uoft pol224 lectures
TRANSCRIPT
Federalism 12-04-16 11:14 PM 1. Federation: state institutions that divide sovereignty between two or more levels of
government
2. Federalism: reconciliation of unity and diversity via autonomy
Most countries are not federalist countries
• Most are unitary states
[1] Federalism as an idea [set of principles]
• modern idea, reflects liberalism and nationalism
• reconciliation of diversity
• developed in the last 200-‐300 years
[i] liberal view, divide the government
• US fed started here (1792)
• limitation of power, protect the individual: separation of powers, the bill of
rights & federalism
• WW2-‐post Germany, was there a US influence?
Germany
• Came together late, composed of different units
• units were autonomous, had different dialects, but saw themselves as one nation
Key: protecting the individual
So real fed needs lib-‐dem?
• Examples: USSR, Russia, etc
• Under the Soviet union, even though the doc stated states could leave, no one left
and everything was centralized in Moscow
• Modern day Russia is also largely authoritarian, because there is no real division
of sovereignty
[ii] autonomy for nations and ethnicities
• also a modern concept
• reconcile the multiplicity
• Swiss ex (1847) classic case after 500 years of confederation: 4 languages, 2
religions, etc
• The lower levels of the government were given powers
• Different communities are allowed self government over key decisions
• Turned to fed from confederation
• Confederation could only act form the national level when all CUs agreed (EU is a
confederation today)
• Mover from the delegated system from the lower to the upper, the upper was not
sovereignty in the confederation
• Fed sovereignty each sovereignty in its own right
Canada (1867) centralized, was not a confed, was called a confederation
Belgium (1993) language divisions
Key: protecting communities
• Eng and French had to be reconciled
• And the maritime provinces with the central prov
• Communities are of interest
[iii] Sheer size? (other factors of federalism)
• Australia (1901)
[2] Federation as (variable) institution
• Variations within federation
• There are different ways in which power can be divided
[i] the degree of centralization
• hard to measure
• Canada, now, is a highly decentralized federation, there is a lot of power at the
provincial level
• how to measure?
• formal divisions of power? The constitution, BNA (s91, 92), there might be a
difference between the doc and the way fed is practiced
• Ottawa has less power in some spheres and more powers in others
• Can declare something of national importance and can nationalize it, but
declaration power is dead
• HI (health insurance) prov, the fed uses conditional grants to influence what the
prov are doing, more than the official doc
• Money (own-‐source revenues: revenues you can rise on your own, income taxes,
the sales tax, tariffs (fed), property taxes (prov)) who has more money
• Transfer payments
• The degree of conditionality
• 1950 hospital insurance, initially the fed gave the money with a lot of strings
attached, eventually the money was given with almost no stings
• Formal division did not change
1. unitary/centralized: UK, France, Italy + 13 others
• UK: moved form 1 to 3 recently
2. unitary/decentralized: Japan, 4 Nordic nations
• welfare state is administered by the municipal gov
• what the municipal government does is controlled by the central government
• national gov can change anything if they wanted to
3. semi-‐federal: Spain and Netherlands
• Spain
4. fed/ centralized
• there are CU which are sovereign, but they can be controlled by the fed
5. fed/ decentralized
• Canada is decentralized
• Canada is more decentralized than others now
Decentralized Canada
1. how much spending do lower governments control
• “lower controlled” the money that the prov raised on its own or it an
unconditional transfer payment
• in Canada over half of the money is lower controlled
[ii] symmetry/asymmetry
• Canada? BNA: distinctive features for QC: civil law, French language
• Not asymmetrical powers but distinctive features
• Constitutional debate
• Meech Lake and Charlottetown Accords would have made Canada an
asymmetrical power
• Would make Quebec a distinct society in Canada
• Would have the power to protect the French language
• Was not clear what it would mean
• Quebec would have additional powers
• Rejected by the English Canada
• Eng Canada believes that Quebec was getting special status and would have
special powers and the Quebec citizens would become special citizens
Why did it fail?
• Liberal motivation v communitarian motivation
• Historically Canada became fed for communitarian reasons
• by 1980s and 1990s was individualistic [Eng Can]
Asymmetry more common in non fed states
• Spain, UK, Italy
• Parts are given their own assemblies
• evolution without giving up sovereignty
Are steps being made towards federalism?
[iii] classical v coordinative federalism
• inter-‐state: divides power between two levels to create less interaction, but a lot
of interaction will happen anyway; if was practically viable, two would be
separate in their sphere and there would be no relations between the national
and the prov govs
• intra-‐state: federal may have more power, but the lower has power at the center
(Germany is the classical case) the lander is not weak because when the fed
wants to pass leg, its passes through the lower house, but they also have the leg
passed in the upper house, the representatives of the upper house are delegates
from the lower level of government
• to pass any leg, they have to have the say so of the lower level of the government
• the Germans like to cooperate and collaborate
[3] What about local governments?
The local government have delegate powers
• the city of Toronto Act passed in Queen’s Park
• the prov can abolish the Act at any time
• sometimes the local governments have sovereignty
3RD Order of Government
• sovereign in their own domain
Cities: creative new governing means or dysfunctional?
In fed, the delegation is usually from the lower levels, but municipal role varies
[1] Anglo-‐Saxon informal, muddling thought (US, UK, Cdn)
[2] Germany: formal, collaborative decisions (Germany, Austria, Spain, Belgium)
• What goes on form the prov and the cities, is like what goes on between the prov
and the fed, there a collaborative bodies and law
[3] France: formal, top-‐down, technocratic [France, Italy, Portugal, Greece, Quebec]
[4] Globalization & Multilevel governance
• Is globalization pushing the power up and down
• Glocalization
• Since the 1960s and 70s the fed government has been loosing or transferring
powers to the provinces
• Provinces are giving powers to the municipalities
• Power is seeping down-‐wards
• Power is also moving up (NAFTA) and other global organizations (WTO/UN)
regional and global
• multilayered system of government
• result, weaken capacity of the state to solve problems; truimpth of the market
• may be multilevel government is how we adapt to globalization
o may be it will deal with greater capacities
o nation state is too small for big issues and too big for small issues
The nation state is not going away
Regions are also expanding: UK, Spain, Belgium
based on the principle of the subsidiary
The Evolution of Canadian Federalism 12-04-16 11:14 PM The Essay assignment
• Before the readings were limited
• The topic, the position and the proof of the position, the hypothesis, the method
• The formal features are the same
• The addition thing is the research
• There are more pages, more information to support the argument
• Collect information to portray more information
• Additional information is key and different sources is key [books, journals]
• Canadian journal of political sciences, American political science review, these
are the most demanding things to read
• Collections by different authors
• Newspaper articles, different subject headings
• Each topic is about a general question and its relevance to Canada and the case
study, the newspaper articles are useful for the case studies
• Academic sources for the general theme
• Globalization and the federal government’s position on the environmental
change
• Federalism and health policy “health care Canada” “mediacare Canada”
“healthcare federal” I am looking for the federal and provincial relationship over
health care in Canada, the minister of health care in Canada
Federalism, the distinction between the ideology [set of values and norms] and structure
[institutions]
Canada is now decentralized
• Canada and Switzerland are the most decentralized
• The lower tier control more money
This is not how the federations started
• High centralized in the beginning
• The BNA Act was highly centralizing
In the BNA
• Ottawa could almost walk over the provinces
• The almost have no sovereignty in the BNA
• Ottawa more powers and right to invade
• Wanted a centralized federation
BNA
• 1. Ottawa more powers
• 2. Rights to invade
• 3. Modest provincial powers in 1867
More powers
• Residual power [sec 91]
o Main federal powers
o Peace, order and good government – the fed government may legislate to
achieve this, unless the power is given to the provinces
o Everything not given to the provinces, the federal government takes all
the power
o Residual powers are important, they show which tier is the more power
o Where the residue will go
o Someone in advance are given the residual powers
o Americans gave the residual powers to the states
o At the time America was in the midst of a civil war
o CND saw that the states were given more power
o Every fed constitution has residual powers because everything cannot be
foreseen when the constitution was written
• Main economic powers: T&C, any tax, banking, all the security powers were to
the federal, at the time the government mostly protected the boarders
• Security issues: military, Indians, criminal law, treaty powers
• Concurrent powers: agriculture and immigration, but feds have the supremacy
in those fields, making the powers more federal than provincial
rights to invade the provincial jurisdiction
• lieutenant governor: represents the crown on the provincial level and this is
appointed by the GG (actually the prime minister)
o colonial type of a relationship between the fed and the province
o if a provinces passes a statue, they can pass it to the fed government and
decide whether royal assent will be given, this could be in the provincial
jurisdiction
• governor general, the head of state for federal business, not really a colonial
emissary from London
• reservation; to block provincial legislation with the help of the LG
• disallow the legislation
o within a certain amount of time, the federal government can overturn
provincial jurisdiction
• declaratory power – building of the transnational highway
o Trans-‐Canada highway
o Declared the highway being of national importance
o Even though transportation was in prov jurisdiction
modest provincial powers
• [sec 92]
• fewer fiscal resources -‐ direct taxes [2] and natural resources [5]
• direct and indirect taxes
• J S Mill is the source of the distinction
• direct -‐ the person who pays it is being charges, income tax is direct
• indirect -‐ the person collects the money and then passes the money on to
someone else, sales tax when you buy something at a store
• customs duties were big in the 1867
• natural resources were not as important in 1867
• social institutions were given to the provinces
o hospitals
o charities
o education
o municipal and local government
o property and civil rights (civil and private law)
• there was no welfare state
[2] Decline of the federal dominances, 1867 – 1930s
the provinces rose in importance because:
1. fiscal means rose in importance [income and sales tax, property tax]
• the feds can do these taxes as well
• direct taxes are the most important taxes
• both levels can tax whatever they want
• social policy changed, the welfare state
• had to be done on the prov level
2. the judicial committee of the privy council (JCPC)
• until 1949 this was the highest court in the land in Canada
• the SCC is appointed by the federal government
• no one in the JCPC owned their job to Ottawa
• committed to a liberal view of the world, small, checked government
• saw the fed as being too powerful, gave more power to provinces
• interpreted the text in favor of the provinces
• saw fed predominance as dangerous
• converted centralist federalism into classical federalism
• the two tiers are more or less equal
• key thing of how it treated the POGG [peace order of the government]
• POGG was the basis for fed claim in disputed areas
Alcohol regulation – who controls is?
