How can the West's economic and political polarization be explained? We argue that persuasive lobbying at various levels of government leads to systematic deviations of policies from those desired by the majority. Implemented policies diverge from the majority position despite centripetal forces...

This paper presents a model determining the available political and economic reform space as well as the economic performance in a society where interest groups are powerful relative to the state. Two types of determinants are derived. The first concerns the vulnerability of unorganized groups...

We argue that the institutionalization of direct democratic elements in a constitution will tend to enhance the efficiency of an economy. In a model of direct democracy it is shown that -- contrary to the political process in a representative democracy -- efficient projects will always be...