I consider the application of János Kornai’s soft budget constraint (SBC) concept to the state capitalist economy. I argue that interaction of SBC with agency problems within the government bureaucracy helps explaining a major feature of state capitalism – failure to privatize underperforming state-owned enterprises (SOEs). Bureaucrats supervising the failing SOEs prefer to keep them afloat and gamble for resurrection; in contrast, privatization would involve recognizing the loss, which would result in acknowledging the bureaucrat’s failure that is disincentivized by the state. This endogenously emerging preferential treatment of state-owned firms creates a competitive advantage against private firms; this explains why in state capitalism privatization may result in lower rather than higher productivity and therefore remain unpopular.
This paper reviews the deeper societal and economic reasons behind the British choice of leaving the European Union. We address the detailed results of the referendum and the long-standing sceptical British attitude towards European integration; next, we analyse the net budgetary contribution that changed enormously after the Eastern Enlargement. It is argued that the rise in the immigrantnative ratio had a significant impact on employee’s pay level in certain areas, therefore pro-Brexit campaigners highlighted migration as one of the major problems arising from EU membership. Increasing income and wealth inequalities and a growing anti-elite sentiment in British society, coupled with the negative image of Brussels bureaucrats and a British approach to the rule of law that is fundamentally different from the continental one, also contributed to the final result of the referendum. Our analysis ends with a glimpse into the close future, emphasising that the future of British-EU relations depends wholly on the pragmatism and wisdom of the negotiating parties.
Hellman , J. – Jones , G. – Kaufmann , D. – Schankerman , M. ( 2000 ): Measuring Governance, Corruption and State Capture: How Firms and Bureaucrats Shape the Business Environment . World Bank: Policy Research Paper 2312 . Available at: http
–232). The advantages politicians and bureaucrats derive from an expansionary monetary policy, thus, can explain a great part of the pro-inflationary and anti-deflationary bias. However, there is another reason why politicians fear deflation. Deflation
The article is based on Aaron Wildavsky's famous model of culture to interpret responsibility. In this model (1) fatalism leads to universal irresponsibility; (2) an individualistic culture values personal responsibility; (3) hierarchical cultures produce hierarchical responsibility; and (4) egalitarian culture generates collective responsibility. The author argues that the only acceptable form of responsibility is the personal one. A higher autonomy of public servants implies a greater degree of accountability and also responsibility. This new type of personal responsibility does not separate public servants into two categories: politicians with responsibility and bureaucrats without it. Personal responsibility presupposes persons who are able to make decisions and can find the balance between their self-interest and a public interest.
. S. — Geraint, J. — Kaufmann, D. — Schankerman, M. A. (2000): Measuring Governance, Corruption, and State Capture: How Firms and Bureaucrats Shape the Business Environment in Transition Economies. World Bank Policy Research Paper No. 2312