• Fed -‐ Not written, must be residual, POGG
• Prov -‐ property and civil rights
• Local prohibition Casa (1896) JCPC drastically restricted POGG
o Ontario was fighting Ottawa the most
o The court POGG is not everything
o Make sure its not on the provincial list
o It has to be nationally important, local prohibition is not national
important, it may be residual, but its not federal
o No, even if POGG says what it says, the power may still be provincial
o May sound like they should not have done this
o Reduced fed power
Snyder Case (1925) went further, POGG only gave Ottawa disputed powers in an
emergency
• Strike in the hydro sector
• Federal government tried to resolve the conflict
• JCPC said the fed had nothing to do in this area
• Went one step further, Ottawa can never use its POGG power to impinge on the
provinces unless there is emergency
Restrictions of POGG
1. Only matters of national importance
2. Only in emergencies
Social insurance Act Reference (1937) Blocked Bennett’s New Deal
• Depression not an emergency
• No new deal in Canada
1987 Ottawa had pervasive powers JCPC pushed hard against federal Ottawa could
not even enact a New Deal
[3] Wartime centralization, 1939-‐45
• JCPC allows Ottawa to use the War Time Measures acts to take proc taxes and
powers needed in wartime
• The war measures allows to suspend liberties
• Its an emergency, may be not at the peace time [emergency view of POGG]
• Went from being highly decentralized to centralized
• Took all the taxes
• War ends, but Ottawa still has all the money
• The difference b/w 1940 and 1945 is that fed has all the money
• The feds the provincial bag of money
• The province could create a new bag by raising the taxes
• The feds controlled the loot after 1945
[4] Cooperative federalism, 1945-‐65
• After WWII the welfare state is built under federal leadership
• 1943 CCF was gaining power
• Liberals in order to offset CCF offered the welfare state reform
• Because the war was fought for the country no the provinces it was seen as
necessary that there would be a national welfare states
• 1940 unemployment insurance was read by the feds, brits allowed this
• pension [‘51 and ‘65]
• this is under control of the feds because the constitution was amended by the
british court
• in other cases, things under provinces stated under provicnes
• provincial jurisdiction, with Ottawa handing back some of that money to covel
the costs
• the fed gave them money but the money came with strings attached [conditional
grants] preserving much of the federal power
• poor provinces also get equalization payments
• This was cooperative because the provinces were weak and they would not
object that much, Quebec went along eventually, there is not much they could do,
there was a nationalistic atmosphere after the WWII, one was senior and the
other one junior
[5] The country changed between 1960s –
• The quite revolution in Quebec
• At this period Quebec also began challenged the federal government
• its no longer the courts, but the federal was being challenged
• in the 1970s the western provinces began challenge the federal government
(natural resource boom)
Province building (a lot during the 1960s and 1970s)
• The building of the welfare states hire bureaucrats these have to be experts
• Provinces had large staffs , capacity to plan for themselves
• by now the powers to intervene were extinct by extinction
[5] Competitive federalism , 1965-‐95
• Friction and conflict
• The fed is being pushed back by the provinces
• Over the 30 years there is a lot of pushback
• the fed wanted to spend less
• there was substantial decentralization
• In 1977 block grants for health, universities – was a lot less conditional , for the
universities not conditional, health – modestly conditional
• health – if you don’t meet standards in the health care system, we will punch you
• in 1995 grant extended to social assistance [unconditional]
• almost no fully conditional grants remain
• those changed by the constitution amendment are still at the federal jurisdiction
• the money given to the provinces was cut
Ottawa lead the conduction of the welfare state and then lead to its dismantling
Constitutional negotiations
would have restricted federal powers [spacial powers]
• Meech lake and Chrlottetown
• had it gone through federal spending power would have decreased
Federal government can raise and spend money anywhere it wants
• It can spend money in the prov jurisdiction but they cannot regulate it
• Over the years, the provinces that spending power should be constitutionally
limited, provinces complained about being bribed by the federal government
Is Canada too decentralized?
• Changed back and forth from centralized to decentralized
• At the begging centralized
• 1930 decentralied
• war time – centralized
The provinces rose up and challenged traditional powers
From mid 1990s – collaborative period?
• Disengaged, the provinces have increasingly took more authority
• Co-‐operative era – greater equality between the two
health care
• in 1995 the transfers were slashed
• provinces had to down size their health care systems
• since then, there is some revision & restoration of the funds
• there is a little collaboration
a little bit collaborative
• priority spending
• shortages of services
• spend more money but spend it more wisely
the provinces never agreed to dictation/monitoring from fed
• limited collaboration
• health accords [1999, 2000, 2004] restored 1995 transfer cuts
• in 2012, Ottawa offers new health finding formula with no provincial input
[there is no collaboration here] -‐ no talk of priority areas
• Harper does not seem to give a fuck about health care
• No promise of oversight
conclusion, disengaging, ending 1945 overlap
Too decentralized?
Political matter, conservatives and liberals/ndp differ
• priorities and parameters for programs
• standards
• some national standard setting [for libs and ndp]
[1] Legislatures [January 10, 2012] 12-04-16 11:14 PM 224 Lecture 1 | January 10, 2012 | Legislatures
Legislatures
• Strong role: making laws
• Weak roles: represent, deliberate, audit
Has the strong role has been lost?
Depends on the country, power depends on:
How strong should legislature be? Trade off between efficiency and inclusiveness
Canada
Party discipline is very high
How does the cabinet control the PR?
Government caucus: sticks and carrots
Control of the opposition
PR’s remaining roles
Strong ones are dead, but what about the weak ones?
Media politics
Throne speech debates
Budget debate
Opposition days
Oral question period
Standing committees
Legislative committees
What are standing orders?
Lecture [January 10 2012] Legislatures Legislatures: the formal bodies in democracies, they change and create laws
Legislatures have two kings of roles
Strong (making or not making statutes)
Weak (representation, deliberation, audit of the executive)
Represent the votes that elected them in Ottawa
Deliberation over the scope of ideas
Audit of the executive, making sure that the EX is not crooked and is acting responsibly
Question # 1: Has the strong role been lost, endangering the weak one?
The formal role of passing laws is still there, but the PR has lost the ability to control the
process, the process is now controlled by the EX
This made representation and deliberation matter less
PR has become a rubber stamp on the statutes created by the cabinet
Is this true?
Depends on the country in question, while in US the LEGI is powerful, in Canada it has
become secondary
This variability depends on two factors:
Is the power fused or separates
How strong is the PD (how much do legislatures have to follow the party line)
SoP + Weak PD = strong LEGI || Fused + Strong PD = weak LEGI
PD has reversed the power relationship because the cabinet can now control the other MPs STRONG PD WEAK PD FUSED Parliament (Canada, UK) Strong PR (Italy, Poland) SEPARATED Weak Congress (S. Korean,
Argentina) Strong congress (USA)
The problem is not equally pressing everywhere (the loss of the strong role)
America and imperial presidency (only in FP, not domestic politics)
Questions # 2: How strong should the legislature be?
In PR systems they are quite weak
There is a trade off between efficiency and inclusiveness
Even though the American congress is more inclusive, its probably not representative of
the American society
In America, in order to pass something there is a number of block needed to be passed
The veto points in the American system
The bill must pass both the house and the senate
PD is weak, there is no guarantee that the party will vote with the president
Strong and powerful committee system
Veto points allow the privileged interests to get involved in the system
Canada and the Golden Age
The golden age 1840-‐1870, before PD
1878 secret ballot is introduced
Now PD is very high, even when compared with the UK
If an MP votes against the party, on budge for example, he risks being kicked out
How does the cabinet control the PR?
Government caucus: discipline the party and reign in the opposition
There is a reliance on the back bench MPs who want to move up in the system
Draw on the ambition of those people, because all they want is controlled by the PM and
the cabinet
Sticks dismissal from the caucus, withholding of funds, not signing the nomination papers,
nominating other candidates
Money is usually raised by party’s central apparatus
Maverick MPs, those MPs who are not going anywhere
Carrots promotion to committee chairs
Those who are higher up in the party hierarchy have better chance of being re-‐elected
The party’s big cheese: money, status, re-‐election
The movement within parties: committees, parliamentary secretary, secretary of state,
cabinet
Secretary of the state is not in the cabinet, but may have EX power
Cabinet: decision-‐making apparatus
Sticks and carrots affect MPs
Party whip
Oversees the discipline
Important for the opposition as well, because there is discipline there as well
Shadows the cabinet in particular policy fields
Control of the opposition
Convention: the government must govern
Opposition may delay/object, create dialogue and audit the government
Electoral Systems and Democratic Reform 12-04-16 11:14 PM The electoral systems
• the last four elections with a majority
• the winning party always gets more seats than they got votes
• NDP less seats than votes
• the system of elections leads to results that the % of votes does not accurately
reflect the amount of votes
why do electoral matter
• they affect the expression of the popular will
• we elect the people who will govern us
the electoral system
• single member plurality system
• different systems can lead to different out comes [even if everything remains the
same]
• SMP v PR
PR: a party’s seas = % votes [35% of the votes gets 355 of the seats]
SMP – first past the post
• the country is chopped into many units
• they are like 308 horse races
• over rewards the 1st party
• will punish the weaker parties
in 2011 with PR Canada would have more coalition government
• rare for a party to get over 50% of the votes
• in any system that has a PR system, hard to form majority
• minority gov v coalition government
• if they know they will never form majority would form coalitions
• policy preferences -‐ for a coalition
Min votes – majority government
3rd parties – always punished
Who supports PR?
• Non governing parties
• federal ndp used to like it
• provincial ndp can win elections with SMP
SMP: distortion of democracy or source of stable government
• leg should reflect the will of the people
• the major counter argument, in the 4 elections the minority of votes was
converted into majority government means stable government, no short term
demands, after the term – holding the government responsible or support him
• with PR there are always going to be coalitions, unstable, so many parties – do
not know who to blame or reward
SMP – adversarial politics?
