Prof. Arye L. Hillman

Prof.
Prof. Arye L. Hillman
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Research interests: 
The political economy of public policy

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Personal summary

Arye L. Hillman’s field of research is political economy, defined as the interface between economic outcomes and political and collective decisions. In international economics, he pioneered the political-economy approach to international trade policy, which subsequently became the standard view with subsequent developments by Gene Grossman, Elhanan Helpman, and others. He formulated original political-economy perspectives on trade liberalization policies and international migration and placed public policy in a political-economy context through integration of public finance and public economics with political rent creation and rent seeking. He viewed development failure and the transition from socialism as political-economy phenomena when the focus of debate in the academic and policy community was on identifying “correct policies” rather than on why governments were not implementing recommended policies. His more than 130 research papers have been published in various professional journals and volumes. “The Political Economy of Protection” (1989; reprinted 2001; reissued in 2014) was the first book to provide a political-economy overview of international trade policy. His textbook “Public Finance and Public Policy: Responsibilities and Limitations of Government” (Cambridge University Press, 1st edition 2003, 2nd edition 2009, 3rd edition planned 2017; published in Chinese, Greek, Japanese, and Russian, and available in Hebrew) combines political economy concepts with public finance in setting out the choice between markets and government. He has a PhD in economics from the University of Pennsylvania. Since 1980 he has been on the faculty of Bar-Ilan University in Israel. He has taught at the Australian National University, UCLA, Princeton, the University of Freiburg, and Paris I (Sorbonne-Panthéon). He has been a fellow of the Japanese Society for the Promotion of Science. Between 1994 and 2015, he served as editor and editor-in-chief of the European Journal of Political Economy (Elsevier), for which he serves as an editorial advisor. Since 1989, he has co-organized the annual Silvaplana Workshop in Political Economy. He is a former president of the European Public Choice Society and a joint recipient with Heinrich Ursprung of the Max-Planck Prize for Humanities Sciences. In March 2016 he was awarded an honorary doctorate by the University of Genoa.

 

PERSONAL AND PROFESSIONAL DETAILS

Date of birth: 13 January 1947

Place of birth: Bad Wörishofen, U.S. zone, Germany

Citizenship: Israel

 

Higher education

PhD Economics, University of Pennsylvania, USA 1970-73 (thesis advisors Albert Ando, Wilfred Ethier)

M. Ecs. Honors, Macquarie University, Sydney, Australia 1968-70, degree awarded in 1972 (thesis advisor Peter Lloyd, Australian National University)

B.A., First Class Honors in Economics and the University Medal, University of Newcastle, Australia 1963-67 (honors thesis advisor Paul Sherwood)

 

Academic family tree: Ron Jones, to Wilfred Ethier; and Albert Ando

 

Professional positions

Bar-Ilan University, Department of Economics Professor Emeritus from 2015, Professor of Economics and William Gittes Chair, 1984 -2015, Associate Professor 1982-1984, Senior Lecturer 1980-1982

Tel-Aviv University, Lecturer, Department of Economics, lecturer 1974-79

University of Pennsylvania, U.S.A., Research Fellow, Economics Research Unit (concurrent with graduate studies) 1970-1973

Macquarie University, Sydney, Australia. Senior teaching fellow 1968, lecturer with tenure 1969-1970

 

Other affiliations

CESifo, Munich, Senior Research Fellow

Kiel Institute of World Economics, International Research Fellow

CEPR, London, Senior Research Fellow

 

Offices and honors

Honorary doctorate, University of Genoa, March 2016

Fellow, Japanese Society for the Promotion of Science, 2000

President, European Public Choice Society, 1996-1997

Max-Planck-Prize for Humanities Sciences, joint with Heinrich W. Ursprung, 1994

 

Visiting positions

University of Paris I Sorbonne-Panthéon, Centre d’Économie de la Sorbonne, visiting professor, Master in Economics Program, Spring semesters 2010, 2011, 2012

University of Freiburg, FRG, Institute for Economic Research, visiting professor, summer semester 2009

Princeton University, U.S.A., Woodrow Wilson School of Public Policy and International Affairs and Department of Economics, visiting professor of economics, spring semester 1989, fall semester 2004

The World Bank, Washington DC, Research Fellow, Socialist Economies Reform Unit, February – September 1990

U.C.L.A., Los Angeles, U.S.A., visiting professor, Department of Economics, 1985-87

Australian National University, visiting lecturer in Public Finance, The Faculties, 1979

University of Illinois at Urbana, U.S.A., visiting assistant professor of economics, 1973-74

 

Silvaplana workshop in political economy

Jointly organized with Professor Heinrich Ursprung of the University of Konstanz, annually since 1989

 

Editorial positions

Editorial Advisor, European Journal of Political Economy (Elsevier), since 2015

Editor and editor-in-chief, European Journal of Political Economy (Elsevier), 1994-2014

Associate editor for Political Economy and Institutions, imp-WG: Economics. The Open-Access, Open-Assessment E-journal, Kiel Institute of World Economics, since 2006

Australian Economic Papers, editorial board, since 2004

Editorial Board, The Journal of International Trade and Economic Development, since 1995

International Advisory Board, Weltwirtschaftliches Archiv, 1995-2015

Advisory Board, Encyclopedia of Public Choice, 1999

Associate Editor, Economics and Politics, 1990-1999

 

Short-term visitor

The University of Queensland, Department of Economics, November-December 2015

The University of NSW, School of Banking and Finance, November 2015

The University of Melbourne, Faculty of Business and Economics, Melbourne Institute, July 2013

Monash University, Department of Economics, August 2012.

The University of NSW, School of Economics, July 2012

University of Havana, October 2006

Huazhong University of Science and Technology, Wuhan, China, August 2005

Cambridge University, Faculty of Economics, January-February 2005

International Monetary Fund, Washington D.C., Fiscal Affairs Department, summers 2000-2003

Nanyang Technological University, Singapore, Albert Winsemius Professor, August 2000

University of Catania, March 2000

Kobe University, Japan, January-February 2000

Monash University, Australia. Visiting researcher, Center for Excellence, July 1981, July 1982.

Australian National University, visiting researcher, the Research School of Social Sciences, summer 1980

 

THESIS SUPERVISION AND TEACHING

PhD Thesis, Bar-Ilan University

Yoav Zeif, 1999. Three essays in international trade policy and income distribution

Shirit Katav-Herz, 2002, Social norms, labor standards, and international consequences

Ronen Bar-El, 2006. Essays in intergenerational economics

Odelia Rosin, 2008. The economic consequences of obesity

Yariv Weltzman, 2010. The persistence of ineffective aid

Rezina Sultana, 2011. Essays on the political economy of economic development

Doron Klunover, 2016, Three essays in the theory of contests

 

Books

Arye L. Hillman, 1989. The Political Economy of Protection. Harwood Academic Publishers, Chur.

A basic principle of the theory of international trade is that free trade is efficient. Possible externalities aside, people can only gain from voluntary exchange. This book considered the reasons why political decision makers have chosen not to allow free trade. Standard trade theory at the time of writing of the book had used the Musgrave separation between efficiency and distributional decisions through lump-sum taxes and transfers.  Yet, because such taxes and transfers are generally not available, the efficiency of free trade is compromised by governments seeking distributional objectives through trade policies. Standard trade theory also assumed benevolent governments choosing policies to maximize social welfare and explained protectionism as a second-best policy of the social-welfare maximizing governments. This volume describes decision makers who have political objectives that are not necessarily consistent with the public interest. Since the initial publication of the book, the political-economy themes of the book have become common place in the literature on international trade policy.

Reprinted 2001 by Routledge, London, and 2014 by Taylor and Francis (Routledge), London

http://www.routledge.com/books/details/9780415753654/

 

Arye L. Hillman, 2009 (2nd edition). Public Finance and Public Policy: Responsibilities and Limitations of Government, Cambridge University Press, New York NY.

3rd Edition to be published in 2017, 1st Edition, 2003

http://www.cambridge.org/us/academic/subjects/economics/finance/public-finance-and-public-policy-responsibilities-and-limitations-government-2nd-edition

The book is a treatise on markets and governments that is widely used in many countries as a textbook on public finance and public policy. Standard public finance is integrated with a political economy perspective on behavior of governments and political decision makers. Lump-sum taxes and transfers are viewed as not feasible. There is therefore interdependence between efficiency and distributional consequences of government decisions. Efficient and social welfare-maximizing policies are compared with policy choices when policy makers are subject to political constraints.

Translations: Japanese 2006, Keiso Shobo, Tokyo; Chinese 2006, Chinese Academy of Social Sciences, Beijing; Russian, 2009, Publishing House of the State University, Higher School of Economics, Moscow; Greek, 2013, Papazisis publishers, Athens; Hebrew (electronic)

 

EDITED VOLUMES

Arye L. Hillman (Ed.), 1991. Markets and Politicians: Politicized Economic Choice. Kluwer Academic Publishers, Boston and Dordrecht.

http://www.springer.com/gp/book/9780792391357

A collection of papers in political economy setting out foundations in different fields of economics of the political incentives for intervening in markets.

 

Arye L. Hillman and Branko Milanovic (Eds.), 1992. The Transition from Socialism in Eastern Europe: Domestic Restructuring and Foreign Trade. The World Bank, Washington, D.C.

Arye L. Hillman and Željko Bogetić (Eds.), 1995. Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies, Tax Bases, and Tax Evasion. The World Bank, Washington, D.C., 1995. Reprinted by Avebury Publishing, Brookfield, Vermont, 1996.

 

Wilfred Ethier and Arye L. Hillman (Eds.), 2008. The WTO and the Political Economy of Trade Policy. Edward Elgar, Cheltenham UK.

http://www.e-elgar.com/bookentry_main.lasso?id=3717

A collection of the papers that made the most significant conceptual contributions to the political economy of international trade policy against the institutional background of the WTO (formerly the GATT) – with an introduction the reviews the literature

 

Roger D. Congleton, Arye L, Hillman, and Kai Konrad (Eds.), 2008. 40 Years of Research on Rent Seeking. Springer, Heidelberg. Volume 1: Theory of Rent Seeking, Volume 2: Applications: Rent Seeking in Practice

http://www.springer.com/gp/book/9783540791881

Introduction and summary: pp. 1 – 42 (both volumes)

The two volumes reprint papers that made the most significant contributions to the theory and application of rent seeking in the 40 years since the introduction of the concept of rent seeking to the literature.

 

Roger D. Congleton and Arye L, Hillman (Eds.), 2015. Companion to Political Economy of Rent Seeking, Edward Elgar, Cheltenham UK.

http://www.e-elgar.co.uk/bookentry_main.lasso?id=15325&breadcrumlink=&breadcrum=&sub_values=

A collection of original papers that summarize the principal conclusions of the theory and applications of rent seeking, including descriptions of rent seeking in different countries.

 

 

Publications

PRINCIPAL ORIGINAL CONTRIBUTIONS

RECENT PUBLICATIONS (FROM 2010)

ALL PUBLICATIONS (CHRONOLOGICAL ORDER)

 

PRINCIPAL RESEARCH CONTRIBUTIONS

 

1.      INTERNATIONAL ECONOMIC POLICY

INTERNATIONAL TRADE

Arye L. Hillman and Clark W. Bullard III, 1978. Energy, the Heckscher-Ohlin theorem and U.S. international trade. American Economic Review 68, 96-106.

Reprinted in:

  • John Cunningham Wood (Ed.), 1997. Bertil Ohlin: Critical Assessments, Routledge, London.

Empirical studies of the factor content of international trade had specified as factors of production capital (human and physical) and labor. Clark Bullard and I introduced energy as a factor of production and asked whether the U.S., which was importing energy (oil) directly, was also importing energy indirectly through the factor content of international trade. We found a version of the Leontief Paradox based on factor complementarity between energy and capital. The U.S., which was a direct importer of energy, was exporting energy indirectly.

 

Arye L. Hillman, 1980. Observations on the relation between "revealed comparative advantage" and comparative advantage as indicated by pre-trade relative prices. Weltwirtschaftliches Archiv 116, 315 – 21.

See also: Jeroen Hinloopen and Charles Van Marrewijk, 2008, Empirical relevance of the Hillman condition and comparative advantage. Applied Economics 40, 2313 – 2328.

‘Revealed comparative advantage’ had been proposed by Bela Balassa a measure of comparative advantage. The measure was and has remained a popular means of quantifying comparative advantage. I showed that that ‘revealed comparative advantage’ does not necessarily reveal comparative advantage and derived a sufficient condition for the measure to be valid.

 

THE POLITICAL ECONOMY OF PROTECTION

Arye L. Hillman, 1982. Declining industries and political-support protectionist motives. American Economic Review 72, 1180-1187.

Reprinted in:

  • The WTO, Safeguards, and Temporary Protection from Imports, Chad Brown (Ed.), Edward Elgar, Cheltenham UK, 2006.
  • The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 43 – 50.
  • Forty Years of Research on Rent Seeking 2 – Applications Rent Seeking in Practice. Roger D. Congleton et al. (Eds.), Springer, Berlin, 2008, pp. 105 – 112.

My 1982 AER paper introduced trade policy as chosen by politically self-interested policy makers. I was influenced by the models of politically self-interested regulation of George Stigler and Sam Peltzman. I was, however, concerned with policy responses to improvements in the terms of trade, which in principle were beneficial to the national economy but evoked protectionist responses. I showed how, in the political-support equilibrium after the improvement in the terms of trade, an import-competing industry was provided with increased protection, but the increased protection did not completely offset the decline in the world import price. The industry gained from the protectionist policy but also consumers were allowed to gain from the improvement in the terms of trade, although not as much as if there had been no protectionist response. Jack Hirshleifer had previously described such an outcome as ‘share the gain and share the pain.’ I proposed the political-support model as an alternative to mainstream expositions by Bhagwati and others that, in a second-best context, described how welfare-maximizing benevolent governments could use protectionism to improve social welfare. The mainstream expositions focused on efficiency, without regard for the distributive motives that motivated politically determined international trade policies.

