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Comparative Politics
Comparative Politics: Observations
Stylised Facts:
Wide variation in government size
Size of Government = Total Government Expenditures / GDP
Variation in the ccope of Government (outlook, policy objectives, how much to spend on public goods):
Some spend more on transportation, others education, some safety and order...
Comparative Politics: Explanations
How can we explain these variations? Well we begin by asking whether and how different political institutions affect the size and composition of their spending.
We focus on two particular features:
Electoral Rule: majoritarian and proportional systems
Regime Type: presidential and parliamentary regimes
Public Finance Model: Basics
A society with 3 distinct groups of voters, it is the government's job to set public policy:
Collect tax
With those revenues, provide public goods (benefits everyone equally, non-excludable and non-rivalrous).
Rent refers to the money that politicians would like to pocket from the revenue, so rent is a catch-all term that we use in economics to for this "undefined-benefit
The three constituencies we have (distinct groups) are indexed by i, numbers 1 to 3, can be targeted with direct benefits (essentially local public goods).
Public Policy: tax (t), public good (g), rent (r), transfers (bi)
More than one politician decides on final policy.
There are three conflicts/tensions:
Between voters (bi): group 1 vs group 2 vs group 3 over who gets a higher bi for example. These groups are identical except for ideology.
Between voters and politicians (r): voters may not want anything being given to politicians from their taxes.
Between different politicians (dividing r): politicians are greedy.
Pre-Election Politics: Set-Up
Two parties, A and B, commit to platforms PA and PB
Party j (=A,B) attempt to maximise expected rent
Expected in the sense that rent only comes to you if your policy/party wins, you have to be in power to impose the rent.
Voters value ideology alongside transfers (bi) + public goods (g)
These constituencies differ in their ideology.
Let's assume that Group 2 has the most swing voters, so that we can utilise the knowledge from policy voting model to say that when transfers are going to be made, this group is going to get most of the transfers.
Pre-Election Politics: Proportional System
Proportional System (Italy): you can think of all three groups as the nation, whichever party gets the largest proportion, then that party gets the win.
When we are setting up the proportional system, then ____ to setting up the problem of the probabilistic voting model, we are assured that there will be policy convergence in equilibrium. That is, both parties A and B, are going to promise the same policy in equilibrium, and that policy will be biased towards swing voters.
That means when we are talking about b1, b2, b3 (transfers), you will give positive transfers to b2 as they are the swing voters. Whereas, b1and b2 will be set to zero.
The swing voters are more responsive because of their ideologies.
We reason we give zero to b1 and b2 is that the increase in the public good (g) affects all constituencies rather than simply adding transfers to b1 and b3. Making it more economical.
The more swing that group 2 are results in higher b2 transfer payments, and the more you'll be required to cut back in the general public good (g).
Pre-Election Politics: Majoritarian System
Suppose 3 electoral districts. Winning the overall election would require winning at least 2 of them.
Surprisingly, winning 2 of the districts is often easier than attempting to win 50% of the votes.
Both the parties are going to promise the same policies in equilibrium, the swing constituencies again will receive most of the attention and transfers.
The party who wins the 2 districts has a majority in the assembly and will implement its pre-announced policy.
The entire competition takes place in district 2. They get all of the targeted transfers.
The asymmetry is now more pronounced in this system because you can really cut back on the public good (g).
"The other two are like, give me anything and I will vote for you. You have sorta driven me down to what is called a reservation value of zero"
Reservation Value of Zero: the citizen is willing to accept a policy where there net gain is zero. They become indifferent between accepting the deal and walking away.
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