Research Library

2000
Who will provide for America’s children, elderly, and working families? Not since the 1930s has our nation faced such fundamental choices over how to care for all its citizens. Now, amid economic prosperity, Americans are asking what government, business, and nonprofit organizations can and can’t do—and what they should and shouldn’t be asked to do. As both political parties look to faith-based organizations to meet material and spiritual needs, the center of this historic debate is the changing role of religion. These essays combine a fresh perspective and detailed analysis on these pressing issues. They emerge from a three-year Harvard Seminar sponsored by the Center for the Study of Values in Public Life that brought together scholars in public policy, government, religion, sociology, law, education, and nonprofit leadership. By putting the present moment in broad historical perspective, these essays offer rich insights into the resources of faith-based organizations, while cautioning against viewing their expanded role as an alternative to the government’s responsibility. In Who Will Provide? community leaders, organizational managers, public officials, and scholars will find careful analysis drawing on a number of fields to aid their work of devising better partnerships of social provision locally and nationally. It was named a Choice Outstanding Academic Book of 2001.

In Dinah Shelton (ed.) Commitment and Compliance: The Role of Non–binding Norms in the International Legal System. Oxford University Press, 2000, 244–263

The explosion of international financial activity over the last decade has been a central fact of international economic life. Balance of payments statistics indicate that cross–border transactions in bonds and equities for the G–9 states rose from less than 10 percent of gross domestic product in 1980 to over 140 percent in 1995. International bond markets have reached staggering proportions: by the end of 1995, some US$2.803 trillion of international debt securities were outstanding worldwide. Capital flows to developing countries and countries in transition grew from US$57 billion in 1990 to over US$211 billion in 1995. Foreign lending in form of international syndicated credit facilities has surged since the 1980s, to over US$320 billion at the end of 1995. Foreign exchange transactions – which represent the world?s largest market – reached an estimated average daily turnover of nearly US$1.2 trillion in 1995 compared to US$590 billion daily turnover in 1989.

Robinson, James A. 2000. “Democratization or Repression?”. Abstract

European Economic Review, 44, 683-693

Regimes controlled by a rich elite often collapse and make way for democracy amidst widespread social unrest. Such regime changes are often followed by redistribution to the poor at the expense of the former elite. We argue that the reason why the elite may have to resort to full–scale democratization, despite its apparent costs to themselves, may be that lesser concessions would be viewed as a sign of weakness and spur further unrest and more radical demands. The elite may therefore be forced to choose between repression and the most generous concession, a transition to full democracy.

Robinson, James A. 2000. “Is Child Labor Inefficient?”. Abstract

Journal of Political Economy, 108, 663-679

We build a model of child labor and study its implications for welfare. We assume that there is at trade–off between child labor and the accumulation of human capital. Even if parents are altruistic and child labor is socially inefficient, it may arise in equilibrium because parents fail to fully internalize its negative effects. This occurs when bequests are zero or when capital markets are imperfect. We also study the effects of a simple ban on child labor and derive conditions under which it may be Pareto improving in general equilibrium. We show that the implications of child labor for fertility are ambiguous.

American Economic Review, 91, 1369–1401

We exploit differences in European mortality rates to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and were more likely to set up extractive institutions. These institutions persisted to the present. Exploiting differences in European mortality rates as an instrument for current institutions, we estimate large effects of institutions on income per capital. Once the effect of institutions is controlled, for countries in Africa or those closer to the equator do not have lower incomes.

American Economic Review, 90, 126-130

Per capita income in many sub–Saharan African countries, such as Chad and Niger, is less than 1/30th of that of the United States. Most economists and social scientists suspect that this is in part due to institutional failures that stop these societies from adopting the best technologies. A particularly interesting historical example comes from the diffusion of railways in the 19th century. While railways are regarded as a key technology driving the Industrial Revolution, there were large lags in their diffusion. For example, in 1850 the United States had 14,518 km of track, Britain 9,797 km, and Germany 5,856 km; in the Russian and Hapsburg empires there were just 501 km and 1,357 km, respectively (all date from Brian R. Mitchell [1993]). Why do societies, as in this example, fail to adopt the best available technologies?