 

James H. Cassing and Arye L. Hillman, 1986. Shifting comparative advantage and senescent industry collapse. American Economic Review 76, 516-523.

Reprinted in:

  •  The WTO and the Political Economy of Trade Policy, Wilfred J. Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 516 – 523.

As import prices decline, sudden collapses can occur in the output of import-competing industries. Such collapses are inconsistent with continuous decreases in output along a smooth supply function. The puzzle of a sudden collapse is resolved by accounting for changes in political calculations of whether support for the industry is worthwhile.

 

Arye L. Hillman and Heinrich W. Ursprung, 1988. Domestic politics, foreign interests and international trade policy. American Economic Review 78, 729-745.

Reprinted in:

  • International Trade, J. Peter Neary (Ed.), Edward Elgar, Cheltenham UK, 1996.
  • The Globalization of the World Economy: Trade and Investment Policy, Thomas Brewer (Ed.), Edward Elgar, Cheltenham UK, 1999, pp. 470 – 86.
  • The WTO and the Political Economy of Trade Policy, Wilfred J. Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 99 -115.

See also: Arye L. Hillman and Heinrich W. Ursprung, 1994. Domestic politics, foreign interests, and international trade policy: Reply, American Economic Review, 1994, 84, 1476-78.

We described trade policy determined through campaign contributions to candidates for political office and compared use of voluntary export restraints and import tariffs as means of protection. The voluntary export restraints in effect created a foreign cartel that benefitted from orchestrated restricted export supply. The domestic industry also benefited from the restricted competing export supply. Consumers lost. Voluntary export restraints resulted in a Hotelling-type convergence of policy positions of candidates for political office, reflecting mutual benefit to foreign and domestic producers. With tariffs, foreign exporters and domestic producers had contrary interests in policy decisions, reflected in divergence of political candidates’ policy positions. 

 

Arye L. Hillman, 1989. The Political Economy of Protection. Harwood Academic Publishers, Chur. Reprinted 2001 by Routledge, London, and 2014 by Taylor and Francis (Routledge), London. http://www.routledge.com/books/details/9780415753654/

The book, published in 1989, provided an overview of international trade policy as a political-economy phenomenon. I was pleased when Gene Grossman and Elhanan Helpman were able to make the political-economy view of protection mainstream through their paper ‘Protection for sale’ (AER 1994). In the 1980s, a political-economy perspective on trade policy was not mainstream. Normative models of benevolent government were the usual means of portraying trade policy.

 

THE POLITICAL ECONOMY OF TRADE LIBERALIZATION

Arye L. Hillman, Peter Moser and Ngo Van Long, 1995. Modeling reciprocal trade liberalization: The political-economy and national-welfare perspectives. Schweizerische Zeitschrift für Volkswirtschaft und Statistik (Swiss Journal of Economics and Statistics), 131, 503-515.

Arye L. Hillman and Peter Moser, 1996. Trade liberalization as politically optimal exchange of market access. In: The New Transatlantic Economy, Matthew Canzoneri, Wilfred Ethier, and Vittorio Grilli (Eds.), Cambridge University Press, New York, NY, pp. 295-312.

Reprinted in:

  • The Global Trading System, volume 2, Core Rules and Procedures, Kym Anderson and Bernard Hoekman (Eds.), I.B. Tauris and Co Ltd, London and New York, 2002.
  • The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 290 – 307.

In the mainstream literature, trade liberalization was viewed as a retreat from optimal tariffs set by welfare-maximizing governments. Collaborative research with Peter Moser and Ngo Van Long proposed a view of trade liberalization as ‘politically optimal exchange of market access’. Our view was consistent with the actual conduct of international trade negotiations. Trade negotiators do not seem to care about the optimal tariffs that have been the focus of the mainstream literature. Negotiators rather are concerned with ‘concessions’ and ‘market access’. We did not succeed in having our papers on trade liberalization as politically exchange of market access published in the journals of the standard trade literature. The idea of political exchange of market access was inconsistent with the standard international-trade model that focused on social-welfare maximizing governments and the optimum tariff.

 

CAPITAL MARKETS AND TRADE POLICY

JoAnne Feeney and Arye L. Hillman, 2001. Privatization and the political economy of strategic trade policy  International Economic Review 42, 535-556.

JoAnne Feeney and Arye L. Hillman, 2004. Trade liberalization through asset markets. Journal of International Economics 64, 151-167.

Reprinted in:

The WTO and the Political Economy of Trade Policy, Wilfred J. Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 173 - 189.

Models of international trade policy had not included consequences of the presence of capital markets. A research program with JoAnne Feeney investigated the links between trade policies and capital markets. A favored model of the community of international-trade researchers has been ‘strategic trade policy’, which recommends that governments subsidize their ‘national’ firms that compete in oligopolistic world markets with ‘foreign’ firms. There are many problems with ‘strategic trade policy’, as was noted by Gene Grossman and Avinash Dixit, amongst others. JoAnne Feeney and I made the point that ‘strategic trade policy’ is meaningless or can be counterproductive when domestic investors have an internationally diversified asset portfolio. Investors lose from the very suggestion of ‘strategic trade policy’ because of uncertainty created about whether  the policy will actually be implemented. In a further study, we introduced capital markets into the specific-factors model of international trade, which is commonly used to derive policy recommendations and studied how diversification of ownership of industry-specific capital moderates protectionist interests.

 

THE ENVIRONMENT AND TRADE POLICY

Arye L. Hillman and Heinrich W. Ursprung, 1992. The influence of environmental concerns on the political determination of international trade policy. In: Kym Anderson and Richard Blackhurst (Eds.), The Greening of World Trade Issues, University of Michigan Press, Ann Arbor MI, 1992, pp. 195 – 220.

Arye L. Hillman and Heinrich W. Ursprung, 1994. Greens, super greens, and international trade policy: Environmental concerns and protectionism. In: Carlo Carraro (Ed.), Trade, Innovation, Environment, Springer, Heidelberg, pp. 75 – 108.

The above studies were the first investigations of the influence of environmental lobbies on international trade policy. Henry Ursprung and I established the circumstances under which environmental lobbies have a common policy interest in international trade policy with producers or consumers. Common interest depended on whether environmentalists care only about their local environment (‘not-in-my-backyard’ types) or are concerned with the global environment. The 1992 paper was an invited presentation for a conference organized at the GATT (replaced by the WTO). The second paper is an extension.

 

BOYCOTTS AND EMBARGO THREATS

Ruth W. Arad and Arye L. Hillman, 1979. Embargo threat, learning and departure from comparative advantage, Journal of International Economics 9, 265 – 75.

Arye L. Hillman and Ngo Van Long, 1983. Pricing and depletion of an exhaustible resource when there is anticipation of trade disruption. Quarterly Journal of Economics, 98, 215 – 33.

Arye L. Hillman and Ngo Van Long, 1985. Monopolistic recycling of oil revenue and intertemporal bias in oil depletion and trade. Quarterly Journal of Economics, 100, 597 – 624.

Just as Jews throughout the millennia have been subjected to boycotts, the state of Israel, since its modern inception in 1948, has been subject to trade embargos and boycotts, both actual and threatened. The U.S. was also subjected to embargo by OPEC for supporting Israel. The studies above were the first to study trade subject to the threat of boycotts or embargoes. The first paper describes a country subject to embargo threat for necessary products such a defense equipment. The second paper derives public policy conclusions when a country that is threatened with embargo on imports of a depletable resource such as oil has substitutable domestic resources that can be used. The third paper describes a cartel such as OPEC that has joint monopoly power in the international oil and capital markets, allowing the cartel to influence both sides of the Hotelling rule for extraction of depletable resources (the price of oil and the interest rate).

 

THE POLITICAL ECONOMY OF INTERNATIONAL MIGRATION

Arye L. Hillman, 1994. The political economy of migration policy. In: Horst Siebert (Ed.), Migration: A Challenge for Europe, J.C.B. Mohr Paul Siebeck, Tübingen, pp. 263 – 282.

Arye L. Hillman, 2002. Immigration and intergenerational transfers. In: Horst Siebert (Ed.), Economic Policy for Aging Societies. Springer, Heidelberg, pp. 213 – 26.

In the standard mainstream international-economics model, movement of capital and labor are described symmetrically through the Rybczynski Theorem. I went beyond the Rybczynski Theorem in viewing international migration as involving people. My 1994 paper considered how politically determined migration policy might be influenced by cultural differences between immigrants and the local population. The 2002 paper described asymmetric benefits from immigration to working-age and retired populations. The papers were invited conference presentations. The papers perhaps went beyond bounds of ‘correctness’ of the time in implying that local residents and immigrants are not necessarily alike but are influenced in their behavior by cultural differences.

 

HISTORY OF POLITICAL ECONOMY: TRADE POLICY

Arye L. Hillman, 1977. The Brigden Theorem. Economic Record 53, 434-446.

In a contribution to the history of political economy, I pointed out that the authors of the 1929 Brigden Report on Australia’s trade policy showed awareness of the Stolper-Samuelson theorem (Protection and real wages, Review of Economic Studies 1941) in proposing that protection increased real wages and thereby provided an incentive for immigration from high-income countries. More direct visible methods of subsidizing immigration might encounter voter opposition or create moral hazard by residents who could threaten to leave if not subsidized. The Brigden committee predated expositions of ‘rational ignorance’ and ‘economic illiteracy’ in explaining choice of public policy.

 

Arye L. Hillman, 2015. Rents and international trade policy. In: Roger D. Congleton and Arye L, Hillman (Eds.), 2015. Companion to Political Economy of Rent Seeking, Edward Elgar, Cheltenham UK, chapter 12, pp. 187-202.

The mainstream model of international trade policy has been counterfactual in a number of respects. The model has excluded politically created rents and proposed that: (1) protection is explained by governments’ efficiency objectives; (2) social welfare is increased by government subsidies to firms competing in international markets; (3) tariffs are imposed to improve the terms of trade; and (4) trade liberalization takes place to reduce or eliminate previously levied optimum tariffs. McCloskey (1998) proposed that economists be viewed as storytellers. Given the evidence that trade policy decisions create rents and that trade negotiators do not seem to care about optimum tariffs and resist improvements in the terms of trade, the question can be asked as why the story without rents and with optimum tariffs was the mainstream model.

 

 

2.     POLITICAL ECONOMY AND PUBLIC POLICY

 

RENT SEEKING

Gordon Tullock proposed in a paper in 1967 that there were social losses from contestable rents. In 1980 Tullock set out a model of contests to investigate the relation between the value of a contested rent and resources used in contesting the rent. The relation measures social loss as rent dissipation. Applied studies had assumed complete rent dissipation. A study with Eliakim Katz confirmed that rent dissipation was complete with competitive entry into rent-seeking contests and showed that rent dissipation remained high with risk aversion.

Arye L. Hillman and Eliakim Katz, 1984. Risk-averse rent seekers and the social cost of monopoly power, Economic Journal 94, 104-110.

Reprinted in:

  • The Political Economy of Rent Seeking, Charles Rowley, Robert Tollison and Gordon Tullock (Eds.), Kluwer Academic Publishers, Boston, 1988, pp. 81-90.
  • The Economic Analysis of Rent Seeking, Roger Congleton and Robert Tollison (Eds.), Edward Elgar, Oxford, 1995, pp. 243 – 249.
  • The Political Economy of Rent Seeking, Charles K, Rowley, Robert D. Tollison, and Gordon Tullock, Kluwer Academic Publishers, Boston and Dordrecht, pp. 81-90.
  • Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 97 – 103.

 

In Hillman and Samet (1987), we provided a theoretical justification for the complete-dissipation assumption. We showed that, in the Nash equilibrium of a contest in which the highest outlay wins (an all-pay auction), rent dissipation is complete on average for any number of rent seekers.

Arye L. Hillman and Dov Samet, 1987. Dissipation of contestable rents by small numbers of contenders, Public Choice, 54, 63-82.

Reprinted in:

  • Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 165 – 184.

See also: Hillman, Arye L. and Dov Samet, 1987. Characterizing equilibrium rent-seeking behavior: A reply to Tullock, Public Choice, 54, 85-87.

 

A study with John Riley added extensions to the all-pay auction rent-seeking contest, including asymmetric valuations of the contested rent. We showed in particular with regard to the all-pay auction that only the two high-valuation contenders actively compete and that rent dissipation does not exceed the value of the rent to the low-valuation contender.

Arye L. Hillman and John Riley, 1989. Politically contestable rents and transfers, Economics and Politics 1, 17-39.

Reprinted in:

  • Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 185 – 207.

 

Bribes are transfers of income but are also sources of social loss when the positions to which the bribes accrue are contested. In Hillman and Katz (1987) we studied rent dissipation when a bribe is distributed up a bureaucratic hierarchy, with officials at each level of the hierarchy benefitting from a share of the bribe.

Arye L. Hillman and Eliakim Katz, 1987. Hierarchical structure and the social costs of bribes and transfers. Journal of Public Economics, 34, 129-142.

Reprinted in:

  • The Economics of Corruption and Illegal Markets, Gianluca Fiorentini and Stephano Zamagni (Eds.), Edward Elgar, Cheltenham UK 1999. In the series The International Library of Critical Writings in Economics.
  • Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 523 – 536.

 

Studies of rent seeking, beginning with Tullock’s original observations, have viewed rents as not persisting overtime. A study with Toke Aidt (2008) generalized the social cost of rent seeking to include rents that endured over time and could require re-contesting in the future. We extended the basic model that had described contests for rents that were available only at a point in time.

Aidt, Toke and Arye L. Hillman, 2008. Enduring rents. European Journal of Political Economy 24, 454 – 53.

 

The literature rent seeking is part of a broader political economy literature concerned with the political principal agent problem. Rent seeking requires rents to have been politically created. Creation of the rents is in general beneficial to the rent creators, who extract a share of the rents for themselves. In the case of the political economy of international trade policy, the political exchange is rent creation for protected producers in return for political support through campaign contributions or votes.

