Source: Gary Lucas and Slavisa Tasic‘s "Behavioral Public Choice and the Law" (West Virginia Law Review, 2015) via Bryan Caplan
SPECIFIC TYPES OF IRRATIONALITY THAT CAUSE GOVERNMENT FAILURE
21 Apr 2016 Leave a comment
in applied price theory, comparative institutional analysis, constitutional political economy, economics of bureaucracy, economics of information, Public Choice Tags: behavioural public choice, growth of government, rational irrationality, size of government
Forget avoidance outrage: public’s real attitude to tax is revealed by their actions @JordNZ
21 Apr 2016 Leave a comment
in applied price theory, constitutional political economy, economic history, economics of media and culture, politics - Australia, politics - New Zealand, politics - USA, Public Choice, public economics Tags: British economy, British politics, expressive voting, growth of government, rational irrationality, revealed preference, size of government, voter demographics
P.T. Bauer on @BernieSanders extending #fightfor15 to entire Third World!
19 Apr 2016 Leave a comment
in applied welfare economics, behavioural economics, constitutional political economy, development economics, economic history, growth disasters, growth miracles, P.T. Bauer, politics - USA, Public Choice Tags: 2016 presidential election, antiforeign buyers, George Orwell, living wage, rational irrationality, The fatal conceit, The pretense to knowledge
India tried that in the 1950s as part of its five-year plans. It did not work that well. Bauer said that in development economics there is a “need to restate the obvious.”
Source: Ending the Race to the Bottom – Bernie Sanders.
Source: Indian Economic Policy and Development – P. T. Bauer (1959) – Google Books
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Americans used to be much more trusting of government
15 Apr 2016 Leave a comment
in constitutional political economy, economics of bureaucracy, income redistribution, politics - USA, Public Choice, rentseeking Tags: rational ignorance, rational irrationality, special interests, voter demographics
#Illinois politicians have no shame about their gerrymanders
11 Apr 2016 Leave a comment
in constitutional political economy, politics - USA, Public Choice Tags: gerrymanders
@JulieAnneGenter tax havens underwrite The Great Escape from extreme poverty in developing countries
08 Apr 2016 Leave a comment
in applied price theory, constitutional political economy, development economics, economic history, economics of bureaucracy, economics of crime, growth disasters, growth miracles, International law, law and economics, property rights, rentseeking
Tax havens and offshore financial centres are vital to the economic development of poor countries. There are plenty of countries, poor countries, where the ability to move funds offshore is fundamental to successful investment. That is missed in the reporting of the Panama Papers:
Consider the big names that have shown up so far on the list. With the notable exception of Iceland, these are not countries I would describe as “capitalist”: Russia, Pakistan, Iraq, Ukraine, Egypt. They’re countries where kleptocratic government officials amass money not through commerce, but through quasi-legal extortion, or siphoning off the till. This is an activity that has gone on long before capitalism, and probably before there was money.
Tax havens and offshore financial centres offer a way in which entrepreneurs can make an honest investment, secure a return and put it aside safely from the reach of the minister’s cousin who wants to muscle in once the business succeeded.
A major problem in poor countries is short time horizons for investment. Entrepreneurs must make their money quickly.
Many years ago there is a survey of entrepreneurs in Russia and Poland. It was in the early 1990s. Each was asked whether an investment project that doubled their money in two years was worth the risk. The Russian entrepreneurs mostly said no, the Polish entrepreneur said yes.
So insecure are the returns from investment in Russia at that time that the phenomenal returns were required before an investment was made. They would only invest if they could double the money in two years.
Many years ago, Mancur Olson wrote an insightful book about prosperity and dictatorships. He introduced the concept of rights intensive production.
As countries become more and more developed, investment horizons lengthen and depends more and more upon the enforcement of contract and property rights in a tolerably honest way.
Instead of being the first entrepreneur to introduce the most basic technologies and profit handsomely, entrepreneurs are introducing a product upgrade or new product that is a minor improvement on current offerings. Such investments will take time to pay off.
In many developing countries, China as an example, property rights are insecure. One way to secure your investment is to take the proceeds offshore to a tax haven. If everything goes wrong, at least you got some nest egg overseas.
As many developing countries have corrupt politicians and dishonest courts, the way to secure gains from honest investments is to move some of the profits offshore. That is why tax havens are essential to poor countries growing richer.
One of the sources of Hong Kong prosperity was investors would deal with a Hong Kong-based company with the requisite political and economic links to China. They could enforce their contracts in China against their Hong Kong assets because the contract was based in Hong Kong under British law.
If the local legal system is inadequate, entrepreneurs well look overseas for mechanisms to force contracts and secure their returns on investments against confiscation.