• The US and Canada
• more coalitions, talk to each other, respect each other more
• political system over all would be less polarized
Cairns thesis and Canada [1968]
• disadvantages of the SMP
• survived a long time and still relevant
SMP is particularly undesirable in Canada because it rewards division regional parties
• In the Canadian politics only makes the situation worse
• punishes weaker national parties
Alternatives
1. Two candidate majoritarian [France], the first and the second have a run off
• In France there is a run off between 1st and 2nd candidates
2. Preferential ballot or alternative vote
• voters rank them in district
• you rank them from 1 to 4 if there are 4
• there is still only one distict
• drop with fewest 1st choice, distribute their votes to their 2nd choices
• does any one have 50% if not, repeat until there is majority
• the winner is the lest disliked candidate
• first choice might not win
• so she looses because she is disliked by everyone else
3. Single transferable vote (STV)
• Ireland – multi-‐member districts [ex 5]
• you rank the preferences from 1 to how ever many candidates there are
• candidate needs a certain % to win a sea [20% of the first choice]
• you need five people to win
• If top gets 26%, transfer 6% to second prefererences
• repeat for all those with surplus
• boosts 3rd candidate
• you go to the bottom with least 1st place votes and trasfer them to others
• eventually you’ll get 5 people with 20%
in Germany
• mixed member proportional [mmp]
• modified PR system
• PR for overall party balance, but with individual districts
How can the district system lead to proportional representation
• 2 ballots, 1 for SMP member and 1 for the party list
• parties with lowest % SMP sears than votes compensate with extra seats form
the list
Candidate debate
• In recent years the debate has gone outside of ths
Parties and the party system 12-04-16 11:14 PM Parties – section C of the course outline
part 1 – broad overview of the state
• outside inst setting of the state
past 2 – the constitution and the institution
• protection of civil liberties
part 3 – things outside the formal state, but are important for the state
what is a political party
• non-‐state organizations, private – not part of the government
• their objective is to control or influence the state ex [the government]
consists of people:
• share the objective of influencing the ex, but they themselves are not a part of
the state, they are “private club”
• may have other objectives
party systems – are more important
• effective number of parties which exists in a system, the power of each and the
relations among them
• the important ones are the more powerful ones
• so the communist party of Canada does not matter
• effective parties are those which are big enough to matter to other parties
Party system
• Who has the power, the balance power
• the parties which matter to each other
party systems are like families
• all members are important
• they have more or less power over you
• the conduct in the home situation, in the home environment there is a web of
relationships which exist in the home
• the conduct, power, status, the character of personality affect each other, affect
you and you affect them
[1] types of parties
a. who controls the party
• elite or mass
• elite parties are controlled by a small group of people
• emerge in legislature, not in the society as a whole
• most early parties in the 19th
start in legislature
• UK, 19th, loose coalitions of parties lead to more organized parties
• tend to be run by leaders
mass parties
• large membership
• gives regular people more say
• the const say that conventions have to be held frequently
• resolutions can be proposed by members
• usually non-‐PR origin
• unions, farmers, NGO's -‐ union base
after become a party
• tend to carry over the mass base
Canada
• Emerged in 19th, along cadre lines [libs and conservatives]
• NDP – mass party
• PC – mass party
real world
• no party is a pure example of either category
• there is spectrum
overtime there is tendency to centralize
• iron law of oligarchy
• if parties want to win and parties want to win because they want to control the
government
why does this happen
• the elite is more likely to have PO polls, experts, etc
• if you want to win you have to use this information
• mass membership can propose crazy resolutions, may not be consistent with
opinions
• weakening of the mass
• there are some with more mass orientation
• but the successful ones will usually have an elitist orientation
Canada – PC
• Committed to separating from Canada
• Its mass orientation has remained stronger than for the fed NDP
• this is an exception which proves the rule
• they run into problems because the members can prevent leaders from going
into the direction they want to go
• the leadership will tend to do what it wants
resisting the iron law of the oligarchy
• oligarchy is still trying to empower itself
mass parties can persist, but they will have a tendency to more toward the elite
parties need members and money to win
• even for an elitist party, the party has to be big
• money is importnat to fiance the campaign
• have to convince people to join and give money
• set of loyal followers
• the party const has to have the capacity to elect people to make sure that people
still think they have power in the parties
• there needs to be an opening up
Elite parties
• have they broadened for policies?
• policy resolutions passed by the masses can and usually are ignored
oligarchic tendencies
• large apparatus to be successful
• interested to get money, not interested to hear your opinions
b. brokerage v ideological parties
brokerage – aggregate interests, enough for them to win
• there are no underling philosophical believes
• different interests are lumped together
• elite parties tend to have this orientation
ideologies
• wants to change the world
• articulates ideals and interests
• green parties – no one wants to pay more in short term, but in long term the
benefits would be great
• these often have mass origin
• car manufacturer
can be on a continuum between brokerage and ideology
the fate of the parties
• mass parties, over time, will move to elitist system
• not as easy to say that they will move from ideology to brokerage
do successful parties form cartels?
what are cartels?
• Once there is a stable set of parties, they work together to keep other parties
from coming into existence
• how they are finance and regulated – collusion between existing ones from
coming into existence, how much money you can spend depend on how many
votes you got in the previous election
• those with limited support – status if the party may be eliminated
[2] The party system [social origins] the system as a whole, each member act position-‐ally
within the system, the character of the parties is shaped by the system
• parties act positionally in systems
• reflect broader social cleavages
social cleavages
• who is dominants and subordinate
• 19c parties followed national revolutions [emergence of the nation state]
• social conflict within the new system came inst with parties
emergence of two parties
• the libs tended to emerge in the conflict with the conservatives
• there was no universal suffrage, property qualifications
• poor people were not in the party system
• only capitalists could vote
• the parties – reflect competition between capitalists and aristocrats
in some countries, the conservatives took on another cleavage
• the secular v religious
• if the conservatives did not do this, catholic parties emerged
industrial revolution
• universal suffrage
• new parties
• by early 20th century
• large industrial base
• masses
agrarian parties – challenge urban dominance
socialists – to rep workers, challenge the working class
after 1917 the communist parties split off form latter, challenge reformists
• revolution rather than gradual change
• splitting the working class vote
fascists emerge to challenge those
• social and communist
• threat to traditional ways of life
there are waves of parties after the extension of suffrage
cleavage structure frozen after 1920s
• cleavage structures were largely frozen
• small farm parties started to merge into urban parties
• the NDP does not get most of its votes from blue collar voters
• while collar, public sector employees
• the social base could change over time
• once party is in place, can shift its base but cleavage structure remains
post materialism cause parties to thaw
• green parties, new left parties
• feminist parties did not survive
• most did not survive
to challenge post materialism – new right
• decline of values
• rejection of new ideas
Parties
• Wide range of possible parties
• Different origins
• Firm social foundation
• System partly freezes, new additions in the 60s
The German party system
1 Christian democratic union [conservative, catholic] [CDU]
• one of the two main parties
• embraced the catholic vote
• aristocrats are not as important anymore
• tradition, small towns
• big business will support this party
2 social democratic party of Germany [socialist] [SPD]
• late 19th out of the working class party
• not socialist anymore
3 free democratic party [liberal] [FDP]
• free market
4 green party [post materialist] [1970s]
• strong party
5 left party [post community] [1980s and 90s]
• 1989 after the wall collapsed
• most people in the east were happy to get rid of the communist system
6. Christian social union
• Bavarian equivalent of CDU
• very catholic
• regional replica of the CDU
map of German history in the party system & different social components
institutions also affect parties
• social foundations to political parties
• the social make up is not the only thing that matters
• not all social cleavages [may die out, there are few true Christian parties] lead to
differences in parties, farmer parties do not exist anymore same with
communists and fascists
• possible for them to overlap with 1 party division, over more than one social
cleavage, good example is the US: REP and DEM – overlap in the us
• there is the same thing in Canada – liberals and NDP
Institutions influence whether cleavages lead to part divisions
• what determines with how many parties you end up with?
[a] electoral systems are important for this
• SMP favor big parties and punish small ones, contrast PR, etc [all other systems]
• Duverger's Law SMP -‐ 2 parties and PR -‐ multiparty system
• small parties tend to be killed off under smp
• the German case, 5 or 6 in a PR type system
• different social cleavages represented in the multiparty system
• US – two parties, SMP
• SMP -‐ more cleavages overlap or they die out
• progressive party
• there is no base for the party to survive
what is SMP combines with regional voting
• exception to the law
• highly relational voting, Canada
• the law will probably not apply
• a lot of parties in the system, this happens in Canada
• because people are so regionalize people give different votes to different parties
• Canada – two party system
what kind of a law has exceptions? Is it not a law at all
how do you measure what is an effective party?
federalism also matters
• the electoral system law is generally true , even though there are exceptions
Decentralized federation – regional parties
• Regional parties represent regional views
• Weaker fed and provincial links: CDN!
• Liberals on the prov and the fed levels differs
• where the lower level of government has more power
parties
• social origins – layering – different groups create parties
• institutions mediate on how the party system works [smp v pr] & federalism
• both matter – society and institutions
wouldn’t parties have an interest in manipulating institutions?
• If they shape the party system and Im in the party system ill have an interest in
manipulating institutions
• how many parties? How focused they are in the federal level
• how do parties respond to this
• early 20 almost all countries had SMP
almost universal SMP system
• most moved to the PR systems in the early 20th century
• why did they change?
The social foundation – mass franchise
• Socialists threatened liberals and conservatives
• before the rise of mass franchise, capitalists v aristocracy
• old elites face a threat form the socialists
• in the SMP – the socialists may come between the two and take over the
government
• not a problem in the US and Canada, or uk where the old party dies out [liberals]
PR was desirable because it would prevent the socialists from winning vs divided right
• Would win the government, even though might not have majority of vote
example BC CND 1952
• CCF most popular party in the county
• in the last minute the system was changes, CCF won many sears but was in
minority
Canada’s party system 12-04-16 11:14 PM the difference between Canadian and other parties
• CDN –brokerage parties
• social cleavages – create different parties
• the party system also reflects the political institutions
• if its SMP the number of parties is reduced
• if inst work, then parties might want to manipulate institutions
Do parties differ?
to what extend does it matter which party get elected?
