Feld, Lars P.; Schnellenbach, Jan --- "Political Institutions and Political Innovations: Theoretical Thoughts and Evidence on Labor Market Regulation" [2007] ELECD 225; in Marciano, Alain; Josselin, Jean-Michel (eds), "Democracy, Freedom and Coercion" (Edward Elgar Publishing, 2007)

Book Title: Democracy, Freedom and Coercion

Editor(s): Marciano, Alain; Josselin, Jean-Michel

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847201263

Section: Chapter 9

Section Title: Political Institutions and Political Innovations: Theoretical Thoughts and Evidence on Labor Market Regulation

Author(s): Feld, Lars P.; Schnellenbach, Jan

Number of pages: 29

Extract:

9. Political institutions and policy
innovations: theoretical thoughts
and evidence on labor market
regulation
Lars P. Feld and Jan Schnellenbach

INTRODUCTION

Economists often perceive themselves as being in a classical liberal tradition
that proposes checks and balances as constitutional means to protect indi-
viduals from state intervention, exploitation or even violence. When it
comes to discussions about political reform and innovation, the same people
however put much trust in political leadership. Glorified examples of how
fundamental economic reform was enforced by charismatic characters are
Margaret Thatcher in the UK (Kavanagh and Seldon, 1989; Siebert, 1997;
Klodt, 1999) and Ronald Reagan in the US (Buchanan, 2000). In Germany,
Ludwig Erhard is given almost exclusively the credit for the German eco-
nomic miracle after World War II (Reichel, 2002). Consequently, the role of
political leadership figures prominently in debates about how to start the
necessary economic reforms in countries like Germany or Switzerland
(Heiniger et al., 2004). In addition, the quest for political leadership is often
accompanied by emphasizing particular countries as role models for
reforms intended by certain parties or groups. Depending on party
affiliation, countries as diverse as New Zealand (Wallis, 1998), the
Netherlands (Becker, 1998; Den Butter and Mosch, 2003) or Denmark
(Döhrn et al., 1998; Green-Pedersen, 2001) and of course the UK and the
US have been praised as examples for successful economic reform.
Based on both lines of thought, ways are explored that supposedly help
to achieve fundamental economic reforms. Frequently, this leads to the ...