The browser you are using is not supported by this website. All versions of Internet Explorer are no longer supported, either by us or Microsoft (read more here: https://www.microsoft.com/en-us/microsoft-365/windows/end-of-ie-support).

Please use a modern browser to fully experience our website, such as the newest versions of Edge, Chrome, Firefox or Safari etc.

Andreas Bergh. Photo.

Andreas Bergh

Senior lecturer

Andreas Bergh. Photo.

Hayekian welfare states : Explaining the coexistence of economic freedom and big government

Author

  • Andreas Bergh

Summary, in English

To explain the coexistence of economic freedom and big government, this paper distinguishes between big government in the fiscal sense of requiring high taxes, and big government in the Hayekian sense of requiring knowledge that is difficult to acquire from a central authority. The indicators of government size in measures of economic freedom capture the fiscal size but ignore the Hayekian knowledge problem. Thinking about government size in both the fiscal and Hayekian dimensions suggests the possibility of Hayekian welfare states where trust and state capacity facilitate experimentation and learning, resulting in a public sector that is big in a fiscal sense but not necessarily more vulnerable to the Hayekian knowledge problem. Pensions in Sweden are used as a case to illustrate the empirical relevance of the argument. The new pension system represents big government in a fiscal sense, but by relying on decentralized choice it requires relatively little central knowledge.

Department/s

  • Department of Economics

Publishing year

2020-02

Language

English

Pages

1-12

Publication/Series

Journal of Institutional Economics

Volume

16

Issue

1

Document type

Journal article

Publisher

Cambridge University Press

Topic

  • Public Administration Studies
  • Economics

Keywords

  • economic freedom
  • economic reforms
  • Hayek
  • state capacity
  • Welfare state

Status

Published

ISBN/ISSN/Other

  • ISSN: 1744-1374