Robinson, James A. 2000. “Rotten Parents”. Abstract

We study the implications of the trade–off between child quality and child quantity for the efficiency of the rate of population growth. We show that if quantity and quality are inversely related then, even in the case of full altruism within the family, population growth is inefficiently high, if the family does not have, or does not choose to use, compensating instruments (for example, bequests or savings are at a corner). In non–altruistic models this trade–off certainly generates a population problem. We therefore prove that the repugnant conclusion is not only repugnant, it may be inefficient. Moreover, we cannot expect intra–family contracting to resolve the inefficiency since it involves contracts which are not credible.

The most convincing theory of comparative economic development asserts that it is institutions – the way societies are organized – that are the fundamental cause of countries? development of underdevelopment. To attain prosperity, a country needs to accumulate physical and human capital and create and adopt technology. Whether or not it does so is determined by the incentives that stem from the institutional environment.

During the nineteenth century most Western societies extended voting rights, a decision that led to unprecedented redistributive programs. We argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution. Political transition, rather than redistribution under existing political institutions, occurs because current transfers do not ensure future transfers, while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution. Our theory also offers a novel explanation for the Kuznets curve in many Western economies during this period, with the fall in inequality following redistribution due to democratization.

Watson, James L. 2000. “China's Big Mac Attack”. Abstract

Nixon was not the only one who went to China; Ronald McDonald is there now, too. McDonald's triumphed — in a cultural zone where many adults think fried beef patties taste bizarre — by catering to China's pampered only children, the so–called little emperors and empresses. The "Golden Arches" have become part of the landscape of Beijing and Hong Kong. But is McDonald's trampling local culture in the name of a bland, homogeneous world order? Not really. Global capitalism pushes one way, and local consumers push right back. Herewith, a parable of globalization.

Published in Foreign Affairs 79, no. 3 (May/June 2000).

Bestor, Theodore C. 2000. “How Sushi Went Global”. Abstract

A 500–pound tuna is caught off the coast of New England or Spain, flown thousands of miles to Tokyo, sold for tens of thousands of dollars to Japanese buyers…and shipped to chefs in New York and Hong Kong? That's the manic logic of global sushi.

In a now–familiar scene, General H. Norman Schwarzkopf, imposing in his desert "battle dress uniform," stood before the press and pointed to the TV on his left. On the screen, a set of bombing crosshairs overlaid a roadbed. Transfixed by the cockpit imagery, the reporters chuckled nervously when someone the general called "the luckiest man in Iraq" drove through the crosshairs. With perfect comic timing, he quipped, "And now, in his rear–view mirror?" as a U.S. precision–guided munition (PGM) detonated, obliterating the road where the driver had just been. According to the Gulf War Air Power Survey, "Few scenes were as vivid on television as the picture of a guided bomb going through a ventilation shaft in an Iraqi office building." A central post–war question was whether such images in fact presaged a new style of combat based on advanced technology: Were we watching the birth of a U.S.–led revolution in military affairs (RMA), or simply slicker packaging of business as usual?

In the Internet age, access has become a key issue for regulation and antitrust. Many Internet libertarians count on low costs of entry and a robust competitive environment, but many segments of the new Internet-based economy, driven by the perceived requirement to show worldwide presence to reach scale economies, might develop towards structures controlled by highly dominant enterprises.

Against this background, this paper reviews, from a European Union perspective, three issues which in the view of the author are fundamental to driving theory and practice with regard to access to telecommunications and the Internet in the European Union: it reviews the current EU framework of access and interconnection to the basic layer of Internet access, the telecommunications network; it then takes a closer look at the recent changes of the system, even if the current reform process has not yet concluded; and it discusses access and control of the Internet and the concept of "top-level Internet connectivity" which has lately become central in this context.