Arye L. Hillman, 2015. Rent seeking as political economy. In: Roger D. Congleton and Arye L. Hillman (Eds.), Companion to Political Economy of Rent Seeking, Edward Elgar, Cheltenham UK, 2015, chapter 2, pp. 10-16.

Rent creating is a topic that can be judged controversial in providing a politically incorrect view of political behavior. The view of government as creating and assigning privileged benefits or rents is inconsistent with a benevolent-government model of social welfare maximization. Ignoring or downplaying political rent creation and rent seeking can, however, result in a misinterpretation of the motives and behavior of governments. My presidential address to the European Public Choice Society (Prague 1997) evaluated the view that political decision makers should not be described as creating and assigning rents.

 

Arye L. Hillman, 1998. Political economy and political correctness. Public Choice 96, 219-239. 

Reprinted in:

  • Forty Years of Research on Rent Seeking 2–Applications: Rent Seeking in Practice. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer, Heidelberg.

 

 

DEVELOPMENT FAILURE

Political economy and rents are central to the study of development failure. Self-interested behavior rent-extracting behavior of governments and associated elites appears to explain why development objectives are not achieved. In the mainstream development literature, the emphasis was often on how successful development was in principle achievable. There was a large gap between a political-economy view and the academic mainstream. An editor of a leading journal (himself originally of the elite of a ‘developing’ country) told me that ‘corruption is overrated’. Yet the evidence has indicated substantial corruption and rent seeking in low-income countries. As occurred in the literature on trade policy, mainstream views changed, and corruption, rent seeking, and ‘governance’ became topics of enquiry in the study of less developed countries. Gordon Tullock (1975) had written about rent-seeking contests in which governments impoverished their people to be eligible for aid. When William Easterly left the World Bank and published a book on his ‘development experiences’ (Easterly 2001), the gates were fully opened to asking questions about the role of governments in development failure.

 

In Epstein, Hillman, and Ursprung (1999), we studied emigration to escape being the victims of rent seeking by local elites. We introduced the idea of comparative advantage in rent seeking, measured as distance from a privilege-dispensing ‘king’. The behavior of the ‘king’ or elites was expressed in political culture (Hillman and Swank 2000).

Epstein, Gil S., Arye L. Hillman, and Heinrich W. Ursprung, 1999. The king never emigrates, Review of Development Economics, 1999, 3, 107 – 21.

Reprinted in:

  • Forty Years of Research on Rent Seeking 2 – Applications: Rent Seeking in Practice. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 265 – 79.

 

Hillman, Arye L. and Otto Swank, 2000. Why political culture should be in the lexicon of economics, European Journal of Political Economy 16, 1 – 4.

 

In a study undertaken in the Fiscal Affairs Department of the IMF, I proposed that corruption, presupposed the rule of law from which corrupt behavior deviated and set out a model of Nietzschean development failure in which the strong act without ethical restraint toward the weak. The response of the weak is randomly not to work, so the appropriation decision of the strong becomes subject to uncertainty. The model predicts that the weak will invest in non-appropriable sources of utility. In a repeated game, a version of the folk-theorem of game theory ensures efficiency with muted appropriation.

Hillman, Arye L., 2004. Nietzschean development failures, Public Choice 119(3), 263 – 280.

 

A study with IMF Fiscal-Affairs economist Eva Jenkner showed that, in various low-income countries, the poor were self-financing education of their children through user prices. Quite remarkably, there had been criticism of parents’ resorting to self-financing of schooling, for example, by the NGO Oxfam, on the grounds that governments should provide schooling for children, not parents themselves. The criticism has an ideological overtone in suggesting that only reliance on government is permitted, even though governments have failed to fulfil their responsibilities.

Arye L. Hillman and Eva Jenkner, 2004. User payments for basic education in low-income countries. In: Helping countries Develop: The Role of Fiscal Policy, Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Eds.), International Monetary Fund, Washington DC, 2004, pp. 233 – 264.

 

We found that, for low-income countries, lower public spending (or a smaller government budgetary deficit) increased growth of per capita income. This result could not be due to the inverse of a ‘crowding-out effect’ (government spending increasing domestic investment through a decline in the interest rate) because the countries in the sample did not have functioning private domestic capital markets. The revealed negative marginal product of government spending in low-income countries could be attributed to rent seeking and corruption in government.

Baldacci, Emanuele, Arye L. Hillman, and Naoko Kojo, 2004. Growth, governance, and fiscal-policy transmission channels in low-income countries. European Journal of Political Economy 20, 517 – 549.

Reprinted in:

 

The theory of encompassing interest proposed that autocratic rulers, as residual claimants,  would resolve all inefficiencies and maximize income. The theory had its origins in Hobbes’ Leviathan. I observed that incentives of governments and elites in low-income countries were often contrary to the predictions of encompassing interest. Governments and elites seemed motivated by the objective of avoiding growth of a middle class that would ask for the political transparency and accountability of democracy.

Hillman, Arye L. 2007. Democracy and low-income countries. In José Casas Pardo and Pedro Schwartz (Eds.), Public Choice and Challenges of Democracy, Edward Elgar, Cheltenham, U.K., pp. 277 – 294.

 

TRANSITION FROM SOCIALISM

An event as momentous as the end of communism comes rarely in economic history. There was, again, among researchers and practitioners studying the transition, a focus on ‘reform’ and the recommendation of correct economic policies. I viewed transition as a political-economy phenomenon in which government was often not the means for a solution but the problem through a culture of personal enrichment from political office.

Hillman, Arye L., 1994. The transition from socialism: An overview from a political-economy perspective. European Journal of Political Economy 10, 191 – 225. Special issue, Festschrift in honor of Peter Bernholz, edited by Manfred Gärtner and Heinrich W. Ursprung.

 

Many of my studies of transition economies were conducted with World Bank economists. Bulgaria provided a case study of politicized transition. The publication of the study on Bulgaria was facilitated by a change of the Bulgarian government.

Željko Bogetić and Arye L. Hillman, 1994. The tax base in the transition: The case of Bulgaria, Communist Economies and Economic Transformation 6, 267-282.

Updated as:

 

Arye L. Hillman., Lubomir Mitov and R. Kyle Peters, 1995. The private sector, state enterprises, and informal economic activity. In Željko Bogetić and Arye L. Hillman (Eds.), Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies, Tax Bases, and Tax Evasion, The World Bank, Washington, D.C., pp. 47 – 70.

Summarized in:

 

A paper with Alan Gelb and Heinrich Ursprung described how, in the transition, rents attainable through privatization and other rent-creating public policies were distractions for productive activity. Rents and privileged private benefit were also present through private use of state assets, protection and export quotas, and the banking system.

Alan Gelb, Arye L. Hillman, and Heinrich W. Ursprung, 1998. Rents as distractions: Why the exit from transition is prolonged. In: Nicolas C. Baltas, George Demopoulos, and Joseph Hassid (Eds.), Economic Interdependence and Cooperation in Europe, Springer, 21 – 38.

Arye L. Hillman and Heinrich W. Ursprung, 1999. The political economy of banking sector reform in the transition. In: Mario Blejer and Marko Škreb (Eds.), Financial Sector Transformation: Lessons from Economies in Transition, Cambridge University Press, New York, pp. 132 – 149.

Arye L. Hillman and Heinrich W. Ursprung, 1996. The political economy of trade liberalization in the transition. European Economic Review (Papers and Proceedings) 40, 783 - 794.

 

Rent seeking in the transition was often a two-stage process, with outsiders competing to be insiders, who in turn competed for the rents attainable from privileged privatization. Liberalization blurred the distinction between outsiders and insiders and increased rent seeking if the culture of rent seeking was sustained.

Arye L. Hillman and Heinrich W. Ursprung, 2000. Political culture and economic decline, European Journal of Political Economy 16, 189-213.

Reprinted in:

  • Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 219 – 243.

 

After some 12 years of ‘transition’, I compared the ‘transition’ from slavery to freedom led by Moses in the 40 years in the desert and the transition from the servitude of communism. Moses led a successful transition and the Promised Land was reached (although Moses did not enter). Many post-communist countries remained in the ‘wilderness’ and seemed to have no ethically guided leader to take them out. The paper was published in Russian in a journal of the Russian Academy of Sciences and is available in English.

Arye L. Hillman 2002. On the way to the Promised Land: ten years in the wilderness without Moses. Published in Russian (translated by Mark Levin). Economics and Mathematical Methods - Journal of the Central Economic and Mathematical Institute of the Russian Academy of Sciences 38, 78 – 94.

 

I have compared the transition from socialism to the metamorphosis of a caterpillar into a beautiful butterfly. In the case of the transition from caterpillar to butterfly, the duration of the transition and the end result are known. The same is not the case in the transition from socialism. ‘Transition’ suggests transience but research on transition suggested that transition was ongoing, with the end result uncertain and not necessarily a western market economy and political system with democracy in which parties alternate in office.

Arye L. Hillman, 2003. Interpretations of transition. In: Nauro F. Campos and Jan Fidrmuc (Eds.), Political Economy of Transition and Development: Institutions, Politics, and Policies, Kluwer Academic Publishers, Dordrecht, pp. 23 – 40.

 

 

3.     OTHER TOPICS

Other topics involve principally Israel.

 

TRANSITION: THE CASE OF ISRAEL

The economy of Israel is part of the study of transition. Israel underwent a successful transition to a high-income economy from a prior economic system in which collective ‘workers-owned’ and privately owned monopolies were protected from domestic and import competition. The justification for the protection was workers’ job security. In 1988, at a conference to mark the 40th anniversary of the re-establishment of the state of Israel, I presented a paper on ‘Impediments to a competitive environment in Israel’. I described the pre-transition economic system, which protected workers’ jobs but was a source of inefficiency and created rents for the managers of the workers-owned and other collective and private monopolies and cartels. Liberalization was required in particular because of the free-trade agreements with the U.S. and Europe. There were ‘liberalization dilemmas’ for an economy that viewed competition as inconsistent with social objectives.

Arye L. Hillman, 1988. Impediments to a competitive environment in Israel. Presented at Symposium on American-Israel Economic Relations in Honor of the 40th Anniversary of the State of Israel, New York (June 1988). With preface January 2016. Available from https://www.researchgate.net/profile/Arye_Hillman?origin=publication_list

Arye L. Hillman 1991. Liberalization dilemmas. In Markets and Politicians: Politicized Economic Choice, Arye L. Hillman (Ed.), Kluwer Academic Publishers, chapter 10, pp. 189 – 207.

 

POLITICAL JURISDICTIONS AND RENT CREATION

When the transition began, the post-communist countries segmented into different independent states. I explained the segmentation as the quest by local politicians for benefits from control of government, including rent creation. The model also applied to the segmentation of the labor market in Israel. Palestinian terror inflicted on Israel’s population resulted in construction by the government of Israel of a ‘separation barrier’. The barrier also segmented a previous unified labor market. The construction of the ‘separation barrier’ could have been stopped at any time if the terror had stopped The terror did not stop until the barrier was in place. The beneficiaries of the segmented labor market were employers or owners of capital in the Palestinian Authority.

Arye L. Hillman, 2005. Political institutions, jurisdictional boundaries, and rent creation. Keio Economic Studies, nos. 1-2 2005, 42, 25 – 37. Special issue in honor of Professor Michihiro Ohyama, edited by Wilfred J. Ethier and Makoto Yano.

 

DEFENSE AND PUBLIC SAFETY

A moral dilemma arises when it is known that terrorists belong to an identifiable population but who is a terrorist is not known before an act of terror is committed. Decision theory can be used to study the trade-off in such circumstances between collective punishment and public safety.

Arye L. Hillman, Raphael Franck, Miriam Krausz, 2005. Public safety and the moral dilemma in the defense against terror, Defense and Peace Economics 16, 347 – 364. (CEPR DP 4736, November 2004).

 

SUPREME VALUES

Peter Bernholz has written extensively on supreme-value ideology. I observed that supreme values underlie incentives for governments to keep people poor. High incomes would be a distraction from achieving the supreme-value objective such as, for example, sustained support in the population for state-supported terror. A more general issue concerns the question why consistence evidence has shown that Muslim populations have low incomes and exhibit low growth. I summarized the evidence and the explanations, to which supreme-value ideology is an addition.

Arye L. Hillman, 2007.. Economic and security consequences of supreme values. Public Choice 30, 259 – 280.

Also published as:

 

CHOOSING TO HAVE A KING

Some 350 years ago, Thomas Hobbes in his book Leviathan (1651), sought to justify a leviathan or king with all-encompassing power. To justify his leviathan, Hobbes used the response of the prophet Samuel to the request by the tribes of Israel that a king should be pointed over them. Hobbes portrayed Samuel as supporting choosing a king. Hobbes however misrepresented Samuel, who advised against having a king. Samuel warned ‘you will regret the day that you appointed a king’. Hobbes’ father was a clergyman and he had access to the bible, including in English.

Arye L. Hillman,  2009. Hobbes and the prophet Samuel on leviathan government. Public Choice 141, 1 – 4.

Arye L. Hillman, 2009. Hobbes and Samuel: reply (to Geoffrey Brennan). Public Choice 141, 13 – 15.

 

INTERJURISDICTIONAL TAX COMPETITION

Ostensibly the first paper describing tax competition in a federal system of government is:

James H. Cassing and Arye L. Hillman, 1982. State-federal resource tax rivalry. Economic Record 58, 235 – 241.

 

 

 

 

 

IV.          RESEARCH SINCE 2010

 

EXPRESSIVE BEHAVIOR

Through expressive behavior, people can define and behave according to a chosen identity without consequence if they are non-decisive. Expressive behavior has been used to explain voting but the behavior is also found in rhetoric, in particular with regard to whether good-will can deter enmity of others and whether there is moral hazard when the state provides benefits contingent on having no income. Public policy is affected when, in an expressive-policy trap, a majority of individually non-decisive voters has supported a policy that each voter in the majority would veto, if the voter were decisive.

