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Coordinated by Sabin DRĂGULIN

Elements for a Theory of Decentralized Governance

 

Cristian-Ion POPA

Institute of Political Sciences and International Relations – Romanian Academy

 

 

Abstract: This year the Romanian Government has triggered a wide-ranging political process in order to revise the existing Constitution and, in this context, an ambitious program of decentralization-regionalization of the Romanian state administration. The article proposes a brief critical analysis of these generous objectives of the Government, and the means of achieving them, using a part of the academic literature devoted to decentralized governance. The two main sections of the article will attempt to address, in turn, and as realistic as possible, (1) the potential advantages of decentralized governance, and (2) some risks of this type of government, as they are described in the relevant literature of public economy.

 

Keywords: decentralization, regionalization, public good and services, public debt.  

 

1. INTRODUCTION

The Romanian Government has triggered this year a wide-ranging political process in order to revise the existing Constitution and, in this context, an ambitious program of decentralization-regionalization of the Romanian state administration. Through this program, the Government expects to bring citizens closer to policy decisions, to allocate the national resources more efficiently, reduce existing regional inequalities and also prevent new ones, including by decentralized absorption of European funds – all these according to higher principles of subsidiarity, accountability, transparency, efficiency, equity and democratic participation[1] .

The article proposes a brief critical analysis of these generous objectives of the Government, and the means of achieving them, using a part of the relevant academic literature devoted to decentralized governance.

Indeed, decentralization is one of the most important current political reforms, which is experienced in a growing number of countries, more or less developed, on all continents. Everywhere, the main objective is to turn government in self-government” – characterized by more participation and cooperation, transparency and accountability. To this end, political power and resources were devolved” to the sub-national (regional and local) levels of government, which has reached to spend about 50% of overall public revenues in some countries[2] .

This “quiet revolution”[3], as Tim Campbell called it, has generated a new model of governance, more participative and responsible, that attempts “to rewrite the Constitutional-Fiscal Contract between government and citizens”. As Tony Blair stated over a decade ago, in the UK the Labour government’s devolution was aimed at “re-balancing power between citizen and government” in order to “move us away from a centralised Britain to a more democratic, decentralised, plural state”.[4] As a more general evaluation, Jonathan A. Rodden points out that: “[…] other than transitions to democracy, decentralization and the spread of federalism are perhaps the most important trends in governance around the world over the last 50 years”.[5]

At the same time, there are an increased number of academic studies and policy-reports of great international organizations (the World Bank, IMF or OECD) focused on the consequences of decentralization on some policy-relevant outcomes such as the macroeconomic stability, public and private investment levels, efficient provision of public goods and services, education, healthcare, school enrolment, etc.  

My analysis is based on a general observation: the decentralized governance, as it is practiced today in the world, coexists with quite different levels of economic prosperity, which casts serious doubts on the existence of a simple, linear and universale causal relationship between “administrative decentralization and economic prosperity”, as official documents of the Romanian Government optimistically assumes. It is too obvious, however, that some decentralized countries (USA, Switzerland) are rich, while others are relatively poor (Russia, Brazil, Argentina); some recorded rapid economic growth (China) and other relatively weak one (Mexico).

Therefore, the two main sections of my article will attempt to address, in turn, and as realistic as possible, (1) the potential advantages of decentralized governance, and (2) some risks of this type of government, as they are described in the relevant literature of public economy. The article ends with some Conclusions (3).

 

2. POTENTIAL ADVANTAGES OF DECENTRALIZED GOVERNANCE

From the perspective of current public economy, the central argument in favor of administrative and financial decentralization, and an enactement in Constitutions of some sub-national (regional) levels of governance, lies in more efficient provision of public goods and services[6] . Decentralized and differentiated provision from one region to another is likely to increase overall, national welfare, more than if they are offered in a centralized and uniform manner. Why? Because an efficient provision (i.e. the sum of marginal benefits is equal to the sum of the marginal costs of inhabitants) of local public goos and services is geographically variable, as result of different needs and costs of production from one region to another. Therefore, if the government wants to increase (maximize) national welfare, it is necessary to decentralize its administration so that it can provide differentiated local goods and services[7].

