The Grabbing Hand: Government Pathologies and Their Cures

by Andrei Shleifer

Book Overview

In many countries, public sector institutions impose heavy burdens on economic life: heavy and arbitrary taxes retard investment, regulations enrich corrupt bureaucrats, state firms consume national wealth, and the most talented people turn to rent-seeking rather than productive activities. As a consequence of such predatory policies--described in this book as the grabbing hand of the state--entrepreneurship lingers and economies stagnate.

The...

• Format: Paperback
• Language: English
• ISBN: 0674010140
• ISBN13: 9780674010147
• Release Date: September 2002
• Publisher: Harvard University Press
• Length: 288 Pages
• Weight: 1.05 lbs.
• Dimensions: 0.7" x 5.7" x 9.1"

Customer Reviews

Is France Corrupt?

When looking for a corrupt country, Andrei Shleifer and his coauthors have one example ready at hand: France. To be precise, most of Shleifer's academic interest and government consulting work concentrates on Russia, the country he left at a young age for the United States, and he has many examples of bad governance and predatory policies coming from both the Soviet past and the more recent era of reforms. But he keeps coming back to France as proof that the universe of countries to draw on for examples of bureaucratic red tape and corruption is not limited to developing countries and transition economies. This is weird. France does not rank that bad in corruption indexes and governance rankings (there is also something to be said against the biases in those measurements: the Doing Business index and Polity IV database are good cases in point). The image of France as a corrupt and treacherous country is mostly limited to the anglo-saxon world; elsewhere, especially in countries that adopted the French legal and administrative system, France is recognized as a model of efficient civil service and rigorous public management. Its laws and regulations provide the predictability and precision that business crave for, and cases of red tape or corruption are the exception rather than the rule. Indeed, I wonder if the France that Shleifer and his coauthors describe is really the country where I grew up. I do remember for instance that there once was a waiting list for getting a new telephone line, but were the delays used by public officials in order to extract bribes from the public, as is alleged by Shleifer? If queues and shortages are deliberately put in place by bureaucrats in order to invite illegal payments from rationed consumers, can one conclude that waiting lists to put one's toddler in a municipal day-care center or to benefit from subsidized social housing can be cut short by paying bribes? Or to mention another example with which the book opens, the Credit Lyonnais' infamous debacle was indeed a major financial and political disaster, but what makes this case different from other banking bailouts throughout the world? What makes France's corruption so special, except perhaps the pretense of some French nationals to always occupy the moral high ground? Shleifer's vision of France as a corrupt country extends to its history. Again, this is not the official story I learned from history books. Can one explain the relative decline of French cities after the 17th century by Bourbon absolutism (not many French are familiar with the argument, although it was first made by Montesquieu)? Was the French chemist Lavoisier a corrupt official because he worked as a tax farmer for the Ancien Regime (the revolutionaries, who beheaded him in 1794, seemed to agree)? Were the many tolls that once slowed traffic on the Seine river comparable to roadblocks in Zaire (their absence in England and presence in France could be interpreted as two different ways

"THE grabbing hand" by "A grabbing hand"

An excellent work by an unusual economist. Shleifer has made assaults on government intervention in the market a theme of his life's work. He called it "depoliticization" in russia. Pity about the title though. Shleifer settled with the US government after the insider trading charges against him and his sidekick Jonathan Hay were proved in a US court. Grabbing hands writing about grabbing hands. How ironic.

Unique and compelling theories of government pathologies

I bought The Grabbing Hand because I was interested in reading more by Andre Shleifer after I read another of his books on financial market inefficiency. I enjoyed that book and felt that Shleifer's work worthy of his Clark medal -- he couples great theoretical arguments with empirical support. This book, The Grabbing Hand, is a series of articles Shleifer wrote with Robert Vishny and others (including Kevin Murphy another Clark medal winner). The book attempts to offer an alternative view of government. They add a third view to the already common "helping hand" view which argues that government works to make the economy better and the "invisible hand" view which argues for only a minimal government. Here they use the public policy argument that government acts in its own self-interest. The first article is an examination of cities in Europe prior to the 19th-century to observe the effects of oppressive government's. One of the most interesting articles is a new explanation of why socialist governments tend to have shortages. The authors argue the shortages result from government's attempts to extract bribes from individuals looking to obtain those limited goods. This explanation explains why, when socialist governments have raised prices, it has not eased the shortage as a conventional supply and demand with a fixed-price argument would conclude. Though this new argument is a little more sinister, it is clever and compelling. Another insightful article is on the conversion of Russia to a more market economy. This article is especially eye-opening if you've read Stiglitz's Global book. Stiglitz argues that Russia's problem was going too fast in their conversion and the government not doing enough economic stabilization. Shleifer and Vishny argue that this is not the case and then present some interesting data on corruption to support alternative explanation. Where Stiglitz makes simple broad generalizations with little support, Shleifer and Vishny dig into the details and find data to support their position. Some articles are less compelling. For example, they attempt to explain why some local governments contract out services to private contractors instead of using in-house governmental services. Though they find many interesting statistically significant results, the explanatory power of their findings is usually very weak (usually under 10%). One complaint is the subtitle of the book which suggests that they will explain cures for the examined government pathologies. Though some cures are suggested it certainly isn't a major feature of the book. After all, many of the results are the result of politics, and it is unlikely politics is going away. I highly recommend the book for some unique and insightful theories on government pathologies. Be warned: the book is not an introductory book to economic analysis of government. Nor is it comprehensive in examining theories of government pathologies. That is not the intention