Today’s Quote of the Day comes from page 19 of the Liberty Fund edition of The Collected Works of James Buchanan: Volume 12: Economic Inquiry and its Logic (emphasis added, footnote omitted):
The confusions embodied in the Pigovian norms are complemented by an even more elementary set of confusions when the economist extends his range to the “choices” of the collectivity. He tends to be trapped in the scarcity-choice maximization nexus, and it is not at all easy for him to accept the fact that a collective “decision-maker” or “chooser” is nonexistant. Failing this, he tends to conceptualize some supra-individual entity which makes effective “choices,” which maximizes the some objective function subject to appropriately defined constraints. But error arises when either the analyst or his interpreters consider such results applicable to the real world.
Analysis of this sort is two-dimensions away from real-world relevance. In the first place, the “logic of choice” for a single decision-maker is applied to a situation where no such person or entity exists. Since there is no maximizer, analysis is of questionable value when it is based on the assumption that one exists. In the second place, the costs and benefits of alternative courses of action must be objectified if the analyst is to do more than present his own value orderings. This objectification runs into the same difficulty as that noted in connection with the Pigovian approach. There may be little or no relationship between the objectively defined costs and benefits and the evaluations of that individuals place on alternatives in actual choice situations.
Buchanan’s point is simple, yet often overlooked (especially in conversations about political action and aggregate supply/demand): there is no “we.” There is no “us.” The United States (or Commonwealth of Virginia or City of Fairfax) doesn’t make decisions. They are just terms used to describe bodies of people and land. People make decisions. People make decisions based upon their preferences. One person’s preference may not be the same as another’s.