   The increase of national welfare via decentralization was first and systematically argued in public economy by Charles Tiebout, in his famous study A Pure Theory of Local Expenditures”[8]. He started from the positions expressed by other great public economists like Richard Musgrave[9] , Paul Samuelson[10] and others according to which, in principle, there is no economical way, of “market type” to determine the efficiency of resource allocation devoted to public goods and services that the government provides. “As a practical matter”, will note in his turn John F. Due:

 

“[…] there is no way in which the marginal social costs and benefits of activities which benefit the community as a whole can be measured; the MSB-MSC rule offers no actual guidance for policy determination… In other words, the optimum levels of each activity are determined by the collective estimates of the community regarding relative desirability of particular degrees of attainment of various specific goals”.[11]

 

This general evaluation has particularly important implications, for it presupposes that a substantial proportion of gross domestic product (the taxes collected in the state budget) would be inefficiently (non-optimal”) managed by the government, compared to the private, market economy. As Tiebout argues, however, if this theory may be valid for national public expenditure, it is not necessarily valid for local public expenditure. Citizens of a free and democratic society, he noted, often “vote with their feet”, choosing to live and work, to educate their children and so on in the region that offers the “tax package” (tax-and-public spending system) that best suits their needs and possibilities. The aggregate outcomes of this fully rational behaviour of citizens, as consumers and voters, requires regional authorities to provide, sooner or later, public goods and services in an efficient manner, such as those provided by private, competitive markets:

 

The consumer-voter may be viewed as picking that community which best satisfies his preference pattern for public goods. This is a major difference between central and local provision of public goods. ... The greater the number of communities and the greater the variance among them, the closer the consumer will come to fully realizing his preference position. [...] Spatial mobility provides the local public-goods counterpart to the private market’s shopping trip”.[12]

 

This general view, widely accepted today in the literature, was formalized later by Wallace E. Oates in the so-called Decentralization Theorem”:

 

“[…] in the absence of cost-savings from the centralized provision of a [local public] good and of interjurisdictional externalities, the level of welfare will always be at least as high (and typically higher) if Pareto-efficient levels of consumption are provided in each jurisdiction than if any single, uniform level of consumption is maintained across all jurisdictions”.[13]

 

  In other words, if it were a single central Planner, both omnipotent and benevolent towards citizens and perfectly informed, it could decide to produce public goods and services, central and local, properly differentiated, i.e. effectively, relative to the needs of each and all, and according to different circumstances from one region to another, thereby maximizing the overall welfare. But how such überindividuelle entity there was not and there is not in no real, history-existing society, we must admit that regional administrators, being closer to the people and the circumstances of their lives, may have a better knowledge and understanding of the needs and costs of meeting them than any central government.

On the other hand, in today’s society there is certain political and constitutional constraints – Equality Before the Law!”, for example – that prevents the central government to programmatically provide differentiated levels of public goods and services. These two types of constraints – informational and constitutional – limits central government’s ability to provide local public goods and services in the differentiated and therefore economically efficient manner.

Thus, administrative-financial decentralization and, consequently, strengthening regional levels of government can help increase national economic welfare. Spectrum of citizens’ migration from one region to another obliges the authorities to provide public goods and services in the quantity and quality considered effective by the citizens themselves. Moreover, significant property rights holders, as well as profitable private enterprises owners, systematically choose between competing tax jurisdictions those that offer them the best fiscal package of local tax-and-services. As a corollary of this analysis, free choice of residences by citizens, and of fiscal jurisdictions by local, domestic and foreign entrepreneurs push regional administrators to adopt wise and balanced policy decisions on taxes and public spending.

As the responsibilities of the central government in decentralized governance, public economy has established long time ago a general normative framework. In principle, the central government bears responsibility of macroeconomic and monetary stability, but also of interpersonal and interregional redistribution of national income”.[14]

The first responsibility necessarily derives from the monetary prerogative, constitutional attributed, to central government and central bank. And the second, which seems less obvious, is supported by the argument that free territorial mobility of economic enterprises and labor severely limited the financial means that regional authorities can have to redistribute income among citizens of their jurisdictions. A bold regional policy to support low-income residents, for example, would generate in time an influx of poor people from other regions and an exodus of persons with high income, which bear the related tax burden, endangering this entire policy.[15]

   Therefore, the tax-assignment problem” concerns the adequacy of different types of taxes at different levels of governance, given the inter-jurisdictional mobility of people, goods and capital. Level and number of taxes decisively influence the overall efficiency of resource allocation, (more) taxed goods being bought less, as private enterprises usually choose the most favorable tax jurisdictions. As ordinary buyers may have to incur additional costs for travel and transportation to purchase goods and services from jurisdictions with lower levels of taxation, etc.. Thus, regional authorities should avoid an increased taxation of highly mobile entities like capital or final goods and to provide instead public infrastructures able to increase local productivity of profitable investments.

