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Federalism Notes

PPE Notes > Politics: Comparative Government - Federalism Notes

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POLITICS

MODULE:

Comparative

Government


TOPIC:

Federalism


Reading

and

Tutorial

Notes

i)

Overview

Riker

definition

(1975):

a

political

organisation

in

which

the

activities

of

government

are

divided

between


regional

governments

and

a

central

government

in

such

a

way

that

each

kind

of

government

has

some

activities


on

which

it

makes

final

decisions.'

To

be

classified

as

federal,

must

satisfy

three

structural

criteria:

1. Geopolitical

division

(ie

not

UK)

2. Independence

3. Direct

governance


Unitary

states:

regional/provincial

officials

don't

have

constitutional

status.

Lack

control

over

power/resources.


Collective

choices

set

by

version

of

will

of

majority

of

citizens.


Federations:

dual

structures,

driven

by

process

of

bargaining

between

number

of

constituent

units

and

center.


Constituent

units

and

government

have

autonomous

powers

to

interact

directly

with

citizens.


Lijphart

(1999):

* Congruent

federalism:

territorial

units

of

a

fed

state

share

a

similar

demographic

(ethnic,

cultural,


linguistic,

religious

etc)

makeup.

Eg.

US

and

Brazil.

* Incongruent

federalism

--

the

dem

makeup

of

the

territorial

units

differ

among

the

units

and

the

country


as

a

whole.

Egs

--

Switzerland,

Belgium.

* Symmetric

federalism

-

equal

powers

of

territorial

units,

eg.

US

* Asymmetric

federalism

-

variation

in

powers

eg.

Belgium,

Canada

(Quebec

has

more

autonomy),


Russia,

Switzerland.


De

jure/de

facto

federalism


Decentralisation

-

distribution

of

actual

policy--making

power;

usually

seen

as

revenue

issue..


Tends

to

go

with

federalism

-

eg.

average

degree

of

revenue

centralization

12%

(Clark

et

al.

2009)

lower

in


federal

states,

but

variation

within

two


Optimal

decentralization

-

dilemma;

costs

and

benefits

both

ways.

Economies

of

scale

but

collective

action


problems,

local

issues/information

asymmetries.


Advantages

* PCT:

control

rent--seeking

behaviour

of

public

officials.


o Preference

satisfaction.

Factor

mobility

--

Tiebout

1956:

vote

with

feet.


o Increases

information

(Hayek

1939;

Oates

1972).

Tailor

policies

and

public

goods


o Competition:


o

expected

to

result

in

smaller,

more

efficient,

and

less

corrupt

govt

(Buchanan

1995).


o enhances

market

economies

and

produces

higher

econ

growth

(Weingast

1999).

* Policy

experimentation

and

innovation

--

Eg

US

welfare

reform

during

the

1990s.

More

adaptable

over


time

--

Evolutionary

progress.

* Increased

govt

accountability

and

responsiveness

to

citizen

preferences

(Lijphart

1999).

* Pol

participation

and

enhance

perceived

legit

levels.

Recruitment.

* Provides

'exit'

and

'loyalty'

mechanisms


Criticism

* Duplication;

potentially

contradictory

policies.

Incumbents:

seek

political

credit

and

minimize

costs.


Seek

to

minimize

electoral

impact

of

unpopular

policy

reforms.

* Collective

action

problems.

Eg.

regional

governments

block

fiscal

reform.

* Moral

hazard:

Incentives

to

spend

beyond

means.

*

*

*

*

'Downward

harmonisation':

levels

of

regulation,

welfare

taxes,

trade

barriers:

lowered

(Hallerberg


1996).

Difficult

to

implement

local

redistributive

tax

systems

because

wealthy

move

to

regions

with


lower

tax

rates.


Asymmetric

fed:

can

amplify

preexisting

inequalities

in

pop,

wealth

and

pol

power.


