Journal File A. Allan Schmid August 1999


(Institutional change and impact analysis)


I. .The 1963 Philippine law giving tenants a right to regulated cash rent was seen by H&R as disequilibrating and made tenant MVP too high relative to opportunity cost wage so the traditional wage for harvesters had to fall (via an institutional change).
Situation Structure Performance
Technology and population changes relative prices. Market equilibrating forces Institution changes from Hunusan to gamma system. 

Landless harvesters lose.

The H&R paradigm makes institutional change the performance variable and other institutions in structure are implicitly held constant. Similar to Williamson who makes choice of governance method a performance variable to be predicted. Implication: can't fight law of supply and demand; do-gooders just make things worse.
Technology and population change creates IUG rent. 

(Land, seeds, and irrigation are complements, so shares are determined by institutions.) 

Policy outcome is 

HEC among landlords--small group 

HEC among tenants--large

Rules for changing rules: 

Constitutional rules--voting, 
campaign finance, state control over landlord violence, how land rights are embedded in local institutions 

a. Landlord solidarity. 
    Tenant docility.

b. Tenant solidarity and perception that institutions are variables.


a. Institutions change from Husanan to gamma. 

b. No change.

Majority wanted poorest groups to share in new technology creating IUG rent.  Ideology. 

HIC in administering sub- 
tenancy law. 

Factor Ownership:
1. Law creating low fixed rent 

2. Prohibition of subtenancy 

3.. Tenant and landless laborer made part-owner. 

.4. Landlords charged for new technology and royalties paid to tenants and landless. 

1. Tenants richer and sub-lease. Landless pressured. 

2. Law is evaded. 

3. Part-owners get share of profit regardless of wage elsewhere. 

4. Poor are richer and no way to see this as disequilibrium in labor market.

In the institutional economics paradigm, none of this is made to look inevitable and natural. Suggests role of preference change, ideology, learning, and rules affecting political power. The role of public choice is explicit and needs moral judgment. Theory affects what you can see and agenda control by suggesting other institutional alternatives to achieve a given performance.