What if government is a game?
Constitutional Economics, developed by Nobel laureate James M. Buchanan, suggests that to get better government, we shouldn’t just try to elect better players. Instead, we need to focus on writing better rules for the game they all have to play.
See How It WorksFirst, Meet the “Players”
Public Choice theory, the foundation of Constitutional Economics, assumes that people in the political arena are motivated by self-interest, just like in the marketplace.
Voters
They seek to elect officials who will provide them with the most personal benefits, whether through direct payments, lower taxes, or favorable policies.
Politicians
Their primary goal is to get elected and re-elected. They design policies and make promises to assemble a winning coalition of voters.
Bureaucrats
They aim to increase the size, scope, and budget of their agencies, which leads to greater power, prestige, and job security.
The Two Stages of the Game
Buchanan argued that we have to separate the process of choosing the rules from the process of playing within them.
Stage 1: Constitutional Choice
“Setting the Rules of the Game”
This is where we decide on the fundamental rules that will constrain all future governments. Because we don’t know who will be in power in the future, we’re more likely to choose fair and impartial rules that limit everyone’s power.
Example: Amending the U.S. Constitution or the Texas Constitution.
Stage 2: Post-Constitutional Choice
“Playing the Game”
This is day-to-day politics. Politicians and voters make decisions on taxes, spending, and regulations within the existing rule structure. Self-interest dominates here, as groups fight for benefits.
Example: The Texas Legislature passing a budget or a law about university funding.
The core idea is simple: Good rules in Stage 1 can protect us from the worst outcomes of self-interested behavior in Stage 2.
Designing the Rulebook: Texas Examples
The Texas Constitution is full of rules designed to limit the power and scope of government. Let’s look at a few through the lens of Constitutional Economics. Click on a rule to learn more.
The Balanced Budget Requirement
The Texas Constitution (Article 3, Section 49a) forbids the state from spending more money than it takes in. The Comptroller must certify that funds are available for any appropriations bill passed by the Legislature.
The Public Choice Rationale: Without this rule, politicians would have a strong incentive to offer voters popular programs and tax cuts now, while pushing the cost (debt) onto future generations. This rule forces a direct trade-off: if you want to spend more, you must also raise taxes, which is politically unpopular.
Illustrative comparison of state spending growth.
The Biennial Legislature
The Texas Legislature meets in a regular session for only 140 days every two years. This is unique among large states.
The Public Choice Rationale: This rule is a powerful check on government growth and intervention. If the legislature meets less often, it has less time to pass new laws, create new agencies, and respond to the demands of special interest groups seeking favors. It forces lawmakers to prioritize only the most critical issues.
Student Connection: Imagine if your student government could only pass new rules for spending student fees once every two years. They would have to be much more careful and deliberate about their decisions, knowing they couldn’t easily change them later.
The Governor’s Line-Item Veto
For appropriations (spending) bills, the Texas Governor can veto individual lines of spending without vetoing the entire budget.
The Public Choice Rationale: Legislators often engage in “logrolling” – “I’ll vote for your pet project in your district if you vote for mine.” This leads to bloated budgets full of pork-barrel spending. The line-item veto gives the governor, who is accountable to all voters in the state, the power to remove these specific items without derailing the entire budget process. It acts as a check on localized special interests.
Hypothetical Example: If a budget bill contained funding for a new football stadium, a new library, and a new concert hall, the governor could veto the stadium funding while approving the other two items. Without this rule, they’d have to accept or reject the entire package.
Why This Matters For You
These ideas aren’t just historical footnotes. They help us understand today’s biggest political debates.
National Debt & Spending
Debates about a federal Balanced Budget Amendment are a direct application of Constitutional Economics. Proponents argue it’s the only way to impose fiscal discipline on Congress.
Term Limits
The push for term limits for Congress or other officials is a constitutional rule designed to break up the power of career politicians who may become more focused on staying in office than serving the public.
University Governance
Think about your university’s constitution or bylaws. Rules about how tuition is set, how student fees are allocated, and what powers the administration has are all real-world examples of constitutional choices that have a direct impact on your college experience and costs.