Govt

accountability:

adding

layers

of

govt

facilitates

blame

shifting

and

credit

claiming

(Rodden

2004,


494).


Treisman

(2002):

countries

with

higher

levels

of

decentralization

have

higher

levels

of

corruption

and


lower

levels

of

public

goods

provision.


Overall


-- Microfoundations:

alters

options/constraints

faced

by

political

actors

modifying

preferences

and


incentive

structure.


-- Welfare

economists/public

choice

theorists:

better

democracy,

better

bureaucracy,

better

markets.


-- But,

complex,

multidimensional

and

contingent

on

other

factors.


-- Effects

depends

on

details

-

institutional

design

and

surrounding

econ/social

circumstances.


-- Empirical

studies:

little

consideration

of

causal

mechanisms.

Gap

between

models

and

behaviour


Variation

in

structures:


Legislative

bicameralism:


--
Territorial

upper

chambers

(eg

USA,

Switzerland)

vs

regularly

timed

conferences

(Canada

-


ineffectual,

appointed

on

patronage

grounds)


--
Direct

election

(Brazil,

USA

since

1913

amendment)

vs

indirect

appointment

by

regions


(Germany,

delegates

appointed

by

Lander

govts


--
Some

upper

chambers

can

reshape

democratic

majority

(Brazil,

USA),

others

more

limited


(India,

Spain).


Control

of

national

leaders:


--
Riker

(1975):

centralized/maximum

(central

rulers

can

make

decisions

in

most

areas)

vs


peripheralised/minimum

(central

rulers

have

at

least

one

area

which

can

act

without

approval)


--
Criticism:

not

dichotomy,

multidimensional


Importance

of

party

system

(Riker

1975):


--
Strongly

centralized

party

system

can

undermine

divisions

of

authority.

Centralised

federalism


often

accompanied

by

a

strong

governing

party,

rendering

federal

divisions

"quite


meaningless."

Eg:

USSR,

Yugoslavia,

Mexico

(under

PRI).


--
Measuring

degree

of

federalism

requires

measuring

party

centralization,

F(party

controls

the


central

government

and

regional

governments;

strength

of

party

discipline)


Origins


--
Riker's

political

conditions

(1975):

focus

on

politicians'

incentives

1. Desire

on

part

of

politicians

to

expand

territorial

control

by

peaceful

means

2. Willingness

to

give

up

independence

for

sake

of

union

because

of

external

threat

or


potential

aggression

3. Establishment

must

be

rational


-- Federal

bargain


-- Stepan

(2001):


--
Coming

together

federalism:

federal

bargain;

previously

sovereign

polities

voluntarily

give

up

to

pool


resources

and

improve

collective

security/

other

econ

goals,

eg.US


--
Holding

together

federalism

--

decentralize

power

to

diffuse

secessionist

pressures,

eg.

India

1950,

Spain


1978,

Belgium

1993.


--
Forced

together:

failure

in

post

communist

states


o Yugoslavia:

imposed

by

communist

party

where

noncommunists

had

no

voice


o Czechoslovakia:

imposed

as

a

means

of

isolating

the

Czech

region


--
Indicates

must

be

based

on

domestic

covenants

if

they

are

to

survive.


--
Issues

of

endogeneity

and

selection


o Reverse

cause

from

outcome

to

origin.

If

self--selected,

does

it

matter?


o No

good

instruments

to

overcome

endogeneity


o GE

theory

unobtainable.

PE

analysis

--

isolate

moments

in

which

some

dimensions

of

the

o

problem

are

fixed

while

others

vary.


Moments

of

exogeneity

-

eg.

Reunification

in

Germany.


Barriers

against

uncooperative

behaviour

of

subnational

governments?

1. Fiscal

Constitution


-- Financial

self--reliance:

fiscal

autonomy

and

fiscal

accountability.

Budget


-- Fiscal

autonomy:

need

own

revenues,

less

transfer

dependency.

Reduces

deficits

and

inflation;


sustainable

growth.

