be responsible for taxation, then of course that will bias their attitude toward more spending as opposed to cutting back on spending.
James M. BuchananI 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.
James M. BuchananOnce 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.
James M. Buchanan