• theory by Downs, if the voters are normally distributed with most in the middle,
parties will not differ fundamentally
• this is because parties want tot win
• they will want to attract as many voters as possible
• will move to the center to capture the marginal voters
• the central voter is the marginal voter and they decide the election
• who ever gets the 51st vote of there are 101 votes
• right at the center
during the time of Downs
• there was a lot of post-‐industrial theories that the politics are over
• not everything is like this
• what if there are many voters on the left and on the right and less in the center
• multi-‐party system – harder to move to the center
• this is so because other parties might cater to the extremist voter
bi-‐modal distribution
• looks like the camel’s hump
• there are less willing in this system for the parties to move to the center
may be we are not in the center and may be parties still differ b/w each other
• different countries and how this changed over time
• is there convergence of parties
Canada's party system
• the framework in the developed world
• fair to say that Canada has some anomalies in regards to its party structure
• Canada is becoming less different
1] The Canadian Anomalies
a] until 2011 the main parties have been the lib’s and the conserve’s
• other countries developed other parties
• in Canada the originating parties stuck on as the main parties in the system
• they were able to stick because they are not divided along social/class cleavages
• the did not have a clear social basis
• as a result there are no ideological difference, as we see in Europe
• there are no set interests
• ideology does not matter as much, those who can form a successful coalition is
more important
• more brokerage than ideological
b] main parties franchise structure
• franchise structure: think of mcdonalds – regulations are set by the elites
• hyper-‐cadre on policy [super elitist]
• choosing of candidates is decentralized
• local campaigns
• but there is a move on the part of the leadership trying to involve more
minorities, women, etc
• local elections are at the local level, under a firm policy mandate
c] the large parties were challenged by minor parties but they were unable to break the
mould
• social credit, etc
• there is a tendency for the small parties to also move to cadre structures
[election never about class and ideology]
2] why are parties like this?
• Underhill – the origins of the CDN party system
• to understand the system you have to go to the beginning
• in the being, there is the province of Canada
• the province has a unified legislature
• when they created, the number of seats were the same for ont and que
• this state was deeply divided and these two communities were equally
represented in the government [different religion, language] the social class was
not the most important distinguishing factor there were others more visible
ones – language, religion, region, urban/rural
• double majority convention
• in 1837 there was a rebellion against the UK colonists
• before they were separate
• we will put them together and we assume that Quebec will assimilate into
English Ontario
• but people knew better that the Quebec will not assimilate
• their weapons
o language, religion
o revenge of the cradle
o their numbers declines but not very much
• convention of DM emerged quickly in CDN history
• the choice was made to compromise
• to win you had to make a deal which would bring together the two different
people
governments became about deal-‐making
• the party which came together in the province of Canada
• the liberal conservative party was the original party
• then becomes conservative, later progressive conservative
• this system expanded to the rest of Canada
• the lib conser extended their power to the rest of the Canada
• they were not ideological, so they tended to create deals
• were good at offering people things they wanted so they were able to win
the party was not liberal and not a conservative
• its only goal was to win through deal-‐making
• later the liberals came about, they were more ideological, but they lost
1896 the system becomes fully brokerage
• both parties had to do this and not rely on ideology
• the libs won after they adapted the brokerage methods
• the libs became better at brokerage than the conserve’s
• by 1890s the people in Manitoba were English, so they out numbered the French
• the conserve’s wanted to intervene in the school question
• but the libs had a different plan 1] told quebce that they should not care about
Manitoba 2] the question was about government power, if it intervenes in
Manitoba now what stops the government from intervening in Quebec
• talk to different people about different things
winning requires money
• parties were not subsidized by the government
• in CND the only place to get money was the business community
• to win, parties had to be good to business
business links provided the pathway for small parties after the war
• if parties cannot move away from big business they will not be able to broker all
interest
• 1921-‐ the progs won, in the west particularly
o farmers and workers
o wanted free trade and BB wanted tariffs
o then NDP and social credit
•
Interest groups and new social movements12-04-16 11:14 PM There are sub components
• They have to be answered separately
Interest groups and social movements
[1] Interest groups in Canada & the US
interest group – non-‐government organization with common interest
• they seek to influence the state from the outside the government or the leg
• contrast this with parties – parties participate in the government
• example: green peace does not seek office, they do not seek to from the gov
groups
• promotion of common interests
• stay outside the government apparatus
the reading
• is it really true that interest groups are bad
• interest groups form to make a contribution to gov (according to him)
• not all IG want to contribute to government
• IG are formed for selfish reasons
• no one forms an IG because they want Canada to be a better place
• IG want specifics
[a] North America: A pluralist setting
• IG work in a pluralist environment
Pluralism: mostly competitive & unregulated policy environment
• seek to influence the government in free and unregulated free for all
• anyone can set up a groups
• there tends to be a multiplicity of groups
• different groups are powerful in different sectors
Pross – IGs might start as issue-‐oriented groups and over time they might institutionalize
Types of INTEREST GROUPS Issue oriented institutionalization Institutionalized Less Formal organization more Less Funding More Less Expertise More Narrow (one river) Issue Focus Broad, prioritized
The transition from one to the other institutionalization
Some might start off as institutionalized
• Business, already organized
under what circumstances will institutionalization be successful?
• Is they master selective incentives
Selective inventive
• needs all the recourses
• funding is important
Funding
• how are you going to get that money?
• We all want different things
The problem of selective investment
• more problematic for envi groups than a farmer groups
• if a groups succeeds, farmers will succeed and their benefits are clear
• only those who belong to the farmer groups will benefit
• farmers are more likely to succeed because, if I want to benefit I need to join the
group, everyone will join the groups because they want the subsidies
• this assosiation will be more powerful
selective incentive: you only get the benefit if you are a part of the organization
• successful IG will be able to master selective incentive
• hairdresses monopoly
Environmental group
• I might want clean air
• I might support the groups
• What if I have to play $100 for it
• Air is a pure public good
• No envi/ group can create selective incentive
• These groups should be less successful
Environmental groups appear to be successful
• theory of rational choice might not capture everything
• I might join green peace because it makes me feel good
• The utility derived from two groups is different
[B] policy networks and communities 277-‐278
1. key IGs & state agencies differ among sectors … pluralism again
• the kings of IG which are relevant for shaping policy will differ b/w sectors
• state agencies, which they try to lobby will also be different
• groups come together to form policy communities
community
• organizations, state and non-‐state
• links of coalition, antagonism exist among different interest groups
network
• the community
• there are different relations between different entities within sectors
• sector level
• its not adequate to look at them in isolation
Levels of Analysis
1. Macro society as a whole
2. Sector relatively distinct policy fields
3. Micro individual group/agency
If we look at sectors we can understand what is going on in the society overall
Political economy – the sectors can be subsumed by the broad system
Business power – broadly true – political economy
How the policy communities look
• Depends on who dominates
dirigiste
• policy likely to be dominated by the bureaucrats
clientalist
• the important actors in the society
• the US example – regulation reform – those who were affected the laws drew up
the law, the society dominated policy formation
• power from society to state
pluralist – power flows in both directions, compare and contrast with corporatist
• open access
• there are many actors
• the exist in the sector level, not macro level
Successful IGs adapt to institutions
• Result: CND and US groups behave different
• If they change over time
• The groups have to change and adapt over time
• There is a change between their behavior
In Canada they are ex dominated
• they may target the cabinet of the senior bureaucracy
Bureaucracy
• highly educated
• they have a lot of expertise
• they work behind the closed doors
• you don’t want to challenge them form the outside
• and you avoid confrontation on the inside
• you take an inside strategy – this is what the successful groups did
• you don’t hear much about the successful groups
• influence of the public opinion is not important for these groups
Issues can be turned around
• there might have conclusions made
• after IG interests were alienated, they can force the government to change
• but if they are public, they probably lost
IG in Canada
• the important ones are not in the public sphere
• target of the relevant actors
• positive relationship over time
• inside strategy, not outside
• this model developed in the 1970s and 1980s
change in the institutions
• with the changing context, the groups within the envi change
• successful groups might change its approach
the changes of the charter modified interests and changed the behaviour of IGs
• go to the court to beat the government
• now outside strategy might be useful
• esp true with charter issues
• even if the government does not give you want you want
• you can go to court and argue your case
• this is important for some areas
• gay marriage, human rights, etc
Standing committees
• More powerful even in the context of strong government
• setting of agenda
• might develop their own agenda
• these are public
• from government to committees
with the changes
• inst groups might be more loud
US – groups have always been more confrontational
• IG, lobbying is at the center of the American political system
• diverse, separation of power
• power is intension
• everything is more open
• views of ind politicians matter a lot more than in Canada
effective way to build a campaign
• be loud
• attract people
the groups
• lobby the congress and ex agency
• formation of iron triangles
• courts
Iron triangles
• b/w congressional committees and agencies and insert groups
• form policy outcomes
• over time there is stabilization of the relationship over time
Court
• long history of charter rights
• interest groups can use them as their outside strategy
In the US they are more visible
Are they more influential?
• or are they only more visible
• politics over the southern pipeline extension
[d] privileged position of business [the role of the non-government in shaping policy
making] network communities , inst change over time
• politics and markets
• there is something else to this
• markets are a prison on policy making
• the government respond to well funded IG – this is true
Structural control of the government
• some groups do not have strong organizations furthering their position
• but the business has a lot of organization capacity behind them
• this organization influence allowed them to gain the position they are occupying
now
• the business does not have a fully structural power because when the public
sentiment against the business is high, the government is able to enact politices
agiant business intersets
structural power
• the government needs the business
• the gov want the business to perform their function well
• business will not awlay get what it wants
• the gov will act agaist the busienss sometime
• but often they get what they want
• and this ability has nothing to do with them giving money to the government
differentiation of the society
• the state and the economy
• they are relatively autonomous
• they still interact
• they are codependent
• because the government need business and the business needs the government
the government
• important for them to get re-‐elected
• economic voting, the economy is important for politicians
with differentiation, how can we get economic growth?
• Most of the business activity are done by business
In the long term – the government will be heavily influences with their desire to induce
people, so that there will be economic growth
• growth is essential for political prospects
• they do not wait for the organization to knock on their door
• they will do things which are most likely to induce decisions
Canadian council of the chief executive
post 2008 bailouts
• how much IG pressure was used or needed?