Arye L. Hillman, 2010. Expressive behavior in economics and politics. European Journal of Political Economy 26, 404 – 419.

 

The source of evidence on expressive voting has been experiments, in general conducted with students. A study of voting of a subgroup of US voters shows expressive voter behavior. There is evidence of expressive voting contrary to self-interest, to confirm identity through allegiance to an ideology. Members of the same sub-group with traditional values vote expressively in their self-interest.

Arye L. Hillman, 2011. Expressive voting and identity: evidence from a case study of a group of U.S. voters. Public Choice 148, 249-257.

 

VOTING IN THE UNITED NATIONS

Data complied on all United Nations General Assembly resolutions on which voting took place between January 1990 and June 2013 reveal a preoccupation with one country, Israel, which is criticized in 65 percent of instances in which a country is criticized in a resolution. No other country criticized in more than 10 percent of resolutions. UN General Assembly voting is expressive because resolutions are non-binding. In the paper below (Becker et al., 2015), we use comparative quantitative criteria to confirm that Israel is subject to discrimination in UN voting. To explain the motives for discrimination, we present a model of behavioral political economy that includes decoy voting, vanity of autocrats, a Schelling focal point for deflection of criticism, and also traditional prejudice. Conclusions relate to political culture expressed in UN voting.

Raphael N. Becker, Arye L. Hillman, Niklas Potrafke, Alexander H. Schwemmer, 2015. The preoccupation of the United Nations with Israel: Evidence and theory. Review of International Organizations 10(4), 413-437.

CESifo Working Paper No. 5034 (October 2014) http://www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/...

 

In a further study of UN voting, Niklas Potrafke and I used voting on the Goldstone Report to investigate whether democracies and autocracies differ in attitudes to self-defense against state-supported terror. The Goldstone Report criticized Israel for self-defense but also by implication proposed as a general principle an interpretation of international law that criminalized self-defense by any government against state-sponsored terror. We find that autocracies supported the Goldstone view of criminalizing self-defense against state-sponsored terror but not democracies.

Arye L. Hillman and Niklas Potrafke, 2015. The UN Goldstone Report and Retraction: An empirical investigation. Public Choice 163(3), 247-266.

 

VOTING WITH GROUP IDENTITY

Group identity predetermines majorities and minorities. There is then no point to a loyal opposition waiting a turn in government. A substantial literature has considered how democracy might be made consistent with group identity. The paper below reports on a study of a case in which sustained democracy co-exists with group identity. We explain the persistence of democracy by distinguishing between expressive voting by non-decisive voters and instrumental voting when groups can be decisive. Democracy can exist with group identity, but democracy in such instances differs from usual political competition.

Arye L. Hillman, Kfir Metsuyanim, and Niklas Potrafke, 2015. Democracy with group identity. European Journal of Political Economy, 40(Part B), 274-287. (Special issue on Behavioral Political Economy).

Working paper Bar-Ilan University no 2015-2 http://econ.biu.ac.il/en/node/3519 CESifo working paper http://www.cesifo-group.de/de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19158376

 

PREJUDICE AND ANTISEMITISM

Although the economics of discrimination has been much researched, it remains a puzzle why there should be prejudice against an entire people, in particular if the people are not present in large numbers among the population that is prejudiced against them. The most long lasting and widespread prejudice has been antisemitism. The literature on prejudice against Jews provides historical accounts but directs less attention at explaining the behavior of antisemites. I have proposed an explanation for the prejudice in behavioral terms, with historical continuity through envy and fear. Cognitive dissonance is also involved. Antisemitism in a population appears related to whether luck or effort is viewed as the primary determinant of personal success. A view of luck as primary appears associated with the extensive antisemitism reported in egalitarian-preference populations in Europe. Low antisemitism in populations in the U.S., Australia, and Canada appears associated with the view that personal success is the consequence of effort rather than luck.

Arye L. Hillman, 2013. Economic and behavioral foundations of prejudice. In Charles Asher Small (Ed.), Global Antisemitism: A Crisis of Modernity, Martinus Nijhoff Publishers, Leiden, Netherlands, and Boston, MA, pp. 51-67. /

 

RENTS IN THE POLITICAL ECONOMY OF INCOME DISTRIBUTION

Arye L. Hillman and Heinrich W. Ursprung, 2016. Where are the rent seekers? Constitutional Political Economy 27, 1-18. Special issue in memory of Gordon Tullock.

CESifo Working Paper No. 5833, March 2016 http://www.cesifo-group.de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=19205597

In a remarkably simple and yet one of the most original and insightful observations of 20th century economics, Gordon Tullock pointed out that there are efficiency losses when public policies and political behavior create contestable rents. Tullock also observed that social losses from contesting rents appeared smaller than might be expected, so raising the question ‘where are the rent seekers?’ Tullock proposed that political accountability and ‘free-riding’ incentives in interest groups limit social losses from rent seeking. We affirm Tullock’s explanations, which apply differently under different political institutions. We compare Tullock with Gary Becker, who focused on deadweight losses from redistribution and concluded, in contrast to Tullock, that political redistribution is efficient. The comparison with Becker highlights the significance of the recognition of Tullock’s concept of rent seeking. By excluding rent-seeking losses from the social costs of redistribution, Becker could arrive at a conclusion more favorable than Tullock to an ideology that sees merit in extensive redistribution. Tullock’s model, although more encompassing of actual social costs of redistribution, would have been less welcome in the social democratic welfare state. 

 

           

 

 

ALL PUBLICATIONS (CHRONOLOGICAL ORDER)

 

BOOKS

Arye L. Hillman, 1989. The Political Economy of Protection. Harwood Academic Publishers, Chur. Reprinted 2001 by Routledge, London, and 2014 by Taylor and Francis (Routledge), London

Arye L. Hillman, 2005/2009. Public Finance and Public Policy: Responsibilities and Limitations of Government, Cambridge University Press, New York NY (1st Edition, 2003, 3rd Edition, 2017).

Other language editions: Japanese 2006, Keiso Shobo, Tokyo; Chinese 2006, Chinese Academy of Social Sciences, Beijing; Russian, 2009, Publishing House of the State University, Higher School of Economics, Moscow; Greek, 2013, Papazisis publishers, Athens; Hebrew (electronic)

 

EDITED VOLUMES

Arye L. Hillman (Ed.), 1991. Markets and Politicians: Politicized Economic Choice. Kluwer Academic Publishers, Boston and Dordrecht.

http://www.springer.com/gp/book/9780792391357

Arye L. Hillman and Branko Milanovic (Eds.), 1992. The Transition from Socialism in Eastern Europe: Domestic Restructuring and Foreign Trade. The World Bank, Washington, D.C.

http://documents.worldbank.org/curated/en/1992/09/440179/transition-socialism-eastern-europe-domestic-restructuring-foreign-trade

Arye L. Hillman and Željko Bogetić (Eds.), 1995. Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies, Tax Bases, and Tax Evasion. The World Bank, Washington, D.C., 1995. Reprinted by Avebury Publishing, Brookfield, Vermont, 1996.

http://documents.worldbank.org/curated/en/1995/09/697061/bulgaria-financing-government-transition-political-economy-tax-policies-tax-bases-tax-evasion

Wilfred Ethier and Arye L. Hillman (Eds.), 2008. The WTO and the Political Economy of Trade Policy. Edward Elgar, Cheltenham UK.

http://www.e-elgar.com/shop/the-wto-and-the-political-economy-of-trade-p...

Roger D. Congleton, Arye L, Hillman, and Kai Konrad (Eds.), 2008. 40 Years of Research on Rent Seeking. Springer, Heidelberg.

Volume 1: Theory of Rent Seeking

Volume 2: Applications: Rent Seeking in Practice

http://www.springer.com/gp/book/9783540791881

Roger D. Congleton and Arye L, Hillman (Eds.), 2015. Companion to Political Economy of Rent Seeking, Edward Elgar, Cheltenham UK.

http://www.e-elgar.co.uk/bookentry_main.lasso?id=15325&breadcrumlink=&breadcrum=&sub_values=

 

JOURNAL ARTICLES

Arye L. Hillman, 1977. The Brigden Theorem. Economic Record, 53, 434-446.

Gideon Fishelson and Arye L. Hillman, 1977. Inflationary government financing and the trade deficit: Evidence from Israel, in Studies in Economics 1977, Nadav Halevi and Ya'acov Kopf (Eds.), Israel Economic Association, Jerusalem, August 1978, p. 94 – 107 (Hebrew).

Elhanan Helpman, and Arye L. Hillman, 1977. Two remarks on optimal club size. Economica, 44, 293 – 96.

Arye L. Hillman and Clark W. Bullard III, 1978. Energy, the Heckscher-Ohlin theorem and U.S. international trade, American Economic Review 68, 96-106. Reprinted in: Bertie Ohlin: Critical Assessments, John Cunningham Wood (Ed.), Routledge, London, 1997.

Arye L. Hillman, 1978. Symmetries and asymmetries between public input and public good equilibria. Public Finance/ Finances publiques, No. 3, 33, 269 – 279.

Arye L. Hillman and Se'ev Hirsch, 1979. Factor-intensity reversals: Conceptual experiments with traded goods aggregates. Weltwirtschaftliches Archiv 115, 272-283. .

Arad, Ruth W. and Arye L. Hillman, 1979. The collective good motive for immigration policy. Australian Economic Papers, 18, 243-257.

Arye L. Hillman and Peter Swan, 1979. Club participation under uncertainty, Economics Letters 4, 307–12.

Gideon Fishelson and Arye L. Hillman, 1979. Domestic monopoly and redundant tariff protection, Journal of International Economics 9, 47-55.

Ruth W. Arad and Arye L. Hillman, 1979. Embargo threat, learning and departure from comparative advantage, Journal of International Economics 9, 265 – 75.

Arye L. Hillman, 1980. Observations on the relation between "revealed comparative advantage" and comparative advantage as indicated by pre-trade relative prices. Weltwirtschaftliches Archiv 116, 315 – 21.

Gideon Fishelson, Arye L. Hillman, and Se'ev Hirsch, 1980. Comparative performance of Israel's industrial exports in the EEC and U.S. markets, in The Economic Integration of Israel in the EEC, edited by Herbert Giersch, J.C.B. Mohr, Paul Siebeck: Tübingen, pp. 125 – 174.

Arye L. Hillman, Edward Tower, and Gideon Fishelson, 1980. On water-in-the-quota, Canadian Journal of Economics 13, 310 – 317.

Gideon Fishelson, Arye L. Hillman, and Se'ev Hirsch, 1980. The factor-content characteristics of Israel's trade in a multilateral setting, in The Economic Integration of Israel in the EEC, edited by Herbert Giersch, J.C.B. Mohr, Paul Siebeck: Tübingen, pp. 175 – 198.

Arye L. Hillman, 1980. Notions of merit want, Public Finance/ Finances publiques 35, 213 – 226.

Arye L. Hillman, 1981. Unilateral and bilateral trade policies for a minimum-wage economy, Journal of International Economics 11, 407 – 413.

James H. Cassing and Arye L. Hillman, 1981. A social safety net for the impact of technical change, Economic Record 57, 232 – 237.

Arye L. Hillman, 1982. Declining industries and political-support protectionist motives, American Economic Review 72, 1180-1187. Reprinted in: The WTO, Safeguards, and Temporary Protection from Imports, Chad Brown (Ed.), Edward Elgar, Cheltenham UK, 2006; The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 43 – 50; Forty Years of Research on Rent Seeking 2 – Applications Rent Seeking in Practice. Roger D. Congleton et al. (Eds.), Springer, Berlin, 2008, pp. 105 – 112.

Mario I. Blejer and Arye L. Hillman, 1982. A proposition on short-run departures from the law of one price: Unanticipated inflation, relative price dispersion and commodity arbitrage, European Economic Review 17, 51-60. Reprinted (in Spanish): “Una explicacion de las desviaciones a corto plazo de la ley del precio unico: inflacion imprevista, dispersion de precios relativos y arbitraje commercial”. In Inflacion y varialibidad de los precios relativos, Mexico, DF, 1984, pp. 75 – 86.

Mario I. Blejer and Arye L. Hillman, 1982. On the dynamic non-equivalence of tariffs and quotas in the monetary model of the balance of payments, Journal of International Economics, August 1982, 13, 163 – 169. Reply, May 1985, 18, 381-382.

James H. Cassing and Arye L. Hillman, 1982. State-federal resource tax rivalry. Economic Record 58, 235 – 241.

Arye L. Hillman and Ngo Van Long, 1982.  Substitutes for a depletable resource and the monopolistic conservationist presumption, Australian Economic Papers, 1982, 21, 193-199.

Arye L. Hillman and Ngo Van Long, 1983. Pricing and depletion of an exhaustible resource when there is anticipation of trade disruption. Quarterly Journal of Economics, 98, 215 – 33.

Arye L. Hillman and Peter Swan, 1983.  Participation rules for Pareto-optimal clubs, Journal of Public Economics [78]20, 55 – 76.

Arye L. Hillman and Eliakim Katz, 1984. Oil price instability and domestic energy substitution for imported oil, Economic Record, 1984, 60, 28-33.

Arye L. Hillman and Eliakim Katz, 1984. Excise taxes, import restrictions, and the allocation of time to illegal activity, International Review of Law and Economics 1984, 4, 213 – 22.

Arye L. Hillman and Eliakim Katz, 1984. Risk-averse rent seekers and the social cost of monopoly power, Economic Journal 94, 104-110. Reprinted in: The Political Economy of Rent Seeking, Charles Rowley, Robert Tollison and Gordon Tullock (Eds.), Kluwer Academic Publishers, Boston, 1988, pp. 81-90; The Economic Analysis of Rent Seeking, Roger Congleton and Robert Tollison (Eds.), Edward Elgar, Oxford, 1995, pp. 243 – 249; The Political Economy of Rent Seeking, Charles K, Rowley, Robert D. Tollison, and Gordon Tullock, Kluwer Academic Publishers, Boston and Dordrecht, pp. 81-90; Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 97 – 103.

