The wisdom of demagogues: institutions,corruption and support for authoritarian populists

This article analyses the drivers of support for authoritarian populist parties in Europe. Such parties claim to represent the interests of ordinary people against greedy and out‐of‐touch elites. Simultaneously, they reject conventional constraints on democratic policymaking. In recent years, such parties on the political left and right have been gaining influence in countries across Europe. Using a panel data set from 1980–2016, we use semiparametric Tobit models with country fixed effects to explain support for authoritarian populists. We find that large vote shares of right‐wing – but not left‐wing – authoritarian populists are associated closely to corruption. Other commonly cited explanations such as unemployment, inequality and immigration perform poorly in predicting support for populist political platforms on the political right. While a full theoretical explanation of the link between corruption and right‐wing populism remains beyond the scope of this article, we suggest that the mechanism involves political trust. Corruption weakens trust in political institutions, which populists exploit. Curbing the rise of right‐wing authoritarian populism in Europe will thus require restoring trust in the integrity of politics.     

Do Liberalising Reforms Harm the Environment? Evidence from the Post‐Communist Transition

Whether or not economic freedom and capitalism are associated with better or worse environmental performance gives rise to a heated political debate. This article sheds empirical light on the debate by examining the association between economic and political freedom on the one hand and environmental performance on the other. Estimating the effects of economic freedom and democracy on four environmental measures since 1993 across 27 formerly communist countries shows that liberalising the size of the public sector is associated with less environmental damage, although only in autocracies. The consequences of regulatory activity, market openness and the rule of law are more mixed.     

Political and Institutional Determinants of Credit Booms

The literature that investigates credit booms has essentially focused on their economic determinants. This paper explores the importance of political conditionings and central bank independence and provides some striking findings on this matter. Estimating a fixed effects logit model over a panel of developed and developing countries for the period 1975q1–2016q4, we find that credit booms are less likely when right‐wing parties are in office, especially in developing countries, and when there is political instability. However, they have not proven to depend on the electoral cycle. More independent Central Banks are also found to reduce the probability of credit booms. Moreover, they seem to be more likely to occur and spread within a monetary union.     

The response of decentralized health services to demand uncertainty and the role of political parties in the Spanish public health system

Decentralization of the public health system should lead to health resources being managed more in line with citizens’ preferences. A decentralized system is more flexible in that it can better adapt resources to local needs. Moreover, if regional political parties have responsibility for public health policies, citizens will be able to elect those parties whose positions are more in line with their preferences. However, the role of political parties in public health management has received little attention in the literature. Focusing on the decision to provide reserve service capacity to deal with demand uncertainty, we analyse whether there have been differences between central and decentralized health authorities in Spain and whether these can be explained to some extent by the way different political parties manage the trade-off between being able to cover demand and the economic costs involved. Using data on Spanish public hospitals for the period 1996–2006, we model the difference between observed and potential output using an output-oriented distance function. Reserve capacity is modelled as a function of demand uncertainty, economic costs and the political party in power. We find differences in the way resources are managed by central government and decentralized authorities, even within the same political party. We also find differences between the decentralized authorities themselves according to the political party in power. We conclude that decentralization of public health in Spain has provided regional political authorities with greater flexibility to manage reserve capacity in line with citizens’ needs and preferences.     

General Election: How would the parties' plans impact the outlook?

• Our modelling suggests that, based upon the three main parties’ economic and fiscal plans, the outcome of the General Election would have a modest, but not immaterial, impact on the UK's economic and fiscal outlook. The Liberal Democrat plans would deliver the strongest GDP growth, followed by Labour, but both would also involve higher debt servicing costs and a higher level of government debt than the plans of the Conservatives.
• In our view these premiums on debt and borrowing costs are so small that it is very difficult to argue that the UK should pursue a more austere fiscal policy and reject the opportunity of stronger growth. But with the latest opinion polls suggesting that it is likely that the next government will be either a minority administration, or a coalition consisting of three or more parties, it is most likely that we will ultimately see some combination of the main parties' plans enacted.
• The experience of 2010 suggests that such political uncertainty could mean that we see several bouts of market nervousness between now and May 7th, particularly in equity markets. However, such turbulence is likely to be short‐lived, providing that the resulting government is perceived to be strong and durable. Even a multi‐party coalition may not be such a bad thing, particularly if it watered down the more contentious policies of the main parties. The worst‐case scenario would be a weak minority government which is both unable to pass any meaningful legislation and unable to seek a fresh mandate. Such a scenario could seriously undermine confidence amongst investors and firms.