• The banks did not have to do much
• the government reached out to the banks
• they induced them to stay in business
• because theya are important for politicies
how can we explain the government do anything which is against the business interests
• the government can do things against the government
• does not address this
• when it comes to this one interests, economic, do not have to have well
organized and financed groups
NEW SOCIAL MOVEMENTS
social movements – non-‐government networks, orgs, (IGs)
new social movement and old social movements
• in the 1970s and the 1980s
• post materialism
• identify politics
• political culture theories – something was changing in the attitude of people in
the western democracies – there are material side, there is also a non material
aspect of the moments
• they are non –government networks
• the goals focus on post materialist
• feminism ,environmentalist, etc
• these equality seeking and difference promoting
Political Economy 12-04-16 11:14 PM Social movements
• Network of activities
• Might include organizations
• Web of actors
• Some organized
• Some are individuals
• Share common agenda and goal
• Not a single entity
• Have been around for a long time
• New social movements
new social movements
• non material basis
• change something which is not specifically economic
• gender, idenity, envitonment
• post material kind
post materialism
• equality movements
• difference promoting
the literature on the new social movemetns
• some activities are questionable
• agendas may be cultural
anti-‐elitism
• oppose some kind of main stream power structure
• feminists, environmentalisms
• some time even conservative causes may be anti-‐elitist – tea party
tea party
• anti-‐elite
• difference
what is the difference between the new soical movment and tea party
• tea party is not cool according to NSM people
• tea party people oppose this
• tea party definition of the NSM fits quite well
• NSM can be right wing and anti-‐elitist
• they say that they are anti-‐elitist, but they seek to promote ideas which would
benift the rich over the poor
there is something new in politics
• politics – networked, diverse
• organizations
• in sea of other acitivites
• sea of other goals
• in the tea pary there are a lot of economic and non-‐economic issues
• the comments by Rush
transnationalizations
• engleheart – post material politics
• globalization 1980s and 1990s
• may be eroding the powers of the state
• NSM are seen as transnational, they cross boraders more easily
• examples on the slides
• makes the movements strong
• and flexible and adaptable
• surprise to status quo
mainstreaming
• if a new movement is challenging from the outside
• trying to change the world
• danger that overtime will become main stream
• first, extreme
• overtime, to work with those inside you compromise
• got too far on the inside
• is not critical enough of the status quo
• liberal feminism v extreme feminism
• tamer version mainstream sold out
• may result form government funding and cooptation
iron law
• of oligarchy – start of as mass parties evolve over time into elite parties
• in order to succeed
• there is a lot of variation
• NAACP v NAC v Greenpeace as IGs that are part of NSMs
• NAC – women’s organization
NSM group mainstreaming Group Government support Mainstream Healthy NAACP no yes yes NAC yes no no Greenpeace no No [?] yea Pollution probe No Yes yes
outcome of mainstreaming is mixed
• groups may be still successful
• mainstream is not necessary
• evolution is fluid and variable over time
• contrast parties
• institutionalization may not lead to mainstreaming
Varieties of Political Economy
States have various relationship to the economy
• the state
• differentiation from the other two
• state: set of inst, broader of social life, legitimate authority
the relationship b/w state and economy
• similar countries and diff b/w them
• the public [sovereignty] and social life [goods/services/value/some are better
off than others]
all capitalist and democracies
• variation
• diff in how economy works
• how much equality and inequality
• how economically viable a state is
political economy is a macro level analysis
• the system as a whole
• society as it transcends spectral differences
• macro level to generalizing
• too vague and abstract?
• when its well done its not true
Political economy
1] state direction
2] corporatism and pluralism
3] 2-‐D scope for all countries
1) State direction: strong and weak
• some states need more state than others
• weak is not necessarily bad
• take off capitalism in the 16th and 17th century
• private sector economic relations capitalist development
• supported and are co-‐dependent
differentiation
• happened to all
• but there are diff levels of it for diff countries
• economy seemed ineffective to take care of itself
• put in place property system true for all, but this was all which req is some
but not others UK, US was sheltered
• US could easily protect their domestic market
Early industrialized
• only needed a weak state
• business people just did their thing
• made sure that there are minimal conditions for economy
• they did not need state to get into the way
• english speaking
• Canada is in the weak tradition
• those who speak English weak tradition
• English tradition
weak state
• embedded with non-‐government interests
• fragmented
• laissez-‐faire
embedded
• responsive on a micro level
• immediate self interest of firms
• gov reacts to immediate self interests
fragmented
• the role of the state
• there is no central agency which drives the eco agenda
• diff ministries and departments
• at fed level -‐ energy dep -‐ manufacturing dep -‐ finance dep
laissez-‐faire
• should help the immediate interests
• the core of weak state
• state out of the economy
• for most part
• do not get into micro management of economy
• don’t define future economic well being of the sector
• involvement – short term
France, Germany, East Asia
• industrialized later
• problem
• was not sheltered (Fr, Ger) like US was
• others are already making stuff
• they have economies of scale
• they can make an average cost for less cost
• you’ll pay more
how can you succeed
1. tariff barriers
2. strong states
strong states
• they do not have the needed business class
• with the needed knowledge and incentive
• before WWII in Ger was highly involved
• Now banks are imp in Ger
• in Fr state always strong
Japan of France
• after WWII
• bombed out, had to start over
• state protected – tariffs
• wanted to get rid of them eventually
• baby capitalists v mature capitalists
• develop the talent by the state
• development funds
• cannot compete with each other, have to cooperate
• purpose: not to beat competitor, but over take the mature capitalists
in their state
• extreme level of technical expertise as to how run diff aspects of economy
• these things should be done
• show them how to do them
• development behind a tariff barrier, which eventually would decline
state autonomous
• form short term business interests
• state has to plan – ministry of int trade and industry
• to develop the agenda
• has to be cohesive
• instead of laissez-‐fair
in from
• cheap loads
• R& D assistance
strong state
• autonomous from economic interests
• internally cohesive
• direct intervention
• bigger engine for the bigger task
French
• guiding the development of capitalism
• state makes long-‐term business decisions
• form the inside the state
Variations over time and between space
Strong states tend to weaken over time
• once the eco is developed
• tariff levels are lowered
• agreement on practices internationally
• once there is dev, state cannot keep up with development
• states don’t become weak, but weaker
in France
• 1980s 1990s privatizations
• there is still circulation of people b/w in the state and economy
globalization
• weak will beat the strong
• may become weaker b/c government cannot make good decisions
• convergence on the weak state model
• this theory cannot be disproved or proved
2. relation within the private sector itself
• how actors within state interact
coordinated
• more coordination
• corporatism
corporatist environment
• business cooperate on R&D, finance
• many be with union in skills, social benefits
• variations in con Europe, east asia
• clusters of companies work around one investment bank
• those relationships are long term
• the loan is going to be paid further down the road
• company does need to worry to be profitable in the short term
• has to be successful in long term
Germany
• business are linked in long-‐term to banks for investments
Strong labour unions
• historical relationship
• business tend to work cooperatively with them
• for social skills and benefits
• company will give more money for training
• business will agree to pay for skills because people will be more productive
• industrial workers make a lot of money in Germany
• trade surplus in Germany
• German worker, despite making more money, is of more value
• they are comparative despite their high wages
• because they export more aboard
corporatists -‐ more successful in manufacturing
• because there is cooperation
• cooperation esp when it comes to skills
cooperation v pluralism
• industry level resources for tech and skills
• there are some areas where they pool their resources
• in American this does not happen
• They will not share information
pluralism
• less cooperation
• at the national level, relations are free for all
• business fight each other
• weaker unions
• US, UK, Canada
business fight each other
• see each other as rivals
• fight unions
• unions do not want to sacrifice in the short term
English – both weak and pluralist
• reflects interest group life
Different emphasis on equity/inclusiveness v liberty
cooperation
• balance of interests
• inclusion of other actors
liberty
• our society values liberty more
• each does their own thing
is pluralism more efficient
• Germany is more efficient not
• before, collaboration is just a waste of money
• competition is more effective
globalization may = convergence
• may happen on the pluralist model
• there is less certainty on this than before
• manufactures – better in corporatist
• service – better in pluralist [good for finance]
• argument before, rich countries are going to lose their manufacturing anyway
• in anglo saxons countries – may be went to far with fianance
four cell model
A+B – 2-‐D model, with 4/5 distinct clusters of countries
Welfare state variation
• Marshall’s social rights
• the welfare state
• market economies create inequality
• there might be other structural factors
• inequality goes with capitalism
• reduce inequality
• reduce the extend of the market economy
• the amount of inequality in capitalism is more than in democracy
welfare and extend of the welfare state
• reduces inequality
• welfare states are capitalist democracies b/w absolute inequality and absolute
equality
what is the welfare state
3 main program types
the building blocks of the welfare states
1. selective for most needy social assistance [welfare]
a. these people have nothing to fall back on
b. you only get is if you’re extremely needy
around selectivity
• inexpensive
• stigmatized
• you have you have nothing to quality
• there is a limited range of people who will get this
• there are more people who feel like shit by going on welfare
• you dont have to worry about those people
• modest – otherwise creates disincentives
• if they go up, for some people it makes more sense to go on welfare
• benefits have to be kept low
2. sadasdasdasd
3. asdadadad
12-04-16 11:15 PM there are differences between liberal democracies
• Anglo Saxon countries are clustered in the same area • English-‐speaking countries value their liberty • They are pluralist with weak state internvetion
Growth rates and prosperity • by convention measures USA is the highest in the world • human development inxed, the USA is not number one
Pure GDP • various of the models work pretty well, except the model D • growth in the recent years, groups D are the crisis economies of today
economices • differ in quite distinctive ways • cooperation and state intervention
Welfare State variation
• Marshalls social rights parallel above varation What is the welfare state?
