The Impossible Split? A Study of the Creation of a Market Actor

Quasi-markets have been created within the health care sector in many countries. One commonly used market model is the purchaser–provider split, which implies that purchasers use contracts to control the providers. A hierarchical organizational solution is replaced by a contractual relation. This article shows that creating quasi-markets in public organizations is complicated by the need to balance the market actors’ (the sub-units) autonomy and the efficiency of the entire public organization. The market actors have limited opportunities to work as autonomous units. The initial aim when creating market actors is to reduce their complexity by giving them distinct responsibilities and authorities. Reducing complexity in some parts of the organization, however, seems to cause problems in other parts. In the article, this effect is called quasi-market externalities or “overflows.” The overflows result in less autonomy for the market actor because the market frame has to be changed. Fiscal pressures, volatile political actors and strong professions are sources of overflow and subsequent changes in the market frame. The conclusion is that it is difficult, perhaps impossible, to create and maintain contractual relationships when both parties are dependent on the same principal.      

THE FED AND THE POLITICAL BUSINESS CYCLE

This study asks whether the Federal Reserve has actively made monetary policy so as to aid the president's reelection. Using Shiller's smoothness "prior" to estimate the shape of cycles, the study finds a political business cycle in unemployment and a preelection increase in growth of the money supply. But the timing of these two cycles is inconsistent. Furthermore, little evidence exists of a cycle in the instruments of monetary policy. Thus, the Fed is not actively creating a political business cycle. Apparently, movements in real money that are not caused—but are not offset—by the Fed are an important cause of the political business cycle.
Elections influence Fed behavior. Monetary tightness occurs early in a presidential term, before reelection incentives become critical. This is due to the Fed's political weakness. Thus, the Fed's independence only partly insulates it from electoral pressures.     

THE FED AND THE POLITICAL BUSINESS CYCLE

This study asks whether the Federal Reserve has actively made monetary policy so as to aid the president's reelection. Using Shiller's smoothness "prior" to estimate the shape of cycles, the study finds a political business cycle in unemployment and a preelection increase in growth of the money supply. But the timing of these two cycles is inconsistent. Furthermore, little evidence exists of a cycle in the instruments of monetary policy. Thus, the Fed is not actively creating a political business cycle. Apparently, movements in real money that are not caused—but are not offset—by the Fed are an important cause of the political business cycle.
Elections influence Fed behavior. Monetary tightness occurs early in a presidential term, before reelection incentives become critical. This is due to the Fed's political weakness. Thus, the Fed's independence only partly insulates it from electoral pressures.     

Breaking Up Old Marriages: The Political Process of Change and Continuity at Work

This article contends that political processes are essential dynamics in creating continuity and change in organizations. A central aim is to inform the debate on change in organizations by conceptualizing and exploring the interplay between actors' political rationales, organizational culture, and new management concepts. Attention is given to the introduction of technical-bureaucratic management concepts for Occupational Health and Safety and the environment through presenting a case study, where both managers' and shop-floor personnel's political behaviour can be examined. The findings illustrate how continuity rather than change often prevails through the existence of more stabilized patterns of politics. The establishment of shared systems of meaning, conceived as the social constitution of the company, is shown to be a central mechanism for the regulation of politics, explaining the selectivity of politics regarding issues, arenas, arguments and actors. In particular, the relative importance of shop-floor personnel's politicking is discussed, and it is shown how their way of politicking differs from the forms found in management. Consequently it is suggested, that studies of political processes, which seek to encompass these forms of politics would benefit from the insights gained in cultural studies.     

The Meaning of Social Efficiency

Abstract

Policy implementation calls for efficiency. But because policy concerns range over broad social and political-economic areas, the efficient pursuit of one particular goal may conflict with the realization of some other, equally important social interest. Hence, efficiency for its own sake cannot be a policy goal. Giving special attention to the development process, the paper discusses the problems and contradictions that arise when policymakers working in a framework of neoclassical economic theory attempt to deal with issues of equity, stabilization, markets and trade. Starting with the limitations of market efficiency when conventional requirements of social welfare as well as social and environmental sustainability are taken into account, it is argued that a more meaningful concept of social efficiency can be obtained with the help of the human development indicators elaborated by the United Nations Development Program, augmented by the sustainability indicators developed by the European Union and others during the last decade.     

