Laissez-faire Policy Research Articles

Twenty-five years of shared life with vancomycin-resistant enterococci: is it time to divorce?

Twenty-five years ago, isolation of vancomycin-resistant Enterococcus faecium (VREm) was reported both in the UK and in France. Since then, VREm has spread worldwide in hospitals. Hospital outbreaks appeared to be related to the evolution since the end of 1980s of a subpopulation of E. faecium highly resistant to ampicillin and fluoroquinolones (the so-called clonal complex CC17) that later acquired resistance to vancomycin. CC17 isolates are presumably better adapted than other E. faecium isolates to the constraints of the hospital environment and most contain mobile genetic elements, phage genes, genes encoding membrane proteins, regulatory genes, a putative pathogenicity island and megaplasmids. Colonization and persistence are major features of VREm. Inherent characteristics of E. faecium including a remarkable genome plasticity, in part due to acquisition of IS elements, in particular IS16, have facilitated niche adaptation of this distinct E. faecium subpopulation that is multiply resistant to antibiotics. Quinupristin/dalfopristin and linezolid are licensed for the treatment of VREm infections, with linezolid often used as a first-line treatment. However, the emergence of plasmid-mediated resistance to linezolid by production of a Cfr methyltransferase in Enterococcus faecalis is worrying. Daptomycin has not been extensively evaluated for the treatment of VREm infections and resistant mutants have been selected under daptomycin therapy. Although control of VRE is challenging, a laissez-faire policy would result in an increased number of infections and would create an irreversible situation. Although so far unsuccessful, dissemination of glycopeptide-resistant Staphylococcus aureus with van genes acquired from resistant enterococci cannot be ruled out.

Monetary Policy in Resource-Rich Developing Economies

The economic literature acknowledges that to avoid the resource curse, resource-rich countries should restrict fiscal expansion and save a significant part of resource revenues outside the domestic economy. However, in these countries governments tend to ineffectively spend a considerable part of windfall revenues in the short run. In this research I construct a DSGE model for a small, open economy to show that if fiscal indiscipline in the form of immediate responses to foreign resource revenue changes is inevitable, then monetary policy can help improve the allocation problem. The simulation results indicate that targeting the exchange rate or price level through foreign exchange interventions by the central bank can soften the negative effects of Dutch Disease and stabilize the economy in the face of volatile natural resource revenues in the short run. I also find that a fixed exchange rate regime outperforms price level targeting by delivering higher isolation and hence less vulnerability to shocks in natural resource revenues. In contrast, if the central bank chooses to pursue a laissez faire policy, i.e., not to intervene, then the economy becomes vulnerable to shocks in foreign resource revenues and the resource curse becomes more severe.

Research on the Innovation Mode of International Monetary System

In existing international monetary system, the American dollar holds the absolute hegemony. After the sub-prime crisis, the Government of United States holds a laissez-faire policy of U.S. An effective international monetary system should help to promote international trade and investment, and achieve equitable distribution of dividends among countries. Existing international monetary system faces prominent defects, such as the supply and demand imbalance of reserve currency, lack of self-driven adjustment mechanism, and extremely unstable flow of capital in the world. To reform the international monetary system has become the trend of the times. In a long period of time, the global economy cannot get rid of dependence on the U.S. market. The status of America, as the supplier of final product market, will not undergo significant changes. The modes for its reform and innovation mainly include the multi-standard monetary mode, the super-sovereign currency mode, and the American dollar mode.

Towards the integration of spread and economic impacts of biological invasions in a landscape of learning and imitating agents

We develop an agent-based model integrated with a spatial stochastic simulation harmful non-indigenous species (NIS) spread model in which farmers have learning and imitation capabilities. The model is applied to the western corn rootworm (WCR) invasion in the UK. The invasion is never eradicated due to the high dispersal capacity of WCR, particularly under climate change conditions. The lowest expected welfare losses arise with a laissez faire policy against the invasion. The effectiveness of NIS control programmes that require participation by land managers is shown to depend greatly on their learning and imitation dynamics. Control programmes might fail completely if there is global knowledge of the burdens of compliance – e.g. through the media – and the land managers can foresee the future consequences of new actions. This is due to coordinated noncompliance occurring across the landscape. If the agents need to experience compliance to learn its consequences or communicate only locally, potential noncompliant behaviour spreads more slowly than the invasion front and trails behind it. In conclusion, negative opinions of land managers over NIS control programmes and their media coverage can strongly undermine programmes. Identification and management of these factors may increase the odds of success of the programmes.

