Economic freedom and human capital investment

HORST FELDMANN

JOURNAL OF INSTITUTIONAL ECONOMICS, Volume 13, Issue 2

Abstract: Using data from 1972 to 2011 on 109 countries, this paper empirically studies the impact of economic freedom on human capital investment. Enrollment in secondary education is used as a proxy for such investments. Controlling for a large number of other determinants of education, it finds that, over the sample period, economic freedom had a substantial positive effect. This is probably because more economic freedom increases the return on investing in human capital, enables people to keep a larger share of the return, and, by facilitating the operation of credit markets, makes it easier for them to undertake such investments in the first place.

The Evolution of Culture and Institutions: Evidence From the Kuba Kingdom

SARA LOWES, NATHAN NUNN, JAMES A. ROBINSON, JONATHAN L. WEIGEL

ECONOMETRICA, Volume 85, Issue 4

Abstract: We use variation in historical state centralization to examine the long-term impact of institutions on cultural norms. The Kuba Kingdom, established in Central Africa in the early 17th century by King Shyaam, had more developed state institutions than the other independent villages and chieftaincies in the region. It had an unwritten constitution, separation of political powers, a judicial system with courts and juries, a police force, a military, taxation, and significant public goods provision. Comparing individuals from the Kuba Kingdom to those from just outside the Kingdom, we find that centralized formal institutions are associated with weaker norms of rule following and a greater propensity to cheat for material gain. This finding is consistent with recent models where endogenous investments to inculcate values in children decline when there is an increase in the effectiveness of formal institutions that enforce socially desirable behavior. Consistent with such a mechanism, we find that Kuba parents believe it is less important to teach children values related to rule-following behaviors.

Libertarianism and Basic-Income Guarantee: Friends or Foes?

JUAN RAMÓN RALLO

JOURNAL OF BUSINESS ETHICS

Abstract: The Basic-Income Guarantee is a governmental programme of income redistribution that enjoys an increasing predicament among academic and political circles. Traditionally, the philosophical defence for this programme has been articulated from the standpoint of social liberalism, republicanism, or communism. Recently, however, libertarian philosopher Matt Zwolinski also tried to reconcile the Basic-Income Guarantee scheme with libertarian ethics. To do so, he resorted to the Lockean proviso: to the extent that the institutionalization of private property impoverishes certain people by depriving their access to natural resources, these people deserve compensation and the most pragmatic way of providing this is through a Basic-Income Guarantee. This paper examines Zwolinski’s arguments and responds by demonstrating that the Basic-Income Guarantee is incompatible with libertarian ethics: the current levels of poverty are not caused by the institutionalization of private property and the Basic-Income Guarantee does not constitute a pragmatic approach to eradicate poverty.

Populism and Institutional Capture

NICHOLAS CHESTERLEY, PAOLO ROBERTI

EUROPEAN JOURNAL OF POLITICAL ECONOMY

Abstract: This paper analyzes the relationship between populism and institutional capture. Populist politicians provide voters with a utility boom followed by a subsequent bust. Non-populists provide a constant level of utility. Once elected, however, politicians of both types are able to seize control of institutions to ensure their re-election. We show that in equilibrium, populist politicians may capture institutions to avoid being voted out of power during the bust: non-populists do not. Voters rationally elect a populist if voters discount the future sufficiently or if it is too costly for the populist to seize control of institutions. Unfortunately, both types of politician may prefer not to strengthen institutions, either to allow their capture or to discourage the election of the populist.

Judaism and Liberalism: Israel’s Economic Problem with its Haredim

DAVID CONWAY

ECONOMIC AFFAIRS, Volume 37, Issue 2

Abstract: This article argues that, in the arrangements for the public provision of welfare for the poor and a basic education for all in both biblical and post-biblical times, Judaism is more closely in accord with classical liberalism than it is with those variants of liberalism which favour no more than the minimal night-watchman state as well as those which favour the extensive welfare states of contemporary Western social democracies. To the extent that Israel’s ultra-orthodox Jews (its Haredim) have been able to secure more by way of state subsidies (through exploiting the leverage their country’s national system of proportional representation has given them, which often leaves them holding the balance of power), not only are they endangering Israel’s viability as a vibrant, developed liberal democracy, they are also guilty of departing from the religious teachings and tradition of Jewish orthodoxy.

Culture, Politics, and Economic Development

PAUL COLLIER

ANNUAL REVIEW OF POLITICAL SCIENCE

Abstract: For a generation, political science has been dominated by the analysis of interests within the framework of rational choice. Although this has enabled major advances, it struggles to provide a plausible analysis of many instances of sociopolitical dysfunction. This article reviews recent innovations in economics, psychology, and economic history that are converging to rehabilitate culture as a legitimate element of analysis. Culture matters, and its evolution is amenable to formal scientific analysis. But these processes need not be benign: There is no equivalent to the invisible hand of the market, guiding a culture toward social optimality. An organizational culture can trap a vital public agency, such as a tax administration, into severe dysfunction. A societal culture can trap an entire country into autocracy or poverty.

Quality of government and regional competition: A spatial analysis of subnational regions in the European Union

ANTONIO BUBBICO, JOHAN A. ELKINK, MARTIN OKOLIKJ

EUROPEAN JOURNAL OF POLITICAL RESEARCH

Abstract: Building on previous work on competition networks and governmental performance among British local governments, this article investigates the diffusion of government quality across subnational regions of Europe through strategic interaction with neighbouring regions or competitor regions more generally. The article demonstrates the presence of spatial interdependence using standard spatial regression models and controlling for common explanations of quality of government. In particular for regions with high levels of autonomy from the national government, there is clear adjustment in government quality to be seen in response to disparities with competitor regions. The article further investigates the intensity of this geographical effect separately in the north and south of Europe in order to estimate the potential for virtuous or vicious cycles of good governance in the two regions, respectively. It is found that while regions in the north develop relatively independently of each other but respond to competitive pressure across Europe, in the south regions demonstrate a higher level of local interdependence, increasing the possibility of virtuous cycles – but also of vicious ones.