As the territorial delimitation of the regions, public economy starts from the following general observation: The existence and magnitude of beneficial “spillover effects” between regions depend on their geographical extension. And an economic, efficient way to enhance these beneficial effects is to increase the size of designed regional jurisdictions. But excessive geographic extension may involve considerable welfare losses due to lower capacity to differentiate local production of goods and services, which is an important source of economic efficiency. Finally, we must find a right balance so that to enhance the benefits of spillover effects, without diminishing those arising from decentralized and differentiated provision of public goods and services.

For example, let’s suppose for a moment that we would start from a tabula rasa, ignoring the history, geography and local and national culture, and would design de novo some regions of the country according to the single criterion of economic efficiency. From the perspective of effective management of the environment (an important public good today) internal rivers, for example, which in the past could delineate certain territories, are the most inappropriate kinds of “natural boundaries”.[16]

If it is not possible that such an important natural resource to be placed within a single region, residents and authorities in neighboring regions must find appropriate, private and public, forms of association, in order to “catch” as many of the economic, mutual beneficial spillovers, but also to prevent any damage, equally mutual, of its improper or even fraudulent exploitation. In general, a “rational map” of regionalization should be designed to enhance, not decrease the substantial potential benefits that can be derived from complete internalization within the same administrative jurisdiction of large natural resources like mountains, river basins, mineral deposits etc.

 

3. RISKS OF DECENTRALIZATION

In the last decades, decentralization policies in industrialized countries, but also in developing, including post-communist countries has no obtained beneficial results in all cases. Based on these heterogeneous experiences, current academic literature devoted to this area has already identified certain types of risks, “dangers”[17] or “traps”[18] of decentralization which, if known and properly understood, can be largely avoided by a government that aims to initiate this type of reforms.   

First of all, decentralization should be viewed and designed as a part of a broader strategy to improve the administrative capacity of the state – through increased transparency and accountability of its actions and decisions, by mobilization and increased participation of citizens in the political process” as a whole.

As Joseph E. Stiglitz[19] reveals, some uncertainty” about the consequences of reforms generates skepticism, so that the proposed measure be regarded as exclusively would benefit some at the expense of others. Lack of transparency decredibilises government commitments and jeopardizes the citizen consensus for its policies. But there are strong incentives” to keep and even cultivate the secrecy in politics. Secret produces substantial rents” those in proximity of political decision centers, information being a valuable, scarce commodity. And according to economic reasoning, wherever and whenever there is a scarce commodity, emerges a market in which the parties – sellers and buyers – trying to exploit and even to conserve this scarcity artificially created. In today’s society, the content of this valuable information typically refers to business opportunities with the state, either at central or local level. More specifically, it provides to initiates” or insiders” (in Romania they are commonly called smart guys”) an asymmetrical” and discriminatory access to the huge flows of financial funds for the production of public goods and services at all levels of government.   

As a political process, decentralization involves many stakeholders and interest groups within and in proximity of government, so it is necessary to renegotiate their control over public resources (both income and expenditure sides). And uncertainties about the attributions of different levels of government and on the sharing of public resources can generate corresponding long political debates that can delay the reform process as a whole.[20]

Regions can use the political process to request and obtain a growing share of public resources without necessarily assume new public responsibilities. In turn, large Ministries (Health, Education, Transport, etc.) do not easily give up to influence the investment policies and central coordination in favor to new regional administrators.[21]

From “fiscal” point of view, decentralization may jeopardize macroeconomic stability at national level in three main areas: the assignment and sharing of tax bases and expenditures; the matching of tax and expenditure decisions; and the regulation of sub-national borrowing levels.[22]

In the early 90s of last century, administrative decentralization in Argentina, for example, has assigned more fiscal levers to provincial governments. These have ignored in large measure the efforts of tax collection at national level, which has contributed significantly to the country’s overall indebtedness and economic crisis of the early 2000s. In China, instead, regional governments are forbidden by law to accumulate deficits and finance them through borrowing. But Brazilian states have accumulated since the late 90s a debt of over 100 billion U.S. $, exceeded only by the higher level of the federal debt and the central bank.[23]

