Competitiveness and performance of national economies is inherently linked to the productivity of their workforces. Some of this productivity is created by full-time primary, secondary, and postsecondary education. A significant part is built up later when workers participate in the workforce. With strong complementarities between technology and skills, training and education is now being considered as a key factor in global competitiveness. Industrialized countries seek to improve, and are willing to substantially invest in, their education and training institutions.

Only recently, the Organisation for Economic Co-operation and Development (OECD) Programme for International Student Assessment study has led to critical scrutiny of primary and secondary education systems in those countries that achieved relatively low scores, and triggered a wave of research and reform suggestions (see, e.g., Fertig & Schmidt, 2002; Fertig, 2003). At least equally important are postsecondary education schemes. Although primary and secondary education provides skills that are largely general and provide mostly academic knowledge, postsecondary schemes are tailored toward specialization, and often toward provision of skills that are specific to the needs and requirements of particular labor markets.

There are large differences between postsecondary education systems across industrialized countries. For instance, in the Anglo-Saxon countries, postsecondary education is usually state provided, through universities, colleges, and vocational schools. There is some concern about the emphasis on the academic bias of this system, with school-based vocational training schemes and specialized colleges not being able to provide workers with the “hands-on” skills the labor market requires.

Introduction

The end of the cold war and the rise of international terrorism have dramatically changed perceptions of national security. Where nations once saw threats emanating primarily from state actors located abroad, they now look also at nonstate entities acting both at home and abroad, as well as to failed states. Threats from nonstate actors have become a more significant issue for both rich and poor states. Table 2.1 displays those changes in perception of the threat, using the United States as an example.

A full analysis of the costs of terrorism would include the costs to rich and poor states, including those costs of rich country efforts to defend against terrorist threats imposed on the poor. This chapter takes a first step by examining the costs to the rich states of addressing the terrorism threat, not the costs of terrorism itself or of the immediate responses to an attack. In that sense, the costs might be thought of as the “secondary” cost of countering terrorism, rather than the “proximate” costs of terrorism. Understandably, the latter have received more attention than the former. However, some sense of where the money is going is necessary to identify possible trade-offs and ask whether the current portfolio of expenditures is the most sensible one. Table 2.2 summarizes the various distinctions and their implications for cost.

Terrorism is the premeditated use or threat of use of violence by individuals or subnational groups to obtain a political or social objective through the intimidation of a large audience, beyond that of the immediate victim. Although the motives of terrorists may differ, their actions follow a standard pattern, with terrorist incidents assuming a variety of forms: airplane hijackings, kidnappings, assassinations, threats, bombings, and suicide attacks. Terrorist attacks are intended to apply sufficient pressures on a government so that it grants political concessions. If a besieged government views the anticipated costs of future terrorist actions as greater than the costs of conceding to terrorist demands, then the government will grant some accommodation. Thus, a rational terrorist organization can, in principle, achieve some of its goals more quickly if it is able to augment the consequences of its campaign. These consequences can assume many forms, including casualties, destroyed buildings, a heightened anxiety level, and myriad economic costs. Clearly, the attacks on September 11, 2001, (henceforth, 9/11) had significant costs that have been estimated to be in the range of $80 to $90 billion when subsequent economic losses in lost wages, workman's compensation, and reduced commerce are included (Kunreuther et al. 2003). The cumulative costs of 9/11 were a small percentage of U.S. gross domestic product (GDP), which exceeded $10 trillion.

The resurgence of interest in recent years in the importance of education and training in furthering the goals of economic progress, fuller employment, and social integration coincides with a new emphasis on the need for “lifelong learning,” both to respond to current changes in the organization and technology of production and service delivery and to counter the socially disruptive effects of increased labor market flexibility.

Although there has been a great deal of interest in and research on initial education prior to labor market entry, continuing job-related training is also believed to be highly influential in determining both corporate or organizational performance as well as individual earnings and career development, although the empirical research on this topic is much more limited. Given that the impact of initial educational attainment on both labor market entry and on subsequent career development is already well established in the research literature, we focus in this chapter on continuing education and training of employed workers.

It should be noted that there has also been a parallel interest in the effects of education and training targeted on the unemployed, and that this field has generated a substantial body of sophisticated empirical research that has already been extensively reviewed (see, e.g., Fay, 1996; Friedlander et al., 1997; Heckman et al., 1999). Most empirical work has been confined to relatively short-term employment and earnings effects.