Franklin M. Fisher and Arye L. Hillman, 1984. The commodity composition of trade and the Heckscher-Ohlin theorem in the presence of aggregate and commodity specific factor-intensity reversals, Journal of International Economics 17, 159-172. Reprinted in: Aggregation: Aggregate Production Functions and Related Topics, chapter 11, pp. 261 – 275, Franklin M. Fisher, Harvester, Wheatsheaf and MIT Press, 1992.

Arye L. Hillman and Joseph Templeman, 1985. On the use of trade policy measures by a small country to counter foreign monopoly power. Oxford Economic Papers, 37, 346 – 52. .

Arye L. Hillman and Ngo Van Long, 1985. Monopolistic recycling of oil revenue and intertemporal bias in oil depletion and trade, Quarterly Journal of Economics, 100, 597 – 624.

James H. Cassing and Arye L. Hillman, 1985. Political-influence motives and the choice between tariffs and quotas. Journal of International Economics 19, 279-290.

Arye L. Hillman and Adi Schnytzer, 1986. Illegal activities and purges in a Soviet-type economy: A rent-seeking perspective, International Review of Law and Economics, June 1986, 6, 87-99. Reprinted in: Forty Years of Research on Rent Seeking 2 – Applications: Rent Seeking in Practice]. Roger D. Congleton, Arye L. Hillman, Kai A. Konrad (Eds.), Springer 2008, pp. 545 – 557.

Arye L. Hillman and Eliakim Katz, 1986. Domestic uncertainty and foreign dumping, Canadian Journal of Economics 19, 403-416.

James H. Cassing, Arye L. Hillman, and Ngo Van Long, 1986. Risk aversion, terms of trade variability, and social consensus trade policy, Oxford Economic Papers 38, 234-242.

James H. Cassing and Arye L. Hillman, 1986. Shifting comparative advantage and senescent industry collapse. American Economic Review 76, 516-523. Reprinted in: The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 516 – 523.

Arye L. Hillman and Dov Samet, 1987. Dissipation of contestable rents by small numbers of contenders, Public Choice, 54, 63-82. Reprinted in: Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 165 – 184. See also: Arye L. Hillman and Dov Samet, 1987. Characterizing equilibrium rent-seeking behavior: A reply to Tullock, Public Choice, 54, 85-87.

Arye L. Hillman and Eliakim Katz, 1987. Hierarchical structure and the social costs of bribes and transfers. Journal of Public Economics, 34, 129-142. Reprinted in: The Economics of Corruption and Illegal Markets, Gianluca Fiorentini and Stephano Zamagni (Eds.), Edward Elgar, Cheltenham UK 1999. In the series The International Library of Critical Writings in Economics; Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 523 – 536.

Arye L. Hillman, Eliakim Katz, and Jacob Rosenberg, 1987. Workers as insurance: Anticipated government intervention and factor demand, Oxford Economic Papers, 39, 813-820. Reprinted in: The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. pp. 585–592.

Arye L. Hillman, 1988. Impediments to a competitive environment in Israel. Presented at Symposium on American-Israel Economic Relations in Honor of the 40th Anniversary of the State of Israel, New York (June 1988).

Arye L. Hillman, 1988. Tariff-revenue transfers to protectionist interests: Compensation for reduced protection or supplementary reward for successful lobbying? Public Choice 58, 169 - 172.

Arye L. Hillman and Heinrich W. Ursprung, 1988. Domestic politics, foreign interests and international trade policy. American Economic Review 78, 729-745. Reprinted in: International Trade, J. Peter Neary (Ed.), Edward Elgar, Cheltenham UK, 1996; The Globalization of the World Economy: Trade and Investment Policy, Thomas Brewer (Ed.), Edward Elgar, Cheltenham UK, 1999, pp. 470 – 86; The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 99 -115; see also Domestic politics, foreign interests, and international trade policy: Reply, American Economic Review, 1994, 84, 1476-78.

Arye L. Hillman and John Riley, 1989. Politically contestable rents and transfers, Economics and Politics 1, 17-39. Reprinted in: Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 185 – 207.

Arye L. Hillman, 1989. Resolving the puzzle of welfare-reducing trade diversion: A prisoners' dilemma interpretation, Oxford Economic Papers 41, 452-455.

Arye L. Hillman, 1990. Protectionist policies as the regulation of international industry, Public Choice 67, 101-110.

Arye L. Hillman 1991. Liberalization dilemmas. In Markets and Politicians: Politicized Economic Choice, Arye L. Hillman (Ed.), Kluwer Academic Publishers, chapter 10, pp. 189 – 207.

Arye L. Hillman, 1991. Market structure, politics, and protection. In: Elhanan Helpman and Assaf Razin (Eds.), International Trade and Trade Policy, MIT Press, Cambridge MA, pp. 118 – 40.

Arye L. Hillman, 1991. Some problems of statistical measurement of economic activity in the transition from planned socialism. In: Economies in Transition: Statistical Measures Now and in the Future, Petr O. Aven (Ed.), International Institute for Applied System Analysis, Laxenburg, Austria, 1991, 69-78.

James H. Cassing and Arye L. Hillman, 1991. Equalizing the cost of success: Equitable graduation rules and the Generalized System of Preferences, Journal of International Economic Integration 6, 40-51.

Arye L. Hillman, 1992. Progress with privatization, Journal of Comparative Economics 16, 733 – 749.

Arye L. Hillman and Adi Schnytzer, 1992. Creating the reform-resistant dependent economy: Socialist comparative advantage, enterprise incentives and the CMEA. In: The Transition from Socialism in Eastern Europe: Domestic Restructuring and Foreign Trade, Arye L. Hillman and Branko Milanovic (Eds.), The World Bank, Washington, DC, chapter 10, pp. 243 – 262.

Arye L. Hillman and Heinrich W. Ursprung, 1992. The influence of environmental concerns on the political determination of international trade policy. In: Kym Anderson and Richard Blackhurst (Eds.), The Greening of World Trade Issues, University of Michigan Press, Ann Arbor MI, 1992, pp. 195 – 220. Invited paper for a conference organized at the GATT (replaced by the WTO).

Arye L. Hillman, 1992. The transition from socialist trade to European integration. In: The EC after 1992 - Perspectives from the Outside, Silvio Borner and Herbert Grubel (Eds.) Cambridge University Press, Cambridge UK, pp. 61 – 79.

Arye L. Hillman, 1992. The transition from the CMEA system of international trade. In: Trials of Transition: Economic Reform in the Former Communist Bloc, Michael Karen and Gur Offer (Eds.), Westview Press, Boulder, pp. 271 – 289.

Arye L. Hillman, 1992. International trade policy: Benevolent dictators and optimizing politicians, Public Choice 74, 1-15. European Public Choice Society Annual Conference, Meersburg, April 1990, plenary lecture

Arye L. Hillman, Istvan Abel, and David Tarr, 1992. The government budgetary consequences of reform of the CMEA system of international trade: The case of Hungary. In: The Transition from Socialism in Eastern Europe: Domestic Restructuring and Foreign Trade, Arye L. Hillman and Branko Milanovic (Eds.), The World Bank, Washington, DC, chapter 12, 277-293.

Arye L. Hillman 1993. Socialist clubs: A perspective on the transition, European Journal of Political Economy, 1993, 9, 307 – 319.

Arye L. Hillman and Heinrich W. Ursprung, 1993. The multinational firm, political competition, and international trade policy, International Economic Review 34, 347 – 63.

Željko Bogetić and Arye L. Hillman, 1994. The tax base in the transition: The case of Bulgaria, Communist Economies and Economic Transformation, 6, 267-282. Policy Research Working Paper number 1267, The World Bank, Washington, DC, March 1994. Updated as: Bogetić, Željko and Arye L. Hillman, 1995. The choice of a tax system, in: Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies Tax Bases, and Tax Evasion], Željko Bogetić and Arye L. Hillman (Eds.), The World Bank, Washington, D.C., pp. pp. 33 – 46.

Arye L. Hillman and Heinrich W. Ursprung, 1994. Greens, supergreens, and international trade policy: Environmental concerns and protectionism. In: Carlo Carraro (Ed.), Trade, Innovation, Environment, Springer, Heidelberg, pp. 75 – 108.

Arye L. Hillman, 1994. The political economy of migration policy. In: Horst Siebert (Ed.), Migration: A Challenge for Europe, J.C.B. Mohr Paul Siebeck, Tübingen, pp. 263 – 282.

Arye L. Hillman, 1994. The transition from socialism: An overview from a political-economy perspective. European Journal of Political Economy 10, 191 – 225. Special issue, festschrift in honor of Peter Bernholz, edited by Manfred Gärtner and Heinrich W. Ursprung.

Arye L. Hillman, Lubomir Mitov and R. Kyle Peters, 1995. The private sector, state enterprises, and informal economic activity. In Financing Government in Transition, Bulgaria: The Political Economy of Tax Policies, Tax Bases, and Tax Evasion, Željko Bogetić and Arye L. Hillman (Eds.), The World Bank, Washington, D.C., pp. 47 – 70. Summarized in: Arye L. Hillman and Željko Bogetić, 1995.

Arye L. Hillman, Peter Moser and Ngo Van Long, 1995. Modeling reciprocal trade liberalization: The political-economy and national-welfare perspectives, Schweizerische Zeitschrift für Volkswirtschaft und Statistik (Swiss Journal of Economics and Statistics), 131, 503-515.

Arye L. Hillman and Heinrich W. Ursprung, 1996. The political economy of trade liberalization in the transition, European Economic Review (Papers and Proceedings), April 1996, 40, 783 - 794.

Arye L. Hillman and Peter Moser, 1996. Trade liberalization as politically optimal exchange of market access. In: Matthew Canzoneri, Wilfred Ethier, and Vittorio Grilli (Eds.), The New Transatlantic Economy, Cambridge University Press, New York, NY, pp. 295-312. Reprinted in: The Global Trading System, volume 2, Core Rules and Procedures, Kym Anderson and Bernard Hoekman (Eds.), I.B. Tauris and Co Ltd, London and New York, 2002; The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 290 – 307.

Arye L. Hillman, 1996. Western economic theory and the transition: The public choice perspective. Economics and Mathematical Methods (Journal of the Central Economic and Mathematical Institute of the Russian Academy of Sciences) 32, 77-90. In Russian, translated by Mark Levin. Published in English as: Trade, Growth, and Economic Policy in Open Economies: Essays in Honor of Hans-Jürgen Vosgerau, Karl-Josef Koch and Klaus Jaeger, editors, Springer, 1998, pp. 351 – 367.

Arye L. Hillman, Manuel Hinds, Branko Milanovic, and Heinrich W. Ursprung, 1997. Protectionist pressures and enterprise restructuring: The political economy of trade policy in transition. In: Trade and Tax Policy, Inflation and Exchange Rates, Assaf Razin and Hans-Jürgen Vosgerau (Eds.), Springer, Berlin, Heidelberg and New York, pp. 215 – 243.

Alan Gelb, Arye L. Hillman, and Heinrich W. Ursprung, 1998. Rents as distractions: Why the exit from transition is prolonged. In: Economic Interdependence and Cooperation in Europe, Nicolas C. Baltas, George Demopoulos, and Joseph Hassid (Eds.), Springer, 1998, 21 – 38. Basis for: Rents and the Transition, World Development Report Background Paper, The World Bank, Washington D.C., April 1996.

Arye L. Hillman, 1998. Political economy and political correctness. Public Choice 96, 219-239. Presidential Address, European Public Choice Society, Prague, April 1997. Reprinted in: Forty Years of Research on Rent Seeking 2–Applications: Rent Seeking in Practice. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer, Berlin, 2008, pp. 791 – 811.

Arye L. Hillman and Avi Weiss, 1999. A theory of permissible illegal immigration. European Journal of Political Economy, December 1999, 15, 585-604.

 Arye L. Hillman and Heinrich W. Ursprung, 1999. Foreign investment and endogenous protection with protectionist quid pro quo. Economics and Politics 11, 1 – 12.

Arye L. Hillman and Heinrich W. Ursprung, 1999. The trials and tribulations of banking in transition economies: A political economy perspective. In: Financial Sector Transformation: Lessons from Economies in Transition, Mario Blejer and Marko Škreb (Eds.), Cambridge University Press, New York, pp. 132 – 149.

Arye L. Hillman and Heinrich W. Ursprung, 1999. What is special about endogenous international trade policy in transition economies? In: Balance of Payments, Exchange Rates, and Competitiveness in Transition Economies [92], Mario Blejer and Marko Škreb (Eds.), Kluwer Academic Publishers, Boston and Dordrecht, 255 – 282.

Epstein, Gil, Arye L. Hillman, and Avi Weiss, 1999. Creating illegal immigrants, Journal of Population Economics 12, 3-21.

Epstein, Gil, Arye L. Hillman, and Heinrich W. Ursprung, 1999. The king never emigrates, Review of Development Economics, 1999, 3, 107 – 21. Reprinted in: Forty Years of Research on Rent Seeking 2 – Applications: Rent Seeking in Practice. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 265 – 79.

Arye L. Hillman, 1999. The political economy of central bank independence. In Mario Blejer and Marko Škreb (Eds.), Major Issues in Central Banking, Monetary Policies, and Implications for Transition Economies], Kluwer Academic Publishers, Boston and Dordrecht, 1999, pp. 73 – 86.

Arye L. Hillman and Heinrich W. Ursprung, 2000. Political culture and economic decline, European Journal of Political Economy, 16, 189-213. Reprinted in: Forty Years of Research on Rent Seeking 1 – The Theory of Rent seeking. Roger D. Congleton, Arye L. Hillman, Kai Konrad (Eds.), Springer 2008, pp. 219 – 243.

