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Archive for the ‘federalism’ Category

The Cato Institute has conducted a new poll of Americans’ attitudes toward federalism. Apparently Americans have become much more favorable to federalism and decentralization over the past 40 years.

The Cato Institute commissioned YouGov for the poll. They asked respondents questions about which level of government should have primary control over each issue area, using the exact same wording from a Harris poll conducted in 1973. This method allowed them to see how Americans’ attitudes have evolved over the past 40 years. On 10 out of 11 issues, Americans were more favorable to state or local control in 2013 than they had been in 1973 (the bars in this graph represent the percentage of Americans favoring primarily federal control over that issue):

cato poll

A majority of Americans still want primarily federal decision-making over national defense, Social Security, and cancer research. Two of those three seem to make a great deal of sense: cancer research is a global collective good, and national defense, by definition, is a national collective good. “Prison reform” and “drug reform” are the two issues on which Americans’ attitudes have moved most significantly toward decentralization. A large majority of Americans now think housing, transportation, education, welfare, prison reform, health insurance, and drug reform, in that order, should be primarily state and local issues. Only on education have Americans become more centralist, and that change is so small as to lie within the margin of error.

Another compilation of surveys suggests that a majority of Americans also want primarily federal decision-making over immigration, stem-cell research legality, protecting the border, protecting civil rights, protecting civil liberties, abortion laws, creationism in public schools, and food safety, in descending order. Most Americans also think paving roads, providing job training, law enforcement, running courts, providing pre-K to low-income children, unemployment, gay marriage, and gun control should be primarily state and local issues.

These results are consistent with those of other surveys, which have tested Americans’ views on particular issues. A 2012 CBS News poll found that 69% of Americans preferred that the states handle marijuana policy, while only 27% preferred that the federal government handle it.

What’s interesting is that on all these issues on which the study reports a partisan breakdown, even drug laws, Democrats are more in favor of federal control than are Republicans. Decentralization has emerged as a very starkly partisan wedge issue.

Growing support for decentralization in the U.S. does not necessarily mean that decentralization is a good idea or that it will happen, of course. As my review of Daniel Treisman’s recent book acknowledges, decentralization can have its pitfalls. Yet within the American context of largely market-preserving federalism, greater decentralization on many of these issues will (more…)

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Since the Scottish independence referendum, the Scottish National Party has seen its membership treble and its poll ratings climb. This boost to pro-independence forces after their referendum failure departs from the script established in previous referendums on autonomy or independence. After the failed 1979 referendum on devolution (due to a turnout requirement – the measure got a majority of votes), the SNP fell back in the polls. After the successful 1997 referendum, the SNP gained in the polls, even though devolution was a Labour-implemented project. After the 1980 and 1995 failed referenda, the Parti Quebecois declined a bit in the polls.

So what’s going on? The biggest reason for the SNP’s gains may be that “Yes” and even some “No” voters in the referendum want to make sure that the Westminster parties follow through on their pledges for even greater devolution. Alex Salmond once said, “It’s only SNP votes that concentrate the minds of Labour.”

To a point, the logic makes sense. The British parties are contesting for power at the center, and party leaders are unlikely to devolve power away from themselves if they can at all help it. A credible secession threat is useful for eliciting concessions.

At the same time, though, there has to be some (more…)

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This paper of mine is now available online in Constitutional Political Economy. It empirically investigates competing theories of how fiscal federalism constrains government. The main conclusion is that different federal systems conform roughly to different theoretical models, with the U.S. – a bit surprisingly – coming closest to “market-preserving federalism.” Some of the early findings from this paper were blogged here at Pileus some time ago.

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Having finally turned the corner on a brutal, 11-day (and counting) cold, I feel up to getting back to my blogging routine. First up: a followup to last month’s post, “Why So Little Decentralization?”

To review, that post posed a puzzle (a problem for political scientists to ponder, you might say). The puzzle is this: developing countries are far more centralized than developed countries. That is so despite the fact that some developing countries are much larger and more diverse than developed countries, and many of them have now been democratic for quite some time. Furthermore, if decentralization were simply a relict of post-medieval state-building (some might venture that sort of claim about Switzerland, for instance), then the fact that developing countries have lower state capacity and a more recent independence than almost all developed countries deepens the puzzle.

I went through two explanations that do not actually explain the puzzle very well: shallow local talent pools and illiberalism. In particular, they cannot explain why developing countries are often very decentralized along some dimensions (allowing discrimination against goods and workers from other regions, linguistic and cultural rights, etc.), but not others (chiefly tax policy).