This chapter considers contributions from the political science literature to understanding the causes and consequences of cross-national diversity in training regimes across the most developed democracies. The recent surge of interest by political scientists in skills has developed as an offshoot of debates over distinctive varieties of capitalism. Although economists are mostly interested in the efficiency effects of different skill formation systems, and sociologists, often, in the effects of educational opportunities on social stratification, political scientists came to the topic of skills through an interest in understanding the political and institutional foundations of national political-economic systems associated with divergent political and distributive outcomes. In these debates, the skill systems that have attracted the most attention are those, such as the German one, that appear capable of reconciling high wages with high productivity via high skills and high value-added production (Streeck, 1991). In this chapter, therefore, we focus particular attention on Germany, while situating this case in the context of a broader comparative literature on the origins, operation, and future of distinctive skill regimes.

The chapter is divided into three main sections. The first section briefly considers a range of arguments by political scientists on the implications of different, nationally specific models of skill formation. It presents an overview of the various typologies that have been devised to characterize cross-national differences in training systems, and it links these to recent claims about how vocational education and training systems fit into broader national political-economic models.

IMPACT OF INTERNATIONAL COMPARISONS IN VET

The political and economic benefits of an international large-scale assessment of vocational education and training (VET) are obvious. Due to the increasing internationalization of economic exchange relationships in goods and in labor markets, as well as to economical, political, and social standardization in Europe – under the condition of increasing knowledge intensity in working processes – educational systems have changed. In particular, vocational educational systems have gained importance for providing competences relating to occupational mobility and independent lifestyle of young people, as well as international competitiveness and innovativeness of enterprises. The European Commission (2005, p. 9) has put forward the ambitious economic and social goal of becoming “the most competitive and dynamic knowledge-based economy in the world.” Therefore, improved participation in education and the labor market is playing a crucial role in reaching these goals.

The practical implications of the problems of competence measurement are reflected in the ongoing progress toward the development of a standardized European Qualifications Framework (EQF). In Europe, the ministers for VET in thirty-two countries have accepted the Maastricht Communiqué, endorsed in December 2004, consisting of an agreement for the development of an overall EQF and a European Credit Transfer System for VET (ECVET). The aim of the EQF is to provide a common set of reference levels as an integration of an ECVET and the European Credit Transfer System in higher education (Commission of the European Communities, 2005).

Terrorism is as old as war, but only with the attacks of September 2001 in NewYork and Washington, March 2004 in Madrid, and July 2005 in London did it become a central concern of governments in the rich countries of the West. This concern prompted policy makers to focus on the potential links to development of both terrorism and the response to terrorism, quickly revealing important lacunae in the literature. To what extent is terrorism related to development? If development is a determinant of terrorism, what are the relative weights of the economic, political, and social aspects of development? And what is the development effect of different responses to terrorism? This volume addresses these crucial questions, synthesizing what we know about the development links with terrorism – and pointing out what we do not.

Policy makers and scholars are concerned with development-terrorism links in both directions: the economic effect of terrorism, but also the development roots of terrorist activity. This volume bridges both, first with contributors who examine the economic and fiscal costs of terrorism and the response to terrorism, and second with others who assess how development affects terrorism, drawing on existing linkages and also reporting on new evidence. The first is a much-investigated issue. Nevertheless, as chapters by Enders and Sandler and Treverton et al. demonstrate, evidence is much more abundant about the costs of terrorism in developed countries than in poor countries. Enders and Sandler also find that the economic costs of terrorism appear to be low in rich countries and, in all likelihood, high in poor countries.

This chapter organizes the conjectures from a rationalist literature on terrorist organizations, analyzing the strategic issues that they face and the consequences of their actions. From this perspective, terrorism is seen as one of a set of rebel tactics that is chosen in response to changes in five factors: funding, popular support, competition against other rebel groups, the type of regime against which they are fighting, and counterinsurgency tactics. However, once groups adopt terrorist tactics over other, more traditional, tactics of insurgency, terrorism becomes self-perpetuating. This is especially true when the use of terrorist tactics coincides with a shift into underground modes of organization.

