Blockchain Papers

Boaz Barak, Rafael Pass

No abstract is available for this record.

Rosario Manasan

Twelve years into the implementation of the Local Government Code of 1991, it is but opportune to assess how the key features of this landmark legislation has contributed to (or detracted from) achieving the balance between local autonomy and accountability. The literature on fiscal decentralization suggests that these two goals are not incompatible. In fact, real autonomy (in the sense of subnational governments being able to link their spending decisions with their revenue/tax decisions) promotes fiscal responsibility. In the context of the ongoing debate in the Philippines, however, local autonomy has been equated (by many LGUs officials) with the independence of LGUs from central government interference. As such, LGU officials have focused more on securing even higher levels of block grants in order to address the widely perceived vertical fiscal imbalance. However, closer scrutiny of the problem indicates that greater_x000D_ tax decentralization coupled with a well designed intergovernmental transfer system that includes elements of fiscal equalization and categorical grants conditional on the achievement of minimum service standards would better enhance the gains that are forthcoming from the decentralization process while minimizing the risks of macroinstability.

Lars P. Feld, Horst Zimmermann, Thomas Döring

The distribution of competencies between the different levels of a federal system may have remarkable effects on economic growth, because mainly the regions of a country contribute to national economic development. Thus, a government’s economic policy is reasonably shaped along regional lines. The theoretical discussion in economics focuses however on the efficiency aspects of a decentralized provision and financing of public services; rarely the argument is raised that decentralization or federalism increases growth through a higher ability of the political system to innovate and to carry out reforms. After a discussion of the theoretical arguments on federalism and growth, we address the empirical question in this paper how important the assignment of decision making competencies and the design of fiscal federalism are for economic development. Finally, on the basis of existing theoretical and empirical studies on economic growth and federalism, open questions and possible ways of answering them are presented.

Rafael Pass

Zero-knowledge proofs are one of the most important cryptographic notions. Since their introduction in the early 80's by Goldwasser, Micali and Racko, they have proven very useful in the design of cryptographic protocols. Nevertheless, many limitations (in terms of e ciency and robustness under concurrent executability of protocols) have also been noticed. In order to overcome these limitations two lines of research have been investigated in the literature: 1. Models with some limited intervention of a trusted party (for example during a set-up phase). 2. Weakenings of the notion of zero-knowledge. In this thesis we attempt to further the understanding of the notion of zero-knowledge proofs by addressing both the above lines of research. More precisely, 1. Concerning the rst line of research, we show that the de nition of zeroknowledge in certain popular models (namely the Common Reference

Ivan Damgård, Serge Fehr, Louis Salvail

The concept of zero-knowledge (ZK) has become of fundamental importance in cryptography. However, in a setting where entities are modeled by quantum computers, classical arguments for proving ZK fail to hold since, in the quantum setting, the concept of rewinding is not generally applicable. Moreover, known classical techniques that avoid rewinding have various shortcomings in the quantum setting.<br /> <br />We propose new techniques for building <em>quantum</em> zero-knowledge (QZK) protocols, which remain secure even under (active) quantum attacks. We obtain computational QZK proofs and perfect QZK arguments for any NP language in the common reference string model. This is based on a general method converting an important class of classical honest-verifier ZK (HVZK) proofs into QZK proofs. This leads to quite practical protocols if the underlying HVZK proof is efficient. These are the first proof protocols enjoying these properties, in particular the first to achieve perfect QZK.<br /> <br />As part of our construction, we propose a general framework for building unconditionally hiding (trapdoor) string commitment schemes, secure against quantum attacks, as well as concrete instantiations based on specific (believed to be) hard problems. This is of independent interest, as these are the first unconditionally hiding string commitment schemes withstanding quantum attacks.<br /> <br />Finally, we give a partial answer to the question whether QZK is possible in the plain model. We propose a new notion of QZK, <em>non-oblivious verifier</em> QZK, which is strictly stronger than honest-verifier QZK but weaker than full QZK, and we show that this notion can be achieved by means of efficient (quantum) protocols.

Laura B. Rawlings, Lynne Sherburne-Benz, Julie Van Domelen

The study seeks to answer four questions that summarize the fundamental issues in the international debate about the capacity of social funds to improve beneficiaries' living conditions: o Do social funds reach poor areas and poor households? Do social funds deliver high-quality, sustainable investments? Do social funds affect living standards? How cost-efficient are social funds and the investments they finance, compared with other delivery mechanisms? The findings and lessons from this research reflect a specific moment in the evolution of six social funds and therefore may not fully predict the future impact of current investments. The evaluation assesses subprojects identified and implemented between 1993 and 1999, a period when longer-term objectives-such as increasing access to and utilization of basic services-began to supplant the funds' original emergency mandates. The time period selected allowed enough elapsed time following the implementation of the social fund subprojects to make measurement of impact and sustainability possible. The evaluation does not consider the effects of social fund projects on employment or on income generation-the original objectives of the first generation of social funds, which were introduced in Latin America. It also does not discuss the effect of social fund investments on capacity building-a more recent emphasis of social funds seeking to assist decentralization and community development.