Culture, state and varieties of capitalism: a comparative study of life insurance markets in Hong Kong and Taiwan1

This article examines the interplay between local culture, the state, and economic actors' agency in producing variation across markets. I adopt a political-cultural approach to examining why life insurance has been far more popular in Taiwan than Hong Kong, despite the presence of a cultural taboo on the topic of premature death in both societies. Based on interview data and documentary references, the findings reveal that as an independent state, the Taiwanese government heavily protected domestic insurance firms during their emergence. These domestic firms adopted a market-share approach by re-defining the concept of life insurance to accommodate the local cultural taboo. The colonial Hong Kong government, on the other hand, adopted laissez-faire policies that essentially favoured foreign insurance firms. When faced with the tension between local adaptation and the profitability of the business, these foreign firms chose the latter. Their reluctance to accommodate local cultures, however, resulted in a smaller market. I argue that state actions mediate who the dominant economic players are and that the nature of the dominant players affects the extent of localization. Specifically, the presence of competitive domestic players alongside transnational corporations is more likely to produce varieties of capitalism.

Profiting from destruction: The Iraq reconstruction, auditing and the management of fraud

Abstract While several US corporations have benefited tremendously from the Iraq reconstruction, the Iraqis and US taxpayers have not done as well. This paper argues that the Bush Administration's neoliberal agenda in Iraq created a corrupt, lawless environment in which corporations could reap huge profits through what would normally be called malfeasance. It further demonstrates how the audit reports produced by the Office of the Special Inspector General for Iraq Reconstruction helped to manage the impact of this massive fraud by giving the perception that the laissez-faire policies of the Bush administration were innocent mistakes, making the failures appear to be independent of one another, reconstructing corporate malfeasance as waste while criminalizing low level employees, and blaming the government agencies, the war and the Iraqis for the fraud.

South Korea's economic future: Industrial policy, or economic democracy?

Many South Koreans believe that the country's remarkable economic successes over the past half-century are the product of an industrial policy that made Korean industry competitive in world markets. While there is widespread sentiment in favor of maintaining the emphasis on industrial policy, others believe industrial policy has generated benefits for some Koreans at the expense of the welfare of working-class Koreans. This has resulted in a push toward economic democracy to more equitably distribute the gains from increased productivity. Neither industrial policy nor economic democracy are in the best interest of Koreans. Rather, a laissez faire policy of minimal government interference will provide the best environment to foster South Korea's continued economic progress.

Agriculture: A Perspective from History, the Metrics of Comparative Advantage, and Limitations of the Market to Understand the Role of State in a Globalising World

Agriculture: A Perspective from History, the Metrics of Comparative Advantage, and Limitations of the Market to Understand the Role of State in a Globalising World

Selling steel in the 1920s

Through a case study on the Tata Iron and Steel Company, this article aims to clarify how a large-scale Indian industrial enterprise developed its business strategy in order to expand suitable sales networks in the 1920s, when the consumption pattern of steel changed drastically. In correspondence with the change, the company devised a business strategy to develop its sales network to minimise information asymmetries between the company, the end user and the intermediary merchant. The development of the sales network enabled the company to cultivate an emerging demand in domestic outlets, thereby helping the company survive after the 1920s. Besides, these successes could have prompted the House of Tata, the family owning the steel company, to initiate development in the domestic market to further its interest after the 1920s. Presumably, this resulted in the sharing of its views with some of the local merchants and entrepreneurs who had opposed the laissez-faire policy of the colonial government to preserve domestic outlets in their hands.

Environmental policy and stable collusion: The case of a dynamic polluting oligopoly

We show that the imposition of a Markovian tax on emissions, that is, a tax rate which depends on the pollution stock, can induce stable cartelization in an oligopolistic polluting industry. This does not hold for a uniform tax. Thus, accounting for the feedback effect that exists within a dynamic framework, where pollution is allowed to accumulate into a stock over time, changes the result obtained within a static framework. Moreover, the cartel formation can diminish the welfare gain from environmental regulation such that welfare under environmental regulation and collusion of firms lies below that under a laissez-faire policy.

