Showing papers in "Constitutional Political Economy in 2016"
TL;DR: The influence of Tullock and the rent-seeking literature on the study of corruption is examined in this paper, where the authors argue that the theoretical corruption literature with its emphasis on principal-agent relationships within government and rent creation by corruption politicians has largely overlooked that contestable rents encourage unproductive use of real resources in seeking these rents.
Abstract: The paper studies the influence of Tullock (West Econ J 5:224–232, 1967) and the rent-seeking literature more generally on the study of corruption. The theoretical corruption literature with its emphasis on principal-agent relationships within government and rent creation by corruption politicians has largely, but not entirely, overlooked that contestable rents encourage unproductive use of real resources in seeking these rents. As a consequence, the literature underestimates the value of corruption control and the cost of corruption itself.
112 citations
TL;DR: In a remarkably simple and insightful observation of 20th century economics, Gordon Tullock pointed out that there are efficiency losses when public policies and political behavior create contestable rents.
Abstract: In a remarkably simple and yet one of the most original and insightful observations of 20th century economics, Gordon Tullock pointed out that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected, so raising the question ‘where are the rent seekers?’ Tullock proposed that political accountability and ‘free-riding’ incentives in interest groups limit social losses from rent seeking. We affirm Tullock’s explanations, which apply differently under different political institutions. We compare Tullock with Gary Becker, who focused on deadweight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison with Becker highlights the significance of the recognition of Tullock’s concept of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution. Tullock’s model, although more encompassing of actual social costs of redistribution, would have been less welcome in the social democratic welfare state.
24 citations
TL;DR: The analysis of the decision-making in the Polish Constitutional Tribunal seems to support the existence of some party alignment, either because judges' preferences coincide with the interests of a specific party or because the judges are incentivized to show their loyalty to a party.
Abstract: Different theories have been developed, mainly in the context of the United States, to explain judicial decision-making. In this respect, there is an important ongoing debate over whether judges are guided by the law or by personal ideology. The analysis of the decision-making in the Polish Constitutional Tribunal seems to support the existence of some party alignment. It is to say that judicial behavior is influenced by the ideology, either because judges’ preferences coincide with the interests of a specific party or because the judges are incentivized to show their loyalty to a party. Party alignment exists but subject to institutional influences. These results are in line with previous findings for other constitutional courts in Europe.
21 citations
TL;DR: In this article, the authors argue that theoretical explanations of the rise of representative government do not account for the abolition or preservation of hereditary monarchy in contemporary democratic states, and distinguish between proximate and fundamental causes of the fall of monarchy.
Abstract: Monarchy has two elements, autocratic government and hereditary succession to office. After surveying arguments for and against hereditary access to public office, the paper illustrates that theoretical explanations of the rise of representative government do not account for the abolition or preservation of hereditary monarchy in contemporary democratic states. The paper then distinguishes between proximate and fundamental causes of the fall of monarchy. The former are military defeat, dissolution of the state as a result of war defeat and decolonization, and revolution. Fundamental causes are those that explain how proximate causes led to the overthrow of the monarchy and focus on the failures of monarchs to preserve national unity and to withdraw from a politically active role.
10 citations
TL;DR: The authors connect the dots in Buchanan's post-2009 analysis of the Great Recession and his reaffirmation of the need for "constitutional money" to his old Chicago mentor's strikingly similar calls for a radical restructuring of the monetary-financial system in the Chicago Plan of the 1930s.