John W. Rich

Waste Processors Management, Inc. (WMPI), along with its subcontractors Texaco Power & Gasification (now ChevronTexaco), SASOL Technology Ltd., and Nexant Inc. entered into a Cooperative Agreement DE-FC26-00NT40693 with the U. S. Department of Energy (DOE), National Energy Technology Laboratory (NETL) to assess the techno-economic viability of building an Early Entrance Co-Production Plant (EECP) in the United States to produce ultra clean Fischer-Tropsch (FT) transportation fuels with either power or steam as the major co-product. The EECP design includes recovery and gasification of low-cost coal waste (culm) from physical coal cleaning operations and will assess blends of the culm with coal or petroleum coke. The project has three phases. Phase I is the concept definition and engineering feasibility study to identify areas of technical, environmental and financial risk. Phase II is an experimental testing program designed to validate the coal waste mixture gasification performance. Phase III updates the original EECP design based on results from Phase II, to prepare a preliminary engineering design package and financial plan for obtaining private funding to build a 5,000 barrel per day (BPD) coal gasification/liquefaction plant next to an existing co-generation plant in Gilberton, Schuylkill County, Pennsylvania. The current report covers the period performance from July 1, 2003 through September 30, 2003. The DOE/WMPI Cooperative Agreement was modified on May 2003 to expand the project team to include Shell Global Solutions, U.S. and Uhde GmbH as the engineering contractor. The addition of Shell and Uhde strengthen both the technical capability and financing ability of the project. Uhde, as the prime EPC contractor, has the responsibility to develop a LSTK (lump sum turnkey) engineering design package for the EECP leading to the eventual detailed engineering, construction and operation of the proposed concept. Major technical activities during the reporting period include: (1) finalizing contractual agreements between DOE, Uhde and other technology providers, focusing on intellectual-property-right issues, (2) Uhde's preparation of a LSTK project execution plan and other project engineering procedural documents, and (3) Uhde's preliminary project technical concept assessment and trade-off evaluations.

Äsa Cristina Laurell

Latin American social medicine (LASM) emerged as a movement in the 1970s and played an important role in the Brazilian health care reform of the 1980s, both of which focused on decentralization and on health care as a social right. The dominant health care reform model in Latin America has included a market-driven, private subsystem for the insured and a public subsystem for the uninsured and the poor. In contrast, the Mexico City government has launched a comprehensive policy based on social rights and redistribution of resources. A universal pension for senior citizens and free medical services are financed by grants, eliminating routine government corruption and waste. The Mexico City policy reflects the influence of Latin American social medicine. In this article, I outline the basic traits of LASM and those of the prevailing health care reform model in Latin America and describe the Mexico City social and health policy, emphasizing the influence of LASM in values, principles, and concrete programs.

Wanzong Peng, Tongliang Lu, Wenju Peng, Zhongpan Wang

File sharing, being the foundation of the Internet, has traditionally relied on a centralized service architecture resulting in significant maintenance costs. Moreover, due to the lack of an effective file management system, instances of sensitive information going out of control and loss of confidentiality in file sharing have occurred frequently. In order to address the difficulty of tamper detection and the lack of supervision in the entire process of file transfer in the current Internet environment, this paper designs a blockchain-based system architecture for secure sharing of electronic documents. An efficient blockchain model is used in our framework, and with the help of distributed storage system and asymmetric encryption technology, file sharing can be controlled, reliable and traceable in the transfer process. Referring to existing consensus mechanisms, e.g., Delegated Proof of Stake (DPoS) and Practical Byzantine Fault Tolerance (PBFT), we propose a new consensus for efficient and secure file sharing. Our experimental results show that our framework can maintain a higher throughput than existing schemes.

Koko Warner, Georg Ch. Pflug, Leslie Martin, J. Linnerooth‐Bayer · 6 authors

This report was commissioned by the Natural Disasters Network of the Regional Policy Dialogue. This report constitutes Phase 2 of this project. While the first phase of the study discusses the components of a national system, the second focuses on instruments for financing reconstruction after a disaster. The research compares centralized, government-directed management systems with those that are localized and decentralized, and also analyzes the factors affecting the financial and political stability of alternative approaches. As natural disasters may result in major resource gaps for governments facing the task of financing reconstruction, the report presents case studies of four countries-Bolivia, Colombia, the Dominican Republic, and El Salvador-to highlight the various policy options. Alternative sources of ex ante funding are identified, including reserve funds, contingent credit, and insurance. These innovative methods of funding are compared with ex post funding possibilities through international aid, loan diversions and increased external debt, budget reallocations, and tax increases.

Wolfgang Fengler, Frank Borge Wietzke

This note presents the methodology and
\n findings of a field study on the financing needs of
\n Madagascar's communes-the country's lowest but
\n most institutionally advanced level of subnational
\n government. Following a first round of municipal elections
\n in 1995, more than 1,500 communes are now formally
\n responsible for maintaining basic administrative services
\n and social and economic infrastructure, including local
\n waste disposal and sanitation. In addition, communes are
\n responsible for identifying and coordinating local
\n investments and for supporting implementation of the
\n national Poverty Reduction Strategy at the local level. To
\n finance these activities, communes receive population-based
\n transfers and small conditional transfers, and can collect
\n revenue from property, market, and consumption taxes as well
\n as user charges. Yet little is known about how much these
\n fiscal assignments satisfy local needs. As part of its
\n policy dialogue with the government of Madagascar, the World
\n Bank is engaged in extensive research that includes
\n geographic mapping of social spending and a review of
\n opportunities and obstacles to fiscal and sectoral
\n decentralization. This research generated the following
\n analysis of local and cross-sectoral service needs and
\n available financing.