Breaking Up Old Marriages: The Political Process of Change and Continuity at Work

This article contends that political processes are essential dynamics in creating continuity and change in organizations. A central aim is to inform the debate on change in organizations by conceptualizing and exploring the interplay between actors' political rationales, organizational culture, and new management concepts. Attention is given to the introduction of technical-bureaucratic management concepts for Occupational Health and Safety and the environment through presenting a case study, where both managers' and shop-floor personnel's political behaviour can be examined. The findings illustrate how continuity rather than change often prevails through the existence of more stabilized patterns of politics. The establishment of shared systems of meaning, conceived as the social constitution of the company, is shown to be a central mechanism for the regulation of politics, explaining the selectivity of politics regarding issues, arenas, arguments and actors. In particular, the relative importance of shop-floor personnel's politicking is discussed, and it is shown how their way of politicking differs from the forms found in management. Consequently it is suggested, that studies of political processes, which seek to encompass these forms of politics would benefit from the insights gained in cultural studies.     

Eco-Frontier and Place-Making: The Unexpected Transformation of a Sustainable Settlement Project in the Amazon

An important issue today is the compatibility of agricultural frontiers, which are driven by economic objectives, with conservationist views. In the Amazon, family farmers are concerned with this issue since they are at the same time actors of the agricultural frontier and considered as potential actors of the preservation of the forest. Through the study of a highly symbolic settlement project in the State of Pará, this paper focuses on the role that family farmers can play in meeting sustainability goals. The central argument which is developed in this paper is that this objective may be achieved when projects do not presuppose social and spatial relationships; rather, it advocates an approach which is attentive to place-making processes.     

Behavioral economics: implications for regulatory behavior

Behavioral economics (BE) examines the implications for decision-making when actors suffer from biases documented in the psychological literature. This article considers how such biases affect regulatory decisions. The article posits a simple model of a regulator who serves as an agent to a political overseer. The regulator chooses a policy that accounts for the rewards she receives from the political overseer—whose optimal policy is assumed to maximize short-run outputs that garner political support, rather than long-term welfare outcomes—and the weight the regulator puts on the optimal long run policy. Flawed heuristics and myopia are likely to lead regulators to adopt policies closer to the preferences of political overseers than they would otherwise. The incentive structure for regulators is likely to reward those who adopt politically expedient policies, either intentionally (due to a desire to please the political overseer) or accidentally (due to bounded rationality). The article urges that careful thought be given to calls for greater state intervention, especially when those calls seek to correct firm biases. The article proposes measures that focus rewards to regulators on outcomes rather than outputs as a way to help ameliorate regulatory biases.     

A SIGNALING MODEL OF COMPETITIVE POLITICAL PRESSURES

This paper models competitive political pressures as a signaling phenomenon. People participate in collective action in support of or against the status quo, or they abstain. Their actions and abstentions inform the decision of a policymaker who may overturn the status quo in favor of a policy alternative. By providing an informational microfoundation for the widely used reduced-form "pressure production functions" and "political influence functions," the analysis allows me to reexamine the role of the free rider problem in creating a bias towards vocal special interests.
The signaling hypothesis finds empirical support with a study of pro- and anti-Gulf War demonstrations that took place in San Francisco and Kansas City (Missouri) in early 1991.     

The Political Economy of Fiscal Consolidations

In the context of recent research in political economy, this paper addresses the policy problem of fiscal consolidation in terms of three types of issues: i) the macroeconomic effects of alternative strategies to consolidate; ii) the institutional setups conducive to a consolidation; and iii) the best strategy for implementing a consolidation in order to maximize its political feasibility. One methodological feature of this survey is an emphasis on policy feasibility. One methodological feature of this survey is an emphasis on policy issues in order to bridge the gap between the level of abstraction of politico-economic models of fiscal policy and the issues faced by a policymaker when attempting a fiscal consolidation.     