Abstract: James Buchanan had long been a champion of the early Chicago school’s emphasis on the essential role that institutions play in framing the market process. In his post-2009 analysis of the financial crisis, Buchanan echoed his old Chicago mentors like Frank Knight and Henry Simons in arguing that the Great Recession, like all previous financial crises, was primarily a failure of the rules governing our monetary-financial system. This “old Chicago” emphasis on the institutional “rules of the game” formed the basis of his essential post-2009 argument that the financial crisis fundamentally represented not a market failure, per say, but a constitutional failure. In this paper, I connect the dots in Buchanan’s post-2009 analysis of the Great Recession and his reaffirmation of the need for “constitutional money” to his old Chicago mentor’s strikingly similar calls for a radical restructuring of the monetary-financial system in the Chicago Plan of the 1930s. Though Buchanan’s twenty-first century resurrection of these ideas has yet to conjure up the academic support of his predecessors, certain elements of his “old school” monetary-financial reforms have experienced a strong revival since the financial crisis, as has Buchanan’s more general call to “constitutionalize money.”
10 citations
TL;DR: In this article, the authors explored theoretically and empirically how enlargement of multi-level systems like the EU affects satisfaction with democracy and found that enlargement tends to depress satisfaction with democratic institutions.
Abstract: Studies on EU enlargement mostly focus on its welfare-economic and much less so on its public-choice dimension. Yet, the latter may be as important as the former when it comes to sustain integration. This paper aims at filling the gap by exploring theoretically and empirically how enlargement of multi-level systems like the EU affects satisfaction with democracy . In order to assess the effects of a widening in membership, we present a novel approach that draws on the probability of being outvoted. We find that, given the institutional arrangement, enlargement tends to depress satisfaction with democracy. Our theoretical results are backed by panel-data evidence for six European economies displaying a significant decline in satisfaction with democracy with growth in EU-membership.
7 citations
TL;DR: The authors assessed Tullock's work on dictatorship and revolutions using a common analytical framework that captures the dynamics of mutually reinforcing perceptions within a potentially rebelling subgroup of a population.
Abstract: We assess Gordon Tullock’s work on revolutions and dictatorship using a common analytical framework that captures the dynamics of mutually reinforcing perceptions within a potentially rebelling subgroup of a population. We can reconstruct all of Tullock’s central findings but we also find him failing to consider revolutions as an unintended result of individual action in certain low-cost situations. That notwithstanding, one central implication of Tullock’s analysis remains intact, namely that no relation can consistently be constructed between the degree of deprivation of a population on the one hand and the probability of an enforced regime change in a public uprising, at least not within the limits of methodological individualism. Hence, whoever aims at strictly inferring macro results from micro behavior must still find Tullock’s work on autocracies and revolutions path-breaking.
6 citations
TL;DR: The salience and relevance of the currently existing global institutions raise the question of their compatibility with some reasonable notion of democracy as discussed by the authors, and they need to be scaled up to the global level by the design and adoption of appropriate institutional formulas.
Abstract: The salience and relevance of the currently existing global institutions raise the question of their compatibility with some reasonable notion of democracy. I hold that democracy, as a form of government based on social consent, can be operationalized with different institutional formulas, mostly depending on the territorial scale and the degree of conflict of interests of the issues submitted to collective decision-making. Democratic institutional formulas include the people’s assembly in small cities, party elections of representatives in large states, and expert accountable rulers at the global level. Analogously to how democracy was scaled up from the city level to the state level in early modern times, it needs to be scaled up to the global level by the design and adoption of appropriate institutional formulas.
6 citations
TL;DR: In this paper, the authors discuss Gordon Tullock's views on Experimentation in Economics, his own research experiment, and his influence on the field of experimental public choice, and argue that Tollock can credibly claim to have been an early supporter of the method and that his work is cited more often than that of other public choice scholars active in the same period.
Abstract: In this paper, I discuss Gordon Tullock’s views on Experimentation in Economics, his own research experiment, and his influence on the field of experimental public choice. I argue that Tullock can credibly claim to have been an early supporter of the method and that his work is cited more often than that of other public choice scholars active in the same period. His work on rent seeking forms the basis of an extensive experimental literature and studies on trust, demand revelation and voter turnout have been strongly influenced by Tullock’s work.
