Governing criminal markets: The role of private insurers in kidnap for ransom

The intersection between the formal and criminal economies presents a range of intractable coordination and enforcement problems. Who orders and facilitates the interactions between private, legal entities, and criminals (potentially) engaged in kidnap for ransom? I analyze the contracts, protocols, norms, and agencies created by insurers to govern this unusual market. Stringent insurance contracts, effective security measures, and orderly resolutions create a profitable market for kidnap insurance. Underwriters manage moral hazard and adverse selection. Business risk consultancies minimize the kidnapping of insured workers, high‐net‐worth individuals, and travellers. Crisis responders ensure that hostages are treated well, keep ransoms moderate and stable, and discourage kidnappers from reneging on agreed ransoms. The state, private sector, and mafias incentivize cooperation and enforce contracts. Understanding this complex polycentric governance architecture is crucial for remedying current trends in “terrorist” kidnap for ransom.     

Liberalization as a Development Strategy: Network Governance in the Korean Mobile Telecom Market

This study analyzes Korea's often noted yet seldom studied spectacular rise to become one of the important global players in the mobile telecommunications industry. The Korean “leap frog” occurred in the context of liberalization under the worldwide liberal telecommunications regime. This article finds that network governance—the emphasis on the use of partnerships and network transactions with global firms as well as the local private sector—is the reason for Korea's success. It examines the origins of and driving forces acting upon the liberalization policy, and discusses how the state and telecom firms cooperated to develop the mobile market. It also assesses the new governance that is taking place in Korea's telecom market by focusing on the changing roles of the state in three major aspects: provision, regulation, and foreign entry barriers into the mobile market. While the Korean government promoted a market‐conforming telecom market and private ownership, this article argues, it formulated rather different governance principles from the U.S. model of liberal governance.     

“Promoter” as an agency in decline of “market orientation” across small scale enterprises in Andhra Pradesh: Study on three selected districts

The study emphasizes the exploration of the influences that “promoter” of the small‐scale unit exerts in shaping the loss of market orientation in regional perspective. The small‐scale firm‐based “inefficiencies” have been measured with aid of the factors “promoter's entrepreneurial orientation,” “faulty resource based planning,” “inefficient managerial control,” and “improper capacity utilization.” The factors were shortlisted after extensive review of the existing literature, theoretical frameworks, and the conceptual notes with regard to the phenomenon of the market orientation decline or industrial sickness across the small‐scale units. The study across promoters of 300 sick industrial units observed the incidence of the sizable and quantifiable impact of the promoter in shaping the prospects for small‐scale unit‐based survival.     

Out of tune or well tempered? How competition agencies direct the orchestrating state

This article analyzes the impact competition agencies have on the orchestrating role of states in domestic private regulation. I argue that these agencies can significantly affect interactions in the governance triangle through the way they apply a “logic of the market” to evaluate agreements between firms. The regulatory framework of European Union competition law has increasingly constrained the ability of firms to take into account broader interests when making agreements to foster social objectives. This logic of the market clashes with the ever‐increasing emphasis governments place on enabling firms to enter into such agreements. I analyze this tension through a case study of a pact of Dutch retailers to collectively introduce higher animal welfare standards for poultry. Using regulatory network analysis I trace the governance interactions between the governance triangle on the one hand (government, non‐governmental organizations, and firms), and the Dutch competition authority, Autoriteit Consument en Markt (ACM) and the European Commission on the other hand. Attempts by the Dutch government to instruct the ACM to be more lenient toward private regulation were blocked twice by the European Commission. As a result, the Dutch government abandoned private regulation as the preferred mode and proposed a bottom‐up process that would generate public regulation as a way to avoid conflict with competition policy. I argue that paradoxically enough the intervention of these non‐majoritarian competition agencies against the “will” of the governance triangle has potentially increased the effectiveness and legitimacy of orchestration processes.     

Government Has No “Religious Agency”: James Madison's Fundamental Principle of Religious Liberty

Religious liberty has reemerged as a problem in liberal democracy. For guidance we can turn to James Madison. Unfortunately, his fundamental principle of religious liberty has been misunderstood. Madison believed that power over religious conscience always remains with the individual, which means that government never has a power to attempt to cause or prohibit religious opinions or profession and only has the power to prohibit religious practices that are “adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.” Madison's fundamental principle of religious liberty is therefore that government has no “religious agency.” In matters of religious establishment, “no agency” means that government lacks even the power to cognize religious opinions or practices. But in matters of free exercise, “no agency” means that government can accommodate citizens’ religious consciences, even if that accommodation requires cognizing their religious opinions. An important but widely overlooked example of Madison's complex but principled approach to religious liberty is his 1790 proposal for a statutory exemption from federal militia service for religious objectors.     

