The title of this book, Democratic Governance and Economic Performance, may (at least before the colon) give rise to expectations of confirming our conventional wisdom about democracy. Indeed, as we have documented in previous chapters, popular media and even academic scholarship have characterized democracy as a one-way street to improved social welfare. But our robust theoretical framework from Chapter 1 shows that democracies can become more concerned about electoral distributions than general opportunities. And in the event that democratic governance goes too far in this manner, that chapter also offers formal guidance as to what we should see as evidence of shrinking opportunities.
In this chapter, we will examine data from the “natural laboratory” that the US local exchange sector offers and find persistent evidence that this (up to now) principled concern about democracy going too far is more than a theoretical curiosity. To start, we will see that output in this sector has...
KeywordsEconomic Performance Coefficient Estimate Real Option Federal Communication Commission Voter Turnout
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