The political economy of voluntary public service

We characterize the voluntary public service policy that minimizes the expected cost of delivering a public service (e.g., jury or military service). We then examine whether a majority rule voting procedure will implement the voluntary public service policy (VPS) whenever it entails lower expected cost than mandatory public service (MPS). We find that majority rule often favors MPS in the sense that majority rule implements MPS when VPS would secure the requisite public service at lower expected cost.

     

Chicago political economy: A public choice perspective

George J. Stigler (Ed.), Chicago studies in political economy. Chicago: University of Chicago Press, 1988. Pages xviii + 641.     

Demographic structure and the political economy of public education

This article examines the relationship between demographic structure and the level of government spending on K-12 education. Panel data for the states of the United States over the 1960-1990 period suggests that an increase in the fraction of elderly residents in a jurisdiction is associated with a significant reduction in per-child educational spending. This reduction is particularly large when the elderly residents and the school-age population are from different racial groups. Variation in the size of the school-age population does not result in proportionate changes in education spending, thus, students in states with larger school-age populations receive lower per-student spending than those in states with smaller numbers of potential students. These results provide support for models of generational competition in the allocation of public sector resources. They also suggest that the effect of cohort size on government-mediated transfers must be considered in analyzing how cohort size affects economic well-being.     

The political economy of dissonance

Cognitive dissonance is defined as the psychological discomfort or annoyance that may exist when an individual's choice is not consistent with his values and beliefs. Dissonance may cause an individual to reconsider his values and beliefs, enter new choices with different parameters, respond to the constraints imposed, or change his individual preference function. This paper extends Festinger's (1957) theory of cognitive dissonance to the work of public choice theorists and seeks to explain the incentives of the iron triangle to foment and quell dissonance. Examples are provided for specific environmental and health and safety risks. Akerlof and Dickens (1983) used cognitive dissonance to justify public sector intervention as necessary to correct what they perceived as a market failure in the choice of safety equipment by workers in hazardeus industries. Unlike Akerlof and Dickens (1983), we argue that the concept of cognitive dissonance is applicable to the analysis of public sector decisions giving rise to government failure as well as private decisions involving possible market failure. This paper views the public sector as a market-like arrangement in which dissonance may be produced and exchanged like any other commodity. Cognitive dissonance provides a useful framework for examining individual choice and also expands our understanding of the unseen elements of rent-seeking.     

The political economy of targeting

One of the most widely used method of targeting is to reduce welfare benefits as income rises. Although the need for such targeting is clear enough, it also entails two important difficulties. Firstly, the prospect for the recipients of losing part of their benefits if they were to earn more can be a deterrent to work harder. Secondly, by reducing the number of recipients, targeting reduces the political support for taxation and redistribution. The purpose of this paper is to study the voting equilibrium of the degree of targeting and the level of taxation in an economy where labour supply is variable. The analysis reveals that targeting may be fatal for redistribution even though it rejects strictly less than the richest half of the population, and that it is not possible for a coalition of the extremes to form and reject the middle income group from the welfare system. Moreover, because targeting affects labour supply, we find that Pareto improvements are possible when targeting is either “too low” or “too high”. We also find that voting simultaneously over taxation and targeting is favourable to the poor in the sense that they can converge to their most-preferred policy by successively forming a majority coalition with the rich to increase targeting and with the middle to increase taxation.     

The political economy of fertility

This paper studies the political economy of fertility. Specifically, I argue that fertility may be a strategic choice for ethnic groups engaged in redistributive conflict. I first present a simple conflict model where high fertility is optimal for each ethnic group if and only if the economy’s ethnic diversity is high, institutions are weak, or both. I then test the model in a cross-national dataset. Consistent with the theory, I find that economies where the product of ethnic diversity and a measure of institutional weakness is high have increased fertility rates. I conclude that fertility may depend on political factors.     

Economists and public policy: Chicago political economy versus conventional views

Both conventional welfare economics and public choice analysis suggest that economists have an important educational role to play in the public policy process — in improving the decision-making process. In sharp contrast, information and incentive problems related to voting rules, the bureaucracy, and the legislature do not arise in CPE because these processes are all perfect agents of interest groups. Consequently, the political process is efficient and there is no scope for beneficial economic analysis as it relates to the sugar program or other public policies. That is, the polity is efficient or it would be reordered by competing interest groups to make it so. But, as Mitchell (1989: 290) stresses, the important unanswered question in CPE remains: if there is no scope for improvement how and why does change occur?The analysis here suggests that the sugar program (and similar policies) may persist not because they are beneficial to the public at large but rather because information and incentive problems in the collective choice process lead to perverse results. Consequently, economic analysts can make a positive contribution to the public policy process by providing information about the responsiveness of alternative institutional arrangements to the values and choices of individual citizens (Wiseman, 1989). The Friedmans' Tide in the Affairs of Men view holds that economic analyses are important in changing public opinion, which is an important precursor to changes in public policy.     

