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Viktor J. Vanberg

for conduct. The language of science is, This is, or, This is not; This does, or does not happen. The language of art is, Do this; Avoid that. In their aspiration to establish their field of study as a “science” on equal footing with the natural sciences, economists put increasing emphasis on the separation between what they are concerned with in their role as scientists and policy issues. In the same vein as Mill, but in even stronger wording, Léon Walras ([1877] 1984: 51f., Chapter 1 in this volume) noted in reference to Adam Smith’s definition of political

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Gerhard Wegner

about alternative market scenarios in the absence of policies under review. This complication of liberal reasoning emanates from the very understanding of the market order as an evolutionary one. Having in mind these difficulties, the widespread reservation of citizens against liberal policies finds a natural 82 Political failure by agreement explanation and must be distinguished from failure of the political system or political institutions. A final step in my reasoning prepares a conclusion which I want to elaborat in more detail in Chapter 5: as a matter of self-interest

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Gerhard Wegner

it were. 103 104 Political failure by agreement However, by its very nature liberalism must do without notions such as ‘real’ or ‘virtual’ interests because it is committed to respecting citizens’ preferences as they are; the term ‘real interest’ stands for paternalism rather than liberalism. But paternalism is not an inevitable conclusion if one accepts that individuals can fail to identify their preferences. The first thing to note is that such a judgement does not remove individuals as the final judges of their self-interest: their own judgement remains the

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Mary Reintsma

The welfare system in the United States underwent profound changes as a result of the groundbreaking welfare legislation passed in 1996 entitled The Personal Responsibility and Work Opportunities Reconciliation Act (PRWORA). The Political Economy of Welfare Reform in the United States examines in detail the legislative process that gave rise to PRWORA and presents two alternative theories to explain this process; the traditional public interest model of government and the public choice model. On the basis of a detailed historical analysis of welfare programs and policies in the US, the author explains the two alternative theories and engages in a detailed institutional and statistical analysis to make a convincing argument for the validity of the public choice paradigm.
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Gerhard Wegner

into practice (the principal–agent problem in politics). This abstraction echoes the ideal of democracy which theorists of deliberative democracy have developed without, however, considering the emerging conflict between politics and markets.11 Theorists of deliberative democracy conceive the problem of discovering collective preferences in a different way to theories of public choice. By doing so, it appears that they have solved what defies solution from the viewpoint of public choice theory, that is, deriving the public interest from individual preferences. Adherents

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Mary Reintsma

9. An econometric analysis of the variables affecting changes in welfare caseloads In this chapter the comparative analysis of the public interest and public choice theories of government shifts both in focus and methodology. The focus of the previous chapter was on the legislative process and the methodology was institutional analysis. In this current chapter the focus is on legislative outcomes and the methodology will be an econometric analysis of a specific outcome – changes in welfare caseloads. A primary objective of those interest groups shown to have most

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Gerhard Wegner

was fully developed and warned against the ‘road to serfdom’, arguing that only a liberal economic order, with a minimum state in particular, can guarantee economic prosperity as well as freedom. These early warnings were ignored and dismissed as an idiosyncratic nostalgia of liberalism, but in view of the undeniable slowdown of economic growth rates and rising unemployment, Hayek’s ideas have attracted theoretical interest decades later. Hence, experiences of democracies with economic policy have supported the renewal of economic liberalism in terms of new

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Mary Reintsma

6. The origins of the new welfare law – a historical overview This chapter briefly traces the historical development of welfare, from individual charity motivated primarily by moral values and administered within the community or parish, to large-scale governmental charity, administered at both national and local levels, and for which the motivations are far more complicated than simple benevolence. The interests and values of different elements within the society and the effectiveness of the interest groups that they comprise are highlighted in the chapter

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Political Failure by Agreement

Learning Liberalism and the Welfare State

Gerhard Wegner

The purpose of this book is to reconsider economic liberalism from the viewpoint of political liberalism. The author argues that advocates of economic liberalism largely overlook empirical political preferences which, in many societies, go far beyond a limited role of the state. Recent difficulties of reforming the welfare state provide evidence that political preferences are at odds with liberal economic policy in numerous cases. This fact challenges a political conception which demands a limited state role but also claims that citizens’ preferences ‘as they are’ should determine the content of policies. Using an evolutionary perspective on economic liberalism, the book develops new arguments about how economic liberalism can be brought into line with political liberalism.
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Mary Reintsma

economic theory as applied to the private sector, that rational individuals pursue their own self-interest, the theory can be used to explain or predict the effect of such behavior on a particular outcome in the public sector. Thus, in the case of welfare, the legislative outcome would be predicted to be a result of the inputs of self-interested individuals acting either individually or, more often, in the context of a particular interest group and constrained by the institutional context of the legislative process. This research was undertaken to examine the validity of