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Book Review: Public Choice And Constitutional Economics edited by James D. Gwartney and Richard E. Wagner

Robert W. McGee

JAI Press, Inc., 55 Old Post Road, No. 2, Greenwich, Connecticut 126830, 1988 • 422 pages, $56.50 (Available at $29.95 from Laissez Faire Books, Department F, 532 Broadway, New York, NY 10012-3956: Telephone: 212-925-8992)

This book is a compilation of eighteen articles written by authors from slightly different perspectives, There are essays by James D. Gwartney and Richard E. Wagner, James Dom, James M. Buchanan, Knut Wicksell, Gordon Tullock, Roger Pilon, Richard Epstein, Terry Anderson and P. J. Hill, Peter Bernholz and Malte Faber, Gale Ann Norton, Peter H. Aranson, Forrest McDonald, Robert Bish, Robert Higgs, Dwight R. Lee and Richard B. McKenzie. But unlike most compilations, there are few gaps or overlaps, and the authors are writing from a common viewpoint—public choice, broadly defined. They all agree that government has overstepped its bounds. Their discussions range from how things got out of hand to how we can get back on course.

The first two chapters provide an especially good backdrop for those who are new to public choice theory. Gwartney and Wagner do a fine job of outlining public choice theory in non-technical language. Over the last 200 years, the Constitution has protected political rights fairly well, but economic rights have been seriously eroded. Politicians act in their own interests rather than those of their constituents. Voters choose candidates who promise them the most. The result is that democracy takes from the majority, whose power is dispersed, and gives to concentrated special interest groups. A few people benefit a lot, while everyone else has to pay just a little bit. But the effect is cumulative. Everyone is trying to live at the expense of everyone else. As the eighteenth-century Scottish historian Alexander Tytler said:

A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury. From that moment on, the majority always votes for the candidate who promises them the most benefits from the public treasury, with the result being that democracy always collapses over a loose fiscal policy.

While government is not supposed to take property for public use without just compensation, it now “takes” as a matter of course, for both public and private use, seldom thinking of compensating the individuals whose property has been taken. Rent control laws are but one of many examples given. One of the most outrageous instances is the 1984 Supreme Court case of Hawaii Housing Authority v. Midkiff, wherein the court permitted the State of Hawaii to use eminent domain to take land and apartments from their owners and sell them to the previous tenants. This action not only was a taking, but a taking for private rather than public use. Yet the action was declared constitutional, even though the Constitution grants authority to government to take only for “public” use. The definition of “public” has become so twisted over the years that it has come to the point where just about anything government does is for the “public.”

Federal spending is supposedly limited to common defense and the “general welfare.” Yet many Federal expenditures go to benefit very small groups, such as sugar farmers, artists at state universities, or any other group that can line up at the Federal trough. But government control over our lives isn’t limited to government spending. Government can take our tax dollars and give them to others, although tax rates can be raised only to a certain point without generating a backlash. Our elected representatives get around this by regulating businesses and forcing them to pay for things that otherwise would be paid for with tax dollars.

Other constitutional protections of economic rights have been seriously eroded over the years. The contract clause has withered and died on the vine. Parties no longer can enter into a contract without worrying about violating a minimum wage law, antitrust law, civil rights law, labor law, or numerous other statutes and regulations. The equal protection clause has been massaged to the point where it now means whatever the court says it means. None of the clauses in the Constitution still can be taken at face value. To learn what each sentence means, we now must look to case law rather than the original wording. It is almost as though the Constitution is void where prohibited by law.

Government is no longer restrained by the chains of the Constitution. The only limits are those in the eyes of our elected and unelected officials. People are now using government to do what they would be prohibited from doing as private citizens.

How did we get into this position? Several of the authors provide answers. As I read each chapter I could see a multi-layered mosaic being woven before my eyes that, on the whole, gives a good, detailed, and scholarly explanation. One of the most interesting interpretations is given by Robert Higgs. Government power (and abuse of individual rights) expands during times of crisis, and never fully retreats after the crisis has passed. Our various wars, as well as the Great Depression, have given rise to new governmental powers. Over the centuries, the power of government has expanded to the point where it now permeates every aspect of our lives.

How can we get out of this mess? Higgs is not optimistic. Electing better public officials is not enough. Neither is appointing better judges. Things will start to turn around when public sentiment demands that things be turned around. In the words of Abraham Lincoln, “With public sentiment nothing can fail; without it, nothing can succeed. Consequently, he who molds public sentiment goes deeper than he who enacts statutes or pronounces decisions.”

This book is one of the better ones on public choice theory. Its scholarly approach, detailed footnotes, and case, name, and topical indexes provide a wealth of references for further study. The fact that it was written by numerous authors does not detract much from the unity of the presentation because the editors did a good job in selecting the articles to be included. []

Professor McGee, who holds doctorates in both accounting and law, teaches accounting at Se-ton Hall University.

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