The political economy of sugar legislation

The findings of this paper are a rather straightforward account of the political economy of senatorial voting on the sugar program. In the spirit of Stigler and Peltzman's accounts of interest group activity, voting on sugar is indeed related to the concentration of economic interests in the Senators' states. States with high concentrations of sugar growers and processing tend to vote for the program, those with high concentration of users tend to vote against it. The emergence of corn syrup as a sugar substitute and its subsequent interests in the program further supports this perspective. These concentrated interests are associated with conditions ripe for overcoming the collective action problem and, we infer, use their organizations to influence senatorial behavior. The political variables suggest countervailing forces which can be interpreted, at least in part, as further examples of organized (here, politically organized) influences on the interests of Senators. Thus, while the model is one of opposing interests, those of producers and users tend to influence different Senators. The major group-interest trade-off, then, is between the pull of organized interests in the constituency with that of party organization at the national (or national institutional level), at least for those for whom the pull is in opposite directions.It is clear, then, that variables representing (concentrated) consumer interests as well as variables representing grower and processor interests as well as variables representing grower and processor interests are significant in determining voting patterns on sugar legislation in the Senate. This model, therefore, is not one in which one-sided organizational interests operate politically uncontested. That, even so, consumer interests are not powerful enough to prevent sugar programs from passing is clear at one level, due to the existence of the program over most of this period. The existing level of the transfers from consumers to producers and of deadweight losses must be reflective of the magnitude of their respective free rider problems. Yet voting on the program to renew or alter those benefits at any level clearly reflects these interests and their interplay.     

The political economy of project delay

Uncertainty about how long it will take to secure approval for large-scale economic projects presents difficulties for policy makers in all industrialized countries. This paper attempts to determine the factors that influence the time required to get public acceptance for energy projects in Japan. It suggests the importance of distributional factors and, hence, the need to examine: 1) the structure of the bargaining environment; 2) the ability of interest groups to sustain opposition to or support for projects; 3) bargaining strategies employed; 4) uncertainty about outcomes; and 5) changing expectations, in explaining why compensation mechanisms operate more effectively in resolving some social disputes than others. It concludes that an analysis of Japanese experience in this area can contribute to an understanding of other social controversies and that the approach has utility to policy makers involved in developing controversial projects.     

The political economy of IMF forecasts

We investigate the political economy of IMF forecasts with data for 157 countries (1999–2005). Generally, we find evidence of forecast bias in growth and inflation. Specifically, we find that countries voting with the United States in the UN General Assembly receive lower inflation forecasts as domestic elections approach. Countries with large loans outstanding from the IMF also receive lower inflation forecasts, suggesting that the IMF engages in “defensive forecasting.” Finally, countries with fixed exchange rate regimes receive lower inflation forecasts, suggesting the IMF desires to preserve stability as inflation can have detrimental effects under such an exchange rate regime.     

The political economy of class conflict

Texts reviewed:

C. Crouch (1977) Class Conflict and the Industrial Relations Crisis, Heinemann Educational Books.

F. Hirsch and J. H. Goldthorpe (eds) (1978) The Political Economy of Inflation, Martin Robertson.     

The political economy of accountability in Timor‐Leste: Implications for public policy

With a view to establishing the likelihood of the occurrence of state capture and different forms of corruption and the feasibility of their management and prevention, important aspects of the historical, social, economic, political and governance context of Timor‐Leste are examined. This context is found to be conducive to various forms of state capture and systemic grand and petty corruption, and to be resistant to conventional short‐term technocratic anticorruption remedies. While the latter are likely to have public relations benefits that may be helpful to the maintenance of political stability in the short run, it is argued that significant anticorruption progress is a long‐term endeavour, achievable principally through: sustained impartial service delivery that undermines beliefs in patronage; hastening—through general education and the creation of a conducive legal environment for business—the emergence of leaders of integrity and the growth of a middle class; and the establishment of the rule of law. Copyright © 2009 John Wiley & Sons, Ltd.     

A political genealogy of political economy

If, at the end of the eighteenth century, political economy became the prevailing representation of economic phenomena, this was due to the fact that, better than other economic or political discourses, it constructed a political framework in which three forces could co-exist. These forces were those that all the authors of this century tried to articulate: the state, capitalism, and those who tried to protect themselves from their power.