Katrinanomics: The politics and economics of disaster relief

Hurricane Katrina revealed massive governmental failure at the local, state and federal levels. This commentary brings the modern theory of property rights and public choice reasoning to bear in explaining why officials failed to strengthen New Orleans's levee system despite forewarning of its weaknesses, failed to pre-deploy adequate emergency supplies as the storm approached landfall and failed to respond promptly afterwards. Its main lesson is that no one should have expected government to be any more effective when confronted with natural disaster than it is in more mundane circumstances.     

Reversal of fortune: the politics and economics of the superconducting supercollider

Congress approved the superconducting supercollider (SSC), but later cut all funding after construction for the project had begun. We claim that this reversal was due, in part, to a problem of time inconsistency. Representatives from states in contention to receive the project had an incentive to support it early in the process. Once Texas was chosen as the SSC site, the other contender states had a greatly diminished incentive to continue to support it. Our empirical results show that the probability of switching from ‘for’ to ‘against’ the project is significantly higher for representatives from the former contender states.     

The war on poverty: between economics and politics

A wealth of solutions to poverty have been proposed, with little understanding of the forces required to turn a sound idea into an implementable program. A system approach is suggested to overcome this deficiency. This implies analyzing the effects of antipoverty measures on other elements of a society and a polity and the feedback effects of changes in these other elements on the new programs which are being introduced. Such an approach is seen overcoming the limitations of fragmented views of the issue—such as the purely economic one—as well as the lack of systematic analysis of a progam's costs, benefits, sources of funds, and nonfinancial resources. Consequently, a challenge is also offered to those who formulate programs without taking into account dominant values (e.g., questions of consensus) and other political considerations (e.g., which groups would benefit or suffer from the program). This is seen as leading to undemocratic action or, most frequently, to inaction due to resistance. The article concludes with a brief review of the recent Nixon-Moynihan proposal in terms of the societal-system approach here advocated, and adds a cautionary note on the limits of planning.In revising this article, I benefited from comments by Daniel Bell, Carolyn O. Atkinson, and Sarajane Heidt.     

The interaction between economics and politics: modelling cycles

Abstract. In this article simulation results are used to analyze the capacity of a general politico-economic model, developed by one of the authors, to generate cycles of various lengths. The model describes behaviour of individuals and organizations in the economic as well as the political sphere. The interaction between both spheres gives rise to short term (business) cycles as well as long term (Kondratieff) cycles. The analyses concentrate on the effect variations in the political sector (regarding, e.g., party identification on non-economic grounds, the sensitivity of voters, and the discount parameter for past economic results) have on the cycles found.     

Robert D. Tollison and the economics of politics

This paper tracks economists’ rising, yet elusive and unstable interest in collective decision mechanism after World War II. We replace their examination of voting procedures and social welfare functions in the 1940s and 1950s in the context of their growing involvement with policy-making. Confronted with natural scientists’ and McCathythes’ accusations of ideological bias, positive studies emphasizing that collective decisions mechanisms were unstable and inefficient, and normative impossibilities, economists largely relied on the idea the policy ends they worked with reflected a “social consensus.” As the latter crumbled in the 1960s, growing disagreement erupted on how to identify and aggregate those individual values which economists believed should guide applied work, in particular in cost-benefit analysis. The 1970s and 1980s brought new approaches to collective decision: Arrow’s impossibility was solved by expanding the informational basis, it was showed that true preferences could be revealed by making decision costly, and experimentalists and market designers enabled these mechanisms to be tested in the lab before being sold to those public bodies looking for decision procedures that emulated markets. In this new regime, the focus paradoxically shifted to coordination, revelation and efficiency, and those economists studying collective decision processes were marginalized.     

The politics and economics of revenue growth: A cross-national analysis

Abstract Despite considerable interest in comparative fiscal policy in general, and the high salience of tax policy and tax reform in the industrialized democracies, there are relatively few cross–national studies of the economic and political correlates of revenues over time. We undertake a cross–national time series study of revenue growth in fourteen OECD countries between 1958 and 1990.We test a number of political and economic hypotheses about revenue change, including political business cycle, 'fiscal illusion', elasticity, and ideological theories. For the 1958—1990 period, we find that all countries, regardless of revenue structure, experience higher real revenue growth as a result of inflation, but that revenue growth is more responsive to unemployment in countries that rely more on direct taxes compared to countries with less direct–tax reliance. We find that this effect is most pronounced in the post–1972 period. We also find that revenue tends to increase in the years following elections, consistent with the idea that governments try to minimize the political fallout from tax increases by separating them as much as possible from election campaign periods; this effect, too, is most pronounced in the post–1972 period. We find no support for 'fiscal illusion' and ideological theories of revenue growth.     

Fact or artifact revisited: Survey instrument effects and pocketbook politics

Sears and Lau (1983) presented evidence that apparent self-interest effects can be, and have been, generated in political surveys by question order artifacts. This evidence was based in part on a tabulation of published reports of self-interest effects in the NES series, specifically on the political effects of personal financial situation. From another analysis of the NES data, Lewis-Beck (1985) concluded, to the contrary, that personal finances have in fact had a consistent effect on voting preferences, without significant contamination from such artifacts. We here argue that his analysis inappropriately defines the conditions for possible contamination. We first lay out a theory of when such contamination effects might occur. We then repeat our analysis, taking into consideration both his observations and our own reappraisal of our procedures. We obtain results consistent with our original position, although the results are confounded by different types of questions appearing disproportionately in contaminated and uncontaminated conditions. However, the 1984 election appears to be a special case, in which self-interest effects were strong and relatively uncontaminated. We then report a split ballot experiment that is not confounded by item content, and find results consistent with our original position. However this methodological debate may be resolved, on the larger question of whether people's economic self-interest has major political implications, the evidence seems clear. In cases not contaminated by item order, which we would take to be the most appropriate test of self-interest effects, personal finances have on the average had only a small effect on political responses.An earlier version of this paper was presented at the 1989 annual meeting of the Midwest Political Science Association, Chicago. Address all correspondence before June 30 to Richard R. Lau, Department of Social and Decision Sciences, Carnegie Mellon University, Pittsburgh, PA 15213; after July 1 address correspondence to Richard R. Lau, Department of Political Science, Rutgers University, New Brunswick, NJ 08903.     