5 citations
TL;DR: This article showed that progressive tax arrangements do not necessarily discriminate against the well-off, and that it can efficiently fulfill some legitimate classical liberals objectives, provided legislative discretion on tax-related matters is duly limited by the principle of generality, as well as by a certain standard of reasonable lawmaking.
Abstract: Any liberal theory that would take seriously the question of equality before the law is bound to engage with discrimination-related matters, and so long as one is a liberal one should oppose all discrimination coming from the state. This, however, may be a double-edged sword since many classical liberals have quite readily opposed progressive taxation by invoking its discriminatory nature. Some liberals will therefore conclude that one cannot establish different tax brackets, lest taxation be illiberal. This paper endeavours to refute this assumption. Progression may be compatible with the classical liberal concern for the rule of law, provided legislative discretion on tax-related matters is duly limited by the principle of generality, as well as by a certain standard of reasonable lawmaking. Through a careful distinction between four concepts of differential treatment, this paper demonstrates that progressive tax arrangements do not necessarily discriminate against the well-off, and that it can efficiently fulfill some legitimate classical liberals objectives.
4 citations
TL;DR: Tullock, who passed away at the age of 92 on November 3, 2014, ranks justly near the top of the list of the “founding fathers” of the public choice research program.
Abstract: Gordon Tullock, who passed away at the age of 92 on November 3, 2014, ranks justly near the top of the list of the “founding fathers” of the public choice research program. Most widely known in the academy as coauthor of The Calculus of Consent (Buchanan and Tullock 1962), Professor Tullock was not named, unfairly in our joint opinion, as co-recipient of James Buchanan’s 1986 Nobel Prize in Economic Sciences. A good case nevertheless can be made that Gordon earned Nobel laurels on his own account for groundbreaking contributions to the literatures on, among other topics of scholarly study, rent seeking, autocracy, bureaucracy, war and revolution, law and economics and bio-economics. This essay celebrates Gordon Tullock’s major influences on the field of public choice, including his launching of Public Choice, the journal for which both of us have served as editors, and his impacts on scholars working at the many and obviously fruitful intersections of economics and political science.
TL;DR: In this article, the authors take up an argument from Ronald Rogowski about the "natural affinity" between trade and an electoral system with proportional representation, and draw on literature on the historical determinants of electoral system choice.
Abstract: This paper takes up an argument from Ronald Rogowski about the “natural affinity” between trade and an electoral system with proportional representation. We draw on literature on the historical determinants of electoral system choice to advance the general argument that trade integration and PR are related because the adoption of PR helps to secure gains from trade. Our specific model of electoral rule changes in the age of globalization predicts that the likelihood of electoral rule change towards more proportionality increases with levels of trade integration in the world economy. The theoretical model draws on a micro model of the distributive effects of increased economic integration. Because more proportional systems are more credibly able to commit to compensate the losers of globalization processes, there will be increased demand to change the electoral system towards more proportionality under economic circumstances that increase the costs of maintaining a closed economy. In accordance with our model, our empirical tests find a positive association between (a) trade integration and the proportionality of the electoral system, (b) proportionality and social spending, and (c) global integration levels and the probability of electoral rules changes that render voting rules more proportional.
TL;DR: In this article, the authors study a policy response to an increase in post-merger social stress, and present, in the form of an algorithm, a cost-effective policy response which is publicly financed and does not reduce the incomes of the members of the merged population.
Abstract: We study a policy response to an increase in post-merger social stress. If a merger of groups of people is viewed as a revision of their social space, then the merger alters people’s comparators and increases social stress: the social stress of a merged population is greater than the sum of the levels of social stress of the constituent populations when apart. We use social stress as a proxy measure for looming social protest. As a response to the post-merger increase in social stress, we consider a policy aimed at reversing the negative effect of the merger by bringing the social stress of the merged population back to the sum of the pre-merger levels of social stress of the constituent populations when apart. We present, in the form of an algorithm, a cost-effective policy response which is publicly financed and does not reduce the incomes of the members of the merged population. We then compare the financial cost of implementing such a policy when the merger involves more or fewer groups. We show that the cost may fall as the number of merging groups rises.
