Political Budgeting Across Europe

Christian Breunig, Christine S. Lipsmeyer, Guy D. Whitten

• Publisher: Taylor & Francis
• Year: 2018
• eBook ISBN: 9781351403122
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Budgeting is a key aspect of governmental behaviour. Research on budgeting has taken various theoretical and methodological approaches, and these differences have prevented scholars from discussing their common topic. In this collection, we have gathered a group of prominent scholars to explore the intermingling of budgets and politics from an assortment of theoretical and methodological perspectives. It highlights not only the breadth of current research but also the range of what remains underexplored. This book was originally published as a special issue of the Journal of European Public Policy.

Budgetary change in authoritarian