Falaschetti Democratic Governance and Economic Performance

How Accountability Can Go Too Far in Politics, Law, and Business
1. Auflage 2009
ISBN: 978-0-387-78707-7
Verlag: Springer
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, Band 14, 131 Seiten

Reihe: Studies in Public Choice

Conventional wisdom warns that unaccountable political and business agents can enrich a few at the expense of many. But logically extending this wisdom implies that associated principals - voters, consumers, shareholders - will favor themselves over the greater good when 'rules of the game' instead create too much accountability. Democratic Governance and Economic Performance rigorously develops this hypothesis, and finds statistical evidence and case study illustrations that democratic institutions at various governance levels (e.g., federal, state, corporation) have facilitated opportunistic gains for electoral, consumer, and shareholder principals. To be sure, this conclusion does not dismiss the potential for democratic governance to productively reduce agency costs. Rather, it suggests that policy makers, lawyers, and managers can improve governance by weighing the agency benefits of increased accountability against the distributional costs of favoring principal stakeholders over more general economic opportunities. Carefully considering the fundamentals that give rise to this tradeoff should interest students and scholars working at the intersection of social science and the law, and can help professionals improve their own performance in policy, legal, and business settings.

Autoren/Hrsg.

Falaschetti, Dino

Inhaltsverzeichnis

1;Preface;7
1.1;A Note on Method;9
1.2;Overview of the Book;10
1.3;References;12
2;Acknowledgments;14
3;Contents;15
4;About the Author;18
5;A General Theory and Statistical Evidence;19
5.1;Theory;20
5.1.1;1.1 Output, Not Price, Reflects Economic Performance;21
5.1.2;1.2 Robustness to Assumptions;25
5.1.3;1.3 Conclusion and a Look Ahead;28
5.1.4;References;29
5.2;Natural Experiments;31
5.2.1;2.1 General Requirements for a Natural Experiment;32
5.2.2;2.2 Experimental Conditions in the Telecommunications Sector;33
5.2.3;2.3 What ShouldWe See if Democratic Governance Goes Too Far in This Application?;34
5.2.4;2.4 Conclusion;36
5.2.5;References;37
5.3;Statistical Evidence;39
5.3.1;3.1 An Empirical Proxy for Economic Performance;40
5.3.2;3.2 Proxies for Democratic Governance;43
5.3.3;3.3 From Correlation to Evidence of Causation;47
5.3.4;3.4 Conclusion;57
5.3.5;3.5 Appendix A;58
5.3.6;3.6 Appendix B;59
5.3.7;3.7 Appendix C;61
5.3.8;References;62
6;Implications for Political Bureaucracy, Competition Law, and Business Organization;65
6.1;Politics;66
6.1.1;4.1 Electoral Accountability Can Weaken Policy Commitments: The Case of Monetary Policy;67
6.1.2;4.2 Electoral Accountability Can Fuel Redistributive Pressures;75
6.1.3;4.3 Conclusion: When Can Policy Benefit from Undemocratic Processes?;81
6.1.4;References;82
6.2;Law;84
6.2.1;5.1 Competition Policy Can Strengthen Economic Performance;85
6.2.2;5.2 But Legal Ideals MustWork Within Political Constraints;86
6.2.3;5.3 Case Study: Do Consumer InterestsWeigh Too Heavily on Insurance Regulation?;90
6.2.4;5.4 Tail Risks and Term Limits;102
6.2.5;5.5 How Big Is This Problem?;105
6.2.6;5.6 Governance Opportunities;106
6.2.7;References;109
6.3;Business;112
6.3.1;6.1 Widespread Support for Increasing Accountability to Shareholders;113
6.3.2;6.2 Strengthening Shareholder Democracy: Policy Developments;115
6.3.3;6.3 Can Accountability to Shareholders Go Too Far?;116
6.3.4;6.4 Diffuse OwnershipWeakens Shareholder Democracy, but Strengthens Commitments Against Opportunism;121
6.3.5;6.5 Evidence on HowWeakening Shareholder Democracy Can Improve Corporate Performance;122
6.3.6;6.6 Quandaries in Macro- and Micro-governance;127
6.3.7;Appendix 1: Formal Overview of Holmstrom's Result;128
6.3.8;Appendix 2: Golden Parachute Agreement for Ameren Corporation;129
6.3.9;References;130
6.4;Conclusion;132
6.4.1;References;135
7;Index;136