Benefits

of

economic

progress

internalized;

market--preserving

environment.

2.Organisation

of

Shared

Rule

3 important

things:


-- relative

strength

of

national

executive:

allows

national

policy

to

prevail


-- formal

representation

of

subnational

units


-- organisation

of

party

systems

-

integration

constrains

opportunistic

behaviour


Integration:

need

to

smooth

distributional

concerns

by

potential

losers,

or

incentive

to

renege


Galligan

B.,

2008

'Comparative

Federalism'


Federalising

tendency:


-- Durability:

US,

Switzerland,

Canada,

Australia


-- Federal

constitutions

successfully

reestablished

in

Germany

and

Austria


-- Spain:

autonomous

regional

communities


-- GB:

devolution


-- Belgium:

effectively

federal

to

accommodate

French--

and

Dutch--speaking

people


-- Last

quarter

of

C20th:

Latam

democratized

and

decentralized.

Relationship.


-- But,

Kenya

-

more

centralization.

1963

independence;

federal

constitution.

Recent

change.


Causes:


Cosmopolitanism

and

multisphere

government


Glocalisation


**Riker,

W.,

(1975)

'Federalism'


Testing

the

Theory


HYPOTHESIS:

federalism

is

a

rational

bargain

aimed

at

a

Pareto--optimal

outcome,

so

"In

every

successfully


formed

federalism

it

must

be

the

case

that

a

significant

external

or

internal

threat

or

a

significant

opportunity


for

aggression

is

present,

where

the

threat

can

be

forestalled

and

the

aggression

carried

out

only

with

a

bigger


government".


Critique:

selects

on

the

independent

variable.


Practical

Ramifications

of

Riker's

Argument


European

Union:

The

European

Economic

Union

will

not

become

a

federal

union

unless

a

significant

political


threat

appears.

Wrong:

driven

by

economic

not

political

concerns.


Who

Benefits

from

Federalism?


When

formed,

it

benefits

those

who

favor

strong

defense

over

economic/political

liberalism.


As

federalism

ages,

it

begins

to

benefit

various

minorities,


Riker

also

answers

several

other

questions,

all

in

the

negative:


-- Federalism

does

not

promote

democratic

policy.


-- Federalism

does

not

promote

democracy

by

promoting

interest

in

state

government.


-- Federalism

does

not

help

maintain

individual

freedoms.


-- Federalism

does

not

benefit

everybody.

It

helps

a

minority

at

the

majority's

expense;

but

the

majority


might

still

keep

since

the

transaction

costs

of

getting

rid

of

federalism

are

very

high


*Stepan,

A.,

(2001)


'Toward

a

New

Comparative

Politics

of

Federalism,

(Multi)Nationalism,

and

Democracy:

Beyond

Rikerian


Federalism',


Federalism

as

a

Demos

Constraining--Demos

Enabling

Continuum


Riker:

'centralised

federalism',

originated

in

US

and

US

modal

form.

Stepan:

continuum

from

least

demos

constraining

to

most

demos

constraining.


US:

extreme

outlier

at

the

demos

constraining

end

of

the

continuum.


All

democratic

feds

are

inherently

center

constraining:

1. Conceptual

reason:

Dahl's

dual

sovereignty

constrains

center.

Agenda

power

dispersed.

2. Demos

constrained

vertically

and

horizontally.

Upper

chamber

represents

territory.

3. Role

of

judiciary


Operationalizing

the

Demos

Constraining--Demos

Enabling

Continuum

1. Degree

of

Overrepresentation

in

the

Territorial

Chamber


Least:

Belgium,

Gini--coeff

of

only

0.015,

vs.

India

is

0.1,

Germany

is

0.32.


US:

0.49,

Brazil

0.52:

each

state

receives

equal

amount

of

senate

seats.

Brazil:

in

1991

one

vote

in

Roraima

worth

144 more

than

in

Sao

Paulo.

2.

