Private sector shrinkage and the growth of industrialized economies: Reply

Further tests and thoughts on the OECD data lead me to conclude that, if anything, my 1986 paper underestimated the magnitude of the inverse relation between economic growth and government size. If one takes the nominal-based measure of government scale, as advised by Saunders, the significance levels, coefficient magnitudes and goodness of fits improve over what I found with my initial investigation. I would suggest that Saunders reconsider his reluctance to believe that the size of the public sector is unrelated to economic growth in OECD countries over this time period.One additional thought appears relevant to the current policy debate concerning budget deficits and economic performance within the major industrialized economies. The empirical work displayed here and in my 1986 paper suggests serious problems associated with the various proposals urging governments to raise taxes and/or ease fiscal policy. Elsewhere, I have suggested that available empirical evidence implies that plans to increase taxes as a way out of budget deficits are plans that carry the potential for raising government spending and possibly future deficits as well. Coupled with the evidence presented here, we should also recognize the potential of tax increases to raise the level of government participation in a country and, accordingly, exert inverse influences on its future economic performance as well. As suggested in my 1986 paper, the empirical evidence may suggest the following irony: While political participants may crave larger and larger non-market resource allocations, their future ability to satisfy that craving may very well be severely constrained by the satisfaction of that same appetite.     

Reviews

Recently, various authors have examined the relationship between growth in government size and total economic growth. In each case, the authors permitted only a monotonic relationship. This paper examines the issue of a non-linear relationship between growth in government and overall growth in the economy.Government contributes to total economic output in various ways. The provision of Pigovian public goods enhances the productivity of the private sector inputs increasing total output. However, the public decision-making process can result in an inefficient quantity of public goods. The likelihood of this outcome increases with the size of government. Further negative effects are created by the revenue raising and spending mechanisms of government, and the increasing diversion of resources into unproductive rent-seeking activities. The magnitude of these effects is likely to increase with the relative size of government.     

Resolving university landlord-tenant disputes

Conclusion The housing arbitration system used by Brigham Young University's Housing Arbitration Board (HAB) has been widely used at the school for many years. It has not worked perfectly. Some landlords are critical of the school's laxness in enforcing arbitral awards.In general, students prefer the process over small claims court (chiefly, it appears, because of cost factors). The school administrators prefer mediation over arbitration but recognize that mediation does not always resolve impasses. Legal questions exist about BYU's potential restraint of trade in using the obligatory contracts the school mandates for landlords. The process relies upon persons of goodwill to serve on the tribunals, but has a long enough track record to demonstrate the HAB concept works quite well. Because of annual turnover, the need for training of mediators/arbitrators is always critical. Other universities may well wish to emulate (or modify) the HAB model in resolving their landlord and student-tenant disputes. William M. Timmins is Professor of Personnel Administration and Labor-Management Relations at the Graduate School of Management, Brigham Young University, Provo, Utah 84602. Among his recent publications isThe International Economic Policy Coordination Instrument: The OECD Experience (London: The University Press, 1985).     

The Virtuous Polity, The Accountable Polity: Liberty and Responsibility in The Federalist

The Federalist claims to present a republican response to thetypical political problems faced by republics. That solutionrequired a departure from all models of republics known at thattime, and in particular a break with Anti-Federalist modelsthat posited heavy reliance on responsibility, understood aseither political accountability or as moral and political virtue.The Federalist challenges the Anti-Federalist notion that a"no-gap polity" is the means to safe and effective republicanism.It also challenges those who believe that virtue of people orrulers is the precondition of a republican polity. Publius doesrequire quasi-virlues of certain sorts—and thus does notrely entirely on calculating selfinterest—but these aresignificantly different from the virtues posited by earlierrepublican theorists or certain contemporary interpreters ofThe Federalist.     

Project USA: American competitiveness and what must be done to restore it

The United States today faces a loss of influence as a world power, a reduction in American independence as a policymaker, and a decline in the standard of living on which Americans have come to depend. History teaches that nations weaker and less productive than the United States can rise to become economic powerhouses and rapidly increase their standards of living. History also teaches that nations failing to recognize their fundamental problems will inevitably decline. American politicians must face what is abundantly clear: the United States is losing ground and must act quickly to reverse its course. This White Paper outlines what must be done. Information about the nation's current status must be analyzed and communicated. Incentives to improve the level of competence in government must be provided and maintained. The emphasis of government policy must be changed to reflect broad economic and technological interests as opposed to special interests. Savings must be encouraged and increased. Infrastructure must be improved Tax laws must be modified to help bring these changes about. Economic and technological issues must be elevated to the importance they require. American thinking must reflect the new realities: that the age of leadership through military power is over, that the requirements for success in the world of the 1990s and beyond require a sound and growing economy that is internationally competitive. The US can accomplish these goals only through foundation-shaking, comprehensive, fundamental changealong the lines we propose herein.This paper is the executive summary (with minor editing modifications) of a white paper that is available from Cornell University's Johnson Graduate School of Management.     

