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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