• sufferning of the cards • lead to an outcome which is different • the final outcome is always more equal • there is a change between how much equality results in the state
There are three main welfare states 1. Selective – for the most needy
• you qualify for being at the bottom of the social ladder • social assistance • inexpensive but stigmatized • ^ because only the most needy get it • advantage: those who structure it, benefits must be low
• low assistance crease disincentives 2. Contributory – social security
• benefits are related to contributions • pensions, employment insurance • in the pay stubb there is a dediction for pension and EI • at 65 people qualify • the benifts you get depend on the amount of money you contributed to the system
• the more you earned, the more you contributed, the more you get at the end
employment insurance • deducated from pay • as long as you get minimal requirement • you qualify for benefits • those benefits are roughly proportional to the amount of money you contributed
• unlike selectivity • this one gives you based on your contributions • beniftis are related roughtly for your contributions • higher benefits for many • excludes unemployed • gendered • regressive taxes
market income • after the EI benefits more equal • those who contribute are richer • those who benifit will be poorer • indirect • exludes the unemployed • you have to have contributed to benefit from them
you have to be in the mainstream of the society • to benefit form these progrmas
gendered • men earn more than women
regressive tax • has a higher burden on the poor than the rich • if you get a job – maximum insurable level • those who have lower paying jobs pay more %-‐wise
less affordable with aging population • those who work – pay for current pensions • because population is aging • the system becomes harder to sustain • most developed countries face this
3. Universal benefits – all get same benefits
• if you really want to reduce inequality • common with social services • Canada: health services • education [K-‐12] • university education is 60% subsidized • government funding if you have low income
universality • higher benefits for all • solidarity • expensive
everyone gets the benefit • because everyone gets it • you have to give the poor and the rich same health care • has to be good enough for the middle and the upper classes
sociaology of health care • in principle, they have access to the same health care system
solidarity • all people identify with the universal social benefits • culturally, we share this in common and believe we deserve it
• universality acculturates a sense of right to the benefits the most expensive one
• payments come from all the taxes Welfare state types
• welfare states differ just as political economies differ • Esping-‐Andersen: different program mixes, different regimes
Liberal welfare states • Anglo states • Group A on the diagram • liberal means market orientaed • cheapest welfare states • lowest taxes
Liberal feature • Most selectivity [cheapest] • modest social insurance • reinforces market workfare • middle class rely on private benefits • middle class people do not rely on the minimal programs
Canada • Social assistance for those at the bottom • Limited resources
Americans • social security system
liberal model : CHEAP SELECTIVITY • reinforces the market • workfare -‐ vairaint of selective social assistance • if you’re employable, you will be put to work • the whole system is designed to sustained the market and the market inequalities
• tries to get people to work hard maximum level is low
• middle class people • do not idenify with those who are in the bottom • third rail of Canadian politics, the health care • outside the rest people do not care about the poor • because the middle class relies on private benefits • we do not really care what happens to those at the very bottom
highest poverty and inequality • selectivity is the most directly redistributive • because it takes from the rich and gives to the poor
why highest level of poverty? • less eligibility, keeping them at the bottom • make sure they get less even if they worked • pushing them into the labour forces • cheap welfare, only the least advantage • does not redistribute as much
the outcome • closer to the original market inequality
SOCIAL DEMOCRATIC
• biggest welfare state • highest taxes • mostly universal
expensive because universal • have social insurance • middle class gets public benefits • solidarity with poor people • Canada has elemets of solidarity thanks to health care
solidarity • what Swedish people think • conservative parties will probably not challenge the universal system in Sweden
• educated by their culture
• to have solidarity and sharing • once its there, it reinforces a set of beliefs
result: lowest poverty and inequality • theres is varitation b/w countires
Conservative welfare state Continental Europe
• believing in the traditional hierarchy • different position in the society
CANADIAN POLITICAL ECONOMY
PRODUCTION TODAY, REPRODUCTION NEXT WEEK Weak state
• protection • pluralism • Quebec anomaly
Stales Economy and National policy
• Harold Innis: Canadian staples path • political economist
Theory • Based on staples production • raw materials and staples • basic thesis was radical at the time • economists though markets drove things • institutional economists • way of doing things • become locked in place • they can reproduce themselves overtime
how did candian economy develop
• colony of European countires • economically also cololny of European countires • use of the colony for economic reasons • new france and new England • ^ did not expect them to become industrial economies • but producesrs of raw materials for europeans markets • American colonites – one of the problems they had – English tried to stop industrialization in America
political and economic metropoles: France and UK UK had laws to prevent industrialization in the colonies
• After these laws were abolished • Canada continued to make and export raw materials
Succession of dependency • Politically and economically • by the mid 20th century – US
Once US became independent, manufactures, we produce raw materials for them and get their manufactured goods
• Poltical dependency • not in the same way as of the UK and France • economically dependent on the US
Went through different staples
• fish, fur, wheat, wood, minerals, hydro, oil and gas what role does the state have all of this?
• State always has a role, even if its limited [property, building infrastructure]
• Infrastructure costs were especially high for Canada • Extraction of raw resources requires infrastructure • Canada is also very large, req large infrastructure • The cost of building the infrastructure were substantial esp because pop was small
Departure after the confederation
• National Policy of 1878 of John A McDonald • challenges path, but only partly with limited success • established the economic base of the country • were close with the business elites in Ontario and Quebec • wanted to depart, succeeded only party
National policy • Build railway • Fill the country with immigrants [esp in the west] • Tariffs to protect manufacturing and create the manufacturing economy in Canada
• if we had free trade, Cdn manufacturers were too small • Tariff wall at the Am border • Sold to people in Canada
a. railway + b. immigration = markets for c. manufacturing (so ISI) ISI
• protected domestic markets • make things for domestic market • no access to other matkerts
industry developed
• only ins certain sections • central Canada • domestic markets • high costs • small population • economies of scale • CND manufactures would always be more expensive • Cannot be as efficient as their American counterparts • the bottom line is that CND still exported staples
• where the country earns its keep is the exporting of staples Another consequences
• Manufacturing base in the central cnd • were not cnd owned • foreign ownership was extensive • owned by those who cnd were tring to protect themselves in the first place
overall
• weak state • tariffs and infrastructure • the railroads were very expensive • by having high taxes and massive debt • US railroads were cheaper, more population • gov involvement? • departure from the classical weak state model
is this good or bad? Innis: what is good
• Resource based exporting economy • innis thought it was bad b/e mature economy needs to diversify and grow
• would haave preferred stronger state indust approach • moving off the natural resource road • would take the state to push the economy in the industrial path
W.C. Mackintosh: Not bad, comparative advantage determine exports and ours is in primary
• When free countries they produce what they produce best • CND better off selling nat resources and buying US manufacturing
POST WAR WW2 1945-‐1984 During the war, the economy because state lead
• Production of munitions • to help the UK • biggest, largest supported of the UK
1945 the war time economy was quickly dismantled [C.D. Howe]
• in peace times – free market • for the next 40 years; gradual change
To 1985
• GATT erodes NP GATT
• multilateral trade agreement • to erode tariffs
In CND tariff wall was gradually dismantled • trade with US [which was strong before the war] grew • by 1950s & 1960s – 70-‐85% of trade with US • US direct investment replaces UK portfolio • as a form of economic control is more direct with the US • after the war – prosperity – based on resource production • manufacturing base serivces the dom market and was foreign owned, inefficient
1965 auto-‐pact guaranteed that CDN production = CDN consumption of the big 3 cars
• signed a deal with the US • CDN would produce cars for entire NA market • if CDN consumes 10% of all the NA markets • we were guaranteed 10% of all production of NA cars • important adaptation • crucial sector of CDN manufacturing • efficiency was associated with the big 3
Prosperity, but with anxiety [1960s/1980s]
• CDN increasingly began to think they lived in a rich gilded cage • Owned by some one else • Everything manufactured was expensive • Dependent on the US • Move away from this model in the 1970s? • Industrial policy • From 1960s to 1980s under Liberals • Set of exercises • Elements of a stronger state model • Since then, 25 years later its all gone
12-04-16 11:14 PM IRAP industrial research assistance program FIRA foreighn investment review agency
• foreign take over’s require singnifican benefits • review process for foreign ownerage • is it of significant benefit?
FIRA • FO [forign ownership] decreased FI [foreign investment]
Now
• review • but we do not ming FO companies • FO has increased • when it declined under FIRA
closing of the London plant CAT
• parts manufacturer • too small to be covered by investment Canada rules • more profitable to move to the US, so they shut it down
FIRA
• may have deterred many FI • might have increased productivity
Protection of cultural industries
• mass media • cable • telecommuncations • cell phones are owned by large companies, so the fees are high • you cannot be 100% owned
put in place in the 1960s • protected • not so much change
Petro Canada [1975] • Crown corporation • public oil company • would be the major played among the big 5 or 6
Intervention
• NEP [national energy progream] • ^ to expend Canadian control in the energy sector • cannot do this now because of our trade agreements • tax insentives, cheaper for the CDN company to do business • two price oil system • CDN oil cheaper • regulation of exports
now • cannot privilege CDN ownership
NEP • Was going to have a shorr or medium convulsions in the oil sector in the west
overall
• stronger state? • very nascent • we are going to own the industry and the technology • ambition to move into diff style of eco policy • japanees/French direction
problem
• domestic problem
• 1870s national policy -‐ buisness community linked to conservative party
• by 1970s and 1980s business moved into diff firection • business did not belienve in intervetion • ^progressive conservatives • Marluney got a lot of money from them • Liberal leader was ineffective • Torries won in a landslide
Business
• wanted free market • exporters or manufacturers, but were FO
some sectors
• nationalist • but where a minority • Bay strees -‐ free trade, suppoted by conservatives
1984
• fundomnetal change in orientation • reduction of liberal politices
1879 • tariff and the Tory strategy
Recently [1984]
• FTA • NAFTA • WTO
Mulruney
• comprehensive FTA with US was the way to go [1989] • would appease albera – wanted more free trade
• comprehensive agreement • upper house, the senate, decided to block • treaty had to be passed through the PR to become law • in 1984 Mulruney did not want comprehensive FTA with US • ^ promised not to implement it • had an election over in in 1989, so it was passed
FTA
• eliminated almost all tariffs • many were reduced under GATT before • eliminated most subsidies
interventions
• not eliminated by the free trade agreement itself • most were gone by 1993 • ^ FIRA, NEP, Petro-‐Canada [privatized] , IRAP, Auto Pact, etc. • massive changes • move from liberal policy
exceptions
• culture • banking • farming
banking
• have to be Canadian owned • protected form the evils of F take over
dairy is also protected free trade under mulruney, but culture off limits
• change in the cell phone companies, cheaping away from the policy
NAFTA • FTA followed by NAFTA • with the US and Mexisco • non-‐trade barriers • chapter 11 – tricker for CDN government, change in public policy which might effect a company, the company might take you to court
• undermining of the profit margin • those things have not been done wvery much • but could happen under NAFTA
WTO
• multilaters [1994] 1995 and later ’87 – ‘93
• future of the economy • WTO world organization • CDN small component • probably did not have an effect over the treaty • the debate, and the ending of the liberal route, more or less irrelevant
• no say with WTO • with WTO we would have ended up with the same results • would have been forced to abandom liberal politices
Now: many non-‐tariff barriers are ended what is the conclusion?