Reviews

R. W. Davies, ed., From Tsarism to the New Economic Policy. Continuity and Change in the Economy of the USSR. London and Basingstoke: Macmillan, 1990, xx + 417 pp., £45.00.

Alastair McAuley, ed., Soviet Federalism, Nationalism and Economic Decentralisation. Leicester and London: Leicester University Press, 1991, ix + 214pp., £38.00.

Loren Graham, ed., Science and the Soviet Social Order. Cambridge, MA and London: Harvard University Press, 1990, ix + 443 pp., £27.95.

Ronald I. McKinnon, The Order of Economic Liberalization: Financial Control in the Transition to a Market Economy. Baltimore, MD, and London: The Johns Hopkins University Press, 1991. xii + 200 pp., £20.00. $32.00.

Mary McAuley, Bread and Justice: State and Society in Petrograd 1917–1922. Oxford: Oxford University Press, 1991, xviii + 461 pp., £45.00.

David Armstrong & Erik Goldstein, eds, The End of the Cold War. London: Frank Cass & Co Ltd, 1990. 216pp., £19.50.

Paul B. Stephan III & Boris M. Klimenko, eds, International Law and International Security: Military and Political Dimensions. A US‐Soviet Dialogue. Armonk, NY, and London: M. E. Sharpe, Inc., 1991, xxii + 362 pp., $90.00.

Richard F. Staar, Foreign Policies of the Soviet Union. Stanford, CA: Hoover Institution Press, 1991, xl + 352 pp., £14.95 p/b.

Robert O. Freedman, Moscow and the Middle East: Soviet Policy Since the Invasion of Afghanistan. Cambridge: Cambridge University Press, 1991, xi + 426 pp., £35.00 h/b, £14.95 p/b.

Galia Golan, Soviet Policies in The Middle East: From World War II to Gorbachev. Cambridge: Cambridge University Press, 1990, ix + 319 pp., £27.50 h/b, £10.95 p/b.

Brian McNair, Glasnost, Perestroika and the Soviet Media. London and New York: Routledge, 1991, x + 231 pp., £35.00.

Shams Ud Din, ed, Perestroika and the Nationality Question in the USSR. New Delhi: Vikas, 1991, xv + 145 pp., £15.95.

Ronald J. Hill & Jan Zielonka, eds, Restructuring Eastern Europe: Towards a New European Order. Aldershot: Edward Elgar, 1990, ix + 226 pp., £28.50.

Aleksa Djilas, The Contested Country: Yugoslav Unity and Communist Revolution 1919–1953. London: Harvard University Press, 1991, v + 259 pp., £27.95 h/b.

Bartlomiej Kamiriski, The Collapse of State Socialism: the Case of Poland. Princeton, NJ: Princeton University Press, 1991, xiv + 264 pp., $39.50 h/b, $14.95 p/b.

David Ost, Solidarity and the Politics of Anti‐Politics. Opposition and Reform in Poland since 1968. Philadelphia, PA: Temple UP, 1990, xi + 279 pp. $34.95.

Roman Laba, The Roots of Solidarity—A Political Sociology of Working Class Democratisation. Princeton, NJ: Princeton UP, 1991, xii + 247 pp., $24.95.

Keith Sword, ed, The Soviet Takeover of the Polish Eastern Provinces, 1939–41. London: Macmillan (in association with the School of Slavonic and East European Studies), 1991, xxiii + 318 pp., £45.00.

William B. Husband, Revolution in the Factory: The Birth of Soviet Textile Industry, 1917–20. New York and Oxford: Oxford University Press, 1990, viii + 227 pp. £25.00.     

Book Review

Radical myths and superpower relations in the 1980s

A review of Mark Kaldor, Gerard Holden, and Richard Falk (eds), The New Detente: Rethinking East‐West Relations, Verso, London, 1989.

Paul Taylor and A.J.R. Groom, Global Issues in the United Nations Framework, Basingstoke, Hampshire, The MacMillan Press Ltd., 1989.

Roger A. Coate, Unilateralism, Ideology, and US Foreign Policy: The United States in and out of UNESCO, Lynne Reinner Publishers, London, 1988.

Bary Buzan, Morten Kelstnip, Pierre Lemaitre, Elzbieta Tromer, and Ole Weaver, The European Security Order Recast: Scenarios for the Post‐Cold War Era, Pinter Publishers, London & New York, 1990, pp.x. 282, £8.95 pbk, £30 hbk.