Essays in Applied Political Economy

Abstract

The first chapter uses economic reasoning to analyze the traditions and institutions of one of the most successful criminal organizations in modern American history: La Cosa Nostra (LCN). Drawing on recently declassified FBI reports, I argue that LCN’s core institutions helped protect its low-profile status, an asset vulnerable to free riding by its own members. Individual members did not bear the full costs of profile-raising police investigations and thus had a perverse incentive to resolve disputes violently. LCN preserved its low profile by incentivizing peaceful reconciliation. La Cosa Nostra rules, and, more importantly, its surprisingly formal court system, kept disputes from escalating into violence, thereby helping LCN avoid profile-threatening investigations. LCN’s longevity and success are, in part, a testament to these institutions’ efficacy. The second chapter examines how increases in the salience of identity and government discretion can undermine democratic institutions and values. Building on the work of James M. Buchanan, the chapter identifies a novel channel through which a constitution’s rules concerning discrimination can impact democratic longevity: slowing the natural turnover of political coalitions. We argue that (1) identitarian coalition-building raises costs to political cooperation and coalition churn, (2) identitarian political phenomena flows from the larger rents associated with the identity group formation and, (3) the rent race can have deleterious consequences, i.e., the subversion of democratic governance. The incentives of coalitions to define themselves along identity-related lines can threaten democratic governance by enabling the formation of permanent winning coalitions. Thus increasing government discretion may not achieve the economic or ethical ends sought. The third chapter shows that public choice scholars have attended only modestly to issues in public health. Given the Covid-19 pandemic, we therefore take stock of public- choice relevant scholarship that addresses issues in public health. Our stock-taking highlights four themes: (1) public health regulations are often driven by private interests, not public ones. (2) The allocation of public health resources often reflects private interests, not public ones. (3) Public health policies may have perverse effects, undermining instead of promoting health-consumer welfare. (4) Health-related market failures used to justify public health interventions do not always exist. We conclude by surveying public-choice analyses of public health policies that deal specifically with contagious diseases.