TL;DR: The authors analyzed the optimal k-majority rule in terms of expected utility and compared it to Dougherty et al. (2015), which focused on costs alone, and found that analyzing kmajority rules in the context of utility, rather than costs, affects the optima.
Abstract: Buchanan and Tullok (The calculus of consent: logical foundations of constitutional democracy. University of Michigan Press, Ann Arbor, 1962) argued that the optimal k-majority rule should minimize the sum of external costs and decision costs. Dougherty et al. (Public Choice, 163(1–2):31–52, 2015) formalized their approach using various groups of voters. In this study, we analyze the optimal k-majority rule in terms of expected utility and compare our results to Dougherty et al. (2015), which focuses on costs alone. Specifically, we replace Buchanan and Tullock’s external cost function with an external utility function that accounts for both the benefits and costs of enacting proposals. We find that analyzing k-majority rules in terms of utility, rather than costs, affects the optima. Furthermore, in terms of utility, the optimal k-majority rule can vary depending on the group one expects to be in during a vote. With some interesting exceptions, individuals from groups that favor the proposal often find small k-majority rules optimal. Individuals from groups that oppose the proposal often find large k-majority rules optimal.
TL;DR: Hayek published a piece in 1960 that criticized corporate social responsibility as a norm for economic organizations, although he regarded corporate actions to be subject to essentially the same moral rules as individual action.
Abstract: Hayek published a piece in 1960 that criticized corporate social responsibility as a norm for economic organizations, although he regarded corporate actions to be subject to essentially the same moral rules as individual action. This article identifies and reorganizes Hayek’s criticisms of social justice, the rule of law and morality, his comparison of the open society and the closed society, and his treatment of charity and altruism. The aim is to clarify the Hayekian perspective on CSR. These considerations explain why the ‘social’ perspective on responsibility is considered dangerous in a free society, how to separate legal compliance and morality from concerns about social justice.
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TL;DR: A comparison of the complicated case of the US constitution and the failed attempt at constitutionalism in contemporary Egypt suggest that many societies are not yet ready for serious constitutional design as discussed by the authors, and that the English civil wars were about religion; the United States constitution ignores religion and avoids the grim conflict of church and state.
Abstract: As James Buchanan often asserted, in constitutional design “we start from here” which is to say we design a constitution to fit the institutions, social practices and so forth that we already have. Comparison of the complicated case of the US constitution and the failed attempt at constitutionalism in contemporary Egypt suggest that many societies are not yet ready for serious constitutional design. The English civil wars were about religion; the US constitution ignores religion and thereby avoids the grim conflict of church and state.
TL;DR: Tullock's impact in political science has been examined in this article, focusing on his influence as a scholar and as an academic entrepreneur and concluding that his primary legacy lies in the impact he had on launching and shaping the careers of prominent political scientists, and thus the development of political science scholarship.
Abstract: We consider Gordon Tullock’s impact in political science, focusing on his influence as a scholar and as an academic entrepreneur. It is common to think of Tullock as a “natural economist,” but his formal training at Chicago encompassed considerable coursework related to political science. We consider three sources of information to draw conclusions about Tullock’s contributions in political science: (1) Course syllabi; (2) Citations in academic political science journals; and (3) Impact on the careers of important political scientists, and shaping the intellectual agenda. Our conclusion is that, while Tullock’s work is clearly significant for central questions in political science, and has received some attention, his primary legacy lies in the impact he had on launching and shaping the careers of prominent political scientists, and thus the development of political science scholarship.
TL;DR: In this article, the authors investigated the impact of constitutional rights on the level of public expenditure in a large sample of countries and found that larger governments tend to inscribe fewer rights in their constitutions.
