Can an electorate use the projected life expectancy of a lifetime-appointed chief executive to enforce binding, informal term limits? Informal term limits based on the life expectancy of a chief executive candidate at election would enable an electorate to exercise discretion in adjusting tenure lengths to minimize expected turnover and tenure-length costs, while also providing a strictly binding term limit: death. We provide a detailed historical case study of Venice from 1172 to 1797, when the ruling patricians utilized informal term limits on their chief executive, the doge, relying on the projected life expectancy of ducal candidates.

The foundational model of distributive politics predicts a positive relationship between the number of legislative districts and the level of inefficiency of projects approved by the legislature—Weingast, Shepsle, and Johnsen's “Law of 1/n.” This relationship has been tested extensively in the empirical literature, with mixed results. This article presents a model wherein passing the omnibus legislation typical of distributive politics is a costly process. The model predicts a nonlinear relationship between legislature size and spending as increasing the size of the legislature also increases the costs of collective action. Results from an empirical exercise based on U.S. state legislatures (1962–2014) are consistent with the proposed model, showing a 1/n effect which diminishes at the margin as the legislature's size increases, especially in the lower chamber.

Faced with looming fiscal issues after the most recent financial crisis, state governments have increasingly taken steps toward tax reform. The reforms they have undertaken range from lowering tax rates to removing exemptions and credits to simplifying the tax code. The relative success and failure of reform efforts depend not only on the specific type of reform but also on the political economy surrounding the reform process, as well as on the economic climate in the state instituting reform. This study first analyzes some overall trends in state efforts to reform tax codes. Then, using case studies of five states that recently implemented reforms, this study finds some commonality in the specific features of the tax reforms as well as in the political economy surrounding the reform process. These findings motivate a discussion of the common features of successful reforms.

You’re probably familiar with the earmarking of selective consumption taxes in your state—for example, gas tax revenues may be dedicated to highway funding. However, tax revenues don’t always “stick” to the program that they’re earmarked to. This chapter shows how earmarked taxes can serve to increase the size of state governments because funds can be moved from program to program. Key takeaways: (1) States may justify new revenue sources with the argument that they will fund worthy programs. A lottery may be implemented with the argument that its revenues will be used to increase education funding. (2) Every US state earmarks a percentage of its revenue. In 2005, Rhode Island earmarked just 4 percent of its revenue, compared to Alabama at 84 percent.

This paper provides a model of employee immolation and provides a case study of the effect that public influences on corporate policy has on the welfare of employees. Conventional wisdom would suggest that efforts to improve the lives of workers within oppressive labor conditions would be viewed at least neutrally if not positively. Recent work, such as Powell (2014), argue that these efforts may not be as clearly beneficial as they were once thought and further that they may worsen the lives of the very people they attempt to improve by worsening economic opportunity. Our work extends this idea, applying it to deleterious effects on employee action rather than on employee opportunity. Specifically, we look at the case of Foxconn employee suicides in the spring of 2010 and the role that public influence played in contributing to employee suicides. We conclude with a cautionary note: that public influence is indeed a powerful tool capable of much good, but that care must be taken to prevent it being misused, even if unintentionally.

The enormous impact that economic freedom can have on economic outcomes makes an understanding of the factors or forces affecting its level paramount. To what extent do citizen preferences regarding the role of government in the economy drive the level of or changes in economic freedom? We explore this question using a new index of voting in the U.S. Congress constructed consistent with the Fraser Institute indices of economic freedom. We use voting on national legislation to examine state‐level economic freedom to clearly separate the measurement of preferences from policies that at least partly reflect these preferences. We find that Congressional votes, both from the House and Senate, are related to increases in state economic freedom, and that the result is generally statistically and economically significant, and robust to inclusion of a variety of socioeconomic control variables. ( JEL D72, H10, H50)

Term limits have been known to reduce electoral accountability by removing the possibility of reelection, thus affecting economic policy choices (i.e., the ‘lame duck’ effect). We show that the magnitude and statistical significance of this effect is influenced by the expected length of a future career. By using incumbent age as a proxy for expected career length, we find that the lame-duck effect is statistically observable only among those politicians with long careers ahead. Using data on US governors from 1950 to 2005, we find evidence that the influence of term limits is heterogeneous, primarily influencing young incumbents who hope to have long careers and thus have stronger incentives to remain accountable to voters. Indeed, we find little evidence of a lame-duck effect among older incumbents, suggesting that their already-shortened time horizons may offset the term limit effect.

Recent events, including the failed recall of Wisconsin Governor Scott Walker and the Chicago teachers strike, have shed light on the relationship between state fiscal policy and public-sector union power. While a literature has developed focusing on various aspects of the link between public-sector unions and government policy, scholars have yet to reach consensus. In most cases, public-sector unions have multiple tools they can use to influence policy. We find that union political contributions and collective bargaining are associated with higher incomes for state and local employees and with higher public employment, both across state and local governments overall as well as within the education sector. We also find relatively little evidence that union activity influences total spending.

