Voters AS A Hard Budget Constraint: On the Determination of Intergovernmental Grants

Recent empirical literature has shown that the determination of intergovernmental grants is highly influenced by the political bargaining power of the recipient states. In these models federal politicians are assumed to buy the support of state voters, state politicians and state interest groups by providing grants. In this paper we provide evidence that the fiscal referendum reduces the reliance of states on matching grants received from the central government and thus the possibility of interest groups and state bureaucrats to obtain more grants. If referendums are available, voters serve as a hard budget constraint.     

A computational electoral competition model with social clustering and endogenous interest groups as information brokers

We extend the basic model of spatial competition in two directions. First, political parties and voters do not have complete information but behave adaptively. Political parties use polls to search for policy platforms that maximize the probability of winning an election and the voting decision of voters is influenced by social interaction. Second, we allow for the emergence of interest groups. These interest groups transmit information about voter preferences to the political parties, and they coordinate voting behavior. We use simulation methods to investigate the convergence properties of this model. We find that the introduction of social dynamics and interest groups increases the separation between parties platforms, prohibits convergence to the center of the distribution of voter preferences, and increases the size of the winning set.     

The political determination of intergovernmental grants in Australia

Intergovernmental grants have been conventionally explained on the basis of either equity/efficiency and/or institutional considerations. This paper seeks to model Australian intergovernmental grants by including both traditional public finance variables and public choice influences; that is, grants are used by federal government politicians to purchase political capital, thereby enhancing their own chances of reelection. The models employed in this paper are tested for six Australian states for the period 1981–82 to 1991–92 using unsystematic grant transfers. The results provide support for these public choice considerations, and highlight the importance of incorporating institutional factors and controlling for misspecification in the error structure in estimates of this type.     

Elite perceptions of mass preferences in The Netherlands; biases in cognitive responsiveness

Abstract. Several studies have shown dissimilarities between political leaders and voters in terms of political attitudes and policy preferences. Though many explanations have been offered for this phenomenon, the knowledge factor has been overlooked. The basic question of this paper is how knowledgeable politicians are of the political opinions of their voters as well as of the general public. Forty-six national Dutch politicians were asked to estimate the percentage of the public at large and of their own voters who agree with specific political statements. These estimates were then compared with the actual distribution of opinions. Though using a rather strict criterion it has been found that politicians tend to give inaccurate estimates of the public's support for various political issues. The inaccuracy does not differ between members of the government and members of parliament, but politicians of parties in office appear to perform worse than members of opposition parties. The data do not support the hypothesis about politicians' ability to correctly estimate majority and minority opinions, or to accurately localize their own voters relative to the public at large. Furthermore it is observed that politicians overestimate rather than underestimate differences in opinion between the electorate and their own voters. No difference is found in politicians'estimates of political issues which can or cannot be classified in terms of 'left' or 'right'. In addition, politicians do not judge their voters to be more right-wing than they actually are. Contrary to our hypothesis, Social-Democratic politicians are not more likely to show a 'conservative bias' in estimating their voters' preferences compared to politicians from the Christian-Democratic and Liberal parties. Finally, the relevance of our findings for political sciences as well as some normative consequences are briefly discussed.     

Estimating voter migration in Canada using generalized maximum entropy

As voters switch political preferences from election to election, understanding the magnitude of voter flows among parties and transitions between voters and non-voters is an essential element of political analysis. As exit polls are uncommon in Canada, voter migration can also be estimated using suitable statistical techniques. Backing out micro-level voter migration probabilities from macro-level election data is a problem of ‘ecological inference.’ This paper uses the method of generalized maximum entropy (GME) to estimate voter migration patterns for the two most recent Canadian federal elections (2004 and 2006) and two most recent provincial elections in British Columbia (2001 and 2005). The estimation results answer important questions about voter behaviour in Canada. These results will be of interest to political scientists, historians, and politicians, as well as econometric practitioners who wish to estimate voter migration.     

