Eusepi wagner public debt; an illusion of democratic political economy (2017)

75, 77, 84–7, 89–90, 95, 98, 106–7, 110–11, 114, 126, 133–4, 139, 146–50, 156–8, 160, 162–3 and a canonical model of public debt 85–9 and credit markets 146–50 definition of 85 Copernicus 31 corporate value 154–5 173 174 Public debt cost and choice 73–6, 105, 128–9 cost transfer through public debt 126–30 cost–benefit analysis 82–3 Council of Economic Advisors counterfactual reasoning 54–6 Coyle, D 57 creative agents 64–6 credit contracts 41, 143, 149, 151, 163 credit markets 14–16, 36, 40–42, 72, 81–2, 89–90, 116–21, 127, 142–3, 146–52 and trust under private ordering 132–3 credit ratings 117, 121, 124 see also rating agencies credit transactions 42, 87–9, 120–21, 131–2, 135, 140, 142–3, 149, 151–2 creditor–debtor relationships 41, 43, 107, 118, 127, 131–3, 147, 153 de Jouvenel, B 91–4, 96, 112 de Viti de Marco, A 12, 14, 16–17, 43–4, 47–8, 52, 70, 73, 75, 77, 83–7, 95, 98, 106, 108, 110, 112, 114, 119, 126, 129–30, 133, 139, 146, 148–9, 156–7, 160, 162–3 see also cooperative states; monopolistic states debt illusion 11–14, 56 debt/GDP 123–4 debtor–creditor relationships 41, 43, 107, 118, 127, 131–3, 147, 153 deferment 41, 44, 131–2, 159 deficit/GDP 123–6 demand for money 78 demand-and-supply apparatus 117–18, 120–21, 124 democratic regimes 34, 38–41, 43, 58, 67–8, 79, 84, 106, 109, 124–5, 130, 158–61 de Viti’s two generic forms of see cooperative states; monopolistic states governance of see governance depression 3, 31, 77 see also recession despotism 67, 77, 83 dictatorial regimes 39, 58–9 direct borrowing see credit markets Drazen, A 21, 34 dyadic exchange 156–8 ecological systems 64–6, 77, 81–2 without mechanism 70–73 economic coordination 3–4 electoral success 18–20, 45, 79–80, 159 see also voters Employment Act (1946) entrepreneurial action 14, 31, 36, 80, 143 Epstein, J M 24, 33 Epstein, R A 26–7 equilibrium 14, 21, 24, 26, 118, 121, 130, 134 equivalence principle see Ricardian equivalence Eusepi, G 70, 110, 141 extraordinary tax 52, 54, 56, 75, 88, 109, 119 federalism 97, 99, 101–5, 110–11, 136, 145 see also subsidiarity fiscal churning 56 fiscal illusion/perception 143 fiscal imbalances 123 fiscal policy 4–5, 7, 9–12, 16, 18, 34, 54–6, 78–9, 83, 146 flat-rate tax 48, 50–52, 114, 119 forced charity 121 framing effects 54 fraud 132, 142 free enterprise 33 full employment 3–4, 20, 28–9, 35 Gaussian distributions 70 gender requirements 72, 81, 121, 150 General Theory of Employment, Interest and Money 2–4, 6, 58, 83 generations, concept of 74–6, 128–30, 148 Gigerenzer, G 113 Giuriato, L 141 Goolsbee, A D 65 governance 47, 51, 68, 77, 79, 88, 111, 139, 151, 160–61 see also cooperative states; monopolistic states in cities 95–7 federalism see federalism polycentric systems of 39 problems of structure and size 97–101 self-governance 91–4, 96–7, 106–7, 111, 161–3 in small towns 94–5 governments as costly borrowers 124–6 as low-cost borrowers 89–91, 147–8 powers of see power, political and promotion of trust 135–6 regime change 32 Great Depression 31 Grossekettler, H 164 Grossman, H 17–18, 20 group choice see collective action guardian activities 71, 143–5 Hacker, J S 164 Hall, R E 49 Hayek, F A 60 Hebert, D 50 Higgs, R 31 Hitler, A 58 Hobbes, T 83 Hurricane Katrina 153–4 income 36, 45, 52, 59, 75, 114, 119 income tax 45, 48, 52, 158 income-expenditure framework 5–10, 20, 29–30, 32, 34–5, 57–9, 63, 77–8 indirect borrowing see bond markets individual choice 37 individualism 75, 115, 147 inflation 5, 19–21, 30, 83, 128 inheritance 137 input-output analysis 61 insurance programs 131, 136–7, 140, 144–5 interest groups 33, 51–2, 97, 117, 124–5, 162 interest rates 11, 41, 54, 83, 90, 108–9, 118–21, 124–5, 146–52 governments as low-cost borrowers 89–91 intuition 30–34, 62 Index ­175 Jacobs, J 25–6, 66, 71, 143–5 see also monstrous moral hybrids Jevons, W S 123 Keynes, J M 2–4, 6–7, 24, 58, 78, 83 Keynesian Revolution 4–5 Keynesianism 3–7, 11, 29–30, 57, 59, 78, 101, 128 Kirman, A P 35 Koppl, R 40 