Climate risks,climate economics,and the foundations of rights-based risk ethics

In this article, I argue that climate ethics must basically be risk ethics. But risk ethics is still an underdeveloped field of normative ethics. For example, rights-based ethical theories, the attractive features of which are outlined in this article, tend to prohibit all risk impositions. Such inability of rights-based theories to deal convincingly with risks could be a reason why the standard approach of climate economics, which as I try to show is based on questionable normative presuppositions, is still as influential as it is. I propose a solution to the problems rights-based moral theories have with risks and outline the basic criteria of permissible and impermissible risk impositions. Finally, I indicate that this will enable us to tackle climate risks in a promising way. The main aim of the article, however, is not to contribute to concrete questions of climate ethics but to the improvement of its normative foundations.     

Tracing policy influence of diffuse interests: the post-crisis consumer finance protection politics in the US

Dodd–Frank, the financial reform law passed in the United States in response to the 2008 financial crisis, established the Consumer Financial Protection Bureau, a new federal regulator with the sole responsibility of protecting consumers from unfair, deceptive, or abusive practices. This decision marked the end of a highly politicized reform debate in the US Congress, in which proponents of the new bureau would normally have been considered to be much weaker than its opponents. Paradoxically, an emerging civil society coalition successfully lobbied decision-makers and countered industry attempts to prevent industry capture. What explains the fact that rather weak and peripheral actors prevailed over more resourceful and dominant actors? The goal of this study is to examine and challenge questions of regulatory capture by concentrated industry interests in the reform debates in response to the credit crisis which originated in the US in 2007. The analysis suggests that for weak actors to prevail in policy conflicts over established, resource-rich opponents, they must undertake broad coalition building among themselves and with influential elite allies outside and inside of Congress who share the same policy goals.     

Ideology and interests in congressional voting: The politics of abortion in the U.S. Senate

Many studies suggest that personal ideology accounts for much more of congressional voting behavior than does attention to the desires of the electorate. There are two main explanations given for this seemingly robust conclusion: 1) poor measures of constituency preferences compared to those for ideology or behavior, and 2) representatives “shirk” on an inattentive electorate. We argue that existing studies have been biased against the “interest” explanation by ignoring the structure of American Congressional elections, in particular the party primary process. Correcting for the party primary effect, we show, within the context of abortion politics, that constituency interests possess greater explanatory power than previous models would suggest.     

Varieties of Limited Access Orders: The nexus between politics and economics in hybrid regimes

This article advances our understanding of differences in hybrid stability by going beyond existing regime typologies that separate the study of political institutions from the study of economic institutions. It combines the work of Douglass North, John Wallis, and Barry Weingast (NWW) on varieties of social orders with the literature on political and economic regime typologies and dynamics to understand hybrid regimes as Limited Access Orders (LAOs) that differ in the way dominant elites limit access to political and economic resources. Based on a measurement of political and economic access applied to seven post‐Soviet states, the article identifies four types of LAOs. Challenging NWW's claim, it shows that hybrid regimes can combine different degrees of political and economic access to sustain stability. Our typology allows to form theoretical expectations about the kinds of political and/or economic changes that will move different types of LAOs toward more openness or closure.     

The politics and economics of auction design in the market for sulfur dioxide pollution

The Clean Air Act Amendments of 1990 aim to create a market in emissions of sulfur dioxide from power plants by distributing a fixed number of tradable pollution permits called “allowances,” and by providing for the auction of a small fraction of the total number of allowances. This article describes potential inefficiencies in this market and how an auction could enhance the market. It shows that the method by which allowances are “bundled together” for auction is an important efficiency-related element of auction design. The article also examines the politics of auction design and how equity goals strongly shaped the design ultimately adopted by Congress. Finally, some implications are suggested for the role of policy analysis in the legislative process.     

The politics and economics of pork barrel spending: The case of federal financing of water resources development

This paper empirically investigates the economic and political factors that have influenced annual Corps of Engineers water resource spending. Despite the common view that “pork barrel” spending is economically unjustified and purely politically motivated, economic factors have been important in determining water resource spending. From 1865–1920, economic development and industrialization increase spending, and from 1921–1988, spending appears to be counter-cyclical. There is also evidence that majority parties control spending levels in the post-Civil war period, while in recent times, legislators act under a norm of “constrained universalism” and are influenced by the costs to their constituents of increased spending.     

Industrialists and farmers: British interests and the European community

The ‘Europeanisation’ of domestic public policies has been among the key themes in recent reforms in EU member states. This article employs the analytical concept of ‘isomorphism’ to come to a better understanding of ‘Europeanisation’. Various mechanisms which might lead to isomorphic change are being identified and applied to the reforms in German competition and public procurement law. The application of the isomorphism framework suggests that ‘Europeanisation’ has multiple sources and cannot be understood as a uniform process nor as leading to uniform outcomes.