Rent-seeking, distributional coalitions, taxes, relative prices and economic growth

Conclusions

The results clearly indicate that much of the considerable variation in the pace and pattern of economic growth between the various American states is explainable by institutional arrangements amenable to revisions through public policy. The findings suggest that long run economic growth would be best served by constraining distributional coalitions, be it through constitutional restraints (e.g., balanced budget amendments, the item veto), statutory changes (e.g., subjecting coalitions like labor unions to the antitrust laws), or some other means (e.g., labor and capital fleeing distributional coalitions, such as in the movement of workers and plants to nonunion areas).