Bob Hancké

This article discusses the adjustment of large firms in France, in particular how they regionalized their production structures in the 1980s. Throughout the ‘Golden Age’, large firms had geographically reorganized their activities: strategic planning remained in Paris, while the actual production was decentralized into the provinces, primarily to address cost and labour conflict issues. When the large firms faced a profitability crisis in the 1980s, and the traditional state‐financed way out of the problems was no longer available, they saw in these proto‐regional production systems a chance to become more competitive. They relied on the decentralization policies of the governments in the 1980s, and used the second‐order effects of the new policies as a means to modernize their own operations. L'article examine l'adaptation des grandes entreprises françaises, notamment la régionalisation de leurs structures de production dans les années 1980. Durant ‘l'Age d'Or’, les grosses entreprises avaient réorganisé géographiquement leurs activités: la planification stratégique restait à Paris, tandis que la production réelle se décentralisait en province, principalement pour résoudre des problémes de couûts et de conflits sociaux. Lorsque ces grandes entreprises se heurtèrent à la crise de rentabilité des années 1980, alors que la solution traditionnelle de financement étatique n'existait plus, elles virent dans ces systèmes de production proto‐régionaux une chance d'améliorer leur compétitivité. Elles s'appuyèrent donc sur les politiques de décentralisation des gouvernements de l'époque, profitant des effets secondaires de ces initiatives pour moderniser leur propre fonctionnement.

Anthony J. Berry

The contribution of theology to control and accounting has been traced through the
\nmonastic tradition demonstrating how the Cistercians used decentralized control of their
\nextensive farms in contrast to the centralized control of the Benedictines (Knowles,1948).
\nThe contribution of theology to political economy was traced by Weber and Tawney in
\ntheir analysis of the Calvinist roots of liberal market capitalism and more subtly by Adam
\nSmith in his ironic use of a phrase from Isaiah Ch 60 as the title for his seminal work on
\nmarkets.
\nThis paper reports upon a case of the interplay of theology and control and accountability
\nwhich occurred as the Church of England set out to respond to a financial crisis.
\nAccountability was theorized as stemming from the three elements of covenant, constitution
\nand contract all of which were contested in the ground metaphor of autonomy. It
\ndemonstrates how a group of financiers from within the evangelical tradition (which places
\nstress on headship and control) led an attempt to create a new church governance body (a
\nnational council) with strongly integrated central control and diminished democratic and
\nconciliar participation. They had described the church as 'a cats cradle of autonomous and
\nsemi autonomous organizations'. The case then demonstrates how the other theological
\ntraditions (anglo-catholic and liberal) were mobilized , over a period of several years, to
\npermit the new body to come into life but to unravel the proposed centralised control and
\nto maintain the existing nature of governance and to enrich the complexity of the 'cat's
\ncradle'.
\nThe case analysis is based upon the theory of eco-systems (as a more formal view of the
\ncat's cradle) to show how the loosely coupled nature of eco systems with their multiple
\ntheological stances and their multi layered processes of relationships and accountabilities
\nwere almost impervious to the attempt to shift them into an ordered and controlled
\nhierarchy.

健二 竹原

First, the study is defined first that the welfare finance is a financial system executed by the public responsibility for the welfare user who have the livelihood problem to do human life. Secondly, the welfare finance in the contemporary society clarifies contradiction to which a quasi-surplus value has been raised while a quasi-value of usability of social welfare has been decreased. Finally, the problem of the decentralization type finance to improve the contradiction of the welfare finance is discussed. In a word, the problems are to be expanded local taxes and to construct a local sovereignty and financial system.

L. Garrison, Adrian Towse

No abstract is available for this record.

Lars P. Feld, Horst Zimmermann, Thomas Döring

Die Kompetenzverteilung zwischen den verschiedenen Gebietskörperschaftsebenen eines föderativen Staates kann sich erheblich auf das Wirtschaftswachstum auswirken, da es insbesondere die Regionen eines Landes sind, die zu seiner gesamten wirtschaftlichen Entwicklung beitragen. Dies legt einen regionalen Zuschnitt der staatlichen Wirtschaftspolitik nahe. Aus ökonomischer Sicht wird in der theoretischen Diskussion hingegen vornehmlich auf die Effizienzaspekte einer dezentralen Bereitstellung und die Finanzierung öffentlicher Leistungen abgehoben. Selten findet sich das Argument, dass Dezentralität oder Föderalismus – vermittelt über eine höhere Innovationsund Reformfähigkeit des politischen Systems – zu einer Steigerung des Wachstums führen. Nach einer Diskussion der theoretischen Überlegungen zu Föderalismus und Wachstum wenden wir uns in diesem Beitrag der empirischen Frage zu, welche Bedeutung die Zuordnung von Entscheidungskompetenzen und die institutionelle Ausgestaltung des fiskalischen Föderalismus für die wirtschaftliche Entwicklung eines Landes haben. Auf Basis der bisher existierenden theoretischen und empirischen Studien zu Wirtschaftswachstum und Föderalismus werden offene Fragen und mögliche Ansätze zu ihrer Beantwortung formuliert. <bold>Abstract</bold> The assignment of competencies in a federal state can have a strong impact on economic growth, because the regions of a country particularly contribute to its total economic development. Hence, public policy should be tailored to regional needs. Public economists however mainly focus on the efficiency of decentralized public goods provision and financing; seldom arguments concerning political innovation due to a decentralized experimentation of policies and its impact on economic growth are considered. After a discussion of theoretical arguments on federalism and economic growth, the empirical question is addressed in this paper whether the assignment of autonomy and the institutional design of fiscal federalism influence economic development of a country. On this basis, open question and potential routes of research are formulated.

