Institutional Diversity and the Economics of Security

Nathan P. Goodman

Advisor: Christopher Coyne, PhD, Department of Economics

Committee Members: Peter J. Boettke, Roberta Q. Herzberg

Online Location, Online
April 16, 2021, 10:00 AM to 12:00 PM


National defense is the textbook example of a “public good” (Coyne and Lucas 2016). Many economists have modeled defense as a pure public good that is optimally provided by a unitary state, or a “defense brain” which maximizes a social welfare function (Coyne 2015). This dissertation, by contrast, analyzes defense and security through comparative institutional analysis.

In the same vein as Elinor Ostrom’s (2005) efforts to study the diversity of human institutional arrangements, I analyze the provision of security within diverse institutional contexts. These include public bureaucracies within the United States, as well as a variety of efforts to provide security through polycentric associations that are not part of the nation-state.

Chapter 1, “Polycentric Defense,” offers a theoretical critique of the orthodox view of national defense as a public good. In addition, it offers a variety of empirical examples of defense and security provided by non-state actors at multiple scales. These cases illustrate the diversity of institutional arrangements used to provide defense in the real-world and cast further doubt on the applicability of the orthodox “defense brain” view.

Chapter 2, “Sounding the Alarm: The Political Economy of Whistleblowing in the U.S. Security State,” analyzes American national security bureaucracies. Building on the public choice literature, we argue that these bureaucracies are characterized by multi-layered principal-agent problems that open the door to opportunism. These principal-agent problems are present in all public bureaucracies within democratic states but are exacerbated by official secrecy within the national security state. We argue that whistleblowers within these bureaucracies possess local knowledge that is often not accessible to citizens or legislators, and that by whistleblowing they help alleviate principal-agent problems and expose opportunism and violations of civil liberties.

Chapter 3, “Border Militarization as an Entrepreneurial Process,” uses insights from the literatures on political entrepreneurship, bureaucracy, and rent-seeking to explain the militarization of American border security efforts. In times of crisis, bureaucrats and politicians seize political profit opportunities associated with expanding their powers and creating new programs. These acts of political entrepreneurship create new profit opportunities for political entrepreneurs. For private contractors who work with border security bureaucracies, these profit opportunities are seized by rent-seeking and building connections with public officials to secure lucrative contracts related to the new border security efforts. For public officials, there are profit opportunities associated with applying the powers, tools, and organizations developed during the crisis to new arenas, which results in mission creep.