Behind the global effects of "top-level-connectivity" looms a fundamental challenge for global antitrust governance. Given the lack of efficient multilateral structures to deal with this challenge, the major regions are struggling to deal with this new phenomenon in existing frameworks– unilaterally within their local markets, as well as through bilateral cooperation in global markets.

In conclusion, the paper assesses the critical role now played by bilateral international antitrust cooperation–global governance by default.

On March 23, 1983, President Ronald Reagan shocked the national security establishment by calling upon the nation's scientific community, "who gave us nuclear weapons, to turn their great talents to the cause of mankind and world peace: to give us the means of rendering these weapons impotent and obsolete." Seventeen years have passed since that speech, and the United States has spent more than \$60 billion trying to develop a defense against ballistic missiles. The Strategic Defense Initiative (SDI, or "Star Wars") and its successors have cost more than twice as much as the Manhattan Project (in constant dollars), but these programs have yet to produce a single workable weapon. This "achievement" is probably a record in the annals of defense procurement: never has so much been spent for so long with so little to show for it. Explaining how this happened—and why—is the main aim of Frances Fitzgerald's Way Out There in the Blue: Reagan, Star Wars, and the End of the Cold War. The "Star Wars" saga, according to Fitzgerald, is the story of how the United States came to chase a chimera. For Fitzgerald, "Star Wars" illustrates "the extent to which our national discourse about foreign and defense policy is not about reality—or the best intelligence estimates about it—but instead a matter of domestic politics, history, and mythology."

The contemporary study of immigration has come a long a way — or at least so it seems to someone whose interests in the subject were first sparked in that prehistoric era we call the late 1970s. Others already knew better, but at the time it wasn't clear to me that there was a field to master, nor a subject that would live for long. Immigration had long since disappeared from the scholarly radar screen, and though it was quietly undergoing a renaissance, its rebirth was hard for this, admittedly obtuse, graduate student to discern. The older literature appeared truly antique. Yes, there was a relevant body of scholarship dating from the 1960s, but this seemed dated, and in any case, reeked of a melioristic liberalism so hopelessly passe that one couldn't take it seriously. It was also easy to succumb to the political correctness of the time: the authors of Beyond the Melting Pot were then at the height of their neo–conservative phase, making theirs the type of book one read only after having wrapped it in a brown, paper cover.

As with any president, it is easy to think up ways that Clinton's record might be improved. But on the whole, he does not deserve the chorus of criticism he has received. Clinton's critics fail to appreciate how changes in the international position of the United States have complicated the making of its foreign policy. The next president will fact similar pressures.

Sutherland, Peter. 2000. “Is Free Trade Fair? Has It Gone Too Gar?”. Abstract

This paper is about trade liberalization, not globalization. It considers whether the significant steps that have been taken in this direction since the formation of the General Agreement on Tariffs and Trade (GATT) in 1948, have resulted not only in the freer movement of goods and services across borders, but also in a fairer, more open international trading system.

In recent years, many countries have instituted monetary reforms aimed at improving anti–inflation credibility. Is it a problem, however, that international welfare spillover effects seldom receive much consideration in the design of monetary reforms? Surprisingly, the answer may be no. Under plausible conditions, as domestic rules improve and international financial markets become more complete, the Nash and cooperative monetary rule setting games converge. We base our analysis on a utility–theoretic sticky–wage (new open economy macroeconomics) model; the question we pose simply could not have been adequately formulated using earlier models of monetary cooperation.

Ray Vernon was a great intellect, an iconoclast for whom scholarly fashions never held much attraction. That is of course what made him a visionary: his pioneering studies of the multinational enterprise, comparative political economy, and what we today call globalization anticipated the flourishing academic work in these areas by a decade or two. And his intellect and scholarly curiosity were matched by a distinguished career in the real world, spanning both the private and public sectors.
Comments on "Estimating the Effects of Currency Unions on Trade and Output," by J. Frankel and A. Rose