Arye L. Hillman and Otto Swank, 2000. Why political culture should be in the lexicon of economics, European Journal of Political Economy 16, 1 – 4.

JoAnne Feeney and Arye L. Hillman, 2001. Privatization and the political economy of strategic trade policy  International Economic Review 42, 535-556.

Arye L. Hillman, Ngo Van Long, and Antoine Soubeyran, 2001. Protection, lobbying, and market structure, Journal of International Economics 54, 383 – 409.

Arye L. Hillman, 2002. On the way to the Promised Land: ten years in the wilderness without Moses. Published in Russian (translated by Mark Levin). In Economics and Mathematical Methods -Journal of the Central Economic and Mathematical Institute of the Russian Academy of Sciences, 38, 78 – 94.

Arye L. Hillman, 2002. Immigration and intergenerational transfers. In: Horst Siebert (Ed.), Economic Policy for Aging Societies. Kluwer Academic Publishers, Dordrecht and Boston, pp. 213 – 26.

Chen Kang, Gu Qingyang, and Arye L. Hillman, 2002. From the helping hand to the grabbing hand: Fiscal federalism in China. In: John Wong and Lu Ding (Eds.), China's Economy into the New Century: Structural Issues and Problems. World Scientific, Singapore, pp. 193 – 215.

Arye L. Hillman, 2003. Interpretations of transition. In Political Economy of Transition and Development: Institutions, Politics, and Policies, Nauro F. Campos and Jan Fidrmuc (Eds.), Kluwer Academic Publishers, Dordrecht, pp. 23 – 40.

Arye L. Hillman, Ngo Van Long, and Antoine Soubeyran, 2003. Lobbying for tariff protection and allocation of entrepreneurial resources. In: New Developments in International Trade: Theoretical and Empirical Investigations, Seiichi Katayama and Kaz Miyagiwa (Eds.), Research Institute for Economics and Business Administration, Kobe, pp. 129 – 46.

Epstein, Gil and Arye L. Arye L. Hillman 2003. Unemployed immigrants and voter sentiment in the welfare state, Journal of Public Economics, 87, 1641-1655. Reprinted in: Seiichi Katayama and Heinrich W. Ursprung (Eds.), International Economic Policies in a Globalized World, Springer, Berlin, 2004, pp. 119 – 32.

Arye L. Hillman and Eva Jenkner, 2004. User payments for basic education in low-income countries. In: Helping countries Develop: The Role of Fiscal Policy, Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Eds.), International Monetary Fund, Washington DC, 2004, pp. 233 – 264. Working Paper no 02/182, November 2002, International Monetary Fund, Washington D.C. Non-technical version: How to pay for basic education: Poor children in poor countries, Economic Issues 33, 2004, International Monetary Fund, Washington DC.

JoAnne Feeney and Arye L. Hillman, 2004. Trade liberalization through asset markets. Journal of International Economics 64, 151-167. Reprinted in: The WTO and the Political Economy of Trade Policy, Wilfred Ethier and Arye L. Hillman (Eds.), Edward Elgar, Cheltenham UK, 2008, pp. 173 - 189.

Arye L. Hillman, 2004. Nietzschean development failures, Public Choice 119, 263 – 280. Revised version of Poverty, inequality, and unethical behavior of the strong . Working Paper no 00/187, November 2000, International Monetary Fund, Washington D.C.

Emanuele Baldacci, Arye L. Hillman, and Naoko Kojo, 2004. Growth, governance, and fiscal-policy transmission channels in low-income countries. European Journal of Political Economy 20, 517 – 549. Revised version of Working Paper no 03/237, December 2003, International Monetary Fund, Washington DC. Reprinted in: Helping countries Develop: The Role of Fiscal Policy, Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste (Eds.), International Monetary Fund, Washington DC, 2004, pp. 67 – 104.

Arye L. Hillman, 2005. Globalization and the political economy of international trade policy. In: Trade Policy Reforms and Development: Essays in Honor of Professor Peter Lloyd, Volume II, Sisira Jayasuriya (Ed.), Edward Elgar, Cheltenham, U.K., 2005, pp. 3 – 22.

Arye L. Hillman, 2005. Political institutions, jurisdictional boundaries, and rent creation. Keio Economic Studies, nos. 1-2 2005, 42, 25 – 37. Special issue in honor of Professor Michihiro Ohyama, edited by Wilfred J. Ethier and Makoto Yano.

Arye L. Hillman, Raphael Franck, Miriam Krausz, 2005. Public safety and the moral dilemma in the defense against terror, Defense and Peace Economics 16, 347 – 364. (CEPR DP 4736, November 2004).

Arye L. Hillman 2007. Democracy and low-income countries. In José Casas Pardo and Pedro Schwartz (Eds.), Public Choice and Challenges of Democracy, Edward Elgar, Cheltenham, U.K., pp. 277 – 294.

Arye L. Hillman and Miriam Krausz, 2007. Directed credits and corruption. In Rahul Gupta and Santap Sanhari Mishra (Eds.), Corruption: The Causes and Combating Strategies. The Icfai University Press, Hyderabad, pp. 73-81.

Arye L. Hillman, 2007. Economic and security consequences of supreme values. Public Choice 30, 259 – 280. Also published as: An economic perspective on radical Islam. In Hillel Frisch and Efraim Inbar (Eds.), Radical Islam and International Security: Challenges and Responses, Routledge, London, 2008, pp. 44 – 69. [64]

Aidt, Toke and Arye L. Hillman, 2008. Enduring rents. European Journal of Political Economy 24, 454 – 53.

Arye L. Hillman, 2008. Globalization and social justice. Singapore Economic Review 53, 173 - 189. Invited lecture: Singapore Economic Review Public Lecture, September 2007.

Arye L. Hillman, 2009. Hobbes and the prophet Samuel on leviathan government. Public Choice 141, 1 – 4.

Arye L. Hillman, 2010. Expressive behavior in economics and politics. European Journal of Political Economy 26, 404 – 419.

Arye L. Hillman, 2011. Expressive voting and identity: evidence from a case study of a group of U.S. voters. Public Choice 148, 249-257.

Arye L. Hillman, 2013. Economic and behavioral foundations of prejudice. In Charles S. Small (Ed.), Global Antisemitism: A Crisis of Modernity. Leiden, Netherlands, and Boston, MA: Martinus Nijhoff Publishers, pp. 51-67. Available at:

http://www.osservatorioantisemitismo.it/wp-content/uploads/2014/05/01_ISGAP_Vol.-I_120114_Web.pdf#page=61

Arye L. Hillman and Niklas Potrafke, 2015, The UN Goldstone Report and Retraction: An empirical investigation. Public Choice 163(3), 247-266.

Arye L. Hillman, 2015. Rent seeking as political economy. In: Roger D. Congleton and Arye L, Hillman (Eds.), Companion to Political Economy of Rent Seeking, Edward Elgar, Cheltenham UK, 2015, chapter 2, pp. 10-16.

Arye L. Hillman, 2015. Rents and international trade policy. In: Roger D. Congleton and Arye L, Hillman (Eds.), 2015. Companion to Political Economy of Rent Seeking, Edward Elgar, Cheltenham UK, chapter 12, pp. 187-202.

Raphael N. Becker, Arye L. Hillman, Niklas Potrafke, Alexander H. Schwemmer, 2015. The preoccupation of the United Nations with Israel: Evidence and theory. Review of International Organizations 10(4), 413-437.

Arye L. Hillman, Kfir Metsuyanim, and Niklas Potrafke, 2015. Democracy with group identity. European Journal of Political Economy 40, 274-287. In special issue on Behavioral Political Economy.

Arye L. Hillman and Heinrich W. Ursprung, 2016. Where are the rent seekers? Constitutional Political Economy 27(2), 124-141. Special issue in memory of Gordon Tullock.

 

OTHER

Gil Epstein and Arye L. Hillman, 1998. Herd effects and migration. CEPR Discussion paper 1811. Centre for Policy Studies, London.

Christian Bjørnskov, Željko Bogetić, Arye L. Hillman, and Milenko Popović, 2014. Trust and identity in a small post-socialist post-crisis society. Europe and Central Asia Region, Poverty Reduction and Economic Management Unit, Policy Research Working Paper 6828, The World Bank, Washington DC.

http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469382&menuPK=64166093&entityID=000158349_20140401135537

 

COMMENTS AND SHORT PAPERS

A note on the distribution of tariff proceeds, Economic Record 1970, 46, 117-19. David E. James co-author.

A generalized cost allocation scheme: Comment. In: Steven A.Y. Lim (Ed.), Theory and Measurement of Economic Externalities, Academic Press, New York, 1976, pp. 103 – 106.

The case for terminal protection for declining industries: Comment, Southern Economic Journal, July 1977, 43, 155-160.

The theory of clubs: A technological formulation. In Agnar Sandmo (Ed.), Essays in Public Economics, D.C. Heath and Co., Lexington, Mass., 1978, 29 – 47.

Preemptive rent seeking and the social cost of monopoly power , International Journal of Industrial Organization, September 1984, 2, 277 – 281.

Producer and consumer interests, the state-owned pipeline, and public authority pricing of natural gas, Economic Record 1984, 60, 85-89.

Comment on: The political economy of protectionism: Tariffs and retaliation in the timber industry. In: Robert E. Baldwin (Ed.), Trade Policy Issues and Empirical Analysis, University of Chicago Press for NBER, 1988, pp. 364 – 368.

Comment on: Technology policy in the completed European market. In: L. Alan Winters and Anthony Venables (Eds.), European Integration: Trade and Industry, Cambridge University Press, Cambridge UK, 1991, pp. 161 – 164.

International trade policy in Israel: Another model, Public Choice, 1992, 74, 355-360.

The economics and politics of Europe 1992. In Europe 1992: The Perspective from Israel, In Arye L. Hillman and Zvi Sussman (Eds.), Israel International Institute for Applied Economic Policy Review, Tel-Aviv, 1991, pp. 7 – 22.

Comment on: Capital controls in direct democracies. In: Hans-Jürgen Vosgerau (Ed.), European Integration in the World Economy, Springer, Heidelberg, 1992, pp. 772 – 774.

Comment on: Money and credit in the transition of the Czechoslovak Republic. In: Horst Siebert (Ed.), The Transformation of Socialist Economies, J.C.B. Mohr Paul Siebeck, Tübingen, 1992, pp. 326 – 330.

Debate on the transition of post-communist economies to a market economy, Acta Oeconomica (Journal of the Hungarian Academy of Sciences) 1992, 44, 285 – 289.

Comment on: The philosophy of locational competition. In: Horst Siebert (Ed.), Locational Competition in the World Economy, J.C.B. Mohr Paul Siebeck, Tübingen, 1995, pp. 17 – 25.

The legal system in the transition from social to private property: with reference to Hobbesian anarchy, Locke's natural right of freedom, and the rule of law. In Proceedings of Conference on Challenges and Opportunities for Economic Transition in Yugoslavia, Goran Pitić (Ed.) USAID, Economic Institute, Chesapeake Associates, 1998, pp. 64-89.

Hobbes and Samuel: Reply (to Geoffrey Brennan). Public Choice 2009, 141, 13 –15.

 

LITERATURE SURVEYS

Fred Gruen and Arye L. Hillman, 1981. A review of issues pertinent to liquid fuel policy, Economic Record 1981, 57, 11-27.

Arye L. Hillman 1989. Policy motives and international trade restrictions. In Hans-Jürgen Vosgerau (Ed.), New Institutional Arrangements for the World Economy, Springer, Heidelberg, 1989, pp. 284 – 302.

Arye L. Hillman and Avi Weiss, 1999. Beyond international factor movements: Cultural preferences, endogenous policies, and the migration of people, an overview. In: Jaime de Melo, Riccardo Faini, and Klaus Zimmermann (Eds.), Migration: The Controversies and the Evidence. Cambridge University Press, Cambridge UK, pp. 76 – 91.

Arye L. Hillman, 2001 (Italian). La politica del commercio internazionale per gli anni 2000: idee fondamentali e sviluppi. Il Futuro delle Relazione Economiche Internazionale, Saggi in onere di Fredrico Caffè, a cure di Giancarlo Corsetti, Guido M. Rey, and Gian Cesare Romagnoli, Franco Angeli, Milano 2001, pp. 27 – 63. (Translated by Maria Grazia Nicolosi).

Arye L. Hillman, 2003. International trade policy: Explaining departure from free trade. In: Encyclopedia of Public Choice, Charles Rowley and Friedrich Schneider (Eds.), Kluwer Academic Publishers, Dordrecht, 2003, pp. 129 – 138. See also Departure from free trade: A survey], CEPR Discussion paper 3707, January 2003. Reprinted in: Charles K. Rowley and Friedrich Schneider (Eds.), Readings in Public Choice and Constitutional Political Economy. Springer, New York, 2008.

Arye L. Hillman, 2003. Trade liberalization and globalization. In: Encyclopedia of Public Choice, Charles Rowley and Friedrich Schneider (Eds.), Kluwer Academic Publishers, Dordrecht, pp. 312 – 20. See also Trade liberalization and globalization: A survey, CEPR Discussion paper 3845, March 2003. Reprinted in: Charles K. Rowley and Friedrich Schneider (Eds.), Readings in Public Choice and Constitutional Political Economy. Springer, New York, 2008.

Arye L. Hillman, 2008. The gains from trade and refusal to trade. In: Ngo Van Long, Makoto Tawada, and Binh Tran Nam (Eds.), Globalization and Emerging Issues in Trade Theory and Policy. A volume in honor of the 80th birthday of Murray Kemp, Emerald Group Publishing, 2008, pp. 193 – 208.

Roger D. Congleton, Arye L, Hillman, and Kai Konrad, 2008. Forty years of research on rent seeking: An overview. In: 40 Years of Research on Rent Seeking. Springer, Heidelberg. Volume 1: Theory of Rent Seeking, Volume 2: Applications: Rent Seeking in Practice, pp. 1-44.

