Tag Archives: Peter Boettke

Abolish Government Favoritism

I was on vacation last week, so I am a little behind on blogging. Before I left, the New York Times’s Adam Davidson ran an interesting article on F.A. Hayek, calling him Paul Ryan’s “guru.” In the piece, Davidson quotes my Mercatus and GMU colleague, Pete Boettke:

In actuality, Ryan is like a lot of politicians who merely cherry-pick Hayek to promote neoclassical policies, says Peter Boettke, an economist at George Mason University and editor of The Review of Austrian Economics. “What Hayek has become, to a lot of people, is an iconic figure representing something that he didn’t believe at all,” Boettke says. For example, despite his complete lack of faith in the ability of politicians to affect the economy, Hayek, who is frequently cited in attacks on entitlement programs, believed that the state should provide a base income to all poor citizens.

To be truly Hayekian, Boettke says, Ryan would need to embrace one of his central ideas, known as the “generality norm.” This is Hayek’s belief that any government program that helps one group must be available to all. If applied, Boettke says, a Hayekian government would eliminate all corporate and agricultural subsidies and government housing programs, and it would get rid of Medicare and Medicaid or expand them to cover all citizens. (Hayek had no problem with a national health care program.) Hayek also believed that the government should not have a monopoly on any service it provides; instead, private companies should compete by offering an alternative Postal Service, road system, even, perhaps, a private fire department.

I’m glad Pete picked up on this. In my view, Hayek’s generality norm is the polar opposite of the Pathology of Privilege. And as I have argued in the past, the abolition of favoritism in government policy has both economic and moral appeal. This appeal, moreover, seems likely to cut across the ideological divide.

Nobel Laureate Elinor Ostrom at Mercatus Today

For anyone who hasn’t seen it yet, 2009 Economics Nobel Laureate Elinor Ostrom, the co-director of the Workshop in Political Theory and Policy Analysis at Indiana University, will be speaking today at a Mercatus Center panel discussion entitled “Challenging Institutional Analysis and Development: The Bloomington School.”

Registration for the event is now closed, but it will be livestreamed on the web at 4 PM.

In October, Emily Washington wrote about what Dr. Ostrom’s Nobel means for those interested in state and local government and governance and resource management:

Ostrom is most notable for her work related to collective action and common pool resources. In contradiction to the Tragedy of the Commons hypothesis developed by Garrett Hardin, she notes that informal social institutions can arise to maintain pooled resources successfully over time. Ostrom has focused on examples of people creating systems for sustainable natural resource management with the ecosystems that they depend on such as forests and fisheries.

[…]

While the idea of a top down authority to manage neighborhood affairs may sound more methodical and efficient than allowing spontaneous order and properly aligned incentives to direct common resource management, Ostrom’s work suggests that Robert Nelson’s policy prescription of Residential Improvement Districts may go much further toward optimal neighborhood governance than top-down city planning authorities.

Paul Dragos Aligica wrote about the prize here, and Peter Boettke wrote about it here.

Anyone with questions about the event can call Megan Mahan at 703-993-4930 or email her at mmahan@gmu.edu.

Elinor Ostrom and Neighborhood Governance

nobel_lin_ostromToday the Nobel Prize in Economics was awarded to Elinor Ostrom, making her the first woman to earn the distinction. Ostrom, who holds a Ph.D. in political science from UCLA, shares the award with Oliver E. Williamson. Both were recognized for their contributions to research in non-market transactions.

From the prize announcement:

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.

Ostrom is most notable for her work related to collective action and common pool resources. In contradiction to the Tragedy of the Commons hypothesis developed by Garrett Hardin, she notes that informal social institutions can arise to maintain pooled resources successfully over time. Ostrom has focused on examples of people creating systems for sustainable natural resource management with the ecosystems that they depend on such as forests and fisheries.

Although Ostrom studied political science, she has made immense contributions to public choice theory. Her work has focused on communal natural resource management; however, Ostrom has also applied her insights into successful self-governance of many types of collective goods, including residences. In a 2003 interview with Paul Dragos Aligica she uses the example of the collective ownership rights of condominiums as a successful case of managing a collective good, especially compared to some failed public housing projects where residents do not have an ownership stake.

While the idea of a top down authority to manage neighborhood affairs may sound more methodical and efficient than allowing spontaneous order and properly aligned incentives to direct common resource management, Ostrom’s work suggests that Robert Nelson’s policy prescription of Residential Improvement Districts may go much further toward optimal neighborhood governance than top-down city planning authorities.

Here, Peter Boettke provides a brief analysis of the importance of Ostrom’s work in mainline economics.