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PPE Notes Politics: Comparative Government - Federalism Notes

Federalism Notes

Updated Federalism Notes

Politics: Comparative Government - Federalism Notes

Politics: Comparative Government - Federalism

Approximately 16 pages

Very comprehensive notes and thoughts on federalism based on a combination of the Oxford set reading list and the tutorial discussion.

i) Overview
- Definitions
- Congruent/Incongruent Federalism
- Federalism vs decentralisation
- Advantages & Criticisms
- Methodological Approaches - rationalist; constructivist; micro foundations
- Structural Variations
- Origins
- Endogeneity Issues
- Literature Summaries
- Structure & Dynamics of EU Federalism

ii) Forms of Federalism
- Influenc...

The following is a more accessible plain text extract of the PDF sample above, taken from our Politics: Comparative Government - Federalism Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

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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