Politics,entertainment and business: a multisided model of media

We offer a model of media as a multisided platform, providing entertainment and news to viewers, commercial opportunities to advertisers, and political influence to politicians, thanks to the presence of influenceable voters among the media audience. We characterize a political economic equilibrium, determining simultaneously media choices and politicians’ electoral positions. We show that as the value of political influence increases, the media transitions from catering to commercial advertisers to selling political influence, resulting in policy choices that hurt influenceable voters.     

Why Vote with the Chief? Political Connections and Public Goods Provision in Zambia

Why are voters influenced by the views of local patrons when casting their ballots? The existing literature suggests that coercion and personal obligations underpin this form of clientelism, causing voters to support candidates for reasons tangential to political performance. However, voters who support candidates preferred by local patrons may be making sophisticated political inferences. In many developing countries, elected politicians need to work with local patrons to deliver resources to voters, giving voters good reason to consider their patron's opinions of candidates. This argument is tested using data from an original survey of traditional chiefs and an experiment involving voters in Zambia. Chiefs and politicians with stronger relationships collaborate more effectively to provide local public goods. Furthermore, voters are particularly likely to vote with their chief if they perceive the importance of chiefs and politicians working jointly for local development.     

Policy persistence and rent extraction

The existing literature has shown that special interest groups can have both growth enhancing and growth retarding effects on an economy. In either case, it is always assumed that the nature of the special interest groups remains constant over time. The hypothesis of this paper is that a dynamic relationship exists between politicians and lobbyists, i.e., that opportunities for rent extraction for special interest groups can evolve over time. In the short run politicians may support “projects” proposed to them by lobbies, because they yield clear economic benefits. However, continued governmental support may imply a cost to society and yield rents to the lobbies. A theoretical framework in which established and new lobbies overlap is developed to model a government’s incentives to behave in a manner consistent with the hypothesis. In this framework, voters can still rationally reelect politicians even if the latter support lobbies for an inefficiently long period of time, because if they did not, then the quality of the pool of new projects would deteriorate.     

Asymmetric Effects of Intergovernmental Grants: Analysis and Implications for U.S. Welfare Policy

Theories of federal grants to states and localities suggestthat these grants have a stimulative effect on spending, causingrecipient governments to expand and contract programs alongwith changes in the grants. However, policymakers may responddifferently to grant decreases than to grant increases becausethey face political and bureaucratic pressures to expand programs.These asymmetric reactions may depend on specific politicalstructures. Pooled time-series regressions of data from theAid to Families with Dependent Children program across 46 statesfrom 1965 to 1994 demonstrate state government responses togrant changes. Bureaucratic pressures and proposals lead statesto expand their welfare benefits upon increases in federal grants,but not to contract them upon decreases in federal grants. Withregard to the 1996 welfare reforms, this study indicates thatthe switch to block grants will lead to little or no state reductionin welfare payments.     

Laffer paradox, Leviathan, and political contest

This paper considers a political contest model wherein self-interested politicians seek rents from the public budget, while general voters make political efforts to protest against politicians’ rent seeking directly (for example, through voting in referendums such as the passage of Proposition?13) or indirectly (for example, through donating money to organized groups such as the National Taxpayer Union). We show that the political contest may ironically lead to the Laffer paradox; that is, rent-seeking politicians may intend to set the tax rate higher than the revenue-maximizing rate. For taming Leviathans, political protests may not be as effective as competition among governments.     

Senior Civil Servants and Bureaucratic Change in Belgium

The Belgian civil service used to be a Weberian bureaucracy, with a strict division of labor between civil servants and politicians, administrative careers based on both seniority and partisan patronage, and a technocratic culture coupled with a high level of alienation from both politics and politicians. Administrative reform came in the wake of the constitutional reform that transformed unitary Belgium into a federal state with several governments, each with a civil service of its own. The fiscal crisis prompted them to look favorably on the promises of New Public Management (NPM). The new Flemish government was first to take advantage of this opportunity, as it had the financial resources, the tendency to refer to Anglo-Saxon and Dutch examples, and the right political and administrative leadership.The staying power of these as yet precarious reforms depends on the continuity of political leadership, the establishment of an administrative culture matching the institutional innovations, and resistance to the endemic temptation to use them for partisan purposes.     

