James M. Buchanan's prescient prediction.

AuthorEngelen, Klaus C.
PositionOFF THE NEWS - Public choice theory - Brief article

Nobel laureate James M. Buchanan's (October 3, 1919-January 9, 2013) obituary brought to mind a somber prediction by this leading proponent of public choice theory. Public choice theory pointedly assumes that politicians and government officials, like everybody else, are motivated by self-interest in getting re-elected or gaining more power, and do not necessarily act in the public interest. Ever-larger power-grabbing European Union institutions--in particular the European Central Bank that is becoming also the eurozone's leading bank supervisor--seem to confirm Buchanan's theory.

At the European Forum Alpbach in the Austrian Alps in 1995, I was able to interview Buchanan and also Alexandre Lamfalussy, who chaired the European Monetary Institute, the organization established to prepare for monetary union and the European Central Bank.

While Lamfalussy praised the "progressing stability culture among the potential member countries of the future monetary union," Buchanan was pessimistic. He bluntly predicted that on the basis of...

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