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The Language of Taxation

The economic analysis of taxation contains two disparate strands of theorizing. One strand is a scientific strand that seeks to explain the rhyme and reason of the pattern of taxation that governments create. The other strand is a normative or exhortatory strand that seeks to instruct governments as to how they should extract taxes from the population. There is no good reason why a theorist can’t contribute to both strands, only not at the same time because the position of political partisan...

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Bankruptcies, bailouts, and some political economy of corporate reorganization

Bankruptcy has long been the standard approach to reorganizing failing corporate entities. In recent years, bailout, whereby a governmental entity takes charge of the reorganization, has appeared as an alternative. At the enterprise level, there is a Coase-like invariance proposition at work in which a failing concern is replaced by a going concern under either process. Significant differences arise once we move beyond the point of reorganization. The choice between bankruptcy and bailout is...

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Trade, Power, and Political Economy

In Private Governance: Creating Order in Economic and Social Life, Edward Stringham explains that private ordering is sufficient to secure full exploitation of gains from trade within a society. After describing the logic of Stringham’s claim on behalf of private ordering, the remainder of this essay examines an enigma that Stringham’s argument entails: private ordering is sufficient for social coordination and yet public ordering is ubiquitous. The exploitation of gains from trade might...

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American Democracy and the Problem of Fiscal Deficits

Most theorists of public finance treat budgeting as a technical problem centered on projecting revenues and expenses. In contrast, I treat budgeting as a political problem, with technical matters serving to obscure more than illuminate that problem. This essay starts by explaining why persistent budget deficits have little to do with technical matters because they mostly reflect the conflictual character of contemporary political economy. The rest of the essay probes this conflictual...

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Hayek, Friedrich August von

F.A. Hayek focused on many traditional economic questions, and also made important contributions to law and economics. His framework differed from Kaldor Hicks efficiency and the wealth maximization norm common among neoclassical law and economics scholars. But he talked about how the common law evolves and helps shape economic outcomes. Underlying this approach was Hayek’s conviction that the essence of law is not created by the state, but rather preexists in the conventions and...

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Kirznerian and Schumpeterian entrepreneurship in Trinidad and Tobago

This paper aims to highlight the possibility that the same cultural and/or institutional environment can differentially affect each of the two moments of entrepreneurship – opportunity identification and opportunity exploitation. It is possible that the cultural and institutional environment in a particular place may encourage opportunity identification, but discourage opportunity exploitation, or vice versa. Specifically, this paper argues that understanding entrepreneurship in Trinidad and...

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The Changing of the Guard

Most economies advance by simultaneously decreasing costs and increasing quality. Unfortunately, when it comes to higher education, this has been turned on its head. Costs keep rising while quality declines. How has this happened? What can be done? This chapter addresss part of this puzzle by examining the administrative bloat in American higher education.

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Political entrepreneurship, emergent dynamics, and constitutional politics

Constitutional political economy mostly distinguishes between rules and actions, with rules selected prior to actions within those rules. While we accept the coherence of this distinction, we pursue it within an open rather than closed scheme of analysis. Doing this entails recognition that societies rarely exhibit universal agreement about constitutional provisions. Recognizing the incomplete character of constitutional agreement points to the existence of margins of contestation. Along...

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