Tocqueville on the Good of American Federalism

If Tocqueville emphasizes, at times, the tendency of Americanfederalism toward consolidation and, at other times, its tendencytoward disintegration, this is not because he is confused butbecause he is keenly aware of the difficulty of combining theadvantages of bigness with those of smallness. Americans havesucceeded in producing such a combination, not through a simpleaggregation of institutional mechanisms but through a synthesisthat reaches to the heart of American civilization–a fusionof dynamism with comfort, of the ideology of popular sovereigntywith the practice of responsible self-government, of calculatedself-interest with spontaneous public virtue, and of enlightenmentwith tradition. Because the Enlightenment, the embodiment ofthis synthesis, provides no ground in its pure form for humandignity, Tocqueville seeks to speak on behalf of those institutionsof federalism that root the idealism of citizens in the realexperience of responsible self-government.     

The PRC,Taiwan, and the overseas Chinese

The rapid growth of China’s economy and its opening to the outside world have attracted a large volume of trade and investment from Hong Kong and Taiwan, creating an economic grouping with a total foreign trade in 1992 almost equal to that of Japan. The economic linkage of this “Greater China” with Southeast Asia’s overseas Chinese communities is steadily growing and will continue to do so for the rest of the decade, barring a sharp drop in the PRC’s growth rate, which seems unlikely.     

Fiscal restraint and the political economy of EMU

While the principle of delegation has become well established on the national level for monetary policy, fiscal policies remain in the hands of policy makers depending on rent-seeking interest groups. We argue that the Maastricht Treaty provides a unique international commitment that enables governments to follow restrictive fiscal policies by attributing their negative side-effects to Europe, and to implement austerity measures despite rising unemployment or a decline in growth. Hence, the popularity of the European idea is instrumented to enforce fiscal discipline. The paper outlines the political economy framework and presents new econometric evidence.