Arye L. Hillman, 2013. Rent seeking. In Reksulak, Michael, Razzolini, Laura, Shughart, William F. II (Eds.), The Elgar Companion to Public Choice (2nd Edition). Edward Elgar, Cheltenham U.K., pp. 307-330.

 

REVIEW ARTICLES

Arye L. Hillman, 2002. The World Bank and the persistence of poverty in poor countries , European Journal of Political Economy 18, 783 – 95. Extended review of: The Elusive Quest for Growth, by William Easterly, MIT Press, 2001.

Arye L. Hillman, 2004. Corruption and public finance: an IMF perspective. European Journal of Political Economy 20, 1067 – 77. Extended review of: Governance, Corruption, and Economic Performance. George T. Abed and Sanjeev Gupta, (Eds.), International Monetary Fund, Washington, DC, 2002.

 

POLICY DOCUMENTS

A program for restructuring of the Histadrut sector of the economy of Israel, August 1989. With Yitzhak Goldberg et al Hebrew and English.

Macroeconomic policy in Hungary and its microeconomic implications. In European Economy, Economic Transformation in Hungary and Poland, Economic Commission of the European Communities, Directorate-General for Economic and Financial Affairs, March 1990, 43, 55 – 66.

The economy of Israel: Misinformation or disinformation? Prepared for the Office of the Economic Advisor, Prime Minister's Office, Israel, January 1992.

Social marginalization: The effects of trade and technology. Research Department, World Trade Organization, Geneva, February 1997.

Israel and Jordan in a new Middle East, in Proceedings of Symposium on Israel-Middle East Relations in the Year 2000, American-Israel Economic Corporation, New York, 1996, pp. 122 – 124.

The past as a guide to the future. In: The Progress of Israel's Economy: The 50th Anniversary of the State of Israel, edited by Mordecai Hacohen, American-Israel Economic Corporation, New York, 1998.

 

 

 

BOOK REVIEWS

Review of Stephen P. Magee, William A. Brock and Leslie Young, ‘Black Hole Tariffs and Endogenous Policy Theory: Political Economy in General Equilibrium’, Journal of Economic Literature, 1991, 29(1), 104-106.

Review of Gordon Tullock, ‘The Economics of Special Privilege and Rent Seeking’, Kyklos, 1991, 44(4), 657-659.

Review of Jonathan Bendor, Daniel Diermeier, David A. Siegel, and Michael M. Ting: ‘A behavioral theory of elections’, Public Choice 2012, 150, 391-394

 

 

Working Papers

Arye L. Hillman and Heinrich W. Ursprung. Academic exclusion: Some experiences. March 2016.

James H. Cassing and Arye L. Hillman, Political choice of the means of protection. April 2016.

 

Research

The principal focus of my research has been the study of public policy from a political- economy perspective. The title of a book that I edited in 1991, ‘Politicized economic choice’, summarizes the research program. Observed and socially optimal policies could in principle coincide. It often seems, however, that political self-interest results in policies that differ from the policies that normative economic models propose as socially desirable. The description of ‘optimal’ policies is then qualified by ‘optimal for whom’. I have sought to explain observed public policies, beginning in international economics with protectionism, trade liberalization and international migration. I subsequently extended the political-economy perspective to public policy more generally, with a focus on politically created rents and rent seeking. A political-economy perspective explains the failure of economic development in low-income countries, notwithstanding substantial aid resources provided by the World Bank and International Monetary Fund, and explains the extended transition from socialism.

The view of international trade policy as political economy is the theme of my book The Political Economy of Protection (1989, reprinted 2001, reissued 2014). Public finance is combined with political economy or public choice in my book ‘Public Finance and Public Policy: Responsibilities and Limitations of Government’ (Cambridge University Press, 2003, 2009, 2017). The book has been translated into Chinese, Greek, Japanese, Russian and Hebrew.

The political-economy approach to public policy emphasizes that lump-sum taxes are in general not feasible or are not used. Hence, contrary to the approach proposed by Richard Musgrave that became standard in the public-finance and international-economics literature, the theory of public policy cannot be realistically formulated as involving independent pursuit of efficiency and distributional objectives. It is a matter of debate whether ideology or convenience has been the reason for the standard policy models proposing a benevolent planner with access to lump-sum taxes. The impossibility of separating distributive from efficiency objectives is a primary premise of my political-economy approach to public policy. With lump-sum taxes and transfers unavailable, there are deadweight losses associated with public spending. The deadweight losses supplement social losses due to contestable rents that policies have created. A theme of my research has been the social cost of rent seeking, or use of resources and time to influence policy decisions.

In 1988, at the then Karl Marx (now Budapest) School of Economics, with the country still under communist rule that was not to end until free elections in March 1990, I presented to an audience of economists the ‘western model of public policy’ inclusive of lump-sum taxes and a social planner maximizing a social welfare function. The audience at first thought that I was in jest. Then, having been convinced that ‘western models’ of recommended public policy did indeed take the form that I had described, the local academics were aghast that the ‘western model’ embodied assumptions about political institutions and human behavior that they were hoping to escape. I attempted to explain that the model was normative (describing what ought to be). That did not allay their distress.

When, around the mid-1990s, political economy began to enter the mainstream in western literature, there was often a tendency to model a median voter as determining policy. As was shown by Moises Ostogorski in 1903, policies determined by the median voter can be precisely the contrary of the policies determined by voting under representative democracy. The median-voter models downplay, or indeed ignore, political discretion and rent seeking. With median-voter models relatively simple to exposit, modeling convenience may have prevailed over describing reality.

My research has focused on representative democracy, for which the political principal-agent problem, political discretion, and rent seeking are present. I have been fortunate to have the ‘public choice school’ to provide a forum to give a hearing to my political-economy ideas.  

 

 

Presentations

Plenary talks and public lectures (excludes departmental seminars)

University of Genoa, lecture on “Political economy”, at ceremony conferring an honorary doctorate, March 4 2016.

Tullock Memorial Conference, George Mason University, Arlington, VI, USA. “The political economy of an idea: The case of rent seeking”, 2-3 October 2015.

Centre for Studies in Social Sciences, Kolkata, Conference on Public Finance, Public Economics, and Public Policy, keynote speaker, “Expressive behavior and public policy”, 5-6 December 2013. http://ctrpfp.ac.in/program_dec_2013.pdf 

Trade and the Organization of Production in the Global Economy: A Conference in Honor of Wilfred Ethier, Vanderbilt University, “Rent extraction and income redistribution: A behavioral perspective on international trade policy”, October 25-26, 2013.

Australasian Public Choice Conference, University of Tasmania. Plenary lecture: “Beyond criticism: Logrolling and decoy voting in the United Nations”, December 10-11 2012

National University of Singapore, Lee Kuan Yew School of Public Policy. Public lecture: “Expressive behavior and public policy”, August 13, 2012

World Bank, ECA PREM Seminar, Washington DC, on “Lost in transition”, June 19, 2012

XII April International Conference on Economic and Social Development, Higher School of Economics, Moscow, “The professional literature in economics”, 3-4 April 2012 http://conf.hse.ru/en/2012/honorary

Public Choice Society, World Conference, Miami. Plenary talk on the contributions of Gordon Tullock, “A good idea: So what”. March 2012

Jerusalem Institute for Market Studies May 2011. Public lecture on: "Identity and expressive behavior in voting in Israel" http://www.youtube.com/watch?v=q2tz5_RW35o

Public Choice Society, San Antonio, March 2011. Plenary presentation: “Behavioral political economy”

Silvaplana Workshop on Political Economy. Pontresina, July 2010. “Expressive policy traps”

CESifo 3rd Workshop on Political Economy, Dresden, December 2009. Keynote speaker on “Expressive behavior”

European Public Choice Society, Athens, April 2009. Plenary lecture on: “Expressive behavior in economics and politics: An overview and a perspective”

Alexander von Humboldt Foundation: The Israeli Humboldt Club, the Humboldt Kolleg Symposium on “When Science and Humanities Meet”, January 8, 2009. Invited lecture: “The welfare state”

Jerusalem Institute for Market Studies, 21 May 2008. Public lecture: "The work ethic and the welfare state"

Hubei College of Economics, China, October 10, 2007. Public lecture: “Is social justice achievable?”

Singapore Economic Review annual public lecture, Nanyang University, September 20, 2007, “Globalization and social justice”

Humboldt University, Berlin, July 9-13 2007, MEMS guest lecturer, public lectures on “Current aspects of public finance and public policy” 

BESA Institute for Strategic Studies, Bar-Ilan University, May 7, 2007, public lecture on “Why does the Arab world remain poor?”

University of Havana, 44th Anniversary of the Initiation of the Study of Economics, Havana, Cuba, October 6, 2006. Plenary lecture on: “The elusive quest for social justice”

Mont Pelerin Society General Meetings, Salt Lake City, August 15-20, 2004.  Plenary address on: “Institutions of international decision making: the United Nations”

The World Bank, PREM Conference, Washington DC, April 27-28, 2004.  Debate with Jeffrey Sachs on: “Economic policies for failed states” http://www.nytimes.com/2004/11/07/magazine/07SACHS.html?pagewanted=all&_r=0

European Public Choice Society, Berlin, April, 2004. Plenary lecture on: “Development failure”

Nanyang Technological University, Singapore, Public lecture, “Why are some countries rich and others poor?” August 2000.

Israel Economic Association, Symposium on 50 years of Economic Research in Israel, April 28, 1999. Invited lecture on: “Political Economy”

European Public Choice Society Annual Conference, Prague, April 1997. Presidential Address: "Political economy and political correctness"

Mont Pelerin Society General Meeting, Cannes, September 1994. Plenary address: "Nostalgia, self-interest, and the transition from socialism"

European Public Choice Society Annual Conference, Portrush, April 1993. Plenary address: "The transition from socialism: Some comforting thoughts for adherents to a public choice perspective"

Geneva Environmental Meetings, Environment and Development: Conflict and Convergence, May 1992. Presentation on: "Environmental protection and international trade"

Annual Meetings of the Economic Association of Israel, Tel-Aviv, December 1991. Plenary lecture: "The political economy of international trade policy"

European Public Choice Society Annual Conference, Meersburg, April 1990. Plenary lecture on "International trade policy: Benevolent dictators and optimizing politicians"

Taft Lecture, University of Cincinnati, April 1989. On: “Liberalizing socialist industry"

 

 

Teaching

Political economy and public policy

Public finance

International trade and migration

 

Personal

BIOGRAPHICAL NOTES

I was born in post-world-war II Europe, in January 1947, in the U.S. zone of Germany, stateless as far as I can tell. My father Yehoshua Hillman (ז"ל) (Helman and Pinczewski families) and my mother Rosa (ז"ל) (née Borenstein), had survived the  Holocaust. After liberation, in the case of my father and mother by the Russian army, survivors went home to see who was left alive (a case of a Schelling focal point). My father found my mother wandering around in Lodz, alone and confused, and took care of her. Poland could at the time be dangerous for survivors, in particular those seeking to reclaim their property. There was a pogrom against Jewish survivors in Kielce Poland in 1946. My parents left Poland in 1946, crossing borders, and reaching a displaced people's camp in southern Germany, from which they moved to the nearby small town of Bad Wörishofen, where I was born. Both my mother and father had been previously married. Their respective spouses and children had perished. There are challenges in growing up in the shadow of the Holocaust. ‘The second generation’ has been studied and written about. I find quite remarkable the claims of the Holocaust deniers, although I understand the motivation. Holocaust deniers view the state of Israel as having been re-created in consequence of the Holocaust and their way of delegitimizing Israel is to deny that the Holocaust ever took place.  

My first languages were Yiddish spoken in the house and German spoken in kindergarten and on the street. Yiddish remained the language of communication with my parents. Bad Wörishofen is situated off the highway between Munich and Lindau. The town has spa waters that have purported curative properties. We lived in Bad Wörishofen until late 1951, at which time we moved to Australia. The trip was long, the boat going from Marseilles through the Panama Canal and across the Pacific to Sydney. My parents appeared to be looking for the end of the earth subject to the presence of a Jewish quorum (minyan). The intention had originally been to move to Israel but there had been reports of insufficient food and extremely hard times. I was to close the circle by later moving to Israel with my wife and children. My parents eventually joined us. They lived out the last years of their lives in Israel, in the presence of grandchildren and great grandchildren.

We arrived in Australia in early 1952. My parents chose to settle in Newcastle, north of Sydney. We lived in a working-class area of a working-class town. My best friend often went to school barefoot, which I did also, not wanting to be different. Amazingly, in retrospect, shoes were not required at school, but this was the early 1950s in a large but provincial NSW town. In our working class neighborhood, my parents built up a successful retail clothing business based on trust and personal credit, at a time when credit and trust were not part of the usual business model. Women came to my mother for clothes because, if a dress did not suit, she immediately said ‘not for you, take it off’.  She imposed her taste but she had good taste because the customers kept coming back. My father managed the business and, in a room behind the shop, continued with the tailoring that was his profession. He also, in time, became the equivalent of the local rabbi, which he could do because of his pre-war yeshiva studies. My father had entered into a personal contract in Auschwitz that, if he were to survive, he would, for the course of his life, honor Jewish traditions. I viewed the contract as applying to his descendants. I had a special responsibility, being the only survivor of my generation.

