Cost disease versus Leviathan explanations of rising government cost: An empirical investigation

In this paper we reexamine the apparently conflicting empirics of Borcherding et al. (1977) versus those of Barry and Lowery (1984). The latter, designed to test the cost disease versus bureau voting power hypotheses on US Citibase annual data between 1947 to 1979, was retested for the longer period available through 1989. Second, and more importantly, we isolate and test for the presence of a second channel for the exercise of bureaucratic power. That channel is the bureau's ability to use its information advantage to capture a portion of newly generated government rents through higher personal benefits (such as higher salaries). Such an analysis (following West, 1991) requires first that those factors generating new rents for government actually result in successful bureaucratic rent-seeking in the form of higher compensation levels. In addition, the analysis requires that these “artificial” increases in bureaucratic wages show up as significant determinants of the higher cost of providing government services. Incorporating a constructed Kau/Rubin variable into the Barry and Lowery database is then shown to improve the predictive power of both the cost disease and bureaucratic power hypotheses for US annual data between 1948 and 1989.     

Indonesia: The politics of inclusion

Much commentary on Indonesian politics since the fall of President Suharto in May 1998 has suggested that Indonesia's political system has remained just as exclusionary as it was prior to his fall, despite becoming much more democratic and decentralised. In contrast to this view, we argue that Indonesia's political system has become more inclusive, if only somewhat more so. The fall of Suharto and the subsequent process of democratisation have removed key obstacles to organisation by poor and disadvantaged groups and their NGO allies, making it easier for them to engage in collective action aimed at achieving pro-poor policy change. By making attainment of political office dependent on the support of the voting public, many of whom are poor and disadvantaged, these developments have also created an incentive for politicians to pursue policy changes that favour these groups or at least that appeal to them. At the same time, however, we argue that poor and disadvantaged groups have not become major players in the policy-making process. Despite the fall of Suharto and democratisation, these groups continue to lack the resources possessed by other participants in the policy-making process. Whereas the politico-bureaucrats and well-connected business groups have been able to exercise influence over policy by buying support within representative bodies such as parliament and mobile capital controllers, the IFIs and Western governments have been able to exercise influence by virtue of their structural power, poor and disadvantaged groups have had to rely on less potent ways of exercising influence such as holding demonstrations, engaging in lobbying activity and participating in public debates. We illustrate these points with reference to two policy issues: land reform and mining in protected forests. The article concludes by considering the future prospects for inclusive policy-making in Indonesia.     

The Hofstadgroup Revisited: Questioning its Status as a “Quintessential” Homegrown Jihadist Network

Despite the Dutch Hofstadgroup's status in the literature as a prime example of a homegrown Salafi-Jihadist terrorist network, the authors, using newly available primary sources, argue that this classification is to a large extent unwarranted. The lack of a rudimentary organizational structure, the existence of divergent views on the legitimacy and desirability of political violence, and the absence of collective action in pursuit of a violent goal rule out labeling the Hofstadgroup as a terrorist organization or network for the largest part of its 2002–2005 existence. A smaller subgroup of extremists did begin developing into a proto-terrorist inner circle from late 2003 onwards. In 2004, this extremist core brought forth the murderer of filmmaker Theo van Gogh. But it was only in 2005, when the remnants of the inner circle tried to resuscitate the Hofstadgroup in the wake of the arrests that had followed Van Gogh's death, that these individual actions were replaced by the communal efforts necessary to warrant the “jihadist network” label often ascribed to the Hofstadgroup. Arguably the most archetypical aspect of the Hofstadgroup case is its ability to illustrate the deleterious effects of the ongoing scarcity of primary sources-based research on terrorism.     

The functioning and regulation of escrow accounts

Abstract

About 40 million Americans have mortgages serviced by escrow accounts. Yet escrow accounts are rarely covered by an explicit agreement between borrower and lender and are often poorly understood. As a result, escrow accounts have become the subject of growing controversy. Federal regulation of escrow accounts has become increasingly detailed and intrusive during the past two decades, and the subject is under almost continuous regulatory review. In the 1990s, the attorneys general of at least 10 states have sued large escrow account servicers over administration of accounts.

The purposes of this article are to explain briefly how escrow accounts work, benefit relevant parties, and are regulated by federal agencies, and to evaluate alternative regulatory programs. Most of the legitimate social goals of federal regulation could be achieved by requiring an explicit escrow agreement at the time of closing on a mortgage. A second‐best requirement would be that interest be paid on escrow balances.