Political and economic systems either allow exchange and resource allocation to take place through mutual agreement under a system of liberalism, or force them to take place under a system of cronyism in which some people have the power to direct the activities of others.
This book, published by the Mercatus Center at George Mason University, seeks to clarify the differences between liberalism and cronyism by scrutinizing the actual operation of various political and economic systems. Examples include historical systems such as fascism in Germany between the world wars and socialism in the former Soviet Union, as well as contemporary systems such as majoritarianism and industrial policy.
By examining how real governments have operated, this book demonstrates why—despite their diverse designs—in practice all political and economic systems are variants of either liberalism or cronyism.
The book presents an improved methodology for measuring cyclical variability of revenues and uses this methodology to show that there is no way to restructure state tax systems in order to appreciably reduce the fiscal stress associated with recessions. Fiscal stress can be lessened by setting aside revenues during prosperous years in a rainy day fund, but current rainy day funds are not large enough to eliminate the fiscal stress caused by recessions.