   Indeed, one of the major risks of decentralization is that of excessive public indebtedness, particularly if there are “soft budget constraints” and strong politically-induced “expectations” of regional authorities to be “helped” and even “saved” in cases of “default”. It is about so-called too big to fail” mentality. In David E. Wildasin’s terms:

 

„A local government’s ability to extract a’bailout’ from a central government depends on how big it is. Larger localities may rationally expect bailouts – and thus operate under softer budget constraints. Effective fiscal decentralization requires an institutional structure that minimizes these adverse incentives”.[24]

 

According to the International Monetary Fund, in many OECD countries in recent decades decentralization has led, among other things, to a significant increase of the “contribution” of regional, sub-national levels of governance at national public indebtedness, as is the case of Regioni in Italy, Communidades Autonómas in Spain or German Länder, the last becoming in recent years the largest sub-national public debtors in Europe.[25]

From the perspective of public economy, excessive public debt accumulated at all levels of government means however a massive transfer of wealth, both unfair and inefficient, between citizens, regions and even between successive generations of the same nation[26] . In this respect, the old David Hume’s evaluation on public credit and debt remains valid: “a practice which appears ruinous, beyond all controversy… either the nation must destroy public credit, or public credit will destroy the nation”, because brings with it “poverty, impotence, and subjection to foreign powers”[27]

The remedy is the adoption of a Balanced Budget Rule” in current Constitutions, tried and failed in the U.S. in 1995, but with chances of success in the European Union, by the Fiscal Treaty entered into force on January 1, 2013. The Treaty requires signatory states (including Romania) to provide sound and sustainable public finances” so that public administrations deficits do not become excessive, so that Member States’ budgets deficit should not exceed 3% of GDP at market prices and public debt does not exceed the threshold of 60% of GDP at market prices. To this end, the Treaty stipulates the formal commitment of Member States to adopt the “Balanced Budget Rule” as mandatory and preferably permanent constitutional” provision.[28]

Public economists recognize that public administration, at all levels, can and should spend, including by credit, to provide public goods and services which the private economy cannot provide, such as national defense, justice and police services, as well basic infrastructure of society, but warns that high administrative costs or increased expenditure devoted to social assistance” may become unsustainable on long-term, undermining the economic growth and national prosperity.

But in the absence of a legal, even constitutional strong constraint, the elected politicians at all levels of government easily approve public borrowings and expenditures for all kinds of real and imagined “needs”, because they are always appreciated by some, others or even all citizens. This “easy” approval ignores, however, basic economic reasoning according to which these resources are extracted from alternative uses, sacrificing material goods, usually more valuable, that can no more be produced, and human needs, usually more basic, which can no more be satisfied, now and in the future.

By spending without taxing”, covering deficits by continuous borrowings, politicians create societal, general undesirable, unjust and inefficient outcomes. It is obvious that these results would be different, much improved in a constitutional framework constraining politicians to collect taxes and then spend them.

The imposition of budget balance rule does not mean however to “constitutionalize” a particular political philosophy (say: liberal, not socialist) or a particular conception of macroeconomic policy. From the perspective of public economy, there is a irreducible conceptual difference between the rules establishing “procedures” for making decisions and the rules that expect “outcomes” of adopted decisions. In fact, the most existing constitutional rules are formal, “procedural”, prescribing modalities by which political activity takes place – voting rights, regular elections, majoritarian government, etc. –, but they cannot anticipate anything substantial about the outcomes that may be obtained from the application of these procedures. In effect, a game whose rules determine par avance the winners is not a genuine game. As James M. Buchanan reveals:

 

“When viewed in this perspective, a constitutional rule for budget balance is procedural rather than substantive. Such a rule does not constrain either the overall size of the public sector (the budget) or the composition of the activities within that sector (emphasis added)”.[29]

 

 4. CONCLUSION

 Some critics of the Fiscal Treaty which requires budget balance often accuse the “fiscal flexibility” limitation of public administration. And, indeed, the rule constrains to some extent the tax choices of policy-makers at all levels of government. But the important issue here is that of the “model” for understanding and predicting their behavior, both individually and in their interaction within institutional structures they inhabit. From this perspective, the “most elementary prediction” that logically follows from the fundamental assumptions of public economy is that, in the absence of effective, strong constitutional constraints, the current States based on representative democracy finance their public expenditure rather by borrowing than by (increased) taxation of the taxpayers, creating in this manner permanent deficits[30].

