Refutation #5 -- Madison as an Economist
From time to time, we receive complaints at the Dead Economists Society that some of our featured economists were not economists at all. James Madison is pointed to as a political scientist and philosopher and, by some, not thought to be much of an economist. Our claim, however, is that Madison was substantially correct in his analysis of political economy. To see this, remember that one of the most cited articles of economics is "The Problem of Social Costs" written by Nobel Laureate, Ronald Coase. In this, Coase describes government as a hierarchical economic structure, much like most businesses with the following exception: government is typically not subject to the external constraints of competition. As a consequence, there can be serious problems when government is used to solve economic problems. Madison clearly recognized this as is evident in Federalist #10 and in other writings. His call that the national government have few and well-defined powers while state governments should have most of the powers of the political process is clearly a Coasean argument. Madisonís insight that introducing competition among governments, the crux of the federalist system, is an economic understanding of how to control the negative externalities of government. That is, indeed, Nobel level economics. It is also something our national Congress and President ought to heed.
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