The government behind insurance governance: Lessons for ransomware

The insurance as governance literature focuses on the ability of private enterprises to collectively regulate, pool, and distribute risks. This paper analyzes how governments support insurance markets to maintain insurability and limit risks to society. We propose a new conceptual framework grouping government interventions into three dimensions: regulation of risky activity, public investment in risk reduction, and co-insurance. We apply this framework to six case studies, describing insurance markets' reliance on public support in more analytically precise terms. We analyze how mature insurance markets overcame insurability challenges akin to those currently presented by extortive cybercrime. Private governance struggled when markets grew too big for informal coordination or when (tail) risks escalated. Government interventions vary widely. Some governments prioritize supporting economic activity while others concentrate on containing risks. Governments also choose between risk reduction and ex post socialization of losses. We apply these insights to the market for ransomware insurance, discussing the merits and potential hazards of current proposals for government intervention.     

“Modernizing Government”: Mapping Global Public Policy Networks

Public sector reform is a key policy area, driven by global public policy networks. Research on these networks has been inductive, highlighting organizations like the Organisation for Economic Co‐operation and Development (OECD). This article examines “virtual policy networks” (VPNs) on the Web. Using IssueCrawler, we conduct a hyperlink analysis that permits us to map seven VPNs. The first network mapped the hyperlinks of 91 organizations identified through inductive methods. The hypothesis that the virtual network would include all actors identified in the inductive approach was refuted. The other six networks focused on: market mechanisms, open government, performance, public employment, reform, and restructuring. Among the findings, the U.S. government is prominent in the first three, while international organizations dominate the others. VPN rankings show that the World Bank dominates the OECD. When the inductive research is blended with the VPN research, the OECD's prominence increases, and we see the importance of market mechanisms and reform VPNs as pillars of globalization.     

Kidnap insurance and its impact on kidnapping outcomes

In the developing world, kidnapping is relatively common, and a market for kidnap insurance has arisen in response. We provide a model that allows us to analyze how kidnap insurance affects the interaction between the kidnapper and the victim’s family when both are self-interested and have complete knowledge. We find that a market for kidnap insurance can be supported because it benefits a risk-averse family, as long as the introduction of insurance does not increase the risk of kidnapping too much. Families should fully insure if purchasing insurance does not increase the probability of kidnapping, and partially insure otherwise. Kidnapping insurance allows families to redeem hostages from kidnappers with a greater willingness to kill, which may reduce the number of kidnapping fatalities as long as the insurance does not increase the risk of kidnapping too much.     

Cyber insurance and private governance: The enforcement power of markets

In the last half decade, cyber insurance has emerged as a multi-billion-dollar industry with the authority to set and enforce standards of security behavior. Although cybersecurity has become a concern of national policymakers, insurers appear to have supplanted the state to play an influential role in governing some aspects of client behavior. This paper explores private governance by cyber insurance firms and evaluates two competing explanations for its emergence – either that the private sector advanced to set and enforce cybersecurity standards for financial gain, or that the state retreated from its responsibility to regulate and private sector actors filled the gap only as necessary. To find an answer between these explanations, this article develops a single outcome case study of the American cyber insurance industry. Following a theoretical introduction to private governance and its manifestation through insurance, the article examines the insurance process and its application in cybersecurity, the key role of standards, and the mechanism of enforcing those standards. The article concludes by identifying key elements of this market-based enforcement and discussing implications for crafting effective private governance in other domains and public policy.     

Toward “hardened” accountability? Analyzing the European Union's hybrid transnational governance in timber and biofuel supply chains

The voluntary/mandatory divide is a constant feature of scholarly debates on corporate accountability for sustainability in global supply chains. A widely held assumption is that the addition of state authority to private transnational governance in global supply chains will “harden” accountability and, thus, promote more sustainable production. The state's ability to set legally binding requirements is expected to coerce companies into complying. The hybridization of private and state authority is seen to strengthen good practice in private authority. This empirical study questions these assumptions based on an analysis of two hybrid governance arrangements for sustainability in global supply chains: the EU's Timber Regulation (EUTR) and Renewable Energy Directive (RED). The results demonstrate that both EUTR and EU-RED yield sector wide efforts of compliance and to this extent can be seen as enhancing accountability in the sense of answerability. At the same time, we find that the policies in both cases are not more demanding, nor enforced strictly, the latter putting into question their potential to coerce companies. Further, a “hardening” of accountability is at least obscured as both EUTR and EU-RED have stripped private authority they employ in their hybrid transnational governance from the need to establish legitimacy with a broader audience. This makes legal compliance and cost-effectiveness the core factor for companies’ efforts to demonstrate compliance. Our findings hence question whether the EUTR and EU-RED have led to “hardened” accountability compared to private transnational governance, and ask for an empirical, more nuanced understanding of what there is to gain or lose from hybridizing private and state authority in transnational governance.     

