WeingastFederalism - Comments on Weingast"The Economic Role...

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Comments on: Weingast, "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development" Introduction 1 In reading and working our way through North and Weingast's article on "Constitutions and Commitment" on England after the Glorious Revolution of 1688, we were led to focus our thoughts on the structure of the national government . 2 In particular, we were lead to believe that something to do with what today we call the "separation of powers" -- in this case, involving the Crown, the Parliament, and the common law courts. 3 The argument which we then explored involved 4 "How much democracy" is needed for the launching and protection of a competitive, market-based economic system? 5 And we explored the possibility that not very much democracy is needed; 6 instead, what is needed is some kind of substantial limitation on the powers of the national government. 7 "Limited government" -- even if not very democratic -- is sufficient. 8 In Weingast's paper titled, "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development," we find a somewhat different -- though I think very compatible -- argument. 9 In particular, Weingast presents an argument about the importance of sub-national governments to the launching and protection of a competitive, market-based economic system. Weingast's arguments 10 Weingast begins with the following observation (p.??): 11 "The fundamental political dilemma of an economic system is this: A government strong enough to protect property rights and enforce contracts is also strong enough to confiscate the wealth of its citizens. Thriving markets require not only the appropriate system of property rights and a law of contracts, but a secure political foundation that limits the ability of the state to confiscate wealth. Far from obvious, however, are the circumstances that produce a political system that plays one role instead of the other." 12 In other words, as he goes on to say, what kinds of constitutional designs can "credibly commit the state to preserving markets, that is, to limits on the future political discretion with respect to the economy that are in the interests of political officials to observe. .." 13 Moreover, 14 "The central component of a credible commitment to limited government is that these limits must be self-enforcing. For limits on government to be sustained, political officials must have an incentive to abide by them." 15 Weingast then focuses his attention on federalism .
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16 Federalism involves the construction of a national government in such a way that geographic subunits -- call them "states" or "provinces", for example -- retain some measure of political authority which the national government cannot remove. 17
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This note was uploaded on 04/09/2008 for the course ISS 225 taught by Professor Williams during the Spring '07 term at Michigan State University.

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WeingastFederalism - Comments on Weingast"The Economic Role...

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