Volume 46, Issue 3

In explaining persistently high unemployment, Mancur Olson’s logic of collective action and the insider-outsider approach both focus on simular incentive structures of pressure groups. This contribution examines the astonishingly rarely tested hypothesis that both approaches are compatible to be integrated in a broader and widely acceptable basis for overdue labour market reforms. Moreover, a straightforward political economy of reforms is derived from this synthesis. However, a deeper comparison reveals that both models also share a great weakness. They clearly do not incorporate interests common to insiders and outsiders and self-correcting mechanisms in the wake of steadily growing costs of unemployment.

The article analyses the potential role of the benefit principle in public finance. Against the background that the benefit principle plays a minor part both in the theory and in the politics of public finance, first the advantages of this principle are traced out. By bringing together both sides of the budget the benefit principle leads to a stronger cost-benefit orientation in the citizen’s preferences and serves as an instrument to curb Leviathan. Given these advantages the arguments against the application of the benefit principle are critically (re)analysed and potential fields of a stronger application are developed. The analysis ends with the design of elements of a “constitutional pact” in order to strengthen the role of the benefit principle in public policy.

Public post offices in most industrialized countries hold a statutory monopoly covering the delivery of letters below a certain weight. Such exclusive rights lead to inefficiencies and distortions to competition. Monopoly regulation is subject to various caveats, for example informational disadvantages of the regulatory authorities, and might even lead to additional distortions. Under the roof of the Universal Postal Union, public post offices have established rules aimed at blocking international re-mailing in the reserved areas. The policy conclusions presented in this article suggest that de-monopolization and flexible prices must obtain priority, in order to enhance efficiency and enlarge the freedom of choice for both suppliers and consumers in the postal sector.

The paper examines theoretical and empirical aspects of convergence in the European Union. Whether the European economies will converge in the future or not, cannot be determined by theoretical reasonning. Neoclassical models predict convergence, endogenous growth models and new regional economics allow for divergence. However, the empirical results for the EU suggest slow (absolute) convergence between the national economies in the past. The economies seem to belong to the same “convergence-club”. The autonomous role of wage policy for the convergence process - somewhat neglected in most theoretical models - as well as some policy implications of the results are also discussed.

This economic policy forum is assigned to the position of the church on the economic and political situation in Germany. Bishop Joseph Homeyer presents the origin, content and intention of the position of the church, in order to illustrate how the two German churches, the catholic and the protestant, perceive their social and political responsibility. Homeyer shows that the churches launched a process of consultation where all groups of the society were invited to present their positions. In a second step the churches analysed three major challenges: mass unemployment, the crisis of the social state and globalisation. Based on this analysis a consens on four issues has been considered to be crucial for the future society: 1) both freedom and personal responsibility are important, 2) economic competition needs to take into account social and ecological aspects, 3) solidarity and justice require a fair distribution of burdens and 4) the principle of subsidiarity has to be properly implemented. Herbert Hax criticizes the position of the church by focusing on three issues: 1) the definition of poverty, 2) the remarks on social and family policy and 3) the propositions on reducing unemployment. On the issue of poverty, Hax questions the criteria used for defining poverty. He argues that they are rather relative and therefore more appropriate to define ineqality. However he considers inequality to be necessary as an incentive for performance. Although the churches stress the principle of solidarity it seems that their demands concerning familiy policy contradict this principle. On unemployment the author rather doubts whether the propositions made by the churches will solve the problem of high unemployment. André Habisch analyses the position of the church from a historical perspective. He argues that traditionally the church in Germany has had a rather sceptical view on the performance of markets. This is due to its role as an institution that feels responsible for poor and weak people. However, by looking at the position of the church in more detail, one can notice that the church supports the social market economy as a model for the future. Also on globalisation the church is not as negative as one might think. Both risks and chances are assessed by them. Although some particular positions of the church deserve to be criticized, overall the author agrees with the church in adding an ethic dimension to the economic analysis.