LIBERTY BETWEEN THE LINES IN A STATIST AND MODERNIST AGE: UNFOLDING THE ADAM SMITH IN FRIEDRICH HAYEK

This article interprets F. A. Hayek as having been constrained by the statism and modernism of his times, and as writing in a way that obscured some of his central ideas. I suggest that between the lines we can see a focus on liberty understood hardily as others not messing with one's stuff– even though Hayek in The Constitution of Liberty defined liberty in ways that tended to obscure this hardy definition, and Hayek often used code words like ‘competition,’‘the market,’ and ‘spontaneous’ where ‘liberty’ or ‘freedom’ would have been plainer, albeit more offensive to the culture. Seeing the hardy definition of liberty between the lines in Hayek enables us to see his focus on the liberty principle and his case for a presumption of liberty. Such a reading of Hayek, I suggest, is true to Adam Smith, who expounded a central message that by and large the liberty principle holds, and that it deserves the presumption in our culture and politics.     

FREEHOLDS AND FREEDOM: THE IMPORTANCE OF PRIVATE PROPERTY IN PROMOTING AND SECURING LIBERTY

In the seventeenth annual IEA Hayek Memorial Lecture, the author examines the historical connection between individual property and individual liberty. Freehold ownership has been essential to the progress of freedom among the English‐speaking peoples. Accordingly, the protection of private property should be given high priority in our system of law.     

CHALLENGING THE CHALLENGERS: A REVIEW OF SERENA OLSARETTI'S LIBERTY, DESERT AND THE MARKET AND DANIEL ATTAS'S LIBERTY, PROPERTY AND MARKETS

These books attack free markets and libertarianism, alleging that their fundamental assumptions are philosophically indefensible. Olsaretti challenges the thesis that free markets produce distributively just outcomes. At most, however, she shows that limited, desert-based justifications of free-market outcomes fail to satisfy her questionable desiderata, and that particular entitlement-based justifications are inadequately supported when they confound voluntariness and freedom. Attas challenges libertarianism itself, claiming that it is fundamentally wrong, and that libertarian notions of property rights are unsustainable. But he considers only arguments based on defective notions of self-ownership and confused notions of freedom; other, more robust justifications of liberty and property are ignored. Though both of these books fail to demonstrate the strong conclusions they assert, they highlight the dangers of substituting polemic for philosophy. Free markets, property and liberty need, and deserve, rigorous philosophical defences.     

von Neumann/Morgenstrn Decision Making and Harsanyi's Theory of Justice: After Rawls and Nozick If It Risks Personal Freedom and Individual Liberty,Can It Be Really Just?

Abstract . John C. Harsanyi has developed a theory of justice based on the von Neumann-Morgenstern (vN-M) theory of decision making under uncertainty. Instead of applying the vN-M theory strictly, however, Harsanyi proposes to modify his approach so as to exclude decisions which seem to be the result of rashness, strong excitement and other circumstances which might hinder rational choice. The result is a theory of justice which is internally inconsistent and potentially hostile to liberty and individual freedom.     

THE MOST IMPORTANT BOOK ON THE MOST IMPORTANT TOPIC OF OUR DAY: A REVIEW OF AFTER WAR: THE POLITICAL ECONOMY OF EXPORTING DEMOCRACY,BY CHRISTOPHER J. COYNE1

Efforts to export democracy and liberty through military intervention have often been ineffective and have resulted in unintended and undesirable consequences. Countries are free because of belief systems, and institutions that follow from those beliefs, which support and reinforce political and economic freedom. Rational constructivist attempts at nation building are therefore likely to fail in places where there is no tradition of such beliefs and institutions. In this superb book Coyne argues that principled non‐interventionism and free trade have historically had the greatest degree of success and should be our guiding policies today.     

