David J. Hebert

The Failure of Direct Monetary Constraints

Monetary authorities around the world have promised a safer money and that they would use this new authority to prevent future economic calamities. This claim has been met with abject failure throughout the history of central banks. Two questions emerge from: why do central bankers almost universally fail to accomplish their stated goals and what can be done about it? This paper identifies two main reasons for their failure: what has come to be known as the knowledge problem from Hayek (1945) and the very incentives of the central bankers to engage in expansionary monetary policy. Various policy proposals have emerged as a means of directly mitigating these failures. However, none have successfully managed to quell the problem of cheap and easy credit. A different solution is therefore necessary; this paper suggests doing so indirectly by eliminating their exclusive power over money. This solution no doubt has its own challenges (including legal challenges which must be overcome), but is nonetheless a viable solution. This paper provides is a clarification of the problem of central banks and encourages the defense of a process that may eventually yield a solution -- specifically, the market process.

Political Parties as Interest Groups

What is the place of political parties within a democratic system of political economy? Parties are often described as intermediaries that lubricate the political process by facilitating the matching of voter preferences with candidate positions. This line of analysis flows from a bi-planar model of the political process where politicians appeal directly to voters. In this paper, we examine how construction of a meso level of analysis that lies between micro and macro levels might influence the relationship between candidates and voters. This meso level interjects such organizations as political parties between candidates and voters, with those organizations comprising interest groups within a democratic process, as against serving simply as neutral intermediaries. In this case, political parties can exert substantive effects on democratic outcomes as they take on characteristics of interest groups, bringing to mind Robert Michels (1915) analysis of the unavoidably oligopolistic nature of democratic political organization.

Micro-Level Catallactic Public Finance

This paper seeks to provide a sketch of a micro-level explanation of public finance. De Viti De Marco (1936) and Buchanan (1949) provide initial starting points for understanding this view of public finance, which was subsequently extended by Wagner (1992, 2007a) and Yoon (2000), among others. While these scholars focus on the fiscal commons created by communal property rights within public sectors, this paper focuses on the power to tax and provide public goods. Building off of Hebert and Wagner (2013), this paper provides a catallactic explanation of taxation and provision of public goods within the individualistic state, where the state is represented as the sum of its individual members acting in a collective capacity.

Rules Rule: How Different Rules Lead to Different Tax Policies

Economists have addressed the effect of taxes on a polity, with several economists then using their findings to justify the implementation of various tax schemes. These theories are loosely based on the ideas of fiscal philosophers from the end of the 19th century, with recent work demonstrating the efficiency gains of optimal taxation theory. These fiscal philosophers, however, almost universally neglect to discuss the implementation of their proposed policies, implicitly believing that politicians will do what is good once they are aware of what is good. Differences in policies among democracies (or differences in the timing of the passage of similar policies), therefore, becomes an explanation of differences in the median voter, which is no different from making a preference-based argument. While plausible, this type of explanation is analytically unsatisfactory. I argue that differing legislative outcomes (of kind or timing) are the result of a difference between the rules the governing body is bound by when proposing and passing legislation. In doing so, this paper pushes back on the preference-based explanation that is prevalent in recent work on comparative public policy and argues instead that the rules of the game matter.

Underinvestment and Expropriation

This paper argues that there are several factors that investors must take into account when choosing to invest or not. One of the most important factors, which goes largely undiscussed in existing literature, is the behavior of governments undergoing political reform. Specifically, the temptation to renege on prior agreements becomes stronger over time. This causes investors to make fewer investments, thus giving markets an appearance of underinvestment. The degree of underinvestment, however, can be used as an indicator for how likely investors believe government expropriation is in particular industries.