Politics versus Policy : Technocratic Traps of Russia's Policy Reforms

Peer reviewe

Public Finance and Low Equilibria in Transition Economies; The Role of Institutions

This paper develops two stylised models of the transitional economy that challenge to some extent, the conventional approach to policy-reforms. In the first model, the absence of market-oriented institutions is responsible for the occurrence of a non-cooperative equilibrium, where the amount of public services provided by the state is too low, which, in turn, adversely affects the global performance of the productive sector. In the second model, the government, which aims to maximise tax receipts, will choose a taxation level that pushes too many firms out of the market; hence the global supply falls below its optimal level. In both models, strain and disruptions specific to transitional systems lead to abnormal responses of the real sector to standard policy measures. Efficient economic policies should explicitly take into account the institutional deficit.http://deepblue.lib.umich.edu/bitstream/2027.42/39703/3/wp319.pd

Business Groups and the Big Push: Meiji Japan's Mass Privatization and Subsequent Growth

Rosenstein-Rodan (1943) and others posit that rapid development requires a 'big push' -- the coordinated rapid growth of diverse complementary industries, and suggests a role for government in providing such coordination. We argue that Japan's zaibatsu, or pyramidal business groups, provided this coordination after the Meiji government failed at the task. We propose that pyramidal business groups are private sector mechanisms for coordinating and financing 'big push' growth, and that unique historical circumstances aided their success in prewar Japan. Specifically, Japan uniquely marginalized its feudal elite; withdrew its hand with a propitious mass privatization that rallied the private sector; marginalized an otherwise entrenched first generation of wealthy industrialists; and remained open to foreign trade and capital.

Reverse Monitoring: On the Hidden Role of Employee Stock Ownership Plans

This paper develops a new understanding of equity-based compensation schemes, such as employee stock option plans. Current literature views such schemes as a measure aimed at motivating the recipient employees to work harder for the firm. Under such a view, this remuneration method either complements or substitutes other measures used to monitor the performance of the recipient employees. In contrast, this paper proposes that the recipient employee be viewed as the potential monitor of other employees and that stock options (or similar types of compensation) motivate her to fulfill this task. This view has many applications and can shed light on persistent puzzles, including why there is sweeping use of stock ownership plans by many new economy firms. No junior employee at Microsoft or Intel can improve the value of her heavyweight employer to such a degree that it will make it worthwhile for her to work harder once stock options are offered. Nevertheless, given the sensitivity of the knowledge industry to leakage of its intellectual property, all employees can add much to the company\u27s value by standing on guard against such leakage. If technology is both a vulnerable and critical asset for the organization, option recipients will be alert in protecting against infringement. Since not much effort needs to be exerted to monitor their peers and supervisors to prevent this significant harm, incentive compensations can easily motivate employees to perform their monitoring task. Many other applications of this new view that cannot be explained by the current literature are discussed in the paper

The Rule of Law, Freedom, and Prosperity.

After decades of neglect, the rule of law is much on the minds of legal scholars today. In the United States, the Supreme Court's controversial decision in Bush v. Gore has triggered renewed interest in understanding the concept of the rule of law and its value to society. Transition and developing economies have increasingly come to recognize the importance of the rule of law in establishing a framework for economic growth and individual liberty. This essay provides an overview of these debates over the concept and consequences of the rule of law. Although American scholars have criticized the Supreme Court's decision in Bush v. Gore as violative of the rule of law, this criticism rests on an erroneous understanding of the rule of law. The tradition of the rule of law, as expressed by Dicey, Oakeshott, Hayek, and others, is consistent with the Supreme Court's decision in Bush v. Gore. Moreover, this tradition of the rule of law is a cornerstone of a free and prosperous society, in America and abroad.

Deregulation and Private Enforcement

Many conservatives oppose much of the administrative state. But many also oppose much of our private enforcement regime. This raises the questions of whether conservatives believe the marketplace should be policed at all, and if so, who exactly should do that policing? In this Essay, based on my new book, The Conservative Case for Class Actions, I take a deep dive into conservative principles to try to answer these questions. I conclude that almost all conservatives believe the marketplace needs at least some legal constraints, and I argue that ex post, private enforcement is superior to the alternatives. Not only is private enforcement the right answer as a matter of theory, but I believe that conservatives need private enforcement as a practical matter if they wish to make progress on their agenda to roll back the administrative state

Monitoring Corporate Performance: The Role of Objectivity, Proximity, and Adaptability in Corporate Governance

This Article identifies the fundamental tradeoff faced by individuals, firms and institutions that monitor corporate management\u27s performance. This tradeoff, between objectivity in monitoring and proximity in monitoring, is central to the corporate governance debate. Proximity exists when monitors maintain close contact with management and participate in important decisions on a real-time basis. Objectivity exists when monitors, such as hostile acquirers, analysts, credit rating agencies, accounting firms, and outside lenders, remain distant from management and evaluate management\u27s performance without influence by management

Reflections in a Distant Mirror: Japanese Corporate Governance through American Eyes

For the last ten years, Japanese corporate governance has served as a distant mirror in whose reflection American academics could better see the attributes of their own system. As scholars came to recognize that the institutional characteristics of the American and Japanese systems were politically and historically contingent, other countries\u27 approaches became serious objects of study, rather than just way stations on the road to convergence. One learned about one\u27s own system from the choices made by others. As it came to be conceived, the Japanese corporation of the 1980s represented quite a different method of organizing production. Styled the J-form by Masahiko Aoki, the Japanese corporation combined an interlocking set of governance arrangements that supported a different kind of industrial organization. The main bank relationship, coupled with cross shareholdings, supported a management commitment to lifetime employment for an important subset of employees who, in turn, had the proper incentives to invest in the firm specific human capital necessary for a production system geared to horizontal coordination and information sharing. Central to the J-form was a commitment to organizational stability, consistent with what was said to be a Japanese focus on process technologies