I think there are two explanations that actually work: secession prevention (in ethnic federations) and excessively personalist electoral systems (in nonethnic federations). In this post I’ll talk about secession prevention.

Some developing democracies are ethnoregionally diverse, that is, they contain minority ethnic homelands that could form the basis of independent states. Examples include (more…)

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Many scholars (for instance) have noted a trend around the world of greater decentralization, at least on certain dimensions. Many non-federal, unitary states have tried to devolve some spending and decision-making authority on local or regional governments. Virtually every democratic government nowadays at least feigns some interest in decentralization.

Yet what strikes me is how little decentralization there has been, especially in the developing world. Some developing democracies that are sometimes described (or describe themselves) as “federal” or “semi-federal” include Mexico, India, Indonesia, Brazil, Argentina, Venezuela (before it went authoritarian some time in the 2000s), South Africa, Malaysia, Pakistan, Iraq, Nepal, and Nigeria. Yet none of these countries, other than Mexico, affords its constituent state or regional governments autonomy commensurate with that found in federal and semi-federal “Western liberal democracies” like Spain, Canada, the U.S., Switzerland, Belgium, Germany, Austria, Australia, and Italy. For instance, in Brazil, states do not have exclusive powers, and the federal government may overrule any state law with its own legislation. In India, the federal government may suspend state governments from operating at all and impose “President’s Rule.” Of all developing democracies, only India, Mexico, and Brazil routinely allow subcentral governments to raise significant revenue through autonomous taxation policies. (I count 9 Western democracies with such fiscal autonomy.)

Some of these developing countries are both huge and ethnically and regionally diverse, India and Indonesia most notably. One might think that these governments would have even more reason to decentralize than would the governments of comparatively homogeneous Western democracies. Therefore, the relative lack of decentralization in developing countries remains a puzzle.

One explanation might be the smaller talent pool in developing countries. Decentralization might not be feasible because uneducated or politically unsophisticated local officials require close supervision from a small cadre of Western-educated central administrators. While this explanation might have some weight in very poor democracies like Mali (before the recent coup), it likely does not apply to the majority of the cases just mentioned. If the talent pool in developing democracies were desperately shallow, then small developing democracies should have little state capacity plus all the adverse sequelae political scientists typically attribute to state weakness. Yet many small democracies in the developing world have performed fairly well: Costa Rica, Jamaica, Trinidad, Botswana, Mauritius, and Namibia, not to mention Slovenia and the Baltic republics in central and eastern Europe. There is no obvious positive relationship between country size and economic or political performance in the developing world.

Furthermore, many of the cases just mentioned do boast significant decentralization along some dimensions. For instance, India and Indonesia lack a unified internal market, allowing local and state or provincial governments to impose trade barriers on products from other regions. This is an economically perverse form of decentralization and one that has been nearly stamped out in the West, apart from certain discriminatory government procurement regulations. In addition, many developing democracies feature significant decentralization of expenditures: local and regional governments control significant budgets, but those budgets are funded by central grants, and most policy authority lies with the center. This set of policy choices is also likely economically perverse, as “vertical fiscal imbalance,” whereby subcentral governments depend heavily on grants or mandatory revenues from the center, tends to encourage fiscal irresponsibility. In Argentina in the 1980s and 1990s, provincial governments established their own banks, which were forced to lend money to those governments, leading to repeated fiscal crisis.

Another explanation might be that there is something about the Western liberal tradition of political philosophy that encourages decentralization. Many developing democracies fit within the category of “illiberal democracies,” where majorities use their political power to trample the rights of minorities. Sri Lanka might be just such a country, where the Sinhalese majority has repeatedly refused to countenance significant autonomy for the Tamil minority, and the central government fought a brutal civil war against Tamil rebels, complete with vast numbers of civilian killings and other human rights violations.

There may well be something to this explanation, but there are also hazards. As Vito Tanzi noted (PDF), demand for decentralization rises with size of government. A nightwatchman state can afford to be centralized because no one really cares about who controls it. Developing countries have bigger governments than Western democracies, not in the government spending as a share of GDP sense, but in the sense that the distribution of resources in such societies is more elastic with respect to the distribution of political power. So demand for decentralization should be higher there. True, the constraint might instead be supply: the views of political leadership in such societies. But then why the “perverse” decentralization in some countries?