G. López-Casasnovas, A. Rico

No abstract is available for this record.

John Grundy, Valentine Healy, L Gorgolon, E Sandig

INTRODUCTION: In 1991 the Philippines Government introduced a major devolution of national government services, which included the first wave of health sector reform, through the introduction of the Local Government Code of 1991. The Code devolved basic services for agriculture extension, forest management, health services, barangay (township) roads and social welfare to Local Government Units. In 1992, the Philippines Government devolved the management and delivery of health services from the National Department of Health to locally elected provincial, city and municipal governments. AIM: The aim of this review is to (i) Provide a background to the introduction of devolution to the health system in the Philippines and to (ii) describe the impact of devolution on the structure and functioning of the health system in defined locations. METHOD: International literature was reviewed on the subjects of decentralization. Rapid appraisals of health management systems were conducted in both provinces. Additional data were accessed from the rural health information system and previous consultant reports. RESULTS: Subsequent to the introduction of devolution, quality and coverage of health services declined in some locations, particularly in rural and remote areas. It was found that in 1992-1997, system effects included a breakdown in management systems between levels of government, declining utilization particularly in the hospital sector, poor staff morale, a decline in maintenance of infrastructure and under financing of operational costs of services. CONCLUSION: The aim of decentralization is to widen decision-making space of middle level managers, enhance resource allocations from central to peripheral areas and to improve the efficiency and effectiveness of health services management. The findings of the historical review of devolution in the Philippines reveals some consistencies with the international literature, which describe some negative effects of decentralization, and provide a rationale for the Philippines in undertaking a second wave of reform in order to 'make devolution work'.