DEFINING, MEASURING AND DEFENDING LIBERTY: A REVIEW OF THE QUALITY OF FREEDOM BY MATTHEW H. KRAMER AND NORMS OF LIBERTY: A PERFECTIONIST BASIS FOR NON-PERFECTIONIST POLITICS BY DOUGLAS B. RASMUSSEN AND DOUGLAS J. DEN UYL

The Quality of Freedom offers a precise, meticulously argued, non-moralised understanding of socio-political liberty as physical unforeclosedness. Norms of Liberty: A Perfectionist Basis for Non-Perfectionist Politics presents an innovative 'metanormative defence' of negative liberty rights that does not depend on atomism, a social contract or self-ownership.     

PUBLIC CHOICE THEORY AND HOUSE OF LORDS REFORM

By revealing the propensity of elected governments to indulge in self‐interest at the expense of the people's liberty, public choice theory provides powerful arguments in favour of an appointed House of Lords rather than an elected upper chamber.     

Henry George's Theory of State's Agenda: The Origins of His Ideas on Economic Policy in Adam Smith's Moral Theory

Abstract . The tension between Henry George's reformism and his laissezfaire liberalism was resolved through a system of natural liberty George derived from the relation between Adam Smith's ethics and economics. Crucial for George's nonutilitarian philosophy of government was the interdependence between the moral sense (sympathy) and the prevailing socioeconomic order. In the appropriate institutional environment, the role of the government was diminished since the pervasive moral sense insured justice by monitoring the individual's pursuit of economic self-interest. In contrast, a defective socio economic order required government intervention. For example, land monopoly and the maldistribution of income undermined the role of sympathy, promoted excessive self interest and the breakdown of the system of natural liberty. Government action through the single tax eliminated the “fear of want,” restored an operative moral sense and guaranteed justice in society. Under these conditions, government can provide additional services for a growing society without being susceptible to “corrupt and tyrannous” behavior.     

NGOS VS CIVIL SOCIETY: REFLECTIONS ON THE ILLIBERAL,THE ILLEGITIMATE AND THE UNACCOUNTABLE

This essay evaluates the nature of non‐governmental organisations and their relation to civil society, and examines appropriate criteria of legitimacy and accountability for NGOs. Unfortunately, many common understandings of NGOs embody fundamental confusions, and obscure the ways in which NGOs are inimical to individual liberty.     

THE ERRONEOUS USE OF CHINA'S POPULATION AND PER CAPITA DATA: A STRUCTURED REVIEW AND CRITICAL TEST

Hundreds of studies in economics misinterpret China's subnational population and per capita data. The most widely used population counts are of hukou registrations from each province, prefecture, county, or city rather than of the people living in each place and generating local gross domestic product. Over 220 million people have left their place of registration, while almost none had when reforms began, creating time-varying errors in estimates of per capita income of subnational units. We survey empirical articles in blue ribbon journals, in development journals, and in regional and urban economics journals that use China's subnational data. Over 80% of articles use these data erroneously; most commonly the wrong population or employment counts are used to measure the size of subnational units, and per capita data are calculated with the wrong denominator for how variables are interpreted. We provide examples of errors from each group of journals, and a critical test of one highly cited study. Specifically, we show that if hukou registrations are erroneously used to measure the local population, following existing practice, conclusions about driving forces for urban area expansion are reversed. We give recommendations for more careful use of China's subnational population and per capita data.     

PLAYING FAIR WITH FAIRNESS (A COMMENT ON ARNSPERGER'S 'ENVY-FREENESS AND DISTRIBUTIVE JUSTICE')

Abstract. The principle that 'no individual prefers another's allocation to his own'is central in the analysis of Economic Justice mainly because of its identity with the basic case of equality of liberty, rather than for its indirect relation with the sentiment of envy. The various reproaches which have been addressed to this principle, gathered by Arnsperger, either are misconceived, or have been answered by rational (justified) extensions or specifications of the principle.     

