Economics Dictionary of ArgumentsHome
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| Fiscal-exchange model: The fiscal-exchange model views taxation as a form of exchange between citizens and the government. People pay taxes in return for public goods and services, much like a market transaction. This model emphasizes the perceived value and fairness of public spending in shaping taxpayer behavior and attitudes. See also Models, Government service, Markets, Taxation, Fiscal policy._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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James M. Buchanan on Fiscal-exchange Model - Dictionary of Arguments
Boudreaux I 27 Fiscal-exchange model/Buchanan/Boudreaux/Holcombe: Buchanan’s fiscal-exchange model of government depicts government as an organization through which individuals come together collectively to produce goods and services they cannot easily acquire through market exchange. Just as individuals trade in markets for their mutual benefit, government facilitates the ability of individuals to engage in collective exchange for the benefit of everyone. This fiscal-exchange model is an ideal, of course; Buchanan was well aware of the possibility that those who exercise government power can and often do abuse it for their own benefit at the expense of others. Much of his work was devoted to understanding how government can be constrained in order to keep this abuse to a minimum. When those constraints are effective, collective action through government can further everyone’s well-being. The fiscal-exchange model is based on the idea that taxes are the price citizens pay for government goods and services. And just like prices in the marketplace, the value of the goods and services government supplies should exceed the prices citizens pay, in the form of taxes, for these goods and services. As a public-finance economist, Buchanan’s work is founded on this idea, but this idea also naturally raises the question of how institutions can be designed to assure that government output is worth its cost. Wicksell/Buchanan: Buchanan here drew on Wicksell’s insight that if individuals are required to agree unanimously to the taxation and expenditures, everyone will benefit. In the fiscal-exchange model, government’s purpose is to enable citizens to organize in order to take collective action, and to bargain with each other to determine which particular activities will be undertaken by government and at what and whose expense. If everyone agrees, government action is in the public interest, because it is in the interest of all of the individuals who make up the public. Trite as Wicksell’s point might sound, it ran - and still runs - counter to the prevalent Anglo-American view of government budgeting._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconBuchan I James M. Buchanan Politics as Public Choice Carmel, IN 2000 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
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