Ideology in Policy Debates: Congress and the S&Ls in the 1980s

Is a national value such as free enterprise relevant to congressional debates of important economic policy bills? This question was examined using debates of three reform bills that dealt with savings and loan industry problems in the 1980s. To employ free enterprise concepts in justifying policy stands challenged legislators because industry problems contrasted sharply in the early 1980s (overregulation) and later (excesses under deregulation). Research demonstrated, however, that free enterprise concepts dominated the earlier discussions and, intriguingly, were at the center of the 1989 debate about bailing out the industry and reforming it. The conclusion elaborates free enterprise's role and speculates about the influence of another national value on the S & L discussions. Enactment of the Financial Institutions Reform, Recovery Enforcement Act of 1989¹ capped a decade of congressional struggle with the question of how to treat the problems of federal savings and loan institutions. Popularly known as “thrifts” or “S & Ls,” their status became a matter of increasing concern to Congress as the 1980s unfolded and public indignation over a prospective government bailout of unprecedented proportions mounted. This article focuses on an aspect of this struggle that has a larger significance, namely, the place of national values2 in the genesis of important economic policy statutes. Given the predilections of American society, the value that tends to loom largest in major economic policy debates is popularly know as “free enterprise” or “the market economy.” One may reasonably object that U.S. capitalism operates under a “mixed economy” whose features include enterprises owned or sponsored by the federal government as well as government subsidies and regulation of private businesses. The short answer to this objection is that the term free enterprise is used here in a mythic sense and “myths are an essential starting place for insights into how values shape policy…” (de Neufville and Barton, 1987). In essence, this article examines the following questions: (1) Did congressional debates on proposed statutes relate provisions of the 1980, 1982, and 1989 bills to free enterprise concepts? (2) If so, what adjustments were made in these concepts for the sharply contrasting circumstances encountered by S & Ls in the course of the decade? and (3) How was the peculiar relationship of government deposit insurance of S & L accounts to free enterprise treated in the bills? Two background sections introduce the discussion.     

“WOMEN'S PRISONS” AND “MEN'S PRISONS”: SHOULD PRISONERS BE CLASSIFIED BY SEX?

What are the differences between “women's prisons” and “men's prisons”? That question is answered in this article, which documents that many institutions “for” women do not provide services designed specially for women, or anyone else. Moreover, some women's prisons provide fewer vocational, recreational, and educational programs than do institutions “for” men. Given the growing literature on the disparity of services and on the relative deprivations faced by many women prisoners, the author questions whether segregation by sex should continue to be used as a major premise of prison classification systems.     

“Grabbing Hand” or “Helping Hand”?: Corruption and the Economic Role of the State

This article seeks to disentangle which features of government intervention are linked to corruption and which are not, by distinguishing between the government roles of regulator, entrepreneur, and consumer. It finds that the degree of regulation of private business activity is the strongest predictor of corruption, and that high levels of public spending are related to low levels of corruption. There is no evidence of direct government involvement in production having any bearing on corruption. It is concluded that advanced welfare capitalist systems, which leave business relatively free from interference while intervening strongly in the distribution of wealth and the provision of key services, combine the most “virtuous” features of “big” and “small” government. This suggests that anti‐corruption campaigners should be relaxed about state intervention in the economy in general, but should specifically target corruption‐inducing regulatory systems.     

Tracing and periodizing China's food safety regulation: A study on China's food safety regime change

How has China's food safety administrative system changed since it was founded in 1949? How can we periodize the process of this historical transformation in terms of regulators, regulatees, and regulatory tools? This review article offers an analytical framework that distinguishes three regimes in the history of China's food safety governance: an old regime of command and control (1949–1977), an intermediate regime of mixed instruments (1978–1992), and a new regime of regulatory governance (1993–ongoing). In the article the regimes' features, advantages, disadvantages, and development tracks are discussed, and the groundwork is laid for an analysis of China's emerging regulatory state. Finally, a new notion of “transitional regulatory state” is used to define the current Chinese regulatory state based on its food safety regulation.     