INFORMATION TECHNOLOGY,CONTROL AND POWER: THE CENTRALIZATION AND DECENTRALIZATION DEBATE REVISITED*

This article addresses the conceptualization of power in relation to the use of computers in organizations. Commonly held views that the application of computer based information systems leads to either a centralization or a decentralization of power and control, or that computers merely reinforce the power of dominant actors, are criticized, and an alternative view is put forward which focuses on the symbolic and disciplinary dimensions of the development of information systems. This perspective is then illustrated in connection with the development of management information systems in the National Health Service.     

MIGRATION AND INSTITUTIONS: EXIT AND VOICE (FROM ABROAD)?

A rapidly growing body of research examines the relationship between migration and institutions. Three strands of studies can be distinguished. Some studies focused on the role of domestic and foreign institutions in the decision to migrate. Others were interested by the impact of migration on institutional reforms in migrants' countries of origin. Recent studies focus on how migrants affect social and informal institutions in the destination countries. This survey puts together these three strands of literature with three purposes. First, we offer a short definition and synthetic typology of institutions, which provide a guide to understand several studies we have critically reviewed. Second, our analysis is presented following the analytic framework exit, voice, and loyalty of Hirschman in order to highlight the brain gain phenomenon for developing countries, from an institutional point of view. Third, we review the limited existing work on the very timely topic, whether migrants are harmful or not to institutions in the host countries.     

THE CONSTRUCTION OF THE SIMPLE X2 AND NEYMAN SMOOTH GOODNESS OF FIT TESTS

Suppose we wish to test whether data are consistent with a completely specified continuous distribution against a general alternative. Familiar omnibus tests are PEARSON'S X² test and NEYMAN'S smooth test. Fundamental problems in the application of these tests are the construction and number of classes to use for X², and the choice of the order of the NEYMAN smooth test. This paper examines these questions.     

Sismondi's principles of liberty and economic progress

The Swiss-born liberal thinker Jean-Charles-Léonard Simonde de Sismondi (1773–1842) rejected metaphysical systems of thought in favour of historical and social analysis. However, in his mature writings, he offered an organising, although a never explicit, set of principles guiding his political and economic disquisitions. I identify Sismondi's essential principles of social study, namely, the effect of political organisation on the character of the people, the need for a ‘national reason’, along with the weight of tradition over individual representation. Subordinate principles of liberty are examined, such as respect for minorities, freedom of public debate, and engagement in local affairs. I argue that, when the political idea of a slowly matured national reason guiding the constitutional progress of liberty is applied to a rapidly changing economic domain, tension is created within Sismondi's understanding of social sciences.     

ASSESSING THE OLYMPIC GAMES: THE ECONOMIC IMPACT AND BEYOND

This study reviews the literature on the evaluation of the Olympic Games, within the broader framework of their significance as cultural assets and opportunities for endogenous growth and sustainable development of the host city. The study reviews the main approaches to the economic assessment of the Games, from the point of view of the underlying economic concepts and methodologies, as well as of the empirical results obtained. It focuses on the effects that are measured and on those, which even though important, are generally neglected. The methodologies utilized for the quantitative assessments of the Games are reviewed with special emphasis on impact and cost–benefit analysis, both on ex ante and ex post basis. The studies surveyed are analysed from the point of view of different sets of effects on the host city, and for a limited number of cases, on the host country. While the major focus is on hosting the Summer Olympics, some attention is also paid to the bidding cities, the Winter Olympics and the Paralympics. The general findings appear to be controversial with some hints of positive overall effects, but also with a well‐documented tendency to exaggerate the benefits and underestimate the costs of holding the Games in the ex ante versus the ex post studies. The survey finally suggests that ex post cross‐country econometric studies tend to catch sizable differential and persistent benefits ignored by individual studies, especially on macroeconomic and trade variables.     