Keeping them Honest: Public and Elite Perceptions of Ethical Conduct among Australian Legislators

Public confidence in politicians across all democratic countries has fallen to historic lows in recent years. In Australia, around one in three voters believe that legislators use their public office for financial gain, and only one in four believe that legislators have a high moral code. Governments in many countries have attempted to deal with this problem by establishing codes of ethical conduct for legislators. This paper examines what standards citizens expect from their politicians and, in turn, what standards politicians themselves regard as important. The data come from the 1996 Australian Election Study survey which asked voters and elected representatives what importance they attributed to the eight principles laid out in the federal parliament's own ethical guide. The results show that voters expect higher standards from legislators than do legislators themselves, particularly with regard to the proper use of public resources and rejecting favouritism. A range of hypotheses are tested to account for citizen and elite beliefs about legislators' ethical conduct. The results show that stronger democratic culture and political skills are important for the public, and lengthy exposure to political parties and democratic institutions for the elite.     

Do intergovernmental grants create ratchets in state and local taxes?

A large literature on the ‘flypaper effect’ examines how federal grants to states at time period t affect state spending (or taxes) at time period t. We explore the fundamentally different question of how federal grants at time period t affect state tax policy in the future. Federal grants often result in states creating new programs and hiring new employees, and when the federal funding is discontinued, these new state programs must either be discontinued or financed through increases in state own source taxes. Government programs tend to be difficult to cut, as goes Milton Friedman’s famous quote about nothing being as permanent as a temporary government program, suggesting that it is likely that temporary federal grants create permanent (future) ratchets in state taxes. Far from being purely an academic question, this argument is why South Carolina’s Governor Mark Sanford attempted to turn down federal stimulus monies for his state. We examine both the impact of federal grants on future state budgets and how federal and state grants affect future local government budgets. Our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years.     

Does more federal environmental funding increase or decrease states' efforts?

We examine the flow of federal grants‐in‐aid from the U.S. Environmental Protection Agency (EPA) to the states. We simultaneously model two dependent variables (the flow of EPA funds, and state environmental and natural resource budgets) to identify the independent roles of state political institutions, political preferences, economic and demographic characteristics, and the task environment. Our central focus, though, is on the relationship between grants and state spending after taking into account those direct effects. We examine the evidence for positive association (a flypaper effect) and negative association (crowding out). We show the different roles for political institutions, political preferences, demographic and economic characteristics, and the task environment in each spending context. Most importantly, we find evidence for a flypaper effect between federal funds and state spending: Federal spending and state spending are positively correlated after accounting for the contribution of the unique factors. © 2010 by the Association for Public Policy Analysis and Management.     

Promoting ethnic equality in campaign messages: Survey experimental evidence from Nairobi,Kenya

In urban sub-Saharan Africa, leaders should appeal to voters of diverse ethnic backgrounds for electoral success. Yet, the political salience of ethnic inequality demands their attention to ethnicity issues in campaign messaging. This study examines the impacts on voter preference of appeals to ethnic equality by using a conjoint experiment conducted in Nairobi, Kenya. Appeals to ethnic equality were varied randomly as follows: (1) no appeal to ethnic equality, (2) appeals to equal opportunities for all ethnic groups (pan-ethnic appeal), and (3) appeals to opportunities for ethnic minorities (pro-minority appeal). The study found a substantial increase in support for politicians making appeals to ethnic equality, while pan-ethnic appeals increased voter support for candidates more than pro-minority appeals. Pan-ethnic appeals were more effective than pro-minority appeals because they bolster support from co-ethnic voters who are also from the candidate's party, while not alienating non-co-ethnic voters or voters affiliated with other parties.     