Abstract: This paper investigates the impact of constitutional rights on the level of public expenditure in a large sample of countries. To do so, we construct a panel of 73 countries from 1960 to 2011. We first investigate factors that drive constitutional changes regarding constitutional rights. To address potential endogeneity concerns in the choice of constitutional rules, we rely on an instrumental variable within estimation (country and time fixed effects) to estimate the impact of constitutional rights on government size. We find that larger governments tend to inscribe fewer rights in their constitutions, but we do not detect any impact of constitutional rights on the government size.
TL;DR: This article examined determinants of establishing these written constitutions and found that coordination costs were less than the benefits from constraining a potential rival band, and that social norms of centralization made having a written constitution less necessary.
Abstract: The Cherokees wrote a constitution in 1827; in contrast, the Yokuts tribe on the Santa Rosa Rancheria Reservation adopted theirs in 2014. As Native American tribal constitutions are common, I examine determinants of establishing these written constitutions. During their formation, some reservations had bands of the same tribe forced onto the same land. These reservations of forced coexistence wrote constitutions at an earlier date. More homogeneous, centralized tribes tended to adopt their constitutions at a later date, although this finding is less robust. The implication is that coordination costs were less than the benefits from constraining a potential rival band, and that social norms of centralization made having a written constitution less necessary. Additionally, a positive correlation is found between having a written constitution and economic output, similar to other studies.
TL;DR: The Shadow of the Future Hypothesis as discussed by the authors has been used to explain inter-branch cooperation under separated-powers constitutions, specifically those of the American states, using the end of governors’ final terms as end points and the rate of overridden vetoes as the extreme case of a breakdown in inter branch cooperation.
Abstract: Prisoners’ Dilemma (PD) experiments confirm and extend Axelrod’s (The evolution of cooperation. Basic Books, New York, 1984) Shadow of the Future hypothesis: subjects cooperate in infinitely repeated PD, but they also cooperate until near the end in finitely repeated PD. So the extended hypothesis is that cooperation depends on the probability of continued play. Observational tests of this hypothesis, or even applications, have been rare at best. Here we not only apply but test it for interbranch cooperation under separated-powers constitutions, specifically those of the American states, using the end of governors’ final terms as end points and the rate of overridden vetoes as the extreme case of a breakdown in interbranch cooperation. Controlling for a variety of factors, including divided government, we find support for the hypothesis, whose explanation of interbranch interaction fills a gap left open by Madison’s Federalist 51: how republican government can control itself when what is needed is “energy” more than safeguards.
TL;DR: In this paper, Tullock's work is organized as a historical narrative, and it becomes clear that conflict, rather than trade or cooperation, are at the core of Tullocks's approach to constitutional political economy.
Abstract: Gordon Tullock wrote widely on the emergence and effects of political and legal institutions. Although he did not provide an analytical narrative, perse, his work provides explanations for the emergence of the state, civil law, constitutional law, and democracy. When his work is organized as a historical narrative, it becomes clear that conflict, rather than trade or cooperation, are at the core of Tullock’s approach to constitutional political economy.
TL;DR: Tullock's impact on the economics profession and on public choice in particular is discussed in this article, where the authors measure this impact through his publications, his editorship of the journal Public Choice, and his association with the Center for Public Choice.
Abstract: This article discusses Gordon Tullock’s impact on the economics profession and on public choice in particular. It measures this impact through his publications, his editorship of the journal Public Choice, and his association with the Center for Public Choice.
TL;DR: This paper proposed a simple household-level economic model to capture the most salient aspects of the debate, including the role of military impressment and the emergence of the Takings Clause of the US Constitution.
Abstract: Many have noted the debate amongst Hamilton, Jefferson, and others on compensating original versus final US Revolutionary War debt holders upon federal assumption of state debts in 1790. However, to our knowledge the economics literature has not yet proposed a theoretical model of the argument. The purpose of this paper is to propose a simple household-level economic model to capture the most salient aspects of the debate, including the role of military impressment and the emergence of the Takings Clause of the US Constitution.