The

Policy

Scope

of

the

Territorial

Chamber


Spain:

upper

chamber

plays

crucial

role

in

preserving

autonomy

of

subunits.


India:

President's

rule:

would

dissolve

a

provincial

legislature

and

government

and

put

the

province

under

the


direct

rule

of

the

centre.

No

vote

needed

for

first

60

days.

Between

1947

and

1997

pres's

rule

was

implemented


over

100

times

and

affected

every

state.

3. Policy

issues

allocated

to

states

or

subunits


Brazil:

lawmaking

authority

rests

with

the

subunits

unless

constitution

specifies

otherwise


Germany:

large

area

of

lawmaking

authority

explicitly

given

to

the

fed

center


Spain:

asymmetric

federalism

--

some

provinces,

eg.

Catalonia

and

Basque

Country

stronger


India:

retains

residual

power

at

the

center.

Constitution

favourable

to

reorganization

along

linguistic

lines.


**Ziblatt,

D.,

(2004)


'Rethinking

the

Origins

of

Federalism:

Puzzle,

Theory,

and

Evidence

from

Nineteenth

Century

Europe'


Comparison

of

state

building

in

Germany

vs

Italy


Thesis:

federalism

emerges

if

the

constituent

states

of

the

potential

federation

possess

high

levels

of


infrastructural

capacity.

Enables

basic

paradox

of

federalism

(strong

but

not

too

strong

central

govt)

to

be


resolved.

1871 Prussian

state

builders

adopted

federal

political

model


Riker:

coming

together

federalism

-

inapplicable

in

Germany.


Infrastructural

model


Not

military

power

but

nature

of

vertical

state--society

relations.


-- degree

of

institutionalisation


-- capacity

of

state

to

penetrate

territories


Causal

mechanism:


-- serve

as

credible

negotiating

partners


-- deliver

benefits

that

state

builders

seek

with

state

formation

-

greater

tax

revenue,

greater

access

to


military

manpower,

greater

social

stability.


Germany/Italy:

purposes

of

national

unification:

to

secure

greater

fiscal

resources,

greater

military

personnel,


greater

social

stability,

and

prestige

on

the

European

stage.

But,

lesser

infrastructural

capacity

of

Italian

regional


states

so

didn't

lead

to

federalization.

Federalisation

deemed

to

be

a

solution

to

the

issue

of

governance

for

the


dominant

state.

Allows

the

periphery

states

a

degree

of

federalization.

Uses

the

pre--existing

instituitons.


Challenges

notion

that

political

center

make

federal

concessions

only

in

the

face

of

internal

threats.

State

of


Prussia

had

overwhelming

military

capacity.


Crucial

issue:

whether

subunits

are

institutionalized,

socially

embedded,

and

highly

infrastructural.


Wibbels

(2005)


The

greater

the

level

of

factoral

confict,

the

more

elites

who

engage

in

constitutional

negotiations

are

likely

to


constrain

the

central

government

by

providing

for

substantial

veto

authority.


Higher

levels

of

inter--regional

inequality

heighten

demands

for

inter--regional

distribution.


-- Persistence

of

features

over

time


-- Redistribution

from

urban

to

rural

(eg.

ISI

policies)

--
--

--
--
--
--
--

Oppenheimer

et

al

(1999):

national

over--representation

of

rural

interests

results

in

significant

reallocation


of

national

tax

revenue


Vertical

distribution

and

organisation

of

governmental

authority:

has

a

regular

impact

on

policy

outcome


and

is

often

persistent

through

time


SS? Complicates

explaining

cross--national

and

time--serial

variation


SS? Relevant

independent

variables

show

little

variation

over

time


Small

number

of

fundamental

alterations

in

relative

balance

of

power


SS? Eg.

US

Great

Depression


ISI

in

Ghana:

rural

interests

under--represented

and

rural

to

urban

redistribution

fostered


US:

constrained

central

government


India:

high

level

of

convergence

among

regional

elites

-->

constitution

with

stronger

center.


