Escape from Europe: a calculus of consent model of the origins of liberal institutions in the North American colonies

July 2018 By in Economics, Politics

VLAD TARKO, KYLE O’DONNELL

CONSTITUTIONAL POLITICAL ECONOMY

Abstract: The migration out of Europe and the establishment of North American colonies presents us with a great puzzle: why did the colonists establish democratic forms of governance? Considering that early democratic colonies appeared even before philosophical works such as those of Locke and Montesquieu were written, it is difficult to make the case that ideology was the driving factor. We show that the calculus of consent model proposed by Buchanan and Tullock (The calculus of consent, Liberty Fund, Indianapolis, 1962) offers a simple but subtle solution this puzzle. Because migrants formed much more homogeneous communities, and because, thanks to the large geographical expanse, the inter-jurisdictional externalities were small, the efficient level of consensus within each colony was much greater than in Europe, and the scope of efficient centralized decision-making was much smaller. Hence, a structure of decentralized democratic communities emerged as the efficient outcome.

Spinning the industrial revolution

June 2018 By in Economics, History

JANE HUMPHRIES, BENJAMIN SCHNEIDER

THE ECONOMIC HISTORY REVIEW

Abstract: The prevailing explanation for why the industrial revolution occurred first in Britain during the last quarter of the eighteenth century is Allen’s ‘high wage economy’ view, which claims that the high cost of labour relative to capital and fuel incentivized innovation and the adoption of new techniques. This article presents new empirical evidence on hand spinning before the industrial revolution and demonstrates that there was no such ‘high wage economy’ in spinning, which was a leading sector of industrialization. We quantify the working lives of frequently ignored female and child spinners who were crucial to the British textile industry with evidence of productivity and wages from the late sixteenth to the early nineteenth century. Spinning emerges as a widespread, low‐productivity, low‐wage employment, in which wages did not rise substantially in advance of the introduction of the jenny and water frame. The motivation for mechanization must be sought elsewhere.

A culture of rent seeking

June 2018 By in Economics, Politics, Society

SEUNG GINNY CHOI, VIRGIL HENRY STORR

PUBLIC CHOICE

Abstract: Tullock [J Dev Econ 67(2):455–470, 1967] introduced the concept of rent seeking and highlighted the social costs associated with collecting and lobbying for or against tariffs, investing in human and physical capital to facilitate or protect against theft, and expending resources to establish a monopoly. A large portion of the rent-seeking literature suggests how formal and informal institutions impact for rent-seeking activities. Culture also affects rent seeking. Communities can have a culture of rent seeking (CoRS), i.e., a perception shared by members of a society that having influence over political allocations is an important and potentially preferable source of private benefit than other avenues of pursuing economic gain. In this paper, we explore how culture affects the nature and level of rent seeking that a society pursues, and whether institutional shifts can strengthen or break down a CoRS.

Two Rights of Free Speech

May 2018 By in Law, Philosophy

ANDREI MARMOR

RATIO JURIS

Abstract: My main argument in this paper is that the right to freedom of expression is not a single right, complex as it may be, but spans two separate rights that I label the right to speak and the right to hear. Roughly, the right to speak stands for the right of a person to express freely whatever they wish to communicate to some other persons or to the public at large. The right to hear stands for the right to have free and unfettered access to any kind of content that has been communicated by others. The right to speak and the right to hear are two separate rights, grounded in different kinds of interests. I try to show that this division of rights and their respective rationales can be utilized to explain how we think about some of the limits of the right to freedom of expression, particularly in the context of conflicts between the right to speak and the right to hear, conflicts that are rather pervasive. I also argue, though perhaps less conclusively, that in thinking about the limits of freedom of expression, an exclusive focus on the harm principle would be misguided. There is no reason to deny that speech is often harmful, sometimes very much so, but the prevention of harm is not sufficient to justify legal prohibition, at least not in this case.

Social contracts for real moral agents: a synthesis of public reason and public choice approaches to constitutional design

May 2018 By in Philosophy, Political Theory

KEVIN VALLIER

CONSTITUTIONAL POLITICAL ECONOMY

Abstract: Citizens in contemporary democratic societies disagree deeply about the nature of the good life, and they disagree just as profoundly about justice. In building a social contract theory for diverse citizens, then, we cannot rely as heavily on the theory of justice as John Rawls did. I contend that Rawlsian liberals should instead focus on developing an account of constitutional choice that does not depend on agreement about justice. I develop such an account by drawing on the contractarian approach to constitutional choice pioneered by public choice theorists, especially James Buchanan. With some modifications, public choice can help identify mutually justifiable constitutional rules based on the extent to which these constitutional rules produce appropriate laws under normal conditions. This new, synthetic approach to constitutional choice also helps to explain the moral significance of contractarian agreement for the public choice theorist.

Resource rents and populism in resource-dependent economies

May 2018 By in Ciencia Política, Economía

ELENA SEGHEZZA, GIOVANNI B. PITTALUGA

EUROPEAN JOURNAL OF POLITICAL ECONOMY

Abstract: A usual explanation for populism is the existence of bad institutions, with an autocratic regime dispelling opposition by distributing income to the ‘masses’ in the manner of the ‘bread and circuses’ of Imperial Rome. In Bolivia, Ecuador, and Venezuela, populist redistribution occurred in conjunction with weakening of institutions. We associate populist redistribution with resource rents available in the course of the commodity price cycle. When production is predominantly natural resources, other industry interests are ineffective in opposing populist redistribution and preventing the undermining of democracy. Rather than associating populism with preexisting bad institutions as others have done, we show empirically that, in the cases we study, resource rents facilitated populism that allowed authoritarian institutions to be created.

The Average Period of Production: The History and Rehabilitation of an Idea

May 2018 By in Economics

PETER LEWIN & NICOLÁS CACHANOSKY

JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT, Volume 40, Issue 1

Abstract: Austrian capital theory tried to capture the intuitive and basically undeniable importance that time plays in economic life, but arguably was diverted down a blind alley with Eugen von Böhm-Bawerk’s average period of production, a purely physical measure of ‘roundaboutness’—the length of the production process. For the general case, such a measure is a chimera. But the intuition is strong, and the idea survived and reappeared at various points in the history of capital theory. Almost unknown to economists, an alternative value measure of roundaboutness has existed at least since John Hicks’s formulation of his average period (AP) in 1939, which, coincidentally, was exactly the same measure discovered by the financial actuary Frederick Macaulay in 1938, called by him “Duration” (D). Macaulay’s D, more richly interpreted as Hicks’s AP, is a measure that more appropriately captures what it was that the Austrians struggled to express over many years in their capital theory and in their analysis of the business cycle.