Krueger, A B 65 Lachmann, L 60 Lakatos, I 21 Latour, B 33 Latsis, S 21 Leeson, P 153–4 Leijonhufvud, A 6–7 Leontief, W 61 Lerner, A 5, 128 Lewis, P 29 liberalism 159 Lindbeck, A 56 liquidity 24, 31 litigation 25 loan portfolios 81–2, 135, 150 lobbying 45 logical action 51, 56, 79–80, 112–16, 122, 144 see also market action logico-experimental model 74, 112–15, 122 Maastricht Treaty 124 Machiavellian thinking 34, 162 macroeconomic theory 2, 7–9, 11–12, 14–17, 20, 32–5, 37, 42–3, 57–8, 73, 75, 79, 82–3, 105–8, 117–18, 127–8, 130, 146, 148, 158 distinguishing myth and reality in 7–9 and economic coordination 3–4 macro-micro supervenience 23–4 majority principle 97–8 majority rule 76, 97, 134, 156–7 market action 51, 80, 112–16, 122, 133 see also logical action market for loanable funds see credit markets 176 Public debt market systems 1–2, 4, 36, 46, 48, 67–70, 78, 133, 138, 156 McGuire, M C 82 mechanical images 61–3, 81 ecological policy without 70–73 median voter model 68–9 Medicare 136 micro foundations for macro 7–8 microeconomic theory 2, 16, 34, 46–7, 127 minimum wage requirements 29 Moberg, L 124 mobility 102 monarchical regimes 16, 36–7, 43, 67–8, 76, 84, 108, 161 and the notion of sovereign debt 39–41 monetarism 29 monetized debt 83 monopolistic states 43, 47, 85–6, 95, 98, 106–7, 110–12, 117–18, 146–50, 156, 160, 162–3 and credit markets 146–50 reason and sentiment 112–16 monstrous moral hybrids 26, 66, 71 systems of survival with 143–5 Morrison, K 24 Mosca, G 51, 79, 112, 116, 123, 151, 160, 162 Mosca, M 163 Musgrave, P B 56 Musgrave, R A 56 mythology 7–9, 16–20, 30, 32–4, 40, 89, 97, 111 national economy 5, 8, 16, 57–8, 63, 83, 107–8, 127 national income 31, 57–8 nationalization 31 neo-classical synthesis 34 net worth 41–2 New Deal 31 Nietzsche, F 13 non-logical action 51, 56, 79–80, 101, 112–16, 122, 144 see also political action oligarchy 91, 93–7, 134 Olson, M 82 open competition 72, 116–18 open-access agenda 93 opportunistic cycles 19–24 opportunity costs 82–3 Ordoliberalism 61 Ostrom, V 58 Pantaleoni, M 45, 47, 124, 148 Pareto, V 51, 60, 79, 107, 112–13, 122, 130, 152, 160, 162 see also logical action; logicoexperimental model; non-logical action partisan cycles 21 PBC models 19–22, 28 alternative framework for 22–6 pensions programs 136–7 see also retirement perfect competition 13–14 personal debt 38, 40–43, 83–4, 89, 108, 147, 154 personal liability 138, 157 Persson, T 25 persuasion 51–2 political action 21, 25, 27, 51, 53, 71, 73, 82, 84–5, 110, 112–16, 122–3, 133, 146, 162 see also non-logical action political business cycles 9, 18–25, 34 Polya, G 94 polycentric systems of governance 39 see also democratic regimes population growth 103 positivism 36–7 Potts, J 24 poverty 70 power, absolute 67, 76 power, political 22, 32–4, 40–41, 43, 65, 67, 72–3, 79, 99–102, 105, 111–12, 123–4, 126, 130, 136, 143, 145, 148–9, 151–2, 159–62 price discrimination 38 price-taking 13–14, 118 printing money private law principles 41, 53, 84, 88, 118, 136–8, 142, 145, 152 see also contract, freedom of; personal liability; private property private ordering 2, 28, 41, 71–2, 76–7, 80–82, 88–9, 91, 118–21, 132–6, Index ­177 138–40, 142, 144–6, 149–50, 152–4, 156–7, 161, 163 credit and trust under 132–3 private property 1–2, 4, 14–15, 17, 32, 38, 42, 44, 46–7, 53, 60, 72, 80–81, 84, 88, 90–91, 118–19, 136–42, 157 see also property rights private spending 5–10, 30–31, 34, 63, 77–9 product accounts 57 profit and loss 2, 26, 45, 124, 139 progressive tax system 52–3, 119 promises 152–5 property rights 9, 38, 44, 46–7, 142 see also private property and taxation 46–9 property tax 45 public choice see collective action public choice theory 130 public debt canonical model of 85–9 cost transfer through 126–30 de Viti’s theory of 12, 14, 17 see also de Viti de Marco, A definition of 130 macroeconomic explanation of 42–3 and personal debt 42–3 as postponed taxation 44 and the problem of trust in society 130–32 as shell game 105–8 as sovereign debt 40–41 as systemic form of collective