Elite

coalitions:

important

implications

for

the

design

of

constitutions


Argument:


-- Factor

endowments:

population,

geography,

soil,

rainfall

etc.


-- Where

initial

heterogeneity

of

factor

endowments

high,

regional

elites

favour

limited

powers.


Urban/periphery

dynamic.

Financial

centres

vs

agricultural

regions.


-- Some

equality

concerns

constituitonalised:

eg.

Indian

constitution:

emphasizes

social

and

economic


justice,

equality

of

status

etc.

German

constitution:

equality

of

living

standards

across

states.


-- Similar

factor

endowments

=>

centralized

state


-- Unequal

distribution

of

wealth

=>

redistribution


-- Direction

of

redistribution

(urban

-->

rural

or

rural

-->

urban)

determined

by

degree

of

intra--regional

asset


inequality.

When

assets

concentrated

elites

resolve

collective

action

problem.


-- Probabilistic

rather

than

deterministic

outputs


-- Argentina:

1853

constitution.

Economic

inequality

and

diverse

factor

endowments

=>

weak

central


government

and

redistributive

pressures

from

BA

to

rural

areas.

Rural

interests

of

Pampas


overrepresented

in

Senate.

Residual

powers

with

provinces

-

eg.

State

could

only

tax

duties

on

trade.


Complicated

by

1890

debt

crisis.

Emergent

working

class

in

BA

and

Cordoba

in

C19th.

Mendoza:

provincial


politics

characterised

by

oligarchy.

Inflexibility

led

to

constitutional

failure,

centralization

of

authority

and


centralization.


-- America:

decentralized

approach

to

economic

development.

North/South

divide.


-- India:

empowered

centre;

few

constitutional

constraints

(also

do

to

anti--colonialism).

Five

Year


development

plans.

Homogenous

factor

endowment

(primarily

agricultural),

but

redistributive.


Redistribution

from

rural

to

urban

areas

to

promote

industrialization.


Beramendi

(2007)


-- Beramendi:

distributive

effects

dependent

on

preexisting

territorial

patterns


-- Hypothesis:

levels

of

decentralization

of

redistributive

policy

are

a

positive

function

of

the

interregional


differences

in

terms

of

income

and

labour

market

risks


-- Conclusion:

territorial

structure

of

inequality

shapes

the

choice

of

fiscal

structures


-- Impact

of

political

institutions

clearly

differentiated

from

conditions

under

which

institutions

come

into


existence


Model:

Decentralisation

of

policy:

endogenous

to

income

inequality.


-- Amount

of

redistribution

function

of

1)

income

differences

between

regions

and

2)

differences

in

labour


market

risk

profiles

of

regional

economies,

based

on

role

of

fiscal

policy

as

an

insurance

mechanism


-- Maximisation

problem:

Max

{Ud(c)

Uc

(c)}

where

Ud(c)

denotes

value

of

consumption

under


decentralization

and

Uc(c)

denotes

value

of

consumption

under

a

centralized

design

of

redistribution


-- Each

region

has

two

sectors:

b,

who

derive

their

population

from

work,

and

l,

nonworking

population.


-- B

experience

uncertainties

from

the

risk

profile

of

the

regional

labour

force

due

to

specialization.

Where

zi


captures

incidence

of

unknown

individual

risk


-- Utility

function

of

any

territorial

unit:


-- Explains

why

some

poor

regions

opt

for

fiscal

decentralization,

eg.

Southern

Democrats

in

negotiation

of

1935 Social

Security

Act

-

centralized

public

insurance

didn't

match

regional

economy


-- **Apply

model

to

EU

-

eg.Germany

opposing

centralization

not

only

because

would

be

net

loss

but

also


because

of

structure

of

economy

post

reunification


-- Incorporation

of

labour

market

risks

into

model

improves

microfoundations

and

causal

mechanisms.

As

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