My parents were unfamiliar with western education. My mother was an effective businesswoman but had left school in pre-war Poland at the age of 12 and my father was most learned in the traditional Jewish manner but he was unfamiliar with Latin characters. Admittance to a selective regional high school introduced me to a social milieu that I had known little about. Other children certainly had more extensive English vocabularies. I was in the class that studied Latin, which apparently was a special privilege. The Latin teacher was said to be secretary of the local branch of the Communist Party and we were made familiar not only with Ovid but also Spartacus. I played rugby and also ‘Australian’ football. I was a member of the school chess team. After I won the local junior championship, the next step was participation in a more prestigious contest, which however coincided with the summer camp at which every year I could meet my wife to-be Jeannette, who lived in Sydney. I made the wise choice of the summer camp. In 1967 I married Jeannette (née Mann) and in the same year completed an honors degree at the local University of Newcastle. With 1st class honors and the University Medal, I was encouraged by Professor Warren Hogan, who was my university mentor, to pursue an academic career.  When Warren Hogan called to inform me that I had won the University Medal, I did not know that the Medal existed. I had to ask him what it was all about.

I was awarded a Commonwealth (of Australia) PhD scholarship and thought to study with Professor Murray Kemp at the University of NSW in Sydney. Professor Harry Edwards, who was at the time setting up the economics department at newly opened Macquarie University in western Sydney, convinced me that I could complete a PhD while teaching. I accepted a teaching position and began a PhD at Macquarie, with Peter Lloyd from Australian National University as external advisor. I was happy to be able to contribute, years later, to Peter Lloyd’s retirement Festschrift. Harry Edwards left academia after election to the Australian federal parliament for the Liberal (actually conservative) Party and remained a backbencher for 22 years, some in opposition. With his Oxford PhD, he was surely a more competent economist than the politicians who occupied the finance ministry and other positions of political power when the Liberal Party was in office. There is political economy in the case study of his career. A good economist is apparently not necessarily a successful politician.

Jeannette and I have always retained a deep appreciation of the opportunities that Australia provided to us and our families. Jeannette’s father Joseph (ז"ל) arrived in Australia as a baby from Harbin in China. Her mother Netta (ז"ל) was born in Australia, her parents having immigrated from Odessa. Netta’s parents ran a pub in Ballarat in the gold-mining area of the state of Victoria and subsequently had a pub in an inner western suburb of Sydney. Joseph Mann was a Sydney lawyer. Jeannette and I, living at a time when the independent state of Israel had been restored, felt an obligation to participate in the rebuilding of the state. Don Patinkin, who had arrived in Israel in the early years of the modern state and was the father of academic economics in Israel, had ensured that academic standards in economics would be high. The road to an academic position in Israel went through a leading graduate school in the United States. In 1970, I resigned from a tenured position at Macquarie University and left to begin graduate school at the University of Pennsylvania.

Jeannette and I arrived in Philadelphia with our two young daughters Tamara and Ilana. Jeannette’s visa did not allow her to work. I had received various graduate-school scholarship offers. Gerry Adams, head of the Economics Research Unit at Penn offered a guaranteed three-year appointment as Research Fellow, a position that paid tuition and provided a stipend of $333 a month, and health insurance. At Penn, I found myself in another world. Fellow students included graduates of MIT and other prestigious universities. Graduate school teachers included Irving Kravis, Wilfred Ethier, Albert Ando, Thomas Sargent, Oliver Williamson, Lawrence Klein, Herbert Levine, Phoebus Dhrymes and Karl Shell. The research-fellowship position limited me to three courses a semester whereas other students could take four. The three-year fellowship limitation provided an incentive to complete the PhD as soon as possible. Zvi Adar, a graduate student ahead of me, who subsequently became a professor in the Tel-Aviv business school, gave me the invaluable advice to choose an advisor who had completed his own PhD thesis in a short period of time. I had nine months left of the Fellowship when I approached Albert Ando, who taught the public economics graduate course, and asked whether the remaining time was sufficient to write a thesis. Albert replied ‘I wrote my thesis in three months and I am three times cleverer than you, so you should be able to finish in nine months’ – which I did. The thesis combined international and public economics. Bill Ethier was my co-advisor. I was Bill Ethier’s first graduate student.

As the end of the three years of graduate school approached, Irving Kravis, the senior international-trade professor at Penn at the time, and whom I regarded as a mentor, offered to propose me for a position in a leading U.S. department (Stanford). I asked instead for a recommendation for a position in Israel. I accepted an offer from Tel-Aviv University, but there was a detour. Our financial resources, not substantial in the first place, were depleted, and, although my thesis had been accepted, I had to make some ‘revisions’. After three years of graduate school, we stayed in the U.S. an additional fourth year. I took an income-maximizing offer for a one-year visiting appointment at the University of Illinois in Urbana. A small university town in the mid-west was a change in many respects from urban east-coast Philadelphia.

We arrived in Israel in June 1974, with now four children, ranging in age from 6 years to 3 months, with our sons Nachman Eliyahu (Eli) and Benjamin additions to our two daughters Tamara and Ilana with whom we had arrived in the U.S. We had never previously been in Israel, which had been for us a concept rather than an actual physical location.

When we were arrived, we were not aware was the deep ideological division in Israel between the ‘left’ and the ‘right’. The division, which has persisted, has a number of dimensions. The ‘left’ had been instrumental in facilitating the establishment of the modern state through the collective institutions, including the kibbutz but also in the economy in general through ‘the holding company of the workers’. The Jews returning to Israel from the later part of the 19th century on did what Jews had not done in Europe during the long years of exile. They defended themselves and they worked the land. The ‘new’ Jews also abandoned their Jewish traditions. The abandonment was a response to antisemitism. ‘If there are no Jews, there can be no antisemitism’. Or ‘we new Jews will not be the target of antisemites’. Many insisted on calling themselves only ‘Israelis’ and not ‘Jews’. Other called themselves ‘Canaanites’, the biblical name of the inhabitants of the Land of Israel before the people of Israel arrived after the Exodus from Egypt. The philosophy of no distinction between peoples also bred the idea that, since all people are equal, peace with everybody is possible. The ideas of the ‘left’ have been extremely prominent in academia in Israel, in particular in the social sciences, but not at Bar-Ilan University, where respect for Jewish traditions has been combined with the quest for scientific advancement.       

I settled in at Tel-Aviv University, where I had excellent colleagues. Elhanan Helpman and Efraim Sadka arrived when I did, having respectively studied at Harvard and MIT. Elhanan seemed focused on a broader recognition than being an academic in Israel could provide. He spent time at Rochester and eventually accepted a position at Harvard. Efraim went the other direction of local involvement including business activity. At Tel-Aviv University, the pragmatism of identifying with the ‘left’ was made clear to me. I was advised to proclaim adherence to universal values and to position myself on the left of the spectrum of ideology and thereby to meet with acceptance by academics in Israel and abroad who were uncomfortable with Jewish identity. I was also advised to accept all blame that was directed against the state of Israel, whatever the accusations. Years later, Jim Markusen, a leading trade theorist who was visiting Israel, asked me ‘what is really going on here – the colleagues from Tel-Aviv are just too reasonable’. I did not engage with Jim on the topic. He would witness for himself during his stay in Israel coexistence, and also religious tolerance, at least from the Jewish side. In a meeting with an attaché from the British Embassy in Tel-Aviv who had come to interview me, I asked what would happen if we actually did what we were accused of doing. His reply was ‘that would be awful’.

I found that the Labor Party in Israel represented the privileged parts of society, including the managers of factories and businesses of the ‘socialist’ sector that in the 1970s and 1980s controlled the majority of the economy. Monopolies and cartels, and trade restrictions, were justified as protection of workers’ job security but were sources of privileged rents (my 1988 paper lists the monopolies and cartels, including ‘enterprise’ ownership). Although principles are otherwise, socialism seems inevitably to benefit the privileged, and perhaps the haughty and smug. Workers in Israel have tended to vote not for Labor but for the Likud.

The unthinkable happened in 1977 when the ‘left’, which had won every election since the establishment of the modern state in 1948, lost the general election. I, perhaps alone in the department of economics, welcomed this development. I had much admiration for the wisdom and modesty of the new prime minister Menachem Begin.

In 1980, I moved across town to Bar-Ilan University, where I found greater personal compatibility. Bar-Ilan had been founded to combine modern learning and research with Jewish tradition. I had tried to move to Bar-Ilan in previous years but was, ironically, suspect in approaching Bar-Ilan from Tel-Aviv University. Jacob Paroush paved the way to Bar-Ilan.

At Bar-Ilan, I self-discovered the Public Choice School. I was influenced by the 1980 volume ‘Toward a Rent-Seeking Society’. The papers of Gordon Tullock and others in the volume were wise and immediately comprehensible. Here was economics that expressed ideas directly and did not hide behind a façade of exaggerated technicality and abstraction that was intended to pass for intellect and sophistication. The ancient Greek and Jewish approach to aesthetics differ. The Greeks regarded aesthetics as an end in itself. For Jews aesthetics is a means to an end. The beautiful flower attracts the pollinating bee and thereby assures the continuation of its kind. Many papers in economics follow the Greek ideal of aesthetics as an end in itself.

The economics department at Bar-Ilan grew around specialization in political economy and decision theory, and in particular the theory of rent seeking. In our intellectual endeavors, we complemented the Public Choice Center in Virginia. Shmuel Nitzan was attracted to contest models. Eli Katz and I had a research program on rent seeking.

A visit to the Australian National University in Spring 1979 led to joint research with Ngo Van Long, Peter Swan, and Jim Cassing (who was visiting from the University of Pittsburgh). Max Corden, Fred Gruen, and Robert Gregory were there for interesting discussions. During a stay as visiting professor at UCLA in 1985-87, I benefitted from the intellectual depth of Robert Clower, Harold Demsetz, Arnold Harberger, and Jack Hirshleifer. Sebastian Edwards, Ed Leamer, David Levine, and John Riley were also stimulating colleagues. At UCLA, I also met Heinrich Ursprung, who was visiting and with whom a long research collaboration began. I benefitted from two semesters, separated by some years, at Princeton, where I had the good company, amongst others, of Gene Grossman and Avinash Dixit.

A stay in 1990 in the newly created Transition Unit of the World Bank under the directorship of Alan Gelb and subsequent return visits sponsored by Manuel Hinds provided opportunities to travel to and study transition countries at first hand. Being ‘on the ground’ and having opportunities for discussions with government officials reaffirmed my political-economy perspective on transition. A research program with Željko Bogetić of the World Bank continued over the years.

Beginning in the year 2000, Vito Tanzi and Sanjeev Gupta, who had introduced corruption as an impediment to development into IMF research and policy discussion, invited me to participate in studies of low-income countries with staff members of the IMF’s Fiscal Affairs Department. During my initial visit to the IMF, I formulated a Nietzschean view of development failure. It seemed to me that the primary impediment to development was not corruption but rather absence of ethics. The strong at will appropriating the output of the weak undermines incentives of the weak to be productive. With the strong controlling the state through authoritarian government, corruption is not defined because the rule of law is absent. The weak have an incentive to pretend to be inherently lazy or unproductive, and to rely on non-appropriable means of happiness, such as music and dance. The domination of the weak by the strong often includes the subjugation of women by men. I approached Stanley Fischer, then deputy chief of the IMF, and asked him whether it was acceptable to put out an IMF research paper on the themes of Nietzsche. He replied ‘fine as long as the poor are not blamed’.    

I have often been an iconoclast, beginning from viewing trade policy as a political-economy phenomenon and going on to political-economy perspectives on other public policies. I have not been an iconoclast as a matter of principle, and not at all from the viewpoint of the public-choice school. I did not accept the at-the-time mainstream explanations for public policy based on the ‘public-economics’ model of benevolent government. Because of the Marxian connotations (contributing according to ability), I was uncomfortable with the lump-sum taxes there were present in the models. As the public-choice school had proposed, whether making choices in the private sector or in government, ‘people are the same people’. I was fortunate to have the public-choice school to provide intellectual company.

From the experience of 20 years as editor and editor-in-chief of the European Journal of Political Economy (from 1994 to 2015), I have come to understand the extent of discretion that editors have over what will be published and what will not. My co-editor Henry Ursprung and I aimed for objectivity and fairness with authors. We did not wish to treat others as we had been treated by some editors, who had at times been supercilious and condescending, and for whom, in the absence of objective criteria for evaluating merit, the scope was present to favor friends and acquaintances, and perhaps authors from leading U.S. departments. We have all seen papers in the ‘leading’ journals that are no better than papers that we know were denied publication. I have encountered excellent economists who did not wish to forgo their identity and location for a career at a ‘leading’ U.S. university. ‘Out of sight, out of mind’ applies very well when editors and reviewers make judgments that compare people who they personally know with others who are just names on a page. Experiments have shown that revealing a person’s face induces sympathy and cooperation. A face behind a name has been shown to change how people relate to others. Location therefore matters in the academic world.

For some 25 years, Henry Ursprung and I have organized the Silvaplana workshop in political economy in the mountains of eastern Switzerland. The workshop was initiated to promote political economy when political economy was not mainstream. The workshop combines presentation of papers with mountain treks and on-the-way discussions. We issue an open call for papers every year. In 1994 we were awarded the Max-Planck Prize for our research in political economy. In recent years I have benefited from having Niklas Potrafke as co-researcher. Niklas has been forthright in joining me to address issues that can be subject to disinformation and emotion. Bill Ethier has continued to provide ongoing guidance. I can always send him a paper knowing that he will provide comments, and that he may attempt to push me back if I have gone too far in saying what he feels should not yet be said. He has told me that I am often ‘ahead of my time’.

In October 2015, because of a legally specified age limit, I was obliged to change my status to professor emeritus. The change is fortunately inconsequential. I keep my office, students, research funds, and my professional life. A reduced teaching load provides more flexibility to travel and more time with the family, including our many grandchildren, two whom have married.

I was proud in March 2016 to receive an honorary doctorate from the University of Genoa. The University has a long tradition, dating back to at least 1471. Genoa is the suggested birthplace of Christopher Columbus, the discoverer of the ‘new world’.  The discovery of the ‘new world’ had unfortunate consequences for native inhabitants but was in the end instrumental, through the United States, in providing for a ‘free world’ in which equality of opportunity supplants privilege and hierarchy.

 

 

Arye L. Hillman

Bar-Ilan University, Israel

April 14, 2016