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The boundaries of the state

  • Wohlgemuth, Michael
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    The paper is organized as follows: in part 2, I give a short account of Humboldt's boundaries of the state that relates to many present-day challenges to classical liberalism: his blunt rejection of any solicitude of the state for the positive welfare of the citizen which also covers education, religion and any kind of moral paternalism. In part 3, I refer to the new economic literature on the optimal size and number of nations in order to discuss whether small states are more likely to be (nearly) minimal states. This literature tends to disregard Humboldt's arguments in favour of exposing the individual to varieties of situations that he can choose and from which he can learn to self-develop. Therefore, in part 4, I argue that the evolutionary merits of this exposure can be illustrated by regarding institutional competition as a Hayekian discovery procedure. In part 5, I look at the partial removal of borders within the European Union and, using some intuitions from club theory, I argue that, in terms of the size of European government, integration has become in most areas too deep whereas in terms of the size of membership in the Union the EU has grown too big in some areas and too small in others. I conclude with a plea for more decentralization and competition amongst jurisdictions as a way to lead, as if by an invisible hand, to at least somewhat more limited states. My qualified claim is thus: more, and more open, boundaries between states lead to more limited governments.

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    Paper provided by Walter Eucken Institut e.V. in its series Freiburg Discussion Papers on Constitutional Economics with number 11/3.

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    Date of creation: 2011
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    Handle: RePEc:zbw:aluord:113
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    1. Johannes Rincke, 2005. "Yardstick Competition and Policy Innovation," Public Economics 0511010, EconWPA.
    2. Roland Vaubel, 2008. "A History of Thought on Institutional Competition," Chapters, in: Institutional Competition, chapter 2 Edward Elgar.
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    4. Roland Vaubel, 2005. "The Role of Competition in the Rise of Baroque and Renaissance Music," Journal of Cultural Economics, Springer, vol. 29(4), pages 277-297, November.
    5. Lars P Feld & Gebhard Kirchgässner, 2001. "The political economy of direct legislation: direct democracy and local decision-making," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 329-367, October.
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    12. Vanberg, Viktor J, 2000. "Functional Federalism: Communal or Individual Rights?," Kyklos, Wiley Blackwell, vol. 53(3), pages 363-86.
    13. Mathias Dewatripont & Francesco Giavazzi & Jürgen von Hagen & Ian Harden & Didier Baudewyns & Gérard Roland & Howard Rosenthal & André Sapir & Guido Tabellini, 1995. "Flexible integration: towards a more effective and democratic Europe," ULB Institutional Repository 2013/9541, ULB -- Universite Libre de Bruxelles.
    14. Michael Wohlgemuth, 2008. "Learning Through Institutional Competition," Chapters, in: Institutional Competition, chapter 3 Edward Elgar.
    15. Buchanan, James M & Faith, Roger L, 1987. "Secession and the Limits of Taxation: Toward a Theory of Internal Exit," American Economic Review, American Economic Association, vol. 77(5), pages 1023-31, December.
    16. Vanberg Viktor, 1993. "Constitutionally Constrained and Safeguarded Competition in Markets and Politics with reference to a European Constitution," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 4(1), pages 26, March.
    17. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
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