• free market completely? • no, in the reading • both fed and prov governments have got into cultivating new kinds of tools whicha re compatible with free trade agreements
• you can still assist companies • cannot discrimante based on their nationality • cannot say, you invest in new form of plastic, we will give you RND support, but we have to say this to all companies
• the green initiative of Onatrio – wind tubnies with SUmsung • legal to help, but has to be the same for all companies
Libs promotion of high technology
• free trade • develop high tech sectros w/o tariff and helping the national companies
clusters and networking • how eco activity happens in more productive environments • the need to comps to work together • think of the silicon valley • cluster • efficient to have small company in high tech there than in Ontario • a lot of high tech comps in the area • same sources of labour, rub shoulders, benift • as a state, you have to get involved and nurture clusters • nurture NRD activity regardless of who ownes them
Harper 2006
• conservatives • more free market • less ambitions but this persists • why shouldn’t we just let the market decide? • the government involvement is less direct • but the government is still involved • as long as you do not protect domestic comps • and as long as you are not leading the economy
overall • Ottawa still practises some intevention • we are closer to the weak model than ever before • US supports more on RND support • silicon valley – high tech spending of the US state in the 1950s and 60s
• doing less than the US • the US is the ultimate free market economy • w/o state ownership and tariffs • fairly dramatic change
2011 • 53% of CDN merchandise exposrts are primary • 28% such imports • food, energy, forestry, mining and minerals • exports half are raw • any other rich country, the pattern is reversed [may be no autralia] • exposrts are resource dependent
history of the economy what do we make all of this
• debate seems to be gone • debate; should we have industrial approach • the advocates are gone now • now there is consensus that the government should do what later libs wants to do foster NRD but not lead the economy
• not strong state traditions • seems to be the best economic policy • is this good or bad? • can have one way or another • Ont and Quebec are hurt by the higher value of the CND $$ • high prieces ofr resources – why our currency is worth so much • is there a policy solution? Cannot do anything
dramatic change in the way we run our economy • there is no partisan divide • globalization • with some government stimulus • may be manufacturers will become more effient in the future
PLURALISM NOT COLLABORATION
• during the 1970s – libs thought that it would be better to sit down with the business and the labour
• the model they drew upon • countries such as Austria and Sweden and the UK
UK – labour was tring to make corperatism work • winter 1977-‐1988 • got even with the unions by electing thatcher
Canada
• nothing so dramatic • unions not as strong • Trudeau – mandatory wage control • labour too weak, organizationally, politically • once exception to the rule
today
• union are weaker than 1970s • no more bargaining on a corporitst arrangment • today – business culture is competitive • firm centers • oppose strong intevention • do not belive in working with unions • the long and the short of it • brief corporatism in the 1970s and 1980s • on a small scale in englush Canada
Quebec
• interesting • distinct political ecnomy • strong v weak stae • pluralism v corporasim • important differences in the last 50 years • can start out of nowhere
The Quite Revolution • 1960s • dramatic changes • ended in 85 • went through shocking changes • as whole pretty peaceful • rise of the separatistm movement
political economy
• Catholic • persieved themselves are not praticulary enthenprenurial • the lib party used the slogan, which became the slogan of the entire era, the masters of our own home
• b/f the church or Ottawa ran quebec’s economy • wanted to become indepenent • use the state to run the province • 80% French • use the state to pursuit our objective • was not a bad thing
1. Stronger state • expended massively • the state intervened to create Franco ecnomic opportunities • goal: business which speaks French • French as the business lanaague
• above this, the bus community was made more francophone hydro quebec
• 1963 nationalized much of it • major developments • culture shock for quebec • was owned by quebec government • workers were French • building dams was high tech task and the Quebec people did it themselves
• Catholics – good people, but are not good for business • this was unaccepted by the people • doubts were dissolved by this
used state agencies
• funding agencies • to finance capitalism in quebec • would go to quebec owned fims • were French speaking • Caisse de depots – collect the money in the fund, use the fund for investment purposes, invetments thoughout the provin e
• SGF, other companies, Bombardier, SNC-‐Lavelin, Videotron, biotech, film, etc
• central to the quebec economy • instigated by loans by the Que government
by 1980s
• mature firms resist more intervention • after firms b/c successful they do not want the government to meddle
• since then, turn to free economy model • date, QUEBEC government still spends on research and development
• business accets owened by the QUE government 3 or 4 times more than in Ontario
move away from strong intervention
• strong/weak mix • NRD in the free market envi • more mixed than strong state • still diff from English Canada • more interventionist • compatible with free trade • start our own industries, compete with others • mixed and far removed from the English canda
pluralism v corporatist
• pluralist from 60s to 80s • cooperation with B&L on economic goal ins the ‘80s • anther tool to empower themselves • unions became culturall legitamate • helped to build their density • strikes in 1970s and 1980s
QUE government sat down with B&L • nationalist society • have to become more cooperatiove
examples • 1996 big summit, B&L • ^ deal, had high deficit at the time • the government wanted to get rid of it • people wanted to cut beniftis • in the exhcnage for acceptace, povety reduction plan • for the first 5 years, the business would pay for it • money would go to povery alliviation • after 5 years – tax payers would take it over
• this would be inconsivible in English Canada • there is no big business confederation in English canda
Quebec
• big leaders are household names • they are always taklking • sometimes agree on things • stronger unions • strikes • cannot have adverasial envi – moved into cooperative envi • busienss enterprises – firm center • competitive • not corporatist • do not have formalized relationships • have summits from time to time to sit down and talk • they are adhoc procedures • b/w pluralism and corporatism • episodic summit meeting approach • diff from pluralist [fight all the time] • PQ more favourable
Quebec economy
• somewhere in betweene • they have done this within the CDN federation
Canada’s Welfare State
• liberal welfare state • reproduction • liberal: selectivity, private, small, cheap, higher inequality, poverty • middle class will rely more on private inst • reading: good early his to the welfare state
origins and history then transformations [less fundomenta]
• in economy radical transformation • less so in the welfare state • the welfare state is more robust than purely liberal model
social policy
• BNA [1867] soc programs under the provinces • who has the power to implement the welfare state • but Ottawa has unlimited spending power • the fed can spend money anywhere it wants, even in prov jurisdictions, but cannot regulate it
• either checks [not regulating] just sending money • change the constitution – change who’s role it is • provinces would have to agree to cont amendment
1939
• welfare state was purely liberal • the only important benefit before WWII was welfare
During the depression
• provinces were on the verge of bankruptcy • did not have tax revenues • the feds started to fund things using their spending power • administation of social accistance • only did it b/c it was an emergency • only sig b/f WWII workerts comp • ^ ensured more the emplyer than the emplyee
workers comp • after WWI • if worker got injured, they would sue
• implement this, if you get infured, you can get support • to get this, you have to agree not to sue the emplyer • modest benefits
small, selectivist state during 1930s: depression – we need to change
• had to more form the entire free market to some protection 1940 unemplyment insurance
• took constitution amendment • limited, esp in the beggning • regulatory, so had to amend • provinces were broke, so they had to agree • beyond pure liberal system
WWII political climate changes
• strong uions • strong CCF
in a war
• a lot of men signed up • the gov is spending $ • men would have been unempl • during war there is almost no unemployment • cannot fire people • because there are no where to replace them • people started to demand more money
political left grew
• CCF • CDN are being killed • fighting to not go back to the liberal model
• by the end of the war, there was a feeling that there needs to be more intervention
rick welfare state -‐ left and labour unions -‐ esping-‐andersen as the war was ending
• CCF was ahead of the liberal • liberals wanted to do something about this • massive social policy changes • Kensyan economic method • Rapid fire – created social benefits • Universal familt allowence • the mother would get the check regardless of income • sent them out base don spending • universal pension • does not matter what money you saved • everyone gets the same amount • amendment • provicnes made the argument and wanted constitutional amerndment
• could have done with spending power alone • became important in the support of old people
1960s
• PSE cost-‐sharing • Spending power • Post WWII veterans had access to universities • Initially sent money directly, now send the money to the province
Two stages of the health care
• 1958 hospital insurance • 1968 medical care insurance
• federal cost-‐sharing • provinces set up their own systems • the fed gives money to the prov and they spend the money • universal, everyone gets the same beniftis • regardless of the income • do not have to pay for it directly • Quebec – set up their own pension plan •
Welfare state 12-04-16 11:14 PM The exam From the section B on From the middle of the first term on The production
• The size and the proportions of the production pie Changes
• protectionism is gone • the state which is left is wea • Quebec is a bit of an exception • on the pluralist side of things
production
• liberal, anglo-‐saxon model welfare state
• moving away from the liberal model • what is the liberal model? • middle class rely on themselves and the private market place • no solidarity with the poor
by 1970s
• universal progrmas • public education system • health care • social insurance generous and redistributive • in the welfare, Canada moved some distance away from US toward universaility, away from the liberal model
what happened since then
debate • how much change did take place • after tranformation period • how radical was it
1940-‐1970s
• solid eco growth • 1973 oil crisis [1st one] • middle east dominant producers of oil • OPEC org • dominate the market • quadrupeled the price • the economy was highly dependent on oil then • oil was a base products • prices started to jump over night
post war success
• low unemploymnet stagflation
• low eco growth + rising prices • deficits
economic policies
• changed deficits
• higher spending than taxes • did not return to surplus unitl 1996
1980s
• globalization • ideology or reality
globalization
• economies of the world are becoming more interdependent • under pressure to reduce social spendind because we are competing with them
• true, cannot afford more taxes and more spending • might belive its true, still cut spending • different set of pressures
by late 1980s
• PC began making changes • universal pension • 1989 universal OAS pension ‘claw back’ • made the system more selective • close to universality • smallish departure from universality
1992
• universal family allowance ends • ended over night • replaces it with selective benefit
UI
• expanded to being very generous • successive cuts, culminating in 1994/94 • renamed it employment insurance • in atlanitc Canada still generous • in Ontario lower than in many states in the US • radical cuts
1995
• liberal budget: reduces cost-‐sharing, culminating in the 1995 budget
• to get out of deficit, cut transfer payments • transfer payments -‐ health, PSE, social assistance • from the fed to the prov, the prov had less money • more restrictions • Ont government – 22% cut in SA benefits and freezes them for 8 years
• Some prov cut more than others • but wend down overall
anything positive? Federal child tax benefit 1993 & 1995
• selective like SA • better structured • better impact than SA; spending power
SA – goes to SW, makes sure she really needs the money • Does not have to see anyone • files a tax form • and if she has a low income, will get money from the fed government
set up • graduated system • lose portions of the credit • as related to how much money you earn • can work and keep some of the credit • works differently • selective • making a difference [statistics] • liberal, but more positive than typical liberal set up • the system b/f – disincentive to work
Universal child care
• on top of selective credits
