Friday, June 6, 2014

Witch hunts and taxes

Noel D. Johnson and Mark Koyama use witchtrials in France to investigate how the rule of law was established in modern states. (Earlier working paper which might differ from the published article.)

"Economists agree that the rule of law is an important correlate of economic growth (Rodrik, Subramanian, and Trebbi 2004). However, relatively little has been written about how the rule of law emerged and about how investments in fiscal capacity affected legal capacity. One reason for this is that historical measures of legal capacity are extremely hard to find." (p78)

"Witchcraft was a very difficult crime to prosecute in early modern France if judges adhered to the letter of the law. As such, witches were most likely to be tried and convicted in regions where magistrates departed from established legal statutes. We argue that collecting taxes required standardized and properly enforced judicial procedures. Hence, as the fiscal demands on the state increased, central governments had an incentive to reorganize and coordinate the enforcement of judicial rules. Our hypothesis is that as governments did so, the frequency of witch trials decreased. Witch trials were [...] symptomatic of weak legal institutions."( p78)

Their preferred estimate implies a "1-standard-deviation increase in taxes collected per capita in a region results in a decrease in witch trials of about one-half of a standard deviation (p97)"

To sum, fiscal and legal capacities of modern states are complements and a common legal standard appears to require a strong fiscal base.

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