Finally, some European and Romanian critics of balanced budget rule imposed this year by the Fiscal Treaty claim that it will ultimately undermine the “European social model” of expanded assistential state. But this argument is incorrect and even specious. Anywhere in the world, including Europe, public administrations must finance their social expenditures mostly by income redistribution of current taxpayers for the sake of high ethical principle of solidarity between members of the same nation and not by excessive public borrowing burdening future generations.

One answer to this problem is real, fiscal decentralization. As recent theoretical research reveals, higher decentralization (measured as the sub-national governments’ share of own source tax revenues) is associated with improved public budget balances.

 

Bibliography

BAHL, Roy, Jorge MARTINEZ-VAZQUEZ, Sequencing Fiscal Decentralization, World Bank, Washington, D.C., 2006.

BOADWAY, Robin, Anwar SHAH, Fiscal Federalism: Principles and Practice of Multiorder Governance, Cambridge University Press, Cambridge, 2009.

BUCHANAN, James M., “The balanced budget amendment: Clarifying the arguments”, Public Choice 90, 1997.  

BUCHANAN, James M., “The Ethics of Debt Default”, The Collected Works of James M. Buchanan, Vol. 14, Liberty Fund, Indianapolis, 2000.

CAMPBELL, Tim, The Quiet Revolution, University of Pittsburgh Press, Pittsburgh, 2001.

CANUTO, Octaviano, Lili LIU, “Subnational Debt Finance and the Global Financial Crisis”, Economic Premise, No. 13, World Bank, Washington, D.C., May 2010.

DILLINGER, William, Steven B. WEBB, Fiscal Management in Federal Democracies: Argentina and Brazil, World Bank, Washington, D.C., 1999.

DUE, John F., Government Finance: An Economic Analysis, Irwin, Homewood (Illinois), 1963.

FAGUET, Jean-Paul, “Decentralization and Governance”, A Special Issue of World Development, 2013.

FUHR, Harold, “The Seven Traps of Decentralization Policy”, International Journal of Administrative Science & Organization, Vol. 18, No. 2, May 2011.

HUME, David, Of Public Credit (1742), Essays, Moral, Political, and Literary, E.F. Miller (ed.), Liberty Fund, Indianapolis, 1987.

KENT, Eaton, Kai KAISER, Paul SMOKE, The Political Economy of Decentralization Reforms: Implications for Aid Effectiveness, The World Bank, Washington, D.C., 2010.

MUSGRAVE, Richard A., “The Voluntary Exchange Theory of Public Economy”, Quarterly Journal of Economics, LII, February 1939.

MUSGRAVE, Richard A., The Theory of Public Finance, McGraw-Hill, New York, 1959.

OATES, Wallace E., Fiscal Federalism, Harcourt Brace Jovanovich, New York, 1972.

OATES, Wallace E., “An Essay on Fiscal Federalism”, Journal of Economic Literature, Vol. XXXVII, September 1999.

PRUD’HOMME, Rémy, “On the Dangers of Decentralization”, Policy Research Working Paper 1252, The World Bank, Washington, D.C., 1994.

RODDEN, Jonathan A., Hamilton’s Paradox: The Promise and Peril of Fiscal Federalism, Cambridge University Press, Cambridge, 2006.

SAMUELSON, Paul A., “The Pure Theory of Public Expenditure”, Review of Economics and Statistics, Vol. 36, No. 4, 1954.

SMITH, Adam, The Wealth of Nations (1776), Modern Library, New York, 1994.

STIGLITZ, Joseph E., “Interests, Incentives an Institutions”, Policy, Spring 1998.

TIEBOUT, Charles, “A Pure Theory of Local Expenditures”, The Journal of Political Economy, Vol. 64, No. 5, 1956.

WILDASIN, David E., Externalities and Bailouts. Hard and Soft Budget Constraints in Intergovernmental Fiscal Relations”, Policy Research Working Paper 1843, The World Bank Development Research Group, November 1997.

***International Monetary Fund, Fiscal Monitor: Balancing Fiscal Policy Risks, IMF, Washington, 2012.


 



[1] MEMORANDUM. Adoptarea măsurilor necesare pentru demararea procesului de regionalizare-descentralizare în România” [http://www.mdrt.ro/userfiles/Regionalizare_memorandum_1902_13.doc].