Sticking to the Union? Nationalism,inequality and political disaffection and the geography of Scotland’s 2014 independence referendum

Scotland’s 2014 Independence Referendum affords a rare opportunity to examine public support for the break-up of a long-established, stable democracy. Analyses of support for Scottish independence reveal that while issues of national identity loomed large in the vote, they were not the only factors involved. Questions around the economic and political direction of the state, and around uneven development, ideology and trust in established politicians also influenced voters’ decisions. Partisanship also mattered, as voters were more likely than not to follow the lead of their party in what had become a highly partisan contest. But some parties – especially Labour – saw large minorities of their supporters vote against the party’s line to support independence.     

Lobbying with conflicting interests: Norwegian local-central relations

Abstract.  The costly lobbying model of Potters and van Winden is confronted with data on lobbying interactions between local assemblies and the national assembly in Norway. A total of 239 interactions are studied. Survey responses by a large number of voters and politicians, as well as registry data on fiscal standing, demographics and elections are utilised. Two of the main predictions of the costly lobbying model gain support in the data. The probability of obtaining substantial discretionary funding from the central level increases: with decreasing conflict of interest between local and central politicians; and with the lobbying cost incurred by local politicians. For a given conflict and cost, however, the rate of lobbying success depends crucially on structural characteristics of the municipality. In particular, the success rate is significantly higher for poor municipalities located in national electoral districts with many seats per voter than for rich municipalities located in districts with few seats per voter.     

Networks and nonprofits: Opportunities and challenges in an era of federal devolution

Abstract

Community development corporations and other nonprofit organizations are increasingly responsible for producing and managing low‐income housing in urban America. This article examines the network of governmental, philanthropic, educational, and other institutions that channel financial, technical, and political support to nonprofit housing sponsors. We analyze the relationships among these institutions and propose an explanation for their success. We then consider challenges the network must confront if the reinvention of federal housing policy is to succeed.

Block grants and rental vouchers, the dominant emphases of federal policy, present opportunities and constraints for nonprofit housing groups and their institutional networks. While states and municipalities are likely to continue to use block grants for nonprofit housing, the viability of this housing will be severely tested as project‐based operating subsidies are replaced by tenant‐based vouchers. We recommend ways that the federal, state, and local governments should help the institutional support network respond to this challenge.     

Competitive Tendering in the Welfare State: Perceptions and Preferences among Local Politicians

Competitive tendering for public services has triggered a heated academic debate. In political economy, competition is claimed to improve efficiency. If this is true, why are most governments faithful to the monopoly model? Political economists suggest that public sector employees and unions influence the preferences of the elected politicians. In new institutional theory, competition is claimed to undermine democratic governance. If this is true, why do some elected governments make use of competitive tendering? In this tradition, organisational solutions are seen as expressions of autonomous values and perceptions about the outcomes of organisational solutions – not as manifestations of vote–maximising politicians subject to self–interested interest groups. When governments use competition, it is due to misconceived management fads that have temporarily penetrated long–established perceptions and value systems. These propositions have not been subjected to proper empirical testing. We have analysed extensive data about Norwegian local politicians, and found support for the notion that the perceptions of elected politicians affect their preferences for tendering for residential care services for elderly people and hospital services. But we found support for the political economy propositions as well. Party affiliation, interest group background and economic situation influence the perceptions and organisational preferences of elected politicians. Reform may be a question of political values and perceived consequences, but these values, perceptions and policy preferences are influenced by political self–interest and can be changed by exogenous economic shocks.     

Political Reinforcement: How Rising Inequality Curbs Manifested Welfare Generosity

We propose a political reinforcement hypothesis, suggesting that rising inequality moves party politics on welfare state issues to the right, strengthening rather than modifying the impact of inequality. We model policy platforms by incorporating ideology and opportunism of party members and interests and sympathies of voters. If welfare spending is a normal good within income classes, a majority of voters moves rightward when inequality increases. As a response, the left, in particular, shift their welfare policy platform toward less generosity. We find support for our arguments using data on the welfare policy platforms of political parties in 22 OECD countries.