     

Military spending and entrepreneurship: Spatial effects of cross‐country spillovers

This paper uses a large cross‐country panel data sample to examine the effects of military spending on entrepreneurship. The other major contribution of this work lies in studying the spatial cross‐country influences of military spending on entrepreneurship. Placing the econometric model in the broader literature on the determinants of entrepreneurship, results show that while own military spending crowds out entrepreneurship in a country, bordering military spending promotes entrepreneurship. In other findings, we find interesting contrasts between the effects of government size and government quality, and between economic freedom and political freedom.     

Why ‘Good Governance’ Fails: Lessons from Regional Economic Development in Colombia

By critically reviewing different strands of literature on institutional change and development, this essay argues that, in order to fully understand subnational economic development, we need to move away from ‘good governance' explanations in which geography‐specific analyses of power structures and elite interests are largely absent. Using findings for Colombia and insights from economic geography and heterodox political economy theories, this essay gives theoretical and conceptual guidelines and approximations for future studies on regional economic development. The contribution provides a place‐based discussion of how the historically evolved distribution of power balances, context‐specific elite interests, and the interaction between place‐bound actors and place‐less dynamics affect subnational institutional arrangements shaping policies and development outcomes. The conclusions drawn are not limited to Colombia and will prove beneficial to researchers studying regional economic development in subnational contexts elsewhere in the world.     

The relationship between economic freedom and peace

Classical liberals have long held that free markets foster peaceful societies. Many argue that free trade between nations will foster economic interdependence, and peace should ensue as a result. Nevertheless, there are many dissenters. While exploring the relationship between free trade and peace is important, it is only one part of ‘economic freedom.’ More research needs to be conducted to see how countries with high levels of entrepreneurship, low levels of corruption, independent judiciaries, and sound regulatory environments might be fostering peace.     

The case for freedom revisited

I argue that the case for freedom is about either knowledge or incentives. Freedom optimises the production and use of knowledge, and gives people the right incentives. I trace the history of these arguments. Knowledge‐based justifications can be found in the writings of Adam Smith, Jeremy Bentham, Wilhelm von Humboldt, J. S. Mill, Friedrich von Hayek, and Karl Popper. Incentive‐based arguments are due to Thomas Aquinas, Adam Smith, and James Mill. I then go on to query the extent to which classical freedom is compatible with other aims such as efficiency, enforcement of contracts, freedom of choice, political participation, and the socialist concept of freedom. Finally, I reject natural selection as a justification of freedom or of the right of property.     

The Financial Crisis and the Hegemony of Urban Neoliberalism: Lessons from Frankfurt am Main

In view of debates among critical urban scholars regarding the relationship between the current economic crisis and the stability of neoliberal hegemony on the urban scale, this article analyzes (1) the impact of the economic recession on the city of Frankfurt am Main, and (2) whether urban politics in the German financial center will witness a new phase of post‐neoliberalization. Statistical analyses of the local labor and property markets and of municipal budget trends reveal that the implications of the current crisis are relatively limited, especially when compared to the dot.com crisis in the early 2000s. Furthermore, a discourse analysis of the debates in the Frankfurt City Council between 2008 and 2010, supplemented by interviews with local political elites, shows that neoliberal hegemony remains stable and powerful regardless of the deep economic decline and a short period of uncertainty and intensive hegemonic struggles. In my analysis I focus on the power of neoliberal subjectivity and knowledge production in order to try and explain the deepening of the general consensus among local elites by demonstrating that a broad majority of actors from different political parties interprets the crisis within a neoliberal rationality.     

WHY ARE SOME PLACES RICH WHILE OTHERS ARE POOR? THE INSTITUTIONAL NECESSITY OF ECONOMIC FREEDOM

We survey perspectives on the economic differences between countries and argue that economic freedom is the key to prosperity. We close by outlining the policy implications. Specifically, removing obstacles to the exercise of economic freedom is an important step towards prosperity.     

Intergovernmental Organisations and Economic Freedom: Wise Technocrats or Black Helicopters?

This article explores the relationship between country membership in major intergovernmental organisations and economic freedom. While it makes no claims to have found any broad theoretically bound, robust causal mechanism, baseline fixed effects models establish relationships amongst economic freedom and membership in the EU, NATO, WTO, UN, OECD, World Bank, and IMF. Though the results are not simple, the strongest findings are negative relationships with the UN, IMF, and WTO, and positive relationships with the World Bank and possibly the EU.     

Testing the Political Replacement Effect: A Panel Data Analysis*

This article tests for the existence of the political replacement effect, as suggested by Acemoglu and Robinson: [American Political Science Review, Vol. 100, pp. 115–131]. They argue that the implementation of market‐oriented reform is crucially driven by the political calculus of incumbent governments: they implement economic policy change if such a choice is not expected to reduce their chances to retain power. This implies a non‐monotonic relationship between the level of political competition and the extent of economic reform. We test this hypothesis using data for 102 countries over the period 1980 to 2005. Our results strongly support the theory.     