Transnational private governance between the logics of empowerment and control

Transnational private governance initiatives that address problems of social and environmental concern now pervade many sectors. In tackling distinct substantive problems, these programs have, however, prioritized different problem‐oriented logics in their institutionalized rules and procedures. One is a “logic of control” that focuses on ameliorating environmental and social externalities by establishing strict and enforceable rules; another is a “logic of empowerment” that concentrates on remedying the exclusion of marginalized actors in the global economy. Examining certification programs in the areas of fair trade, organic agriculture, fisheries, and forest management, we assess the evolutionary effects of programs prioritizing one logic and then having to accommodate the other. The challenges programs face when balancing between the two logics, we argue, elucidate specific distributional consequences for wealth, power, and regulatory capabilities that private governance programs seek to overcome.     

Can non‐state global governance be legitimate? An analytical framework

In the absence of effective national and intergovernmental regulation to ameliorate global environmental and social problems, “private” alternatives have proliferated, including self‐regulation, corporate social responsibility, and public–private partnerships. Of the alternatives, “non‐state market driven” (NSMD) governance systems deserve greater attention because they offer the strongest regulation and potential to socially embed global markets. NSMD systems encourage compliance by recognizing and tracking, along the market’s supply chain, responsibly produced goods and services. They aim to establish “political legitimacy” whereby firms, social actors, and stakeholders are united into a community that accepts “shared rule as appropriate and justified.” Drawing inductively on evidence from a range of NSMD systems, and deductively on theories of institutions and learning, we develop an analytical framework and a preliminary set of causal propositions to explicate whether and how political legitimacy might be achieved. The framework corrects the existing literature’s inattention to the conditioning effects of global social structure, and its tendency to treat actor evaluations of NSMD systems as static and strategic. It identifies a three‐phase process through which NSMD systems might gain political legitimacy. It posits that a “logic of consequences” alone cannot explain actor evaluations: the explanation requires greater reference to a “logic of appropriateness” as systems progress through the phases. The framework aims to guide future empirical work to assess the potential of NSMD systems to socially embed global markets.     

Governance Forms in Urban Public-Private Partnerships

The article starts a conversation in the literature about the governance structures of certain kinds of collaboratives in public management: public-private partnerships. The findings come from the study of implemented partnerships for regeneration and management of city centres in the U.S. (Business Improvement Districts) and U.K. (Town Centre Management), and the introduction of urban regime theory. A three-ideal typology is built up, concerning the roles played by structures/design of the partnership, legal frameworks, incentives, evolution, competition, governance structures, and the ways all of these evolve. The conclusion is that public-private partnerships are constantly evolving and may assume “variable geometries” in response to the form of governance dominating their internal arrangements. Partnerships may be of various kinds: symbolic partnerships, in which hierarchical governance predominates; instrumental partnerships, which obey market rules; organic partnerships, where the predominant form of governance is network-based. The kind of PPP employed affects how the relationship between public and private organisations is managed.     

When private governance impedes multilateralism: The case of international pesticide governance

Private standards play an increasingly important governance role, yet their effects on state-led policymaking remain understudied. We examine how the operation of private agricultural standards influences multilateral pesticide governance with a particular focus on the listing of substances under the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, a treaty-based information-sharing mechanism that allows countries to refuse hazardous chemical imports. We find that private agricultural standard-setting bodies use the Rotterdam Convention's pesticide list to develop their own lists of banned substances. This alters the Rotterdam Convention's intended role, impeding efforts to add substances to the treaty, as attempts by private actors to impose stricter governance than state actors can undermine the potential for international state-based governance to become more stringent. We characterize this as a “confounding interaction” whereby institutional linkages between actions by public and private actors with broadly aligned goals results in unexpected negative consequences for governance.     

Explaining the size of the public sector

This paper aims at providing an explanation for the size of the public sector based on the idea of “social insurance”. The main assumption made is that the public sector is less efficient but also less volatile than the private sector. The “demand-driven” level of the public sector that is derived as the one that maximizes the utility of the representative employed consumer depends positively on the variance of private output. An increase in the size of the public sector has a positive effect on expected employment and a negative effect on expected consumption. The size of the public sector set by the government which maximizes the probability of being re-elected will be higher than the “demand-driven” level if voters' preferences for employment is higher than the consumption loss associated with public employment.