Shooting up: counterinsurgency and the war on drugs

Most policymakers see counterinsurgency and counternarcotics policy as two sides of the same coin. Stop the flow of drug money, the logic goes, and the insurgency will wither away. But the conventional wisdom is dangerously wrongheaded, as Vanda Felbab-Brown argues in Shooting Up . Counternarcotics campaigns, particularly those focused on eradication, typically fail to bankrupt belligerent groups that rely on the drug trade for financing. Worse, they actually strengthen insurgents by increasing their legitimacy and popular support. Felbab-Brown, a leading expert on drug interdiction efforts and counterinsurgency, draws on interviews and fieldwork in some of the world's most dangerous regions to explain how belligerent groups have become involved in drug trafficking and related activities, including kidnapping, extortion, and smuggling. Shooting Up shows vividly how powerful guerrilla and terrorist organizations -- including Peru's Shining Path, the FARC and the paramilitaries in Colombia, and the Taliban in Afghanistan -- have learned to exploit illicit markets. In addition, the author explores the interaction between insurgent groups and illicit economies in frequently overlooked settings, such as Northern Ireland, Turkey, and Burma. While aggressive efforts to suppress the drug trade typically backfire, Shooting Up shows that a laissez-faire policy toward illicit crop cultivation can reduce support for the belligerents and, critically, increase cooperation with government intelligence gathering. When combined with interdiction targeting major traffickers, this strategy gives policymakers a better chance of winning both the war against the insurgents and the war on drugs.

INTERNATIONAL ORIGINAL EQUIPMENT MANUFACTURING AND ORIGINAL DESIGN MANUFACTURING CONTRACTS WITH QUALITY-DIFFERENTIATED PRODUCTS

We build a model of international subcontracting in quality-differentiated goods. Assuming no entry in an original equipment manufacturing (OEM) market, we show that the foreign outsourcer will choose an original design manufacturing (ODM) contract only if the subcontractor is good enough at product design. However, the product quality with the ODM contract is not necessarily higher than that with the OEM contract. When the subcontracting market becomes perfectly competitive, the outsourcer will always choose an OEM contract. In a two-period model with learning and entry effects, the foreign outsourcer chooses between different modes of manufacturing contracts. We demonstrate that a laissez-faire policy on research and development (R&D) activity may be optimal even if the subcontracting firm can only obtain an OEM contract. In the case where the OEM market becomes perfectly competitive in the second period, we predict that a positive R&D subsidy in the first period can help the domestic subcontractor obtain OEM–ODM contracts and, as a result, national welfare rises.

Resale price maintenance and restrictions on dominant firm and industry-wide adoption

We consider a model in which firms use resale price maintenance (RPM) to dampen competition. We find that even though the motive for using RPM is thus anti-competitive, market forces may limit the overall adverse impact on consumers. Indeed, we find that when there are a large number of firms in the market, consumer welfare under a laissez-faire policy might be as high or almost as high as it would be under an alternative policy in which RPM is banned. Government interventions that put an upper limit on the extent of industry-wide adoption of RPM can have adverse welfare effects in the model. We further show that proposed guidelines in the United States and Europe may come close to minimizing welfare.

Hangovers of globalization

Denmark is known for its rather “liberal” and implicit language policy. Many of the decisions concerning the use, acquisition and status of languages are influenced by political decisions made on other topics and by the changing governments’ hidden political agenda. Language policy is therefore not so much non-existent as it is hidden. The aim of the present article is to uncover the covert mechanisms of language policymaking and its relationship to the prevailing linguistic culture. The roots of the laissez-faire language policy in Denmark are planted deeply in the prevailing linguistic culture in the country, according to which sanctioning and controlling the use of language is conceived as discriminatory, as it is in conflict with the right to freedom of speech. However, recent sociolinguistic research carried out in Denmark bears witness to the fact that the laissez-faire or liberal language policy does not necessarily contribute to linguistic diversity, but quite to the contrary speeds up the opposite processes of standardization and dedialectalization.

Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya

We model farmers as facing small fixed costs of purchasing fertilizer and assume some are stochastically present biased and not fully sophisticated about this bias. Such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer (free delivery) just after harvest. Calibration suggests that this policy can yield higher welfare than either laissez-faire policies or heavy subsidies. (JEL Q13, Q12, Q16, Q18)

Level Playing Fields in International Financial Regulation

ABSTRACTWe analyze the desirability of level playing fields in international financial regulation. In general, level playing fields impose the standards of the weakest regulator upon the best‐regulated economies. However, they may be desirable when capital is mobile because they counter a cherry‐picking effect that lowers the size and efficiency of banks in weaker economies. Hence, while a laissez faire policy favors the better‐regulated economy, level playing fields are good for weaker regulators. We show that multinational banking mitigates the cherry‐picking effect, and reduces the damage that a level playing field causes in the better‐regulated economy.

