Hayekian welfare states : Explaining the coexistence of economic freedom and big government
(2020) In Journal of Institutional Economics 16(1). p.1-12- Abstract
To explain the coexistence of economic freedom and big government, this paper distinguishes between big government in the fiscal sense of requiring high taxes, and big government in the Hayekian sense of requiring knowledge that is difficult to acquire from a central authority. The indicators of government size in measures of economic freedom capture the fiscal size but ignore the Hayekian knowledge problem. Thinking about government size in both the fiscal and Hayekian dimensions suggests the possibility of Hayekian welfare states where trust and state capacity facilitate experimentation and learning, resulting in a public sector that is big in a fiscal sense but not necessarily more vulnerable to the Hayekian knowledge problem.... (More)
To explain the coexistence of economic freedom and big government, this paper distinguishes between big government in the fiscal sense of requiring high taxes, and big government in the Hayekian sense of requiring knowledge that is difficult to acquire from a central authority. The indicators of government size in measures of economic freedom capture the fiscal size but ignore the Hayekian knowledge problem. Thinking about government size in both the fiscal and Hayekian dimensions suggests the possibility of Hayekian welfare states where trust and state capacity facilitate experimentation and learning, resulting in a public sector that is big in a fiscal sense but not necessarily more vulnerable to the Hayekian knowledge problem. Pensions in Sweden are used as a case to illustrate the empirical relevance of the argument. The new pension system represents big government in a fiscal sense, but by relying on decentralized choice it requires relatively little central knowledge.
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- author
- Bergh, Andreas LU
- organization
- publishing date
- 2020-02
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- economic freedom, economic reforms, Hayek, state capacity, Welfare state
- in
- Journal of Institutional Economics
- volume
- 16
- issue
- 1
- pages
- 12 pages
- publisher
- Cambridge University Press
- external identifiers
-
- scopus:85072185856
- ISSN
- 1744-1374
- DOI
- 10.1017/S1744137419000432
- language
- English
- LU publication?
- yes
- id
- 547029fa-b6eb-41cd-9b9f-dea3605bf083
- date added to LUP
- 2019-10-11 14:11:56
- date last changed
- 2022-04-18 18:09:00
@article{547029fa-b6eb-41cd-9b9f-dea3605bf083,
abstract = {{<p>To explain the coexistence of economic freedom and big government, this paper distinguishes between big government in the fiscal sense of requiring high taxes, and big government in the Hayekian sense of requiring knowledge that is difficult to acquire from a central authority. The indicators of government size in measures of economic freedom capture the fiscal size but ignore the Hayekian knowledge problem. Thinking about government size in both the fiscal and Hayekian dimensions suggests the possibility of Hayekian welfare states where trust and state capacity facilitate experimentation and learning, resulting in a public sector that is big in a fiscal sense but not necessarily more vulnerable to the Hayekian knowledge problem. Pensions in Sweden are used as a case to illustrate the empirical relevance of the argument. The new pension system represents big government in a fiscal sense, but by relying on decentralized choice it requires relatively little central knowledge.</p>}},
author = {{Bergh, Andreas}},
issn = {{1744-1374}},
keywords = {{economic freedom; economic reforms; Hayek; state capacity; Welfare state}},
language = {{eng}},
number = {{1}},
pages = {{1--12}},
publisher = {{Cambridge University Press}},
series = {{Journal of Institutional Economics}},
title = {{Hayekian welfare states : Explaining the coexistence of economic freedom and big government}},
url = {{http://dx.doi.org/10.1017/S1744137419000432}},
doi = {{10.1017/S1744137419000432}},
volume = {{16}},
year = {{2020}},
}