Henk van den Belt

On May 20, 1999, Nature published a brief report on an experiment performed by researchers at Cornell University that indicated that pollen from genetically modified (GM) Bt corn (Zea mays) could kill the larvae of monarch butterflies (Danaus plexippus). In laboratory tests, caterpillars fed milkweed (Asclepias curassavica) leaves dusted with pollen from a Bt corn hybrid showed retarded growth and increased mortality. “These results,” the authors stated, “have potentially profound implications for the conservation of monarch butterflies” (Losey et al., 1999). In a press release announcing the publication in Nature, the principal investigator on the Cornell study, John Losey, had expressed due caution: “Pollen from Bt-corn could represent a serious risk to populations of monarchs and other butterflies, but we can't predict how serious the risk is until we have a lot more data. And we can't forget that Bt-corn and other transgenic crops have a huge potential for reducing pesticide use and increasing yields. This study is just the first step, we need to do more research and then objectively weigh the risks versus the benefits of this new technology” (Cornell News, 1999). Such caution was wasted on Greenpeace International. The day the findings of the Cornell study were published it already demanded that authorities in the United States, Argentina, Canada, and the European Union take immediate action and prohibit the growing of genetically engineered maize crops. The environmentalist nongovernmental organization (NGO) reiterated its earlier call for a ban on all releases of genetically modified organisms (GMOs). Less than a month later, in a media-oriented action, members of Greenpeace dressed up as butterflies confronted a meeting of European Union environment ministers held in Luxembourg, carrying banners demanding “Give butterflies a chance.” In Europe, their campaign apparently found resonance among the authorities: The European Commission decided to freeze the approval process for new Bt maize varieties. The Cornell study did not show that monarch butterfly populations in the wild were actually endangered by Bt corn. However, when Monsanto and Novartis, the companies that sold Bt corn at that time, correctly pointed out that the detrimental effects had so far only been shown in the laboratory, Greenpeace branded them as irresponsible. A spokesperson declared: “Such reactions are the precise opposite to precaution and follow the same pattern of denial these companies have employed for decades, when health and environmental effects of their chemical pesticides were exposed. However, in the case of these GMOs we are talking about living toxins that can reproduce in nature and transmit their dangerous traits to wild species. We cannot consider GMOs harmless until harmful effects are fully proven (sic)” (Greenpeace, 1999a). (The last sentence is obviously a—Freudian?—slip of the tongue and should be read: “We cannot consider GMOs harmless until the absence of harmful effects is fully proven.”) For Greenpeace, not just monarchs were supposed to be endangered. The NGO drew up a list of over 100 species of butterflies that it believed could be harmed by GM maize. It accused biotech companies and regulatory authorities of fully ignoring these risks (Greenpeace, 1999b). More recent field research performed in the American Midwest, however, seems to indicate that monarch butterfly populations are hardly affected, if at all, by the large-scale cultivation of Bt maize in this region (Ortman et al., 2001). The monarch butterfly case is only one among many occasions in which the so-called Precautionary Principle (PP) has been invoked to advocate preventative action to forestall possible harm even before the likelihood or the possible extent of the latter has been scientifically well established. This principle is highly contested. With many other environmentalist NGOs, Greenpeace champions its adoption as a central principle of international law against tenacious opposition from the United States, Canada, and Australia (Greenpeace, 2002). The principle is also at issue in recent World Trade Organization trade disputes between the United States and the European Union. But why does the PP play such a central role? The PP is an outgrowth of increased environmentalist awareness since the 1970s. The conviction took hold that humanity finds itself in a historically unprecedented situation in which our technological capacity and the potential scale of our actions far exceed our predictive knowledge. According to the German philosopher Hans Jonas, this discrepancy between the ability to foresee and the power to act itself assumes ethical importance and asks for humility and responsible restraint on our part. Jonas maintains that it is possible to extract from this situation of profound scientific uncertainty a rule or principle of decision making that is itself not uncertain at all, namely the rule “to give in matters of a certain magnitude—those with apocalyptic potential—greater weight to the prognosis of doom than to that of bliss” (Jonas, 1984). The supreme moral imperative in the new age, Jonas holds, is that humankind may not put its own existence and survival at stake in the wager of technological progress. If we want to find a philosophical basis for the PP, we must look for it in Jonas' book on the imperative of responsibility (although he himself did not use the expression PP). Environmentalists often hold that modern biotechnology has “apocalyptic potential” because it tampers with the basic processes of life. If we release GMOs into the environment, the ultimate consequences for the natural flora and fauna are extremely hard to predict but may well be irreversible. However, many environmentalists, just like Jonas, believe that we possess a decision rule or principle for dealing with fundamental scientific uncertainty that is itself not the least uncertain. That rule is the PP. Thus, in almost any debate, it seems that the PP can be brought in as a trump card to override all other considerations and arguments. But what exactly is the PP? Proponents of the PP assert that the principle is already “enshrined” in such international agreements as the Convention on Biological Diversity and the Cartagena Protocol on Biosafety, but existing definitions of it are at best partial and incomplete. In the context of dealing with environmental hazards, the Rio Declaration of 1992 presented the following formulation of what a precautionary approach entails: “Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.” A well-known definition of the PP was spelled out in a January 1998 meeting at Wingspread in Racine, Wisconsin. The Wingspread Statement summarized the principle thus: “When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically” (Raffensberger and Tickner, 1999). Definitions such as these beg many questions. Is there ever full scientific certainty? Do we need a minimal threshold of scientific certainty or plausibility before we may (or should) undertake preventative action? And do we really know how to prevent harm if we are so much ignorant about the underlying cause-effect relationships? The definitions that are currently on offer fail to spell out the precise conditions that have to be fulfilled before the PP may be invoked or the nature of the preventative action that has to be taken. The types of action suggested range from implementing a ban, imposing a moratorium while further research is conducted, allowing the potentially harmful activity to proceed while closely monitoring its effects, to just conducting more research. The PP does not have a very precise meaning as long as such crucial aspects are left largely unanswered. In practice, however, the PP is often given a more definite meaning by reducing it to an absurdity. Normally, no minimal threshold of plausibility is specified as a “triggering” condition, so that even the slightest indication that a particular product or activity might possibly produce some harm to human health or the environment will suffice to invoke the principle. And just as often no other preventative action is contemplated than an outright ban on the incriminated product or activity. The intervention of Greenpeace in the monarch butterfly case seems to fit this pattern. Closely linked to various versions of the PP is the idea of reversing the onus of proof. Thus, the adherents of the Wingspread Statement declare that “the applicant or proponent of an activity or process or chemical needs to demonstrate that the environment and public health will be safe. The proof must shift to the party or entity that will benefit from the activity and that is most likely to have the information” (Raffensberger and Tickner, 1999). Greenpeace also holds that effective implementation of the PP requires a shift in the burden of proof (Greenpeace, 2001). Shifting the burden of proof seems a fairly straightforward way to ensure, as Jonas demanded, that greater weight will be given to the “prognosis of doom” than to the “prognosis of bliss.” Before looking into the proper assignment of the burden of proof, we must first examine more closely the underlying justification for the strong version of the PP. Why should the prospect of harmful effects of a new technology take precedence over the prospect of beneficial effects, quite apart from the inherent likelihood of each of these possibilities? The obvious answer seems to be that such a priority is