the changes might have been not as drastically bad what are the evidence where are we now 1. soical services [SS] 2. income transfers [IT] SS
• change hard to measure • service quality hard to measure
still have UHC • there are strains • each prov – range of services on a list • delisting of the rang of services • in Ont, getting your eyes testes • waiting lists – can be long • have built up in some areas • cost pressures across the board • almost every prov – health care 45% • aging society • these pressures will keep going up • technologies for treatment are expensive
PSE remains public
• tuitions has gone up • 3 times today since late 1970s • less financial aid • even mid income could get grants • grants are mostly gone • levels of debt increase • larger classes
do we need universal child care • in Quebec there is
there has been buckling but not breaking
• similar system • but they are not drastically different
income transfers
• we can use surveys and be more precise • how much $$ is transferred between people • how much does it reduce inequality
measured of inequality
• SLID data is better over time • good but not definitive • the survey is better today than 30 years ago • measurements are different • people probably under-‐reported before
Social Transfer Payments reduce inequality
• starting from market • incomes taxes too • other taxes not so much
overall pattern 1. market inequality [before the government] has risen in Canada since 1980s
• and elsewhere in the world • globalization increased outsourcing • auto companies might make parts in other parts of the world • technological change • blue collar jobs on the decline due to tech change • machines are more likely to replace blue collar workers
• there are many theories to suggest, setting the government impact aside, market income inequality has gone up
how to measure inequality
• the gini coefficient • from 0 to 100 • 0 -‐ every one is equal • 1000 -‐ perfect inequality, one has all equal
after transfer and tax inequality not no more or less
• transfers and taxes are doing the same thing as they did before • market inequality has gone up • the welfare state is reducing that as much today as back in 1980
Market income, SA, UI/EI, Child benefits, income taxes
• reduce inequality • reduce the gini number • redistribution is about the same since 1980 • market inequality is greater
welfare state
• is it weaker • or is it the same, just the market inequality has increased
the elderly
• lowest poverty rate outside Sweden • may increase in the future • income security is just as strong
contrast with the US
• inequality has risen substantially
half full of half empty • if market income is more unequal, the welfare state should be stronger
• is it possible? No country is doing this today • less free market in welfare state • more free market in the economy
less marketization for welfare state than economy [production] welfare
• cuts but also increases • the system is almost as redistributive
why is there this difference internal
• pressures for welfare state • stronger union means government will redistribute more • stronger than in the US • political parties are parties which favor social policies more then dems in the US
• federalism, the fed government pay a lot for the services • the prov have the ability to make the feds pay politically • prevented the system from being reduced more
economy
• people do not care if air Canada or petro Canada is privatized • trade deals, WTO, capital flows
external • free trade acts and agreements • ability to promote dom companies is harder • less powerful than internal pressures
pressures • to reduce intervention in the economy
the market has moved into free market direction strong v weak pluralism v corporatism Canadian economy and the state GLOBALIZATION AND LIBERAL DEMOCRACIES to what extend is globalization reducing the role of the government
• how do capitalist countries differ • are free market countries winning over the other ones
will globalization undermine variety?
• Will it lead to the non-‐liberal models to fade or converge on the liberal model
what is economic globalization
• more trade, FDI, MNC outsourcing and capital flows • since the 1970s there have been changes to the whole international environment
• rich countries and Canada • greater trade
FDI is nothing new for Canada
• post Innis • our economy is foreign controlled • supply chains from different parts of the world
MNC outsourcing Broader capital flow
• central to the fear and the promise • might undermine variety
• race to the bottom • the amount of money which flows is huge, the sums are vaster than the post war era
• the funds are larger than involved in the first three [trade, FDI, MNC] • currency • international capital flow is financial side of international trade • much of the money has nothing to do with trade, FDI or MNC activity
currencies
• flexible in their values • they are relatively stable • I might buy money today and sell them tomorrow • I might buy stocks in a German company b/c German currency might be stronger than today
Post WWII The Bretton Woods system After WWII
• meetings in BW in New England • among big players in the world economy • agreed on broad policies to promote growth • free trade [GATT]
GATT • To promote gradual introduction of free trade in the world • Thought it was a good idea b/c
Depression history • Comparative advantage of more trade • after the depression, countries closed off their economies • people closed off economies • this only worsens the situation • business and the unions always supported protecting dom industries
comparative advantage • if there are 10, each 10 would be better off to specialize and trade • export them between each other • the outcome – specialization, everyone better off and richer • freer trade
not all they did
• allowed exchange controls to regulate capital flows exchange controls
• regulation of capital flows • trade is a good thing • so we want to open the world • free flow of currency would not be a very good thing • major reason, everyone knew, at the time, one country had a powerful and secure economy
• there were only two rich economies which were not bombed during the war
• people would insets in US and not other states • exchange controls were sever • a way to try to maintain soundness of other currencies • preventing holders of these currencies from exchanging them with american dollars
• America – half of the global economy currency pegs
• needed against gold-‐secured US$ • regulated and adjustable • wanted to prevent them from running into US dollars [exchange control]
Pegs
• when transaction did take place • it would take place at a fixed rate • both nations agree on the peg • hard for people to just flow the money into other currencies • orderly exchange of money • peg of .25 to one franc • market balance
gold standard
• before the war • exchange their currency for gold • the ultimate sound measure of value • outside US after the war did not want this
For a long time $35/US$ for an ounce
• others pegged to the US dollar • and the system was controlled by exchange
heavy regulation esp for weak economies
• free markets but controlled • mixture of the two • pegs + control = prevent short term currency runs
this would allow trade to occur
• orderly FDI, MNC activity, state-‐regulated • trade grew but under state regulation • states had the right to control how much FDI they had • the state oversee s the gradual opening up of the economy
embedded liberalism [Ruggie]
• liberalism, in terms of a big welfare state • strong growth – opening up of trade, “economic miracle”
• this growth was connected with variable economic system • the states could chose how to engage with the growth • strong v weak, P v C • France: planned economic growth, 4 year plans • regulatory mechanisms to borrow money • determined by the things they needed after the war, like steal
Different welfare states
• domestic interests who lost in these choices had limited exit options • French business opposed intervention • Swedish businessmen did not like high taxes
exit options
• small for people who do not like those things • BW prevented people from exiting the country • they were stuck in the country • they had to adapt to the circumstances
controlled globalization
• prevention of the losers to exit the state • in the long term would be in a bad position • both the French state and the Swedish state they had to have strategies which in the long term would make sense
• in both cases good choices had to be made • different kinds of capitalism were possible
12-04-16 11:14 PM globalization
• same direction in rich democracies • common frame work of economy • direction of neo liberal envi • in competitive world most viable
post war
• models of economy more market oriented • within embedded liberalism • there is control of the free trade system • contraind to stay in the economy during developmet • business money was stuck in that specific currency • every currency was pegged to the dollar
1970s and 1980s
• change in the global economy • new envi globalism neo liberalism will win out
the money system began to be seen by americans as not working for them • Vietnam war • public was not happy about the wat • the gov did not want to raise taxes, ran debt instead • the am gov was stimulating the eco through the deficits • US$ because of their debt and trade deficit US$ over valed by the system
by early 1970s • by holding other currency to high, American dollar was punished • american dollar floats • and looses value • restore competativenes • cheaper for Americans to export • am firms would be more competitive
• did not work forever free floating currency
• before protected • currency floats on the market and the price is determined by the market, prices for currency changes from day to day
exchange control are difficult, end • esp for affluent western countries
Eurodollars • offshore, unregulated $$
growth of capital flows • central to globalization • not trade, not FDI • speculative dynamic buy and sell currency or assets • short term gains • so when markets are unhappy, money runs • market panics • transformations in the values of the assets
implication for the globalization theorists this the argument of the globalizers
• they think the world has been changed • short term logic of capital flows – low taxes, lean and mean economy and less distribution
• because their yield better and quicker results • before long term relationship between the bank and the firm, coordinated and long term relationship
• improvements not fast • notion of patient capital
is there evidence to support this or is this people only think and because they think this better, they move their money to those states where taxes are bad
then there are those who just do not high taxes, and these people tend to be conservative in their political and economic perspective
• in the 1970s the French tried to nationalize a bunch of firms • as soon as they started this • firms began to leave the economy • and they reversed position quickly
Sweden 1994
• well dev welfare states • out of recession • deficit • balance the books by rising taxes and cutting spending • immediate run on the Swedish money • the government announced reversal of the policy the next day • because the markets were unwilling to pay increased taxes
the flight of the capital in both cases
• defeated 2 political initiatives liberal model is favored
• low tax and spending what can happen
• in other models, other than the liberal model, the elites may be convinced to change their positions
• may by they wont • dom pressures • rigidities – factor which undermines performance • cannot be easily removed • not change but decline • as they farther behind
lib more efficient
• more immigrant societies • their populations are growing fasters • is it enough to make up for the problem of inequity? • ultimately, the questions is of social choice
social choice
• by objective measure, justifies inferior equity • do you want to live in a soc where there is more spending • or do you want to live in place that
societies make choices
• these choice are constrained by the power structure of the states • values reflect the power relationship in the state • powerful indicator is union density
union • indirect effect of their presence • changes the power relationship within society • affect what model you'll end up with
what about Latin states
• there is nothing good about their political economies • 2008 more to do with morgadge • conseqeunces showed areas of weaknesses in economies • these economies are vulnerable • external debt for Greece • sense that they lack international markets
these states
• clientists • corruption • regulation • special deals behind the closed doors
• getting things from the gov depends on who you know • taxes based on corruption • why should i have pay those payments • 50 to 60 % of jobs are highly secured • high youth unemployment • out of facism • need to build legitemacy for the state • clientistic culture
will it change • form within or from outside • special deals for people, enough people, blockages to change • bad capitalist models
variation on the pattern • important to not generalize too much • divisions within groups • there are variation within groups
liberal; US the richest per capita, also has most poverty and inequality • cause and effect • other factors • is there something else about the American economy
B and C sections of the syllabus from October 25 on constitutions and on 70% of the course material one question more or less equivalent to one question lecture and then readings