Editor's introduction

American Journal of Economics and Sociology, The,  Nov, 2004  

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Surely, rational economic behavior is carried out in the context of broader conventions, traditions, and institutional norms. Economists are advised to take notice of these other questions and in this way fortify and enrich economics beyond its orthodox forms and approaches.

This journal has had a long and colorful history in its attempts to illuminate and apply some of the insights that can be found in Henry. George's writings. Toward that end, I organized a session at the 2002 meeting of the Southern Economic Association in New Orleans on the topic "Echoes of Henry George's Economics in Modern Analysis." That session generated three interesting papers. First, Professor Richard Arnott prepared an original and insightful survey of the "Henry George theorem" that has come to play an important part in the field of urban economics. The theorem suggests that land rents can, under certain circumstances, be large enough to fund an optimal amount of public services. This Henry George theorem (HGT) provides criteria for creatively thinking about what an optimal-sized city might look like. At least one economist has tried to apply the HGT to find out if Tokyo is too large or just about right. Arnott reviews these findings and the methods and the limitations of such studies. The evidence suggests that there are loud echoes of Henry George in modern urban economic theory.

The next of the papers, by Professor Nicolaus Tideman, argues that the modern theory of the "winner's curse" in financial economics and the warnings about the waste associated with that phenomenon are especially applicable in land speculation. Since Henry George's reform proposals were designed to put an end to land speculation, they might also be credited with ending the losses associated with the "winner's curse" phenomenon in speculative markets. Again, we have echoes of Henry George in modern financial analysis.

Professor J. G. Backhaus proposes that natural resources need to be managed better and that some natural resources need to be used in sustainable ways so that they do not get exhausted too soon or at all. Tax policy will play an important part in either hastening the ill-conceived consumption of valuable resources or perhaps by not allowing that tragedy to occur.

In this context, Backhaus explores the idea that Henry George's insights have relevance today in designing a tax policy that makes the best use of nature's resources. His essay is enough to persuade the reader not only that more work needs to be done on this question but also that it is a good question to pursue with the aid of George's insights.

Finally, we were fortunate to get two scholars, Professor Randall G. Holcombe and Fred E. Foldvary, to comment on all three papers. It is an unusual situation when the comments presented are as good as the papers, and we have that situation in this issue.

This November issue also contains a shorter symposium on African economic development and the failures so evident on that continent. Our symposium contains two papers. The first, by Professor Augustin Kwasi Fosu, provides some additional insight into the sad state of affairs in Sub-Saharan Africa. Using coups as a measure of political instability, Fosu shows that political instability has a measurable and decided negative effect on economic development in the region. The nearly two-decade period between 1967 and 1985 has produced tendencies that seem even today to continue unabated.