defensible only when the harmful effects are of such magnitude that they carry catastrophic (or, as Jonas would say, “apocalyptic”) potential. The infinite costs of a possible catastrophic outcome necessarily outweigh even the slightest probability of its occurrence. This type of reasoning exhibits a remarkable resemblance to a well-known example of a “zero-infinity dilemma,” namely Pascal's famous “wager.” When it comes to wagering on the existence of God, the 17th century French philosopher argued incisively in his Pensées that it is better to be safe than sorry (Haller, 2000; Graham, 2002; Manson, 2002). Given an unknown but nonzero probability of God's existence and the infinity of the reward of an eternal life, the rational option would be to conduct one's earthly life as if God exists. Alas, Pascal's reasoning contains a fatal flaw. His argument is vulnerable to the “many gods” objection (Manson, 2002). Consider the possible existence of another deity than God, say Odin. If Odin is jealous, he will resent our worship of God, and we will have to pay an infinite price for our mistake. Never mind that Odin's existence may not seem likely or plausible to us. It is sufficient that we cannot exclude the possibility that he exists with absolute certainty. Therefore, the very same logic of Pascal's wager would lead us to adopt the opposite conclusion not to worship God. Pascal's argument, then, cannot be valid. If the wager argument is not valid, the strong version of the PP (which Manson dubs the “catastrophe principle”) cannot be valid either. Take the application of this principle to the problem of global warming. Environmentalists often argue that even if it is not conclusively established that the emission of carbon dioxide and other gases causes an enhanced greenhouse effect, the mere prospect of an ecological catastrophe due to such a scenario should lead us to drastically curb our emissions of greenhouse gases now. By the same logic, however, one could conjure up the possibility of a coming ice age. The mere prospect of this equally catastrophic scenario should then induce us to avert this outcome by stepping up the emission of greenhouse gases. Thus, the strong version of the PP would lead to contradictory recommendations (compare with Graham, 2002). In a similar way, it could be argued that this principle commits us to each of two contradictory policies: (a) We must not develop GM crops, and (b) We must develop GM crops. The first alternative is argued vehemently by many environmentalists who appeal to the PP. To support the second possibility, Gary Comstock conjures up a dramatic scenario in which people are forced to seize upon the remaining reserves of nature in a desperate effort to overcome food shortages resulting from global warming. He then argues, in the style of the environmentalists, that “lack of full scientific certainty that GM crops will prevent environmental degradation shall not be used as a reason for postponing this potentially cost-effective measure” (Comstock, 2000). Therefore, the strong version of the PP is untenable. But what about the proposed shifting of the onus of proof toward those who advocate a new technology or activity? Reversing the burden of proof would amount to substituting the maxim “guilty until proven innocent” for the age-old legal principle “innocent until proven guilty.” Biotech enthusiasts and antiregulationists resent this departure from what they consider time-honored legal sanity (Miller and Conko, 2000). They are prone to counter the frequent invocation of the PP with an equally insistent demand of “sound science.” The same opposition is also at the center of the present World Trade Organization trade disputes between the United States and the European Union and their disagreement on the regulation of GM crops. One side claims the moral high ground, whereas the other side attempts to seize the scientific high ground. The situation is highly polarized because various economic and political interests are at stake (Fig. 1). Wheat (Triticum aestivum) fields in the Palouse region of the state of Washington in the United States. The polarized discussion about the PP and the adoption of GM crops has become a proxy for everything that Europeans and environmentalists in other countries don't like about modern agriculture. The rejection of agricultural biotechnology may perhaps be tolerated as a European indulgence but hardly makes sense on a global scale. The critics of the PP assert that the burden that environmentalists and regulators want to impose on the proponents of new technologies tends to be unbearable (Miller and Conko, 2000). In the name of absolute safety, the latter are asked nothing less than to demonstrate conclusively that the new technologies they advocate offer no possible harm. This is a formidable, perhaps even logically impossible, task. You cannot prove a negative (compare with Wildavsky, 1995). Moreover, a risk-free world is not a real option. Thus, a consistent application of the PP would in the final analysis stifle all innovation. A closer analysis of what is involved in applying the classical principle “innocent until proven guilty,” however, reveals that the situation need not be as black and white as it seems at first sight. Take the paradigm case of criminal justice. There are two main ways in which a miscarriage of justice can come about. Either the suspect did not commit the crime, but the verdict found him guilty; or the suspect did commit the crime, but the verdict found him not guilty. In a civilized system of justice, the risks of the first type of error are minimized as far as possible. That is what is meant by the phrase “innocent until proven guilty.” The system contains safeguards and precautions in the form of high standards of proof so as to ensure that a suspect will be condemned for a certain criminal offense only if it has been established “beyond reasonable doubt” that he in fact committed the alleged offense. Alas, there is a price to be paid for this cautious and civilized approach, namely the possibly large number of wrongdoers who have to be acquitted due to “lack of sufficient proof.” To a certain extent, the risks of the two types of error are inversely related. We may to the risk of an by demanding ever more standards of proof but only at the of increasing the risk of Therefore, we must that there is an involved in the of our system of criminal justice. We may to our standards as high as we but a must be the system will become by making it to sentence on the of there is a similar to be between the of a type or a type the of when it is in fact or to the when in fact it is By a we a particular this should on our of the and with of the two types of The analysis that the at issue is not just to burden of proof. as we for more or less standards of proof, an of In other the burden we want to put on the of one or the other party more or less on we our standards of proof more or less This may us to from the polarized opposition of PP versus In most companies to GM crops have to their to for health effects and environmental This can be more or less The of those who by “sound is a fully risk However, it is only possible to this in more and such as or are at then the expression “sound is because it the that necessarily into the of of and between type and type In other or more ecological effects are at the of the fully risk is of “sound will be to such less straightforward as or risks that can be However, as the proponents of the PP are in lack of of harm is not of lack of harm. If we are really about such hazards, we can put in effort to more about their plausibility or It would be to our with an appeal to “sound science.” A recent European on the release of GMOs into the environment that any that to or a transgenic should carry out a environmental risk into immediate and 2001). This new regulation of GM crops much further than some American also argue for a more approach et al., 2001). The new European a burden of proof on biotech companies to or not they are to take that burden on their will on the definition of a or for conducting environmental risk The to be is that the on these companies will become them at the of regulatory and for of environmental This will be enhanced by the fact that the of the has been by the PP and that regulatory authorities may give to the of GMOs only they have been that the release will be safe for human health and the The fairly of the environmental risk need not be in if of play for the regulation of GM crops can be More is also about the that have to be taken into in The outcome of the is for on or not in are taken as a or or not a strong to as a option is 2001). The and of a Bt maize hybrid or any other transgenic might be quite in than in the United States. Europeans are to because their countries lack of and other of regulatory at holds that the in on GM is not about safety, but is in fact a proxy for a on how should be 2001). GM crops have become a for all that Europeans don't like in modern agriculture. a for and a rejection of agricultural biotechnology perhaps may be tolerated as a European the prospect hardly makes sense on a global scale. this is what Greenpeace us as a the NGO us a serious answer to the of how to a growing world and natural the of modern biotechnology (compare with 1999). We can even press the environmentalist organization by the Thus, it that the polarized on the PP is just a proxy for a on the of world agriculture.

