The Politics of Fiscal Austerity: Democracies and Foresight

Daunting fiscal policy challenges face democratic systems throughout the world. Fiscal austerity in the wake of the Great Recession prompted nations in the Organisation for Economic Co-operation and Development (OECD) to institute major spending cuts and tax increases, increases that caused political and social fallout for years to come. While economies and budgets have improved in the past several years, significant fiscal adjustments lie ahead due to aging populations and the seemingly inexorable growth of health care costs. Faced with larger cohorts of retirees and fewer workers, nations will have to come to grips with a fiscal reality of higher spending and lower revenues for the foreseeable future. This article examines whether and how fiscal austerity measures are politically stabilizing or destabilizing for elected leaders responsible for their imposition. Many would predict that democracies are ill suited to make these hard choices, and certainly regimes have gone down to defeat following the formulation of austerity programs. However, the record is mixed-many regimes have found strategies to mitigate the political fallout and guarantee reelection in the wake of austerity. While traditional incremental and pluralist politics continue to characterize the budgetary strategies of many systems, major policy reforms have risen to the center of policy agendas elsewhere. While the magnitude of the fiscal crisis prompted the adoption of major policy shifts in hard-pressed nations, such reforms were undergirded by a more volatile policy process featuring the emergence of new pathways to power with greater roles for experts and symbolically compelling ideas

Ernst Freund as Precursor of the Rational Study of Corporate Law

Gindis, David, Ernst Freund as Precursor of the Rational Study of Corporate Law (October 27, 2017). Journal of Institutional Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2905547, doi: https://dx.doi.org/10.2139/ssrn.2905547The rise of large business corporations in the late 19th century compelled many American observers to admit that the nature of the corporation had yet to be understood. Published in this context, Ernst Freund's little-known The Legal Nature of Corporations (1897) was an original attempt to come to terms with a new legal and economic reality. But it can also be described, to paraphrase Oliver Wendell Holmes, as the earliest example of the rational study of corporate law. The paper shows that Freund had the intuitions of an institutional economist, and engaged in what today would be called comparative institutional analysis. Remarkably, his argument that the corporate form secures property against insider defection and against outsiders anticipated recent work on entity shielding and capital lock-in, and can be read as an early contribution to what today would be called the theory of the firm.Peer reviewe