Daniel Kuehn on Democracy in Deficit

“Whenever I read from Democracy in Deficit I always have the same reaction that I do reading Hayek on "scientism". I think "how could someone who was otherwise so brilliant go so terribly wrong?". It happens I suppose. Notice the strange conflation of everything liberal he doesn't like with Keynesianism. Notice the bizarre characterization of fiscal irresponsibility as the origin of the problems of the 1970s (this was written in 1977).”

“Often you'll hear the argument that whether Keynes was right or wrong, he opened the flood-gates to politicians who destroyed fiscal sanity in his name. Buchanan makes this argument in Democracy in Deficit, and recently it's been repeated by Peter Boettke and Don Boudreaux. […] I appreciate James Buchanan a great deal. I've said here before I was thoroughly impressed when I was first assigned to read him as an undergraduate. I still am. But James Buchanan did a very poor job thinking about the legacy of Keynes, and unfortunately his arguments have been reproduced widely. […] If you have a problem with politicians - criticize politicians. Don't bring the bone you have to pick with Keynes into it unless there's a much clearer connection than this one.”

“I would say that Buchanan makes two mistakes here: (1.) a history of thought mistake, in diagnosing exactly what Keynesians and their models say or assume, and (2.) an analytic mistake, in addressing how we should expect this to play out. The first is actually easily corrected. The second is a little more involved, I think. But the empirical evidence makes it pretty clear that he was wrong, I think. Think of every argument we've had about fiscal policy and the debt in the last several years. This is clearly not a world where Keynesian economics is driving policy in an over-indebted direction. The picture is complicated by (1.) automatic stabilizers, and (2.) long term trends in entitlements that have nothing to do with deficit financing or Keynesian stabilization. I think that's part of what throws people. I'd like to explore this more, but I'm still not sure if it's worth the investment of time.”