Economic Freedom and Prosperity: The Origins and Maintenance of Liberalization

282 Pages·2018·2.415 MB·English

by  Benjamin Powell (editor)

“This book tackles an issue that does not get the deserved attention. While
many books study the benefits of economic freedom, this project studies
the origins and persistence of economic freedom. Any attempt to increase
our economic freedom needs to understand the roots and necessary condi-
tion for economic freedom to flourish and persist in time. This book offers
a timely endeavour carried out by one of the most reputable authors in
the field.”
— Nicolás Cachanosky, Metropolitan State
University of Denver, USA

Economic Freedom and Prosperity
Economic theory and a growing body of empirical research support the idea
that economic freedom is an important ingredient to long-run economic pros-
perity. However, the determinants of economic freedom are much less under-
stood than the benefits that freedom provides. Economic Freedom and Prosperity
addresses this major gap in our knowledge. If private property and economic
freedom are essential for achieving and maintaining a high standard of living, it
is crucial to understand how improvements in these areas have been achieved
and whether there are lessons that can be replicated in less free areas of the
world today.
In this edited collection, contributors investigate this research question
through multiple methodologies. Beginning with three chapters that theoreti-
cally explore ways in which economic freedom might be better achieved, it
then moves on to a series of empirical chapters that examine questions includ-
ing the speed and permanence of reform, the deep long-run determinants of
economic freedom, the relationship between voice and exit in impacting free-
dom, the role of crises in generating change, and immigration. Finally, the book
considers the evolution of freedom in China, development economics, and
international trade, and it concludes with a consideration of what is necessary
to promote a humane liberalism consistent with economic freedom.
Economic Freedom and Prosperity will be of great interest to all social scien-
tists concerned with issues of institutional change. It will particularly appeal
to those concerned with economic development and the determinants of an
environment of economic freedom.
Benjamin Powell is director of the Free Market Institute and Professor of
Economics at the Rawls College of Business Administration at Texas Tech
University, USA. He has authored or edited five other books and more than 50
scholarly journal articles, his research findings have been reported widely in the
popular press and he has been a regular commentator on national television.
Routledge Foundations of the Market Economy
Edited by Mario J. Rizzo, New York University, and Lawrence H. White,
George Mason University
A central theme in this series is the importance of understanding and assessing
the market economy from a perspective broader than the static economics of
perfect competition and Pareto optimality. Such a perspective sees markets as
causal processes generated by the preferences, expectations and beliefs of Eco-
nomic agents. The creative acts of entrepreneurship that uncover new informa-
tion about preferences, prices and technology are central to these processes with
respect to their ability to promote the discovery and use of knowledge in society.
The market economy consists of a set of institutions that facilitate voluntary
cooperation and exchange among individuals. These institutions include the
legal and ethical framework as well as more narrowly “economic” patterns of
social interaction. Thus the law, legal institutions and cultural and ethical norms,
as well as ordinary business practices and monetary phenomena, fall within the
analytical domain of the economist.
33. Austrian Economics Re-examined
The economics of time and ignorance
Mario Rizzo and Gerald P O’Driscoll Jr
34. Economic and Political Change after Crisis
Prospects for government, liberty, and the rule of law
Edited by Stephen H. Balch and Benjamin Powell
35. Competition and Free Trade
Pascal Salin
36. Economic Freedom and Prosperity
The Origins and Maintenance of Liberalization
Edited by Benjamin Powell
For more information about this series, please visit www.routledge.com/series/
SE0104
Economic Freedom and
Prosperity
The Origins and Maintenance of
Liberalization
Edited by Benjamin Powell
First published 2019
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
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Routledge is an imprint of the Taylor & Francis Group, an informa business
 2019 selection and editorial matter, Benjamin Powell; individual
chapters, the contributors
The right of Benjamin Powell to be identified as the authors of the
editorial material, and of the authors for their individual chapters, has
been asserted in accordance with sections 77 and 78 of the Copyright,
Designs and Patents Act 1988.
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or registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Powell, Benjamin, 1978- editor.
Title: Economic freedom and prosperity : the origins and maintenance
of liberalization / edited by Benjamin Powell.
Description: Abingdon, Oxon ; New York, NY : Routledge, 2019. |
Series: Routledge foundations of the market economy ; 36 |
Includes bibliographical references and index.
Identifiers: LCCN 2018029514 (print) | LCCN 2018030620 (ebook)
| ISBN 9780429443817 (Ebook) | ISBN 9781138335394
(hardback : alk. paper)
Subjects: LCSH: Free enterprise. | Liberalism—Economic aspects. |
Free trade. | Economic development. | Economic policy.
Classification: LCC HB95 (ebook) | LCC HB95 .E256 2019 (print) |
DDC 330.12/2—dc23
LC record available at https://lccn.loc.gov/2018029514
ISBN: 978-1-138-33539-4 (hbk)
ISBN: 978-0-429-44381-7 (ebk)
Typeset in Bembo
by Swales & Willis Ltd, Exeter, Devon, UK
Contents
List of figures ix
List of tables x
List of contributors xii
Acknowledgements xv
Introduction 1
BENJAMIN POWELL
PART I
Theory 9
1 Taming Leviathan 11
PETER J. BOETTKE AND LIYA PALAGASHVILI
2 Constitutional drift and political dysfunction:
underappreciated maladies of the political commons 32
ALEXANDER WILLIAM SALTER
3 The limits of liberalism: good boundaries
must be discovered 48
ADAM MARTIN
PART II
Empirical explorations and case studies 61
4 The rise and decline of nations: the dynamic
properties of institutional reform 63
RUSSELL S. SOBEL
viii Contents
5 The persistence of historical influences on
current economic freedom 89
STEPHAN F. GOHMANN
6 Institutional convergence: exit or voice? 117
JOSHUA C. HALL
7 Crises and government: some empirical evidence 131
JAMIE BOLOGNA PAVLIK AND ANDREW T. YOUNG
8 Does immigration impact institutions? 154
J. R. CLARK, ROBERT LAWSON, ALEX NOWRASTEH,
BENJAMIN POWELL AND RYAN MURPHY
9 The genesis and evolution of China’s
economic liberalization 170
JAMES A. DORN
PART III
Keynote addresses 197
10 Freedom versus coercion in economic development 199
WILLIAM EASTERLY
11 The case for free trade since David Ricardo 207
DOUGLAS A. IRWIN
12 Manifesto for a new American liberalism: or, how
to be a humane libertarian 221
DEIRDRE NANSEN MCCLOSKEY
Index 247
Figures
1.1 Government spending as a percentage of GDP 14
1.2 Total number of Federal Register pages published,
1936–2013 16
3.1 Ex ante consent/Ex post exit 54
3.2 Consent tilt/Exit tilt 54
4.1 Relative frequency distribution of one-year changes in
economic freedom, 2000–13 66
4.2 Relative frequency distributions changes in economic freedom
by period, 2000–13 67
4.3 Does transition process length matter for permanence? 73
4.4 Fast versus gradual transitions: some examples 74
4.5 First-mover areas in the recent EFW decline for the
United States 80
4.6 The post-socialist transition economies 82
10.1 Median trade share of worldwide GDP 204