[2] Jean-Paul FAGUET, “Decentralization and Governance”, A Special Issue of World Development, 2013.

[3] Tim CAMPBELL, “The Quiet Revolution”, University of Pittsburgh Press, Pittsburgh, 2001.

[4] Anthony BLAIR, “Speech to the Welsh Assembly”, 2001 [http://www.totalpolitics.com/speeches/devolved-politics/devolution/33433/tony-blairs-speech-to-the-welsh-assembly.thtml].

[5] Jonathan A. RODDEN, Hamilton’s Paradox: The Promise and Peril of Fiscal Federalism, Cambridge University Press, Cambridge, 2006, pp. 1-2.

[6] Wallace E. OATES, An Essay on Fiscal Federalism”, Journal of Economic Literature, Vol. XXXVII, September 1999, pp. 1120–1149.

[7] Ibidem, p. 1120.

[8] Charles TIEBOUT, “A Pure Theory of Local Expenditures”, The Journal of Political Economy, Vol. 64, No. 5., 1956, pp. 416-424.

[9] Richard A. MUSGRAVE, “The Voluntary Exchange Theory of Public Economy”, Quarterly Journal of Economics, LII, February, 1939.

[10] Paul A. SAMUELSON, The Pure Theory of Public Expenditure”, Review of Economics and Statistics, Vol. 36, No. 4, 1954.

[11] John F. Due, Government Finance: An Economic Analysis, Homewood (Illinois), Irwin, 1963, p. 22.

[12] Charles TIEBOUT, “A Pure Theory of Local Expenditures… cit.”, pp. 418, 422.

[13] Wallace E. OATES, Fiscal Federalism, Harcourt Brace Jovanovich, New York, 1972, p. 54.

[14] Richard A. MUSGRAVE, The Theory of Public Finance, McGraw-Hill, New York, 1959.

[15] Wallace E. OATES, An Essay on Fiscal Federalism”, Journal of Economic Literature, Vol. XXXVII, September 1999, p. 1121.

[16] Ibidem, p. 1130.

[17] Rémy PRUD’HOMME, On the Dangers of Decentralization”, Policy Research Working Paper 1252, The World Bank, Washington, D.C., 1994, pp. 1-36.

[18] Harold FUHR, The Seven Traps of Decentralization Policy”, International Journal of Administrative Science & Organization, Vol. 18, No. 2, May 2011, pp. 88-93.

[19] Joseph E. STIGLITZ, Interests, Incentives an Institutions”, Policy, Spring 1998.

[20] Roy BAHL, Jorge MARTINEZ-VAZQUEZ, Sequencing Fiscal Decentralization, World Bank, Washington, D.C., 2006.

[21] Kent EATON, Kai KAISER, Paul SMOKE, The Political Economy of Decentralization Reforms: Implications for Aid Effectiveness, The World Bank, Washington, D.C., 2010, p. 20.

[22] Robin BOADWAY, Anwar SHAH, Fiscal Federalism: Principles and Practice of Multiorder Governance, Cambridge University Press, Cambridge, 2009.

[23] Octaviano CANUTO, Lili LIU, “Subnational Debt Finance and the Global Financial Crisis”, Economic Premise, World Bank, Washington, D.C., No. 13, May, 2010, pp. 1-7.

[24] David E. WILDASIN, “Externalities and Bailouts. Hard and Soft Budget Constraints in Intergovernmental Fiscal Relations”, Policy Research Working Paper 1843, The World Bank Development Research Group, November 1997, p. 1.

[25] International Monetary Fund, Fiscal Monitor: Balancing Fiscal Policy Risks, IMF, Washington, 2012, p. 46.

[26] James M. BUCHANAN, “The balanced budget amendment: Clarifying the arguments”, Public Choice 90, 1997, pp. 117–138.

[27] David HUME, Of Public Credit (1742), Essays, Moral, Political, and Literary, E.F. Miller (ed.), Liberty Fund, Indianapolis, 1987, par. II. IX.2.

[28] Treaty on Stability, Coordination and Governance in The Economic and Monetary Union [www.european-council.europa.eu/.../treaty-on-stability,-coordination...].

[29] James M. BUCHANAN, “The balanced budget amendment...cit.”, p. 126.

[30] Idem, The Ethics of Debt Default”, The Collected Works of James M. Buchanan, Vol. 14, Liberty Fund, Indianapolis, 2000, pp. 519–533.