James M Buchanan

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James Buchanan, the 'Public Choice' guru, was a professor at Virginia Polytechnic. He transferred over (with many associates) to George Mason University (funded commercially) which became the US center for 'Public Choice' economics which was taken up briefly by politicians like Margaret Thatcher and Ronald Reagan. This is an extreme form of libertarian, free-market, small government economics which found favor with the tobacco industry, but the politicians quickly discovered that it was too extreme.

His most important work was "The Calculus of Consent" which earned him the Nobel Memorial Prize in 1986. [Note: This is a prize given out by the economics community, not by the Nobel Institute in Sweden, but it is seen as a related form of recognition.] Buchanan's theory was on how politicians and bureaucrats are affected in making decisions by self-interest, utility maximization and other non-monetary considerations.

Buchanan became the guru of the Public Choice Society at GMU, and his devoted associate, Robert D Tollison quickly realised that this ideology was a commercial proposition that could be exploited. He, and over a hundred of the Society members, became lobbyists for the tobacco industry for real monetary considerations.

Buchanan was a right-wing ideolog, who joined the Board of Advisors at The Independent Institute (which later took over the tobacco industry's Cash-for-Comment Economists Network) and he was a long-term member of the Mont Pelerin Society, (for a time its President). He was also a Distinguished Senior Fellow at the Cato Institute, [2]

James Buchanan was one of the four gurus of the Public Choice economic ideology. This was an ultra-libertarian economic school of thought which boosted free-markets to the pinnacle of man's achievement, and regarded any government involvement in the provision of services or goods or infrastructure as an incipient form of socialism. Tullock worked with Gordon Tullock who was another guru at Virginia Polytechnic and later at George Mason University. It was as much a quasi-political movement as it was a center for economics theory.

The other two Public Choice gurus were G. Warren Nutter, and Leland Yeager -- who don't seem to figure in the tobacco documents.[3] However:

  • Buchanan and Nutter, organized the Thomas Jefferson Center for Studies in Political Economy at Virginia Poly.
  • G Warren Nutter, a close friend of Sen. Strom Thurmond, was appointed as Assistant Secretary of Defence for International Security Affairs in March 1969.
  • Leland Yeager at the University of Virginia wrote "International Monetary Relations" and worked with the Reason Foundation
Tullock and Buchanan had disciples in Robert D Tollison, Dwight R Lee, William F Shughart and Robert B Ekelund. Under Tollison's leadership, they set up the Public Choice Society, then the Center for Study of Public Choice, and eventually the Cash for Comments Economists Network. They recruited libertarian economists in other states (generally the lowly paid economists at State Universities) and provide many years of service to the tobacco industry by an organised network of lobbying under direction of the Tobacco Institute.

Buchanan was the one who received the Nobel Prize for this ideology -- and he also became president of the Mont Pelerin Society -- the top position in the top think-tank of the libertarian hierarchy.



The Cash-for-Comments Economists' Network was run by Savarese through a partnership with Professor Robert D Tollison who used the staff and facilities of the Center for Study of Public Choice at George Mason University to prove cut-out and organisation services. They developed and maintained a network of Economics Professors with at least one on tap in virtually every US state. As one Professor transferred or dropped out (there was a regular turn-over) a new one would be recruited in that State. In all, about 130 university professors were involved in the period 1985-1995, and costs ran to $3 million/year at a time when professor's salaries were in the $30-40,000 pa range. An active network member at a State university could almost double his normal salary.

  The main focus of the group was to write commissioned op-ed articles on a subject determined by the Tobacco Institute. The draft article would then pass back through the network to TI staff, who were essentially public relations experts. Here they were 'improved' and refined; then sent to the Institute's outside lawyers for vetting. Modified articles then returned to the professor, who would then send them to a designated State newspaper as if they were his 'independent expert opinion'. The professors received a base amount for writing and bonuses for successfully planting the article on the newspaper. Some, but not all, received a small (eg.$1000) annual retainer.[4]]

  Published papers would also be copied by the professor and sent to his local Federal Representative and Senator (for a further bonus). Sometimes there were special commissions, but generally the work was writing op-eds and LTE's where they were paid just on results (varied from about $700 to $3000 over the years). Network members could also be called upon to provide witness services and promote the cigarette companies' political/economic line at local ordinance or State legislative hearings. An active professor of economics at a State University could almost double his salary with these activities and with some further appearances, for instance, speaking on the importance of cigarettes in economic terms at major economic conferences, etc.
      Cash for Comments Economists Network   &   Robert Tollison   &   James Savarese   &   Network Document Index


Buchanan, as the head guru this area of economic specialisation (known in some circles as the Virginia School) tended to stay above the sordid money-grubbing actions of his followers, but Tullock obviously turned his hand to writing tobacco propaganda for money. Tullock was also the editor of the Public Choice journal.

The Cash for Comment Economists Network eventually split up and most of the members transferred over to work for the tobacco industry under the cover of the Independent Institute with William F Shughart taking a leading role. Savarese and Tollison then appeared to have formalised their partnership, with Tollison and his wife becoming part of James Savarese & Associates. Tullock was, at this time with Arizona State University, and he went with the new network group functioning out of the Independent Institute.

Note: For what it is worth ...

  • The cigarette industry was established by "Buck Duke" who's real name was James Buchanan Duke. He invented the automatic rolling technique.
  • Lorillard, the makers of Kent cigarettes had the infamous miracle-filter Micronite -- made from asbestos -- on sale during the period March 1952 until May 1956 when it was realised that asbestos kills the customers even faster than tobacco. Lorillard was later sued by a man named James C. Buchanan and his wife when he developed mesothelioma, a form of lung cancer only associated with asbestos inhalation. [5]

Documents & Timeline

1986 Oct 17 The Wall Street Journal records their surprise that James Buchanan had been given the Nobel Prize.[6]

1990 May 7 Martin Gleason and Carol Hrycaj at the Tobacco Institute are looking for new ideas to develop around the "Social Cost" theme with smoking and the economists. The circulation is to those external consultants at Ogilvy & Mather looking after the Labor Management Committee and to James Savarese and Leslie Dawson who work on the LMC, but also on the Cash for Comment Economists Network. It includes some slightly older notes:

Action Needed

William Prendergast is preparing a monograph that rebutts "social cost" arguments. An executive summary of this paper will be distributed.

The Coalition Against Regressive Taxation has commissioned an analysis of the degree to which the overall progressivity of the federal tax structure has changed over the last 10 years.

Several new excise tax-related studies are underway and will be completed by spring 1989. In addition, an update of the Chase economic impact study has been commissioned.

Due by mid-year is a book examining earmarking and "user fees" from a public choice perspective. The treatise will contain 8-10 chapters written by respected economists, including, Henri LePage and Nobel laureate James Buchanan.

They already have an extensive list of economist which are listed under Resources:.