NONPARAMETRIC AND SEMIPARAMETRIC PANEL DATA MODELS: RECENT DEVELOPMENTS

In this paper, we provide an intensive review of the recent developments for semiparametric and fully nonparametric panel data models that are linearly separable in the innovation and the individual-specific term. We analyze these developments under two alternative model specifications: fixed and random effects panel data models. More precisely, in the random effects setting, we focus our attention in the analysis of some efficiency issues that have to do with the so-called working independence condition. This assumption is introduced when estimating the asymptotic variance–covariance matrix of nonparametric estimators. In the fixed effects setting, to cope with the so-called incidental parameters problem, we consider two different estimation approaches: profiling techniques and differencing methods. Furthermore, we are also interested in the endogeneity problem and how instrumental variables are used in this context. In addition, for practitioners, we also show different ways of avoiding the so-called curse of dimensionality problem in pure nonparametric models. In this way, semiparametric and additive models appear as a solution when the number of explanatory variables is large.     

THE SINO-BRITISH JOINT DECLARATION, 1997, AND THE LAND MARKET OF HONG KONG*

In September, 1984, Britain and China concluded the Joint Declaration on the Future of Hong Kong. The Joint Declaration guarantees the continual practice of capitalism and a high degree of autonomy for Hong Kong for a period of 50 years after 1997. It helped to rebuild confidence and caused property prices to rise. However, Annex HI of the Joint Declaration places severe restraints on the present government, limiting its ability to respond to market trends and generate funds from land sales. This paper seeks to look at some of these effects. It is argued that there is very little room for the present government to maneouvre and that even now the constraints imposed by the Joint Declaration are affecting the land market in Hong Kong. Higher land prices, a slower rate of horizontal expansion of the city and a greater intensity of land use are likely consequences of the newly imposed contraints. The recent emphasis on inner city development and redevelopment vis-a-vis a new town development strategy is in part attributable to the Joint Declaration.     

ENVY-FREENESS AND DISTRIBUTIVE JUSTICE: A REPLY TO KOLM'S COMMENT

Abstract. This reply takes up specific points raised by Professor Kolm over which there persists some disagreement between us. It offers a rather broad, philosophically oriented discussion of the issues. I explain why I think Kolm is right in preferring the term 'equity'to that of 'envy-freeness,'but I express moral doubts concerning the interpretation proposed by Kolm of equity as a criterion of equal liberty. On this basis, I then defend my own specific interpretation of equity as a welfarist-egalitarian criterion, and express some reluctance as to the alleged 'moral irrelevance'of individual preferences in the theory of equity. I also briefly discuss the conceptual role played by counterfactuals and try to mitigate somewhat Kolm's critique of the use of axioms involving 'imaginary' situations.     

ARTHUR SELDON: GREAT EDITOR, THINKER AND RADICAL ECONOMIST

Arthur Seldon, the founder editor of Economic Affairs and first Editorial Director of the IEA, died in October 2005, a few weeks before the 25th anniversary issue went to press. Many tributes have been paid to Arthur Seldon in obituaries in The Economist and the major national newspapers. In this special section of Economic Affairs we reproduce four of the speeches given at his memorial service on 15 January 2006. Respectively, they illustrate the fond affection for Arthur Seldon felt by Ralph Harris, the founder General Director of the IEA; Stuart Waterhouse, a fellow LSE student; Martin Anderson, who worked with Arthur Seldon editing Economic Affairs; and Geoffrey Howe, former Chancellor of the Exchequer. Three members of Arthur Seldon's family also spoke at the memorial service. Their talks concentrated on Arthur Seldon's family life, but the following more general thoughts particularly resonated with all present. His adopted son, Michael Perrott, commented that he was ‘a lion amongst thinkers, timeless and uncompromising’. Peter Seldon spoke of his father as ‘a visionary’ and ‘a genius’; he concluded, ‘we are all unique but the word could have been invented for Arthur’. Peter's brother Anthony Seldon commented that ‘he [Arthur] lives on in all of us’. – Philip Booth