Machiavellian experimentation

This paper proposes the following mechanism whereby polarization of beliefs could eliminate political gridlock instead of intensifying disagreement: the expectation of political payoffs from being proven correct by a policy failure could drive decision makers who do not believe in the new policy to agree to policy experimentation, because they are confident that the experiment will fail, thus increasing their political power. We formalize this mechanism in a collective decision making model in the presence of heterogeneous beliefs in which any decision other than the default option requires unanimity. We show that this consideration of political payoffs can eliminate the inefficiency caused by a unanimous consent requirement when beliefs are polarized, but could also create under-experimentation when two actors hold beliefs that differ only slightly from one another. We further show that this under-experimentation can be reduced when the political payoffs become endogenous. We illustrate the empirical relevance of the mechanism in two examples with historical narratives: we focus on the decision making process of the Chinese leadership during the country’s transition starting in the late 1970s, and we further apply the model to the disagreement within the leadership of the Allied Forces on the Western Front of World War II in the autumn of 1944.     

The social budget policy process in Russia at a time of crisis

ABSTRACT

This article examines the process of Russian social budget formation during 2015–2016, a period marked by a significant reduction in state revenues due to changes in Russia’s economic and international environment. Participants in the budget process included the president, prime minister, the financial–economic and social blocs of government, and experts outside the government. An important concern associated with the social sphere was maintaining political popularity. Budget formation in this area occurred via bureaucratic bargaining, with the president intervening only on the most salient issues. Examples of policy elaboration including indexation of major benefits and the freezing of pension contributions are considered.     

NATIONAL SECURITY AND INDUSTRIAL POLICY: THE NEED FOR A PUBLIC CHOICE PERSPECTIVE

This paper argues that the issues raised by the industrial policy debate are as much political as they are economic. There is every reason to believe that, without substantial reform of political institutions, efforts to administer a rational new industrial policy would soon degenerate into the type of inconsistent morass of special-interest-generated policies which industrial policy advocates rightfully criticize as our de facto set of industrial policies.
This important political dimension has been overlooked by many industrial policy advocates. An important exception is Robert Reich, who has proposed a new centralized industrial policy agency in hopes that the battle of conflicting interests would promote greater aggregate efficiency. We argue that on theoretical grounds, however, such centralization might either increase or decrease efficiency. The competition of the military services under the Defense Department gives us a close analogue for study. Unfortunately, however, our review of efficiency in defense policy suggests that this would be a very poor model on which to base a broader industrial policy. To promote substantial increases in defense and industrial policy efficiency appears to require that much more fundamental institutional reforms be considered.     

The old and the new: the evolution of polymer and biomedical clusters in Ohio and Sweden

This paper examines the rapid growth of the polymer-based and biomedical clusters in Ohio and Sweden – two regions of similar size and with similar traditions undergoing similar industrial restructuring. Two issues are addressed: First, why has growth been so strong in these particular clusters, i.e., can we identify the sources of the growth and dynamics in these sectors? Second, why do these two clusters differ in Ohio and Sweden in terms of size, level and type of activity, number and composition of actors, size structure of firms and growth patterns over the last couple of decades? In particular, what is the role of public policies as well as cultural, historical, and geographic factors? Our main conclusions are (1) that there is strong path dependence in both clusters in both countries, and (2) that the key to rapid development is a high absorptive capacity combined with rapid diffusion to new potential users. Our policy discussion addresses these issues.     

Introduction to the Special Issue: Bordering the Middle East

ABSTRACT

Seven years after the beginning of the Syrian uprising and thirteen years after the transformation of Iraq into a federal state, one can notice the permanence of the nation state borders in the Middle East despite the worst prediction of a general breakdown of the colonial lines. But the Middle East, like no other region in the world, seems to face such a challenge to the state border system with the lasting internal fragmentations in Syria, Yemen, Libya and Iraq. In reaction to this threat, governments erected sophisticated and costly fences at the edge of the states, transforming the regional landscape, raising issues of states’ sovereignty and regimes’ legitimacy; they are also highlighting the existence of the local communities (religious, ethnic or tribal) that are largely straddling across the international borders, defining alternative boundaries of belonging. This special issue intends to deal with two main questions: how do borders influence actors’ identity building? And how do identity politics at the local or national level re/define borders and boundaries? Six case studies stemming from intensive fieldwork research provide insights on state-community relationships through the lens of border issues in the Machreq and the Gulf areas thanks to different disciplinary approaches. Through IS territorialisation, Jordanian Bedouins, Kuwait’s national identity representations, Israel’s Lebanese residents, Oman’s construction of political sovereignty and representations of Gulf and Middle Eastern borders, authors highlight multi-scalar processes of identity building and representations through the bordering of the national, tribal or religious group.     

