Security: Collective good or commodity?

This is the author's accepted manuscript. The final published article is available from the link below. Copyright @ 2008 Sage.The state monopoly on the legitimate use of violence in Europe and North America has been central to the development of security as a collective good. Not only has it institutionalized the state as the prime national and international security provider, it has helped to reduce the threat from other actors by either prohibiting or limiting their use of violence. The recent growth of the private security industry appears to undermine this view. Not only are private security firms proliferating at the national level; private military companies are also taking over an increasing range of military functions in both national defence and international interventions. This article seeks to provide an examination of the theoretical and practical implications of the shift from states to markets in the provision of security. Specifically, it discusses how the conceptualization of security as a commodity rather than a collective good affects the meaning and implementation of security in Western democracies.ESR

On the Power and Weakness of Rational Expectations: Logical Fallacies, Periodic Bubbles and Business Cycles

A popular interpretation of the Rational Expectations/Efficient Markets hypothesis states that, if the hypothesis holds, then market valuations must follow a random walk. This postulate has frequently been criticized on the basis of empirical evidence. Yet the assertion itself incurs what we could call 'fallacy of probability diffusion symmetry': although market efficiency does indeed imply that the mean (i.e. expected) path must be a random walk, if the probability diffusion process is asymmetric then the observed path will most closely resemble not the mean but the median, which does not necessarily follow a random walk. To illustrate the implications, this paper develops an efficient markets model where the median path of Tobin's q ratio displays regular cycles of bubbles and crashes reflecting an agency problem between investors and producers. The model is tested against US market data, with results suggesting that such a regular cycle does indeed exist and is statistically significant. The aggregate production function in Gracia (Uncertainty and Capacity Constraints: Reconsidering the Aggregate Production Function, 2011) is then put forward to show how financial fluctuations can drive the business cycle by periodically impacting aggregate productivity and, as a consequence, GDP growth

The Foreign Economic Effect of the U.S. War on Drugs

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The Measurement of Inequality, Concentration, and Diversification.

The Lorenz curve and Gini coefficient are typically used to measure inequality. A different way to measure inequality is introduced here: I = CN, the product of concentration and number of units. The resultant index can be interpreted with reference to an inequality base where one unit owns all and the rest nothing. This inequality index also integrates the measurement of inequality, concentration, and diversification into one system, where diversification is measured as the inverse of concentration. I = CN accommodates various measures of concentration, including the Herfindahl-Hirschman and Tideman-Hall indexes. The Tideman-Hall concentration index also provides indexes of concentration, diversification and inequality as functions of Gini. As one application, the inequality index can be used to provide an index of economic development

The Ethics of Taxation

The judgment of taxation by ethical standards requires a universally applicable ethic. Such an ethic, natural moral law, can be derived using the Lockean framework based on equality. By this universal ethic, persons have property rights in their bodies and lives, and thus in their labor. The taxation of wages and of products of labor are therefore morally wrong. The equality premise, combined with the Lockean proviso on land, leads to the conclusion that public revenues may be justly obtained from the rental benefit of natural resources. Voluntary user fees and invasion penalties such as pollution charges are also morally proper sources for public finances

Circumventing California's Proposition 13 for the Public Collection of Rent

Abstract Prior to the passage of Proposition 13, local governments in California set their own property tax rates and received the revenues. California's Proposition 13, enacted in June 1978, severely limits the state's ad valorem real property tax. The measure limits the real property tax to one percent of the purchase price, and also limits the annual increase to two percent until the title is transferred. The proposition also shifted the allocation of the revenues from the counties to the state. However, state laws and local initiatives have enabled cities and counties to circumvent the limitations of Proposition 13 to extract revenue from real estate with parcel taxes, special assessment districts, developer charges, and other charges. Real estate is also tapped privately to by homeowner association assessments, which play an increasingly important role in providing civic services. This paper analyzes the impact of Proposition 13 and examines these statewide and local measures to get around the tax limitation. While the initial impact of Proposition 13 was a reduction in the state's fisc, increases in the sales and other taxes as well as local revenue sources have now restored the tax burden of Californians to slightly above the national average. Thus, the proposition has been largely an exercise in futility, centralizing government, greatly increasing the complexity of its public finances, and ultimately failing to constrain the size of government

Do Markets Promote Immoral Behavior?

Pure markets enhance good behavior, because in such arrangements, voluntary acts are rewarded and involuntary acts are punished. A pure market, as we define it, consists only of voluntary human action. That’s because a truly free market includes governance structuresthat penalize coercive harm, and such pure markets do not impose any restrictions or costs on honest and peaceful human activity.Critics of markets think otherwise. They point to slave markets or a market for stolen goods as examples of market immorality

Is the Free Market Ethical?

A market free of coercion is on firm moral ground