The value added by this literature, in conjunction with some standard econometric analyses, is that it helps to identify the relevant actors, to reckon their utilities and payoffs, and to highlight different factors that affect when/where/and against whom terrorists strike. However, because the studies under review are not, by and large, written as part of a coherent, self-aware literature, a summary of the conjectures offered in the literature will not lead to an internally consistent body of testable hypotheses. Instead, we use the literature as a jumping off point to suggest a series of broad hypotheses that should serve as a foundation for future theoretical analysis and statistical testing. The emphasis here will be on developing hypotheses to understand why, where, and when civilians are likely to become victims in rebellions.

Introduction

Utilitarianism has been opposed to theories of fairness (especially Rawls's theory) in many respects. We want to focus here on a particular division that has been seldom discussed, although it is reflected in the structure of welfare economics. Welfare economics is indeed currently separated into two very different branches. One branch deals with social welfare functions and devotes a substantial energy to the study of utilitarianism. The other studies fair allocation in economic models and, formally, its main focus is on allocation rules. The difference is the following. A social welfare function associates each member in a class of possible contexts with a ranking of all possible alternatives, whereas an allocation rule only associates each member in the class with a selection of “best” alternatives. As it has long since been noted in the theory of social choice, an allocation rule is a kind of ranking, albeit simple (any two selected allocations as well as any two nonselected allocations being deemed socially indifferent), and a ranking immediately leads to an allocation rule (which selects the best alternative in every context).

Actually, there is a second important difference between these two branches. The arguments of the social welfare functions studied by the former are interpersonally comparable utilities (usually comparable in levels, differences, or ratios), whereas the whole body of literature representing the latter is purely ordinal, making use of no other welfare information than the preferences of the agents over simple alternatives.

I want to raise a subject associated with one of our two distinguished honorands, John Rawls. A proposal of his that has gained almost universal acceptance in the philosophical community is that the way to test and to strengthen ethical beliefs is to bring them into wide reflective equilibrium. It is not that that seems to me wrong. It is just that it has always seemed to me to say so very little. That is the thought I want to develop.

Piecemeal Appeal to Intuition

Among philosophers, the most common sort of criticism of our ethical standards nowadays is what can be called piecemeal appeal to intuition. We are all familiar with how it goes: It follows from your view that it would be all right to do such-and-such, but that's counterintuitive, so your view must be wrong.

Philosophers now pretty much agree that, as criticism, piecemeal appeal to intuition is weak, though, for lack of anything stronger, their belief has not had the revolutionary effect on their practice that one could reasonably expect to follow.

It is not that piecemeal appeal to intuition shows nothing. It is just that the doubts that it raises are not very strong. It may well be that some intuitions are as close to sound moral beliefs as we shall ever get. Others, however, clearly are not, and there are no internal marks distinguishing the first lot from the second. Intuitions, despite the misleading suggestion in their name of a special sort of perception into moral reality, are just beliefs.

Introduction

Consider a group of people whose preferences satisfy the axioms of one of the current versions of utility theory, such as von Neumann–Morgenstern (1944), Savage (1954), or Bolker (1965)and Jeffrey (1965). There are political and economic contexts in which it is of interest to find ways of aggregating these individual preferences into a group preference ranking. The question then arises of whether methods of aggregation exist in which the group's preferences also satisfy the axioms of the chosen utility theory, while at the same time the aggregation process satisfies certain plausible conditions (e.g., the Pareto conditions introduced later).

The answer to this question is sensitive to details of the chosen utility theory and method of aggregation. Much depends on whether uncertainty, expressed in terms of probabilities, is present in the framework and, if so, on how the probabilities are aggregated. The goal of this chapter is (a) to provide a conceptual map of the field of preference aggregation – with special emphasis, prompted by the occasion, on Harsanyi's aggregation result and its relations to other results – and (b) to present a new problem (“flipping”), which leads to a new impossibility result.

The story begins with some bad news, roughly fifty years old, about “purely ordinal” frameworks, in which probabilities play no role.

Arrow's General Possibility Theorem (1950, 1951, 1963): No universally applicable nondictatorial method of aggregating individual preferences into group preferences can satisfy both the Pareto Preference condition (unanimous individual preferences are group preferences) and the condition of Independence of Irrelevant Alternatives (group preference between two prospects depends only on individual preferences between those same prospects).