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Edited by Brigitte Unger, Daan van der Linde and Michael Getzner
Brigitte Unger, Loek Groot and Daan van der Linde
This introduction aims to provide a framework to address not only the normative question on what ought to be the character and business of government (or any other public authority), but also to positively evaluate shifts between private and public roles in recent history. Historical evaluations of the balance between market, state and society may serve as an alternative for models arguing that the ‘right’ configuration exists: why did current tasks evolve the way they did, and what can be learned from the past? Changes in technology or in the economic environment (such as the emergence of the European Union and globalization) can be held responsible for shifts in the optimal allocation between the public and private sphere, but there might also be a major shift of preferences regarding what should be public or private. Although it is hard to claim that the pendulum in the division between public and private, or market and government, has begun to reverse its swing, we feel it is important to give an account of the public sector in order to better understand what is at stake.
Richard M. Salsman
Not until the Enlightenment and the financial revolution in the eighteenth century did sovereigns borrow publicly, regularly, and responsibly. Constitutionalism, the rule of law, ethical acceptance of lending, and more respect for sanctity of contract increased creditors’ willingness to lend. Three centuries of data show that public leverage – the ratio of public debt to GDP – was highest at the end of the Napoleonic Wars and World War II. Public leverage since 1980 has increased steadily for many sovereigns, but for most of them leverage is still far below prior peaks. The multi-decade rise in public leverage reflects burgeoning welfare states but also coincides with an anomalous decline in public borrowing costs, due mainly to repressive central bank policies.