Asylum recognition rates in Europe: Policies and performance

A minority of applicants for asylum in Europe gain some form of recognition as refugees, and this has been a controversial issue. From the early 2000s, the EU introduced a series of directives to prevent a race to the bottom in asylum policies and to harmonise policy between destination countries, but the results have not been fully assessed. In this paper I examine the determinants of recognition rates for asylum applicants from 65 origin countries to 20 European destinations from 2003 to 2017. The outcomes of the EU directives have been mixed, but taken together they are associated with increased recognition rates. These made a modest contribution to the trend increase in recognition rates, most of which is due to increased political terror and human rights repression in origin countries. But differences between European countries remain large, even after accounting for origin-country composition and for differences in the adoption of EU directives. Some of this may be accounted for by differences in bureaucratic frameworks through which policy is administered.     

Lobbying and Welfare in a Representative Democracy

This paper studies the impact of lobbying on political competition and policy outcomes in a framework which integrates the citizen–candidate model of representative democracy with the menu-auction model of lobbying. Positive and normative issues are analysed. On the positive side, lobbying need have little or no effect on policy outcomes because voters can restrict the influence of lobbyists by supporting candidates with offsetting policy preferences. On the normative side, coordination failure among lobbyists can result in Pareto inefficient policy choices. In addition, by creating rents to holding office, lobbying can lead to "excessive" entry into electoral competition.     

Regional Integration and Welfare: Framing and Advocating Pro-Poor Norms through Southern Regionalisms

Regional organisations are moving away from traditional market-based goals to embrace issues of welfare, yet the role they play in social policy formation, and their contribution to the embedding of alternative approaches to development, is poorly understood. This article explores whether and how the Union of South American Nations (UNASUR) and the Southern African Development Community (SADC) advance pro-poor norms and policies in national and global governance. Whilst not coherent citizenship-centred projects of regionalism, SADC and UNASUR have developed institutional competences to address the health–poverty nexus, though their policy development practices and methods take quite different forms. Theoretically, the paper develops a framework addressing three key claims: (i) poverty and welfare need to be brought in to the study of regional governance; (ii) the agency of Southern regional organisations in the generation and diffusion of norms needs to be taken more seriously in the literature and in practice; and (iii) context matters for whether and how regional organisations provide normative leadership; act as brokers in a (re)distributive way; or as advocacy actors in a political way, enabling claims at different levels of governance.     

The Socio-scientific Construction of Global Climate Crisis

This article adapts and applies a securitisation framework to produce an analytical explanation for the heightened geopolitical status of climate change over the past decade, as demonstrated by the breakthrough Paris Agreement of 2015. Rather than speech acts invoking security, the focus of this analysis is on the socio-scientific discourse of global climate crisis that emerged in the several year period leading to the 2009 COP 15 conference in Copenhagen. Two types of experts—contributory and interactional—are identified as the essential and interdependent actors that engaged in ‘crisification’, a novel crisis-based perspective on political agenda setting, in which climate crisis served as a primary discursive device employed by prominent advocates of urgent action. Contributory experts, that is, authoritative climate scientists and their institutions, together with interactional experts—non-scientist social actors who appropriated and mediated scientific data and knowledge in framing climate change as a global crisis—constituted an extended epistemic community of climate advocates. Through an array of speech acts, this extended community effectively co-constructed a convincing climate crisis discourse that consisted of quantitative data artefacts based on CO₂ concentration and global mean temperature, and qualitative invocations of existential threat to human civilisation, which contributed to the ascent of climate change on the global political agenda. In proposing crisification as a complement to securitisation, the article offers a theoretical innovation that facilitates constructivist analysis of issues framed as crises, including geopolitical problems in certain non-military sectors where crisis is a favoured label for perceived threats to core values.