Scandinavian Working Papers in Economics

Ratio Working Papers,
The Ratio Institute

No 1: The Frailty of Economic Reforms: Political Logic and Constitutional Lessons

Niclas Berggren
Additional contact information
Niclas Berggren: The Ratio Institute, Postal: P.O. Box 5095, SE-102 42 Stockholm, Sweden

Abstract: Why are efficiency-enhancing reforms often frail and subject to being undermined over time? Two theories are examined: public-choice theory, which explains this as the possible result of a need, from time to time, to wipe the slate clean in order to retain productivity in the distribution of favors to interest groups, and a theory which acknowledges that politicians may implement reforms for ideological reasons but still, as time passes, be influenced by the logic of the political and media systems to abandon their initial aspirations. In any case, the demise of reforms is partly a function of the constitutional setting: rules which encourage shortsightedness and easy satisfaction of interest-group agendas make it difficult for decision-makers to withstand pressure for legislative change. Avenues to mitigate these problems through constitutional reforms are explored.

Keywords: tax reform; political incentives; constitutional reform

JEL-codes: D70; E65; H20; H30

37 pages, April 1, 2003

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