To examine the extent and form of decentralization in developing democracies, I have, with the help of University at Buffalo Ph.D. student Govinda Bhattarai, developed a new dataset of regional self-rule in consolidated democracies worldwide. The coding scheme extends that introduced by Liesbet Hooghe, Gary Marks, and Arjan Schakel for Western democracies and various postsocialist European countries. Without going into details here, I will simply note that we coded the scope of policy powers of subcentral governments, the scope of taxation powers of subcentral governments, the local electoral accountability of subcentral officials, and the ability of the central government to veto subcentral laws.

Using those indicators, I then construct two higher-level, multiplicative indices of economic self-rule and political self-rule. Economic self-rule takes into account political self-rule as well as the tax autonomy of subcentral governments. Economic self-rule ranges from 0 (none) to 48 (maximum). Political self-rule ranges from 0 (none) to 16 (maximum).

The scatter plot below shows regional self-rule on the economic (Y axis) and political (X axis) dimensions in 2006, the latest year for which data on regional self-rule in the Hooghe, Marks, and Schakel dataset are available (our data go to 2010, however). Each observation in this plot is a type of region: either a particular region with its own autonomy statute (like Aaland in Finland or Scotland in the UK), or a type of regional government with the same autonomy arrangement (like states in the U.S. or in India).

economic & political self-rule(You can click the image to get a better view.)

Look at how few (more…)

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I recently read Daniel Treisman’s brilliant book, The Architecture of Government: Rethinking Political Decentralization. This book is particularly important for classical liberals who defend decentralization as an important institutional reform for promoting and protecting individual freedom. Treisman’s thesis is essentially that decentralization is overrated. He doesn’t argue that decentralization generally has bad consequences, even under readily identifiable circumstances, but that the consequences of decentralization are so unpredictable and case-specific that few generalizations, even highly conditional ones, can be made about them. The book is largely architecture of governmenttheoretical, and Treisman takes on standard justifications of decentralization like Tiebout sorting, the role of mobile capital in keeping government small, and keeping government “close to the people.” While Treisman’s counterarguments to decentralization’s defenders are well thought out and in many cases persuasive, I remain more optimistic about our ability to make valid generalizations about decentralization. Still, any defender of “competitive federalism” or more local governance will need to grapple with Treisman’s challenges. I’ll take some of the most important of these challenges in turn.

One common argument for decentralization comes from Charles Tiebout: competition among local governments providing public goods allows residents to reveal their true preferences for these goods and incentivizes local governments to act on those preferences. Treisman argues that key assumptions of the model are so thoroughly violated in reality that the predictions of the model are not likely to hold true in the real world.

First, he argues that if “public service differentials are capitalized into property prices, then pressure on governments may disappear completely” (79). Residents then won’t leave districts that provide poor public services, and local officials will not be disciplined. (more…)

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I have just posted a couple of my working papers to SSRN for those who are interested. They are as follows:

  1. Public Policy and Quality of Life: An Empirical Analysis of Interstate Migration, 2000-2012
    Abstract:
    Individuals and households choose their political jurisdiction of residence on the basis of expected income differentials and jurisdiction-specific characteristics covered by the general term “amenities.” In addition to fixed characteristics like climate and terrain, amenities may include public policies, as in the well-known Tiebout model of migration. Do Americans reveal preferences for certain public policies by tending to migrate toward jurisdictions that offer them? This article tests whether state government involvement in fiscal policy, business regulation, and civil and personal liberties more often reflects an amenity or a disamenity for Americans willing to move. As identification strategies, the article estimates spatial, matched-neighbors, and dyadic models of net interstate migration for all 50 states, covering the years 2000-2012. The evidence suggests that cost of living, which is in turn strongly correlated with land-use regulation, strongly deters in-migration, while both fiscal and regulatory components of “economic freedom” attract new residents. There is less robust evidence that “personal freedom” attracts residents.
  2. Civil Libertarianism-Communitarianism: A State Policy Ideology Dimension
    Abstract:
    This paper investigates the existence of a second dimension of state policy ideology orthogonal to the traditional left-right dimension: civil libertarianism-communitarianism. It argues that voter attitudes toward nonviolent acts that are sometimes crimes, particularly weapons and drugs offenses, are in part distinct from their liberal or conservative ideologies, and cause systematic variation in states’ policies toward these acts. The hypotheses are tested with a structural equation model of state policies that combines “confirmatory factor analysis” with linear regression. The existence of a second dimension of state policy essentially uncorrelated with left-right ideology and loading onto gun control, marijuana, and other criminal justice policies is confirmed. Moreover, this dimension of policy ideology relates in the expected fashion to urbanization and the strength of ideological libertarianism in the state electorate. The results suggest that the libertarian-communitarian divide represents an enduring dimension of policy-making in the United States.

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