Fernando Antoñanzas

No abstract is available for this record.

Jonathan D. Moreno

In 1986, the German sociologist Ulrich Beck published the first edition of his book, Risk Society.1 Beck's book has attained wide popularity, especially in Europe, for his analysis of the distance between scientific expertise and popular opinion in the understanding of potential harms. Time and again, Beck points out, the public complains that there is a harmful process at work, while the scientists who are appointed by authorities to assess the complaints conclude that there is no objective basis for concern. Too often, though, the scientific conclusions are advanced without involving the public and without taking into account conditions outside of the laboratory. Subsequent experiences, such as the Mad Cow disaster in British livestock, have only reinforced the problem. Public skepticism about genetically modified organisms and the food supply can be traced to the same roots. On both sides of the Atlantic, the example of HIV in the blood supply, the halting management of the crisis, and the resulting loss of public confidence in the system, constitute an all-too-familiar case for readers of this journal. These kinds of examples and the conditions that Beck describes and explicates helped lead to the development of a policy standard, again especially in Europe, called the precautionary principle. In a 1992 statement, the European Environment Agency gave a succinct statement of the principle: [I]n order to protect the environment, a precautionary approach should be widely applied, meaning that where there are threats of serious or irreversible damage to the environment, lack of full scientific certainty should not be used as a reason for postponing cost-effective measures to prevent environmental degradation. Further, The precautionary principle permits a lower level of proof of harm to be used in policy-making whenever the consequences of waiting for higher levels of proof may be very costly and/or irreversible (emphasis added).2 Paradoxically, technologic advancement itself is the source of the risks that concern us. In other words, scientific expertise has created the very conditions that society now doubts the experts fully appreciate. In Risk Society, Beck defines risk as “a systematic way of dealing with hazards and insecurities induced and introduced by modernization itself.” He goes on, “Risks, as opposed to older dangers, are consequences which relate to the threatening force of modernization and to its globalization of doubt.” The social and political conditions that affect current issues in transfusion medicine are thus part of a much larger “globalization of doubt” about expertise. Although he does not allude to transfusion medicine per se, it is a paradigm case of risk in the sense that Beck writes about, for it has been a modernizing development in medical care and the risks it brings about would not exist without that modernization. The tensions within a “risk society” are brought to the surface when a new incident reignites doubt, such as concerns about West Nile virus in the summer of 2002. Sensitized by previous failures to satisfy public concern, responsible officials leap into action, often shifting their attention and energy away from known and measurable risks to persuade society that the unknown and often nonmeasurable risk is being taken seriously. This reaction, while understandable in light of the critique leveled by Beck and many others, should give us pause. Along with policies intended to drastically reduce risk, it is an example of the way that the precautionary principle has been both transformed into a dogma and taken out of its original context. I call these tendencies “creeping precautionism” because the adoption of a precautionary stance may not even be noticed until it is too late, and because a reasonable principle can easily be turned into a self-defeating ideology. Consider two recent policies that public health and blood industry experts have cited in conversation as examples that might reflect creeping precautionism: p24 antigen testing for HIV, which may have prevented one case per year at a cost of tens of millions a year; and deferral of donors who have been European residents, when the risk of CJD risk remains highly theoretical with no documented case of transmission, and hundreds of thousands of units have been lost as a result. I am no authority on the complex medical and public health issues involved, but suppose for the sake of argument that these policies raise valid questions. How did they come to pass? Clearly many elements came into play in these policy decisions. One that has not previously been identified is the fact that, as these policies were being formed, the precautionary principle came to have a great deal of influence in environmental health circles. In fact, I believe that we live in a period in which the principle has, without argument and often without conscious awareness, both been taken out of context, applied to problems other than catastrophic health concerns, and misinterpreted. The original context was environmentalism, where ecologic complexities and uncertainties present risks that, for all intents and purposes, may truly be inestimable and irreversible. Those conditions may not apply in other policy contexts. The misinterpretation has been to suppose that precautionism requires that only zero risk is acceptable, or at least something quite close to zero risk. Even advocates of the principle would recognize these subtle shifts in thinking as errors. In particular, it is clear that no action or inaction is risk free, and that any decision has opportunity costs. The opportunity costs of precautionism in the blood industry are, among others, the loss of many usable units of blood and the alienation of potential donors. I am not arguing that the policies in question are without merit nor that they should be repealed. Rather, I urge that a discussion begin in the blood services community about whether unwarranted precautionism has in fact crept into policymaking. This discussion should also take into account the peculiar stresses upon the role of expertise in a modern democracy. To step back for a moment, it is useful to recall the classical origins of the idea of expertise. In his seminal work, The Republic, Plato uses an allegory to characterize the situation of the truly knowledgeable person. He spins a tale about a group of slaves bound to their places since birth, unable to turn their heads, and only able to view a wall in front of them. Behind them are carried ordinary objects, whose shadows fall upon the wall. Knowing nothing better, the slaves assume that the shadows are the real objects. Now suppose, Plato continues, a slave manages to break his bonds and escape to the mouth of the cave. Unaccustomed to the light, he will at first be blinded by the sun, then realize to his horror that all his life what he has thought was reality was merely illusion. He tries to enlighten (pun intended) his comrades, but they mock him as mad. Discouraged, he takes his place among the slaves again. The allegory implies that knowledge is painful, hard to achieve, and subject to ridicule by the ignorant. This is the uncomfortable position of the expert. The problem is especially grave in medicine, whose practitioners are supposed to be sensitive to the uninitiated. Yet, too much sensitivity is incompatible with the detachment and decorum that the physician requires to be effective. Sir William Osler, generally regarded as the father of internal medicine, commented on this dilemma of the health care expert over a century ago. Imperturbability. . . . It is the quality which is most appreciated by the laity though often misunderstood by them; and the physician who has the misfortune to be without it, who betrays indecision and worry, and who shows that he is flustered and flurried in ordinary emergencies, loses rapidly the confidence of his patients.3 I write as a product and professor of the bioethical revolution in medicine, which is characterized by a deep suspicion of expertise, manifested as the insistence on informed consent and truth telling by doctors. This revolution is only about 30 years old in practice and would have shocked my father, a 1917 graduate of the University of Vienna medical school. The emergence of bioethics in the 1970s (my father died in 1974, too soon to experience the sweeping changes in medical ethics) is of a piece with the appearance of the precautionary principle of the 1980s. Both are rooted in skepticism of professional authority, and both have advocated lay involvement in medical decisions. I do not advocate repudiating the new medical ethics. As the Yale University psychiatrist and law professor Jay Katz has long pointed out, the doctor-patient relationship was for eons characterized by a doctor-dominated paradigm that is best left behind. Yet, I worry that the critique of modernism, of expertise, has swung too far. In the clinical setting, I have seen this phenomenon manifested as the reluctance of physicians to give advice to patients who are facing a complex treatment decision. Often I hear complaints that doctors respond to patients’ requests for guidance with the demurrer that it is their decision, that they must exercise their self-determination. This is a case of turning patient autonomy into a shield behind which doctors can hide. The ethical principle of autonomy should not be an excuse for abandoning the counseling that patients crave. Similarly, in the long run I think it is bad for the profession to give up the moral authority that comes with expertise. Perhaps those with expertise in public health and blood should open a conversation about whether they have succumbed to creeping protectionism in an honest attempt to learn from the horrors of the HIV experience. I cannot say whether this is the case, only that the signs point to this possibility. On the importance of a philosophical view of scientific expertise, consider Osler again. A rare and precious gift is the Art of Detachment, by which a man may so separate himself from a life-long environment as to take a panoramic view of the conditions under which he has lived and moved: it frees him from Plato's den long enough to see the realities as they are, the shadows as they appear. Could a physician attain to such an art he would find in the state of his profession a theme calling as well for the exercise of the highest faculties of description and imagination as for the deepest philosophic insight.4 In our time, scientists have learned about the pitfalls of an aristocratic attitude. The challenge is to balance those lessons with society's continuing need for unshackled expertise. To this end, efforts should be made to develop evidence that quantifies, or at least aids in prioritizing risks, with the goal of evidence-based risk assessment. Scientists and physicians should then recognize their social obligation to participate in policy debates in which their expert opinions can help the public balance imminent and more remote risks and evaluate the costs associated with risk-minimizing initiatives. In this way, perhaps we can all meet the Platonic challenge of doing science in a democracy.