Happiness in transition: An empirical study on Eastern Europe

This paper analyzes the determinants of life satisfaction in a pooled data set of representative individual survey data from seven East European countries collected during the early phase of economic and political transformation using ordered logit models. Those core socio-demographic and economic variables relevant in the US and West European countries have a similar impact on happiness in Eastern Europe under conditions of dramatic economic, political, and social change. The individual effects of variables across countries are not statistically different from the results obtained from the pooled data set. Cross-country differences in aggregate happiness can be explained well by variations in the unemployment rates, the degree of political freedom and the human development index.     

Collateralized Social Relations: The Social in Economic Calculation

Traditionally, economists have viewed social relations as "friction" or "impediments" to exchange and have excluded social relations from their analyses by assuming autonomous actors. Recently, however, a number of scholars—economists, sociologists, anthropologists, and other social scientists—have begun to discuss the numerous ways in which social arrangements both prompt and channel economic activity. Rational choice theory, social capital and network analysis, and agency and game theory, are among those approaches that consider the effects of social relations on economic action. In this paper we extend that discussion by arguing that social relations can function as "collateral" or assurance that an economic transaction will proceed as agreed by the parties involved. We review recent microeconomic theories and conjecture how they might be developed following this observation, which is derived from sociological and anthropological studies of economic action and organization.     

Economic freedom as driver of growth in transition

This paper reviews the political economy of economic growth in post-communist economies making the transition to free markets, focusing on the role of economic policy and institutions. We test the hypothesis that better institutions, measured in terms of economic freedom, contribute to growth. To begin with, the empirical results from the cross-section of transition economies confirm this hypothesis. Yet the question is deeper than that since there is an interactive effect between economic freedom and investment. The paper concludes that non-linearities are present in the growth model.     

The politics of cutback management in thirteen European countries: statistical evidence on causes and effects

The politics of fiscal consolidation in thirteen European countries are statistically analysed. Based on the political economy literature, political factors are identified that explain for the consolidation. Variables are selected representing strength of government and political orientation, and fiscal consolidation is distinguished into spending cuts and cuts in administration. The statistical analysis of political explanations for cutbacks hardly yields significant results and nor does the analysis of fiscal and economic effects of consolidation. The analysis of political effects of consolidation does lead to significant results. Some earlier political economic findings are not supported for our sample of thirteen European countries.     

Forecasting elections in Turkey

This paper proposes a model for forecasting elections in Turkey. In doing so, this study is based on three theoretical premises: first, that the voters reward or punish parties according to their performances relative to the macroeconomic conditions; second, that the popularity of the political parties in Turkey are closely connected to their performances in local elections; and third, that the centre-periphery distinction affects the fortunes of the political parties in Turkey. The contribution of this analysis is the introduction of an explicit model on which can forecast the impact of economic and political variables on the elections in Turkey by using reliable, public and macro level data. Our findings show that the dynamics of the evaluation of political parties in Turkey follow a similar pattern to those of contemporary democracies, being driven by both economic and political factors.

“…why did AKP win? There cannot be a scientific and sociological explanation of this.”Özdemir ?nce, 17 August 2007, Hürriyet, emphasis added.

     

A Perfect Impasse? Cuba's Move Towards the Market and the United States' Move Towards Cuba

This article first analyses the internal economic trajectory of the Cuban economic reforms and evaluates their effectiveness in delivering the extensive and intensive development needed to correct Cuba's structural and economic imbalances. It concludes that without the lifting of the US economic sanctions success will at best be only partial, with serious implications for long‐term stability. The article then evaluates the reasons for the US economic sanctions against Cuba and argues that while the embargo policy might have failed to topple the Cuban communist regime, it has served other, largely unacknowledged, purposes that are important in explaining why the policy has persisted. The article concludes by suggesting that the US is not likely to jettison the sanctions regime while Cuba's single‐party, state‐led economic system remains. At the same time, Cuba is not likely to jettison its single‐party system while the sanctions remain.     

AGAINST LEVIATHAN: A REVIEW OF CLASSICAL LIBERALISM IN THE 21ST CENTURY: ESSAYS IN HONOUR OF NORMAN P. BARRY1

Classical Liberalism in the 21st Century is a collection of essays from colleagues and friends of the late Norman Barry, Professor of Social and Political Theory at the University of Buckingham. Most share Barry's Hayekian perspective. The essays cover themes such as: international competition in trade and between jurisdictions; the corporate social responsibility fad; secular economic errors; policies relating to alleged global warming; the state's impotence at removing externalities; the moral functions of competition; and, above all, Barry's rigour and eloquence in the economic and political case for freedom.