Description | Unconventional thoughts on economic development and globalization |
h1 tags | Dani Rodrik's weblog When are outcomes driven by ideas instead? When behavior cannot be directly predicted by interests as defined above, and when we can trace the impact of prevailing discourses/narratives on changing how interests are perceived. In particular, This way of thinking provides us with a way to testing interest-based arguments. We ask: Applying the framework I provide two brief applications to show how this works. In the first case, the Reagan income tax cut of 1981, evidence suggests it was ideas that was dominant. In the second case, German support for austerity policies in the euro zone, I argue it was interest. |
h2 tags | Unconventional thoughts on economic development and globalization About What I do Me at work Recent Posts Recent Comments This is what the WSJ thinks I look like... Search the blog Archives June 28, 2021 June 13, 2020 October 27, 2019 July 29, 2019 February 15, 2019 September 11, 2018 June 25, 2018 January 19, 2018 January 18, 2018 January 16, 2018 Therefore we can say outcomes are “interest-based” when they are the direct result of agents’ ex ante characteristics. More specifically, · Are the individual characteristics that define preferences (and produce behavior in question) ex ante salient? · Is the strategy space ex ante determinate? · Is there unique, plausible model of the world? Reagan tax cut of 1981 This is typically viewed as the result of big business interest in low taxes. And it is true that business eventually became a supporter of low taxes on personal incomes. But as Monica Prasad among others has shown, business opposed those tax cuts in 1980. They were more concerned about cutting the deficit than about the provision of supply-side incentives. In Prasad’s (2012) words, “the record could not be clearer that business groups opposed Kemp-Roth.” Ideas appear to have played a crucial role in changing perceptions of interests; it was all about selling a new model of how the world works. Here the policy entrepreneurship of Jack Kemp, Art Laffer, Jude Wanniski was particularly important. The Laffer curve may have been a gimmick, but it was effective in packaging, marketing and framing the tax cut proposal. German support of austerity policies in euro zone This is typically presented as the result of peculiar German ideas on economics: “Americans are from Keynes; Germans are from Hayek.” But one can present a counterargument that stresses the primacy of interests instead. |
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