More than 40 years ago, Elinor Ostrom began her adventures with the police. In order to combat the conventional view that ‘bigger means better’, Ostrom pioneered a fieldwork-based framework for measuring police services that utilized consumer surveys and thereby created a community-centered model of analysis for public services.
When the stories of the Icelandic and Irish crises are told, they are framed as if one country did everything right to exit recession and the other country everything wrong. This article assesses their recovery policies and finds that the truth lies somewhere in between. By allowing its banking system to suffer substantial losses, Iceland shielded its citizens from the costly debt overhang apparent in Ireland. Ireland's commitment to open capital markets and price deflation has allowed trade flows to remain robust, and relative prices to realign to signal sustainable production plans to entrepreneurs. These responses provide a roadmap for other small open economies with large financial sectors entering similar crises in the future.
“Fragility” is the well-known property of being easily breakable, of failing under moderate stress. The opposite property is “antifragility,” a term coined by Nassim Nicholas Taleb (2012a) and the title of his recent book. In this article, Lawrence White considers how we might achieve antifragile banking and monetary systems. There are reforms that can marginally reduce fragility, but the author argues that to achieve antifragility will require a serious turn away from “one-practice-fits-all” centralized regulation and toward a free market’s mixture of innovation and strict discipline. In banking it will require an end not only to “too big to fail” bailouts
of uninsured creditors and counterparties, but also to other forms of taxpayer-backed depositor and creditor guarantees.
The success of BRAC shows how to overcome public choice dynamics at a
time of crisis. These lessons apply today, but they must be understood correctly.
While creating a small commission or task force to tackle a problem has many
advantages, it is just one aspect of what made BRAC succeed. A spending
commission modeled on BRAC should be focused, independent, composed of
disinterested citizens given clear criteria for their decisions, and be structured in
a way that allows its recommendations to be operative unless Congress rejects
them. This prescription is the only way that a spending commission has a
chance to actually result in spending cuts.
Led astray by Marxist and Keynesian dogma, the literature on the origins of the permanent war economy has overlooked a leading cause of the elevated levels of U.S. military spending since the end of World War II: the economic rents created by the federal government’s monopoly on national defense, and the pursuit of those rents by the labor, industry, and military lobbies. Although the permanent war economy benefits powerful special interest groups, it generates a significant negative externality by diverting resources from other, private uses.
Investigations of a society's competitiveness aim to trace the causal mechanisms behind patterns in wealth and poverty across societies. This paper argues that to be productive such investigations must be comparative, historical, and political economic in nature. Comparative historical political economy is how social scientists generate useful knowledge about the wealth and poverty of nations. Our contribution is a methodology – or rather a collection of methodologies – for understanding national competitiveness and attempts to improve it: one focuses on political-economic analysis, another on historical analysis, and a third on comparative analysis.
We argue that in order to answer the challenges that James Buchanan put to contemporary political economists, a reconstruction of public choice theory building on the work of Buchanan, F.A. Hayek and Vincent Ostrom must take place. Absent such a reconstruction, and the significant challenges that Buchanan raised will continue to go unmet.
Policy debates surrounding online child safety and digital privacy share much in common. Both are complicated by thorny definitional disputes and highly subjective valuations of “harm.” Both issues can be subject to intense cultural overreactions, or “technopanics.”1 It is common to hear demands for technical quick fixes or silver bullet solutions that are simple yet sophisticated.2 In both cases, the purpose of regulation is some form of information control.3 Preventing exposure to objectionable content or communications is the primary goal of online safety regulation, whereas preventing the release of personal information is typically the goal of online privacy regulation.4 The common response is regulation of business practices or default service settings.
In this review essay, Paul Dragos Aligica reviews Pragmatist Democracy: Evolutionary Learning as Public Philosophy by Christopher K. Ansell, Sufficient Reason: Volitional Pragmatism and the Meaning of Economic Institutions by Daniel W. Bromley, and The Priority of Democracy: Political Consequences of Pragmatism by Jack Knight and James Johnson.
The recent wave of enacted and proposed U.S. energy regulations imposes energy efficiency standards on light bulbs, appliances, and motor vehicles based on the unsupported assumption that consumers and firms are irrational and that energy efficiency should be the paramount concern.
For an exploration of the economic situation and more, the Mercatus Center at George Mason University invites you to join Dr. Bruce Yandle as he presents a year end, quarterly economic commentary and discusses the outlook for the year ahead.
Mercatus Senior Research Fellow Keith Hall explains the economics behind the jobs numbers and how to read between the lines to get a better understanding of what they mean for our economy and different groups of Americans.
In this book, Paul Dragos Aligica discusses some of the most challenging ideas emerging out of the research program on institutional diversity associated with Elinor Ostrom and her associates, while outlining a set of new research directions and an original interpretation of the significance and future of this program.