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Inspiring Economics

Human Motivation in Political Economy

Bruno S. Frey

Bruno S. Frey illustrates what he perceives to be the inspirational quality of economics and how this differs from the type of economics studied in many academic institutions. He introduces insights into economics from a psychological perspective, dealing with issues such as transformation of anomalies, identification in democracy and crowding effects, and focuses on intrinsic motivation and how it is undermined.
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Chapter 11: FOCJ: Competitive Governments for Europe with Reiner Eichenberger

Bruno S. Frey


LIBERALIZED ECONOMIC AND RESTRICTED POLITICAL MARKETS IN EUROPE European integration was outstandingly successful at granting the four ‘freedoms’ related to the movement of goods, services, labour and capital. As a result of establishing a single, competitive European economic market, the citizens of the countries forming the European Union have certainly experienced a significant increase in welfare. In contrast, no such open and competitive market for politics has been established: the competition between governments was successfully restricted by the various European treaties and institutions. While the European Union’s power in politics, including economic policy, is still quite limited, no steps have been undertaken to actively institutionalize competition between all levels of governmental units. Such competition has, at best, been considered for national governments, but there are strong efforts to undermine it by ‘harmonizing’ or ‘equalizing’ taxes. Other forms of political competition should be envisaged, too. Welfare can be improved substantially by promoting competition between newly emerging jurisdictions that are organized by functions instead of territories. The fifth freedom suggested here allows for such Functional, Overlapping, Competing Jurisdictions. They will be called by their acronym FOCJ (one such jurisdiction will be called FOCUS). FOCJ form a federal system of governments that is not dictated from above, but emerges from below as a response to citizens’ preferences. This fifth freedom requires a constitutional decision, ensuring that the emergence of FOCJ is not blocked by existing jurisdictions. Every citizen and community must have the right to appeal directly to the European Court if...

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