An Economics Reading List

Public Finance and Public Economics Texts, Public Choice

Bastable, Charles, Public Finance.

One of the first textbooks ever written on the subject, and still eminently readable, with clear organization, definitions and explanations. The taxation of income, capital, imports, consumption goods, etc., and the effects on wages, rents, profits, production, and consumption are major topics, along with the government’s budget constraints.

Friedman, Milton and Rose Friedman, Tyranny of the Status Quo

This book clearly spells out why governments tend to tax and spend far
beyond any point that can be justified in terms of promoting the general
welfare. Additional spending can always be targeted in ways that provide
visibly concentrate benefits on politically organized groups (including
government bureaucracies) with the costs so widely dispersed (and often
delayed) that they generate little political opposition. And once a spending
program is put in place, people make decisions on the basis of its
continued existence (decisions that would make no sense in its absence),
interest groups coalesce around it, and so eliminating it becomes almost
impossible no matter how ill advised it is. Some of the issues used to
illustrate the problem (e.g., deficits, inflation, and unemployment) are not
currently as troublesome at they were when the book was written, but, as
an understanding of the Friedmans’ argument makes clear, there is no
reason for complacently assuming that these problems won’t return.
Unfortunately, other issues discussed (education, crime, trade restrictions,
and excessive government spending) remain serious problems. The book
ends with an insightful consideration of how the status quo’s tyranny can be weakened, if not completely defeated.

Buchanan, James M., Collected Works, in particular:

• Public Principles of Public Debt,
• The Calculus of Consent, (with Gordon Tullock)
  This is a classic in Public Choice, effectively creating this field of research
  and providing much of the impetus and direction for its development. A
  major emphasis is on the importance distinction between decisions on the
  political rules of the game (the Constitution) and political decisions within
  the rules of the game. Political power provide opportunities of some to
  gain at the expense of others and unless these opportunities are tightly
  constrained the result will be decisions that are rational from the
  perspective of each political decision-maker, but destructively irrational
  from the perspective of the entire polity. There is an interesting tension in
  the book between the analyses of the powerful and destructive forces of
  ordinary politics and the positive-sum possibilities of constitutional
  democracy.
• 
  Public Finance in Democratic Process: Fiscal Institutions and Individual Choice,
• 
  The Demand and Supply of Public Goods,
• 
  The Power to Tax: Analytical Foundations of a Fiscal Constitution

Frank, Robert, Luxury Fever

Miller, Roger Leroy, Daniel K. Benjamin, Douglass C. North, The Economics of Public Issues

O’Rourke, P. J., Parliament of Whores

If you would like to laugh and learn at the same time, then there is no better way to learn about public choice than by reading Parliament of Whores. When your customers have no motivation to know anything about the quality or cost of the product you are selling, then you are almost surely a politician and there is no limit to the bamboozle you can get away with, as long as your serve it up with a steady barrage of sanctimonious nonsense. The resulting waste may be depressing, but the absurdities are hilarious when lampooned by a first-rate humorist such as P. J. O’Rourke. The chapter on Agriculture policy alone is worth the price of this book.

Rauch, Jonathan, Demosclerosis