James Buchanan, now in his 90’s, won the Nobel Prize in Economics several years ago for his work in “public choice theory” which is sometimes called the economics of politics. It holds that when people get elected to public office they continue to act in what they perceive to be their own interest and not in the fictional “public interest.” This video explains why politicians won’t cut government spending (it’s not in their interest):
If you find this interesting and want more go here and read Amity Schlaes account of how public choice theory explains the following events and circumstances:
— The federal government exploited AIG’s crisis in order to regulate an area in which state law has traditionally held sway.
— The federal government exploited the auto industry crisis to get its nose into what has formerly been private-company territory: corporate management.
— The federal government exploited the mortgage and banking crisis, using it to capture the remaining private part of a sector in which it already has outposts: health care.
— The federal government exploited the Chrysler deal to reduce the credibility of commercially traded bonds–thus elevating the quality of its own bonds—by screwing bondholders.