lying 138–41 three forms of 136–8 who is indebted to whom? 108–10 public interest 18, 151 public law 84–5, 137, 152, 159 public opinion 112–16 public ordering 2, 28, 72, 77, 80–82, 84, 88–9, 91, 118, 137, 139–40, 142–3, 145, 148, 156–8, 161, 163 bond markets in the presence of 120–24 and the degradation of trust 133–6, 152–5 romance vs realism in the explanation of 150–52 public spending 5–10, 30–32, 34–6, 63, 77 aggregation fallacies 16–17 see also aggregative theory credit markets see credit markets Puviani, A 43, 54, 56, 143 quantitative easing 83 quantity theory of money 77 Rabushka, R 49 race requirements 72, 81, 121, 150 rates of return 74 rating agencies 117–18, 121 see also credit ratings Read, L 1, 3, 62 realism 7–9, 17–20, 32, 111 in the explanation of public ordering 150–52 recession see also depression 2008 crisis 6, 25, 71, 117, 135 referendums 74, 87 regime change 32 religious action 113, 115 see also non-logical action representative individual 14–15, 21, 148 residual claimancy 26–7, 40, 89–91, 108–9, 124–5, 132 retirement 137, 140, 144–5 see also pensions programs Ricardian equivalence 11, 14–17, 43, 45, 49, 53, 56, 73, 75, 105–8, 129–30, 146, 148 and personal loans 41–3 Ricardo, D 10–11, 16, 44, 130, 148 riskiness 90–91, 119, 149–50, 152 Robertson, D H 24 robotic agents 61–3 romantic view of politics 150–52 Roosevelt, F D 31 Roubini, N 21 roving bandit paradigm 82–3 rule of law 152–3, 161 ruling elite 58, 148, 160–61 sales tax 45 Salsman, R M Schmitt, C 111, 160, 162 Schumpeter, J A 14, 59 Seater, J J 11 178 Public debt self-governance 91–4, 96–7, 106–7, 111, 161–3 Selgin, G 29 sentiment 112–16, 123, 152, 162 Shackle, G L S 6–7 shell game, public debt as 105–8 Simmons, R T 161–2 Smith, A 25, 64, 70, 76–7, 82 Sobel, R 154 social cost 116 social insurance programs 136–7, 140, 144–5, 164 social security 136, 138, 145 social welfare 60, 121–2 Socialism 144 societal flourishing 15, 73, 76–7, 81–2, 135, 139, 143, 157 sovereign debt 39–41 sovereignty 39–40 spot transactions 131–2, 142 Stalin, J 58 standards of living 32 stationary bandit paradigm 76–7, 83 statistics 97 stock markets 154–5 Storr, N M 154 Stringham, E P 47, 142 structure of production 59–61 subsidiarity 97, 101–2, 135, 143 see also federalism supply-and-demand apparatus 117–18, 120–21, 124 systems theory 64 Tabellini, G 25 taxation 5–6, 9–12, 14–17, 31, 33, 39, 42–4, 50, 56, 74, 86, 88–9, 106–7, 109, 114, 116, 119–20, 125–6, 128–30, 145, 148, 159, 163 extraordinary tax 52, 54, 56, 75, 88, 109, 119 flat-rate tax 48, 50–52, 114, 119 income tax 45, 48, 52, 158 political economy of 51–3 progressive tax system 52–3, 119 and property rights 46–9 property tax 45 sales tax 45 tax codes 49–52, 158 tax discrimination 49 tax rates 103, 116 Tobin, J 18 trade unions 97, 102, 140, 144 triadic exchange 156–8 trust 137, 143 political economy of 156–8 under private ordering 132–3 problem of in society 130–32 public ordering and the degradation of 133–6, 152–5 trust funds 136 unanimity 75, 91–2, 156–7 underground economy 152 unemployment 6, 19–20, 28, 30 universal suffrage 98 usury laws 149–52, 160 Vernazza, D 141 voters 79–80, 87, 91–2, 97–9, 130, 156, 161–2 see also electoral success Wagner, R E 3, 7, 22–5, 29, 45–6, 50, 60, 70–71, 110, 124, 139, 143 war 3, 39 wealth redistribution 121, 123 Weaver, C L 145 wheel of income 59–60 White, L H 29 white lies 140 Wicksell, K 43, 67–8 Wieser, F von 112 Yeager, L B 7, 77 ... triadic exchange 156–8 trust 137, 143 political economy of 156–8 under private ordering 132–3 problem of in society 130–32 public ordering and the degradation of 133–6, 152–5 trust funds 136 unanimity... action public choice theory 130 public debt canonical model of 85–9 cost transfer through 126–30 de Viti’s theory of 12, 14, 17 see also de Viti de Marco, A definition of 130 macroeconomic explanation... 156–8, 161, 163 bond markets in the presence of 120–24 and the degradation of trust 133–6, 152–5 romance vs realism in the explanation of 150–52 public spending 5–10, 30–32, 34–6, 63, 77 aggregation