Development and regulation of traditional Chinese medicine practitioners in Hong Kong

Professor Sian Griffiths and Vincent Chung from the University of Hong Kong offer an insight into the history, and future, of Chinese medicine In response to the increasing popularity of traditional, complementary and alternative medicine (TCAM) worldwide,1 the World Health Organization (WHO) has launched a Traditional Medicine Strategy 2002-52 emphasizing the goal of facilitating the development of TCAM national policies among member states. In 2005, the WHO conducted a global survey on TCAM development and found that 45 of 141 (32%) responding member states have established national policies on TCAM, while 51 (56%) were contemplating such development.3 One of the major elements of TCAM policy is the regulation of practitioners and this issue is high on the policy agenda of many developed countries, including the UK,4 Australia,5 Canada6 and the US.7 In the West, the profile of TCAM rose as part of its 'renaissance' in the late 1 990s, spurred by dissatisfaction with conventional western medicine (WM) as well as a growing exploration of global ideas. However, in other parts of the world, both history and culture determined a different course. In Hong Kong, the origins of TCAM development can be dated back to its creation in the mid- 19th century. Hong Kong was a British colony for over 100 years until the handover of its sovereignty to China in 1997. WM practice was introduced to Hong Kong and southern China by missionaries at the end of the 19th century8 but although it was the formal healthcare system, traditional Chinese medicine (TCM) remained the medical care of choice for most of the population due to accessibility, affordability and cultural appropriateness. Despite TCM's wide usage, the British colonial government adopted a laissez-faire policy towards it TCM was treated as an indigenous custom and was monitored by the Secretary for Home Affairs instead of the Secretary for Health. The government's sanction of TCM practice started in 1894, when the health officials deemed TCM to be 'incompetent' in managing the plague epidemic.8 Popularity of TCM further declined during the Japanese occupation in World War II, when many Chinese were repatriated over the border to mainland China. In the post-war period TCM practice continued only in small private settings.8 Thus, TCM was unregulated for most of the 20th century. The situation in colonial Hong Kong contrasts starkly with mainland China's policy in promoting the coexistence and integration of TCM and WM since the 1950s.9 Today, the WHO recognizes China to be one of the first healthcare systems in the world to adopt full integration of TCAM and WM at all levels of care.2 In China's latest healthcare reform proposal, TCM's potential role in tackling the burgeoning problem of chronic non-communicable disease within its ageing population has been highlighted.10 Under the influence of Beijing's long-established national TCM policy, Hong Kong's reunification with China in 1997 signified the end of stagnation in TCM development.11 The impetus for change had become apparent in legislative change in the last decade of the colonial period.12 This legislation triggered the colonial government to carry out preparatory work for TCM development. With the handover back to China on 1 July 1997, the first Chief Executive of the Hong Kong Special Administrative Region (SAR) announced the government's initiatives in developing TCM, and a consultative document on the issue was published in the following month. TCM's role in the Hong Kong healthcare system was officially recognized for the first time after 1 00 years of marginalization. Similar top-down commitments have been re-emphasized in the Chief Executive's policy addresses of 2001 and 2005, and also in the 2007 election manifesto of the current Chief Executive of the SAR. The focus of development in the last decade of TCM development has been the regulation and professionalization of TCM practitioners (TCMP). …

Welfare in differentiated oligopolies with more than two firms

Excessive differentiation in the quality or location dimension in order to soften price competition is a well-established conclusion concerning duopolistic markets. This has inspired authors to discuss policy measures that may improve welfare in a differentiated market. In the present paper, a general welfare analysis is conducted for a varying number of firms. It is shown that outcomes are almost optimal when three or more competitors are in the market. In light of this, a laissez-faire policy should be adopted. For a range of entry costs, market outcomes entail insufficient entry. Therefore, a subsidy to entry may improve welfare.

The Politics of Inequality: A Political History of the Idea of Economic Inequality in America. By Michael J. Thompson. (New York: Columbia University Press, 2007. xiv, 249 pp. $32.50, ISBN 978-0-231-14074-4.)

Rooted in political science, The Politics of Inequality ambitiously attempts to synthesize the history of the idea of economic inequality in the United States and to use it to criticize current public policies. Michael J. Thompson argues that opposition to economic inequality began with the founding of the republic, continued through the rise of industrial capitalism in the nineteenth century, and reached its apogee during the Progressive Era and New Deal. Recent policies, however, have reversed course and have come to promote economic inequality. Thompson writes that because this reversal runs counter to the past, “The importance of history and tradition for the present becomes clear … [and] serves as a way to rethink and reevaluate the social world of the present” (pp. 179–80). Thompson argues that at America's founding its thinkers were opposed to economic inequality and shaped policies to reduce or eliminate it. To the Founders and subsequent thinkers, economic inequality and political equality should not coexist. Political action during the early republic and laissez-faire policies in the nineteenth century reflected fears that inequality would re-create old world institutions and destroy equality of opportunity and, with it, democracy.

Chimneys in the Desert: Industrialization in Argentina during the Export Boom Years, 1870 – 1930

Chimneys in the Desert: Industrialization in Argentina during the Export Boom Years, 1870 – 1930