This note describes an approach to teaching the public choice perspectives on voting using an episode from Comedy Central’s animated television show, South Park. The episode titled, “Douche and Turd,” demonstrates the near-zero value of an individual vote, the intrinsic value individuals place on the act of voting itself, problems arising when voters must choose amongst undesirable candidates rather than issues, and the role of political campaigning; and mirrors public perception regarding the 2004 presidential campaign between George W. Bush and John Kerry.

This article proposes an empirical framework based on a synthesis of the seminal “Law of 1/n” and “Leviathan” theories, which models the relationship between government spending and the number of jurisdictions in a federal system as determined by the interplay of the costs related to centralized government (which fall as the number of jurisdictions increases) and the costs of distributive politics (which rise as the number of jurisdictions increases). Using a panel of U.S. state and local government spending data, empirical tests based on this combined framework show that the effect of intergovernmental competition predicted by the Leviathan model is partially offset by the Law of 1/n. This result helps explain the inconsistent findings in the previous empirical literature.

A large literature on the ‘flypaper effect’ examines how federal grants to states at time period t affect state spending (or taxes) at time period t. We explore the fundamentally different question of how federal grants at time period t affect state tax policy in the future. Federal grants often result in states creating new programs and hiring new employees, and when the federal funding is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes. Government programs tend to be difficult to cut, as goes Milton Friedman’s famous quote about nothing being as permanent as a temporary government program, suggesting that it is likely that temporary federal grants create permanent (future) ratchets in state taxes. Far from being purely an academic question, this argument is why South Carolina’s Governor Mark Sanford attempted to turn down federal stimulus monies for his state. We examine both the impact of federal grants on future state budgets and how federal and state grants affect future local government budgets. Our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years.

This paper examines the impact of dynastic political privilege on the behavior of incumbents. Incumbents have opportunities to serve themselves at the expense of voters, but society can design political institutions to mitigate these principal‐agent problems. Dynastic political privilege may be one such mechanism. We argue that the possibility that opportunistic behavior in office may damage family members' political prospects disciplines incumbents. We test this hypothesis using data for 1950–2005 on U.S. governors, including a new data set on the family relationships of politicians, and find that dynastic political privilege increases incumbent accountability. (JEL H71, H10)

Several theories suggest that states’ choices of constitutional rules are at least partially a function of neighboring constitutions. This paper provides the first analysis of spatial dependence of specific provisions within state constitutions in the United States. The analysis effectively makes constitutional rules endogenous, contributing to a relatively underdeveloped branch of constitutional economics. By employing a series of probit estimations of nineteen specific constitutional rules, I find evidence of spatial dependence in state constitutions. Specifically, the presence of specific constitutional constraints pertaining to term limits, supreme court justice selection, recall, home rule, direct democracy, constitutional amendment by convention, balanced budget requirements, tax and expenditure limits, line item veto, victims’ bill of rights, health and welfare, right to privacy, environmental protection, sex discrimination, abortion, and official language all exhibit some evidence spatial dependence.

This paper reexamines whether fiscal decentralization constrains Leviathan government. Using panel data for Pennsylvania, we compare actual property tax rates to the Leviathan revenue-maximizing rates for municipalities, school districts, and counties. Using spatial econometric methods we also estimate the degree of spatial dependence at the three levels of local government. We find that fiscal decentralization results in stronger intergovernmental competition and lower tax rates. We also find evidence of collusion among school districts that exhibit high interdependence but also high tax rates. This calls into question the current literature's blind use of spatial dependence as a measure of intergovernmental competition.

This dissertation consists of three essays, each examining a type of strategic interaction between government jurisdictions. Specifically, I explore the effect of distributive politics in the legislature on intergovernmental competition, how fiscal decentralization serves as a constraint on Leviathan government, and how state constitutions are designed in response to neighboring institutions. In essay one, I combine the Brennan and Buchanan (1977, 1978, 1980) 'Leviathan' model with the seminal Weingast, Shepsle, and Johnsen (1981) 'Law of 1/n' to show that the effect of increased decentralization on government size is limited by associated increases in legislature size. Essay two employs two distinct empirical strategies to test the 'Leviathan hypothesis' that fiscal decentralization decreases government size. While the theory holds at the municipal and county levels, school districts exhibit relatively high tax rates while simultaneously high levels of interdependence. This suggests collusive behavior at that level. In the final essay, I perform the first spatial econometric test of diffusion of constitutional rules. I find that provisions in neighboring constitutions are a key determinate of the types of provisions found in a given state's constitution.

PurposeThe paper aims to apply the ideas found in the paper of Adam Smith, the pre‐eminent eighteenth century economist, to the field of management.Design/methodology/approachThe paper provides a brief biography of Smith, summarizes his main contributions, and then applies them to contemporary management practices.FindingsAdam Smith was the first person to identify specialization and the division of labor as the main drivers of productivity. He also conceptualized the “invisible hand principle” which explains how, under the proper set of incentives, self‐interested individuals are directed to pursue activities that benefit the whole of society. Both ideas are of utmost importance in the field of management. Specifically, successful managers are those who are able to create good “rules of the game” which align the incentives of labor with the goals of the firm.Practical implicationsSmith's contributions provide a foundation for the division of labor and demonstrate the importance of establishing the right “institutions” within a firm.Originality/valueThe paper arrives at practical implications for managers from the paper of an eighteenth century economist.