Why Would Anyone Want Austerity?

"It is easy to see why the diversity of the Italian public finance tradition appealed to Buchanan. In fact, Buchanan would often point out that the continental thinkers, by which he meant Knut Wicksell, Bruno Leoni, and Maffeo Pantaleoni, among others, were “far ahead” of English-speaking theorists. Committed to an historical and evolutionary theory of the Roman Jus Civile and the ancient common law, this tradition concluded that our political world had collapsed into a system that restrains individual liberties. The more extreme version of this view (as later summarized by Carlo Lottieri) went so far as to question whether liberty and democracy are ultimately compatible. The question—and this will sound familiar to students of Buchanan—is under which conditions it is legitimate to coerce citizens. The gold standard for such legitimacy is consent, of course: if someone signs a contract voluntarily, they can be sanctioned for violating their promise. The question was when, or if, it is possible for citizens to consent to being coerced by majority rule.

But there is quite a bit more to the Italian tradition of public finance. Having 2,500 years of history with budgets and with the effects of different taxing and governing arrangements creates a fecund setting for research. This raises one of the central paradoxes of Italy as a nation. Italy belongs in every conversation over food, fashion, cars, art, even engineering and high quality manufacturing. It is also a notorious pit of political dysfunction and economic nonsense. Yet the view of public finance in Italian scholarship is generally sensible, informed by theory, and empirically and technically excellent."