Newspapers and agenda setting
25 Mar 2016 Leave a comment
in constitutional political economy, economics, economics of media and culture, Public Choice Tags: media bias
@AntonyGreenABC priceless tweets on Australian upper house quotas
21 Mar 2016 Leave a comment
in constitutional political economy, economics, politics - Australia Tags: bicameralism, proportional representation, Upper Houses
Left-wing governments are rare in Australia
21 Mar 2016 Leave a comment
in constitutional political economy, economic history, politics - Australia, Public Choice Tags: Australian Labour Party, Bob Hawke, Gough Whitlam, left-wing governments, Paul Keating, Social Democrats
There have been one left-wing government in Australia since 1949. That was the Whitlam government elected between 1972 to 1975.
The Australian Labour Party defeated a tired and smelly Liberal National party government that had held office for 23 years. There was no landslide when it was time to throw out a 23 year government.
Gough Whitlam managed to beat dopey old Billy McMahon on a small swing and win a majority of 9 seats in 1972. That was later reduced to 7 in the 1974 election.
Hawke, Keating, Rudd and Gillard Labour governments were all social democratic governments. They were not left-wing governments.
@BernieSanders defence of #Castro did not help spread democracy
14 Mar 2016 Leave a comment
in constitutional political economy, economic history, Marxist economics, politics - USA
An Economic Approach to School Integration: Public Choice with Tie-ins
12 Mar 2016 Leave a comment
in applied price theory, constitutional political economy, discrimination, economics of education, economics of media and culture, rentseeking
Thomas Borcherding “An Economic Approach to School Integration: Public Choice with Tie-ins.” Public Choice, 1977, argues that a reason for racial or ethnic discrimination in the public sector is politics encourages the coercive transfer of income from the racial, religious or ethnic group to those with more political influence.
Race can be used as a means of organizing coalitions to lobby for fiscal and economic discrimination in favour of even a previously unprejudiced group.
Preferences of each group to locate in a common geography and the severe control over entry or exit from the group that such things as skin colour, language, caste, and religious dogma impose make the organization of racial or ethnic coalitions by political entrepreneurs fairly cheap and minimises free riding and defection.
Prejudice may reinforce the solidarity of each group and help to monitor via custom, mores, and folkways the behavior of those that would attempt to bring persons of other groups into the former coalition. Further, prejudice may also serve as a device to rationalize exploitation of another group by fiscal or other means.
Borcherding argues that integration, racial balancing, quotas, and busing of school children take on a new logic when income transfers can be tied to fairly immutable characteristics such as race.
Mixing of children by race reduces the ability of a white dominated school board to differentially favour its own partisans’ children and to discriminate against those of blacks.
This paper anticipated Becker’s point that the competition among pressure groups for political influence for looks for lower cost ways of redistributing wealth so as to as much as possible limits the largess as much as possible to the pressure groups that lobby for it and their allies.
Solution aversion and the anti-science Left
11 Mar 2016 1 Comment
in applied price theory, applied welfare economics, comparative institutional analysis, constitutional political economy, economics of regulation, energy economics, environmental economics, global warming, health economics, law and economics, politics - Australia, politics - New Zealand, politics - USA, property rights, Public Choice Tags: antiscience left, climate alarmism, geo-engineering, GMOs, growth of knowledge, gun control, motivated reasoning, nuclear power, political persuasion, solar power, solution aversion, wind power
Climate science is the latest manifestation of solution aversion: denying a problem because it has a costly solution. The Right does this on climate science, the Left does it on gun control, GMOs, and plenty more. Cass Sunstein explains:
It is often said that people who don’t want to solve the problem of climate change reject the underlying science, and hence don’t think there’s any problem to solve.
But consider a different possibility: Because they reject the proposed solution, they dismiss the science. If this is right, our whole picture of the politics of climate change is off.
Some psychologists wasted grant money on lab experiments to show that people that think the solution to a problem is costly tend to rubbish every aspect of the argument. Any politician will tell you you do not concede anything. Sunstein again:
Campbell and Kay asked the participants whether they agreed with the IPCC. And in both, about 80 percent of Democrats did agree; the policy solutions made no difference.
Republicans, in contrast, were far more likely to agree with the IPCC when the proposed solution didn’t involve regulatory restrictions…
Here, then, is powerful evidence that many people (of course not all) who purport to be skeptical about climate science are motivated by their hostility to costly regulation.
The Left is equally prone to motivated readings. For example, it was found that those on the left are much more concerned about home invasions when gun control can reduce them rather than increase them.
The Left picks and chooses which scientific consensus as it accepts. The overwhelming consensus among researchers is biotech crops are safe for humans and the environment. This is a conclusion that is rejected by the very environmentalist organisations that loudly insist on the policy relevance of the scientific consensus on global warming.
Previously the precautionary principle was used to introduce doubt when there was no doubt. But when climate science turned in their favour, environmentalists wanted public policy to be based on the latest science.
The Right is welcoming of the science of nuclear energy or geo-engineering. The Left rejects it point-blank. Their refusal to consider nuclear energy as a solution to global warming is a classic example of solution aversion. Let he who is without sin cast the first stone.
Utopia, you are standing in it! 
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