Roman Inderst, Holger M. Müller

Abstract We study optimal financial contracting for centralized and decentralized firms. Under centralized contracting, headquarters raises funds on behalf of multiple projects. Under decentralized contracting, each project raises funds separately on the external capital market. The benefit of centralization is that headquarters can use excess liquidity from high cash‐flow projects to buy continuation rights for low cash‐flow projects. The cost is that headquarters may pool cash flows from several projects and self‐finance follow‐up investments without having to return to the capital market. Absent any capital market discipline, it is more difficult to force headquarters to make repayments, which tightens financing constraints ex ante. Cross‐sectionally, our model implies that conglomerates should have a lower average productivity than stand‐alone firms.

Richard Schragger, William A. Fischel

In his ambitious new book, William Fischel, a Professor of Economics at Dartmouth College, gives us a new political animal: "The Homevoter." The homevoter is simply a homeowner who votes (p. ix). According to Fischel, she is the key to understanding the political economy of American local government. By implication, she is the key to understanding state and national government as well. Homeowners warrant special attention because "residents who own their own homes have a stake in the outcome of local politics that make them especially attentive to the public policies of local government" (p. ix). That is because local decisions - about how much to spend on schools or trash pick-up, for instance - directly affect home values in ways that most state or national decisions do not. The "homevoter hypothesis" is deceptively straightforward: decentralized, local governments provide a desirable balance of taxes and government services because the homevoter seeks to maintain or increase the value of her single largest asset - the family home (pp. 4-6). The homevoter explains why local governments "work better at providing local services than do larger-area governments" (p. x). This plausible sounding thesis has its roots deep in the decentralizing tradition of public finance theory. The idea that multiple local governments provide government services more efficiently than does a centralized government originated with Charles Tiebout's seminal article, A Pure Theory of Local Expenditures. Tiebout's solution to the problem of how to ensure the proper level of expenditures on public goods was to posit a market in public services. In his model, multiple local governments offer distinctive tax and spending packages, and "consumer-voters" choose to reside in jurisdictions that best fit their preferences, exiting those jurisdictions that do not. The notion that consumers of public goods "vote with their feet" by choosing where to live has become something of an economic maxim.

Mehmet Şişman, Doç. Dr. Selahattin Turan

In the last two decades, educational policy makers and educational leaders have reemphasized the importance of decentralization in education and its critical role in democratization of education and society. Leading scholars in the field state that educational decentralization is a complex process that deals with different dimensions of educational reform efforts and changes about policy making, finance, curriculum and administration of local schools in education. The purpose of this study was to examine the literature concerning decentralization and democratization efforts in education to provide a brief guidelines for government officials, educational policy makers and those who are intended to lead Turkish education and public schools for the twenty first century.