Brad Taylor

Abstract: We argue that the existing literature analyzing competition among governments has neglected the important role of barriers to entry. The dominant neoclassical approach has taken a static view of competition and ignored innovation. More recent Austrian and evolutionary accounts of jurisdictional competition have recognized that competition is a discovery mechanism, but have not sufficiently analyzed the role of the institutional entrepreneur.

It often seems strange to Westerners that some countries have remained poor. The real peculiarity, however, is that we have become rich. History has not been a steady march towards higher living standards, but a long period of stagnation punctuated by a brief burst of spectacular growth in some parts of the world. Most people, for most of human history have been extremely poor by our standards. Statistically speaking, poverty is the norm.

Abstract: Those advocating reform to increase competition among governments are caught in a catch-22: they recognize that competition is needed to improve rules but seek to increase competition by changing the rules. Reforms emerge from the strategic interaction of political actors, and the only way to robustly alter the institutional equilibrium is to alter the noninstitutional factors which structure the game.

We extend the two-level understanding of politics formulated by public choice theorists by adding a third level – the competitive environment in which governments are embedded. We argue that it is this level which ultimately determines the quality of rules and conclude that virtually all forms of political activism are focused at the wrong level. Existing systems are resistant to reform, and this means that many other forms of activism are doomed to failure or relative insignificance. Seasteading – the establishment of autonomous communities on the ocean - on the other hand, sidesteps the problems of reform and has the potential to radically improve government performance. Moreover, the ocean has another important benefit – low costs of moving large structures – with the potential to make the governance industry more competitive in the long run.

A number of theorists have recently argued that Tiebout competition can act as a discovery mechanism and produce institutional innovation. We extend these arguments by considering the extent to which barriers to entering the governance market limit innovation. If competition among governments is to produce new and better ways of governing, many diverse governance ideas need to be tested, and we argue that existing polities will generally be less willing and able to experiment with new institutions than newly-formed and relatively young jurisdictions. Organizational inertia and a rational desire to avoid the high cost of failed reform mean that most radical institutional innovation will come from new entrants in the governance market rather than the reform of incumbents. We provide evidence from American history, showing that the emergence of near-universal adult suffrage – the removal of economic, racial, and gender qualifications on the franchise – was driven by the formation of new polities rather than the reform of existing ones.

We review methods and assess the policy influence of a series of publicly-funded Cost of Illness studies, mostly published since 1990. Our analysis shows that headline cost estimates, including the influential paper by Collins and Lapsley (2008), depend on an incorrect procedure for incorporating real world imperfections in consumer information and rationality, producing a substantial over-estimate of costs. Other errors further inflate these estimates, resulting in headline costs that are unrelated to either total economic welfare or GDP and therefore of no policy relevance. Counting only external, policy-relevant costs not only deflates overall figures substantially but also results in rank order changes among cost categories. Despite this, Cost of Illness studies appear effective in mobilizing public opinion towards increased regulation and taxation that is not justified by an expected increase in economic welfare: this is the cost of cost studies.

We consider the relative robustness of libertarian anarchy and liberal democracy to meddlesome preferences.Specifically, we examine how the liberty of those wishing to engage in externally harmless activities is affected by people who wish to prevent them from doing so. We show that intense, concentrated meddlesome preferences are more likely to produce illiberal law in anarchy; while weak, dispersed meddlesome preferences are more likely to do so in democracy. Using insights from the economics of religion, we argue that anarchy is more likely than democracy to produce small groups with intense meddlesome preferences. Absent government provision of public goods, voluntary groups will emerge to fill the gap. Strict religious groups – ‘sects’ – are more able to overcome collective action problems and will therefore be more prevalent in an anarchic society.These sects are apt to instil intense meddlesome preferences in their members and have the ability to enforce them: anarchy produces the situation to which it is most fragile. Our argument highlights the importance of ideology in comparative institutional analysis, and reveals unresolved questions in the conventional understanding of institutional robustness.

We develop a dynamic theory of the industrial organization of government which combines the insights of public choice theory and a dynamic understanding of competition. We argue that efforts to improve policy should be focused at the root of the problem – the uncompetitive governance industry and the technological environment out of which it emerges – and suggest that the most promising way to robustly improve policy is to develop the technology to settle the ocean.

Despite much theoretical discussion the enforceability of constitutional constraints, the question has received little empirical attention. After discussing the theoretical arguments for and against the proposition that constitutions are capable of protecting individual liberty against encroachment by the state, I use the Reporters without Borders index of press freedom and a content analysis of national constitutions to ask whether constitutions protect freedom. I find that, controlling for a number of other factors, constitutional prohibition of censorship is correlated with greater press freedom, and that constitutions seem to be most effective at times when liberty is most at risk. Vague constitutional guarantees of press freedom, on the other hand, seem to have little effect. While the results indicate that parchment does matter, constitutions should not be seen as binding rules which preclude particular actions by government, but as constraints which reduce the likelihood of certain political outcomes. The results reveal both the strengths and limitations of the constitutionalist project of James M. Buchanan and other pubic choice scholars.

This paper draws on the “preference reversal” literature in psychology and behavioural economics to argue for the impossibility of welfare economics. The effect of normatively-irrelevant contextual factors shows that humans do not have a coherent preference function which pre-exists and informs choice. Every choice is a constructive act which forces us to choose among incommensurable values: choice creates preference. This rules out the possibility of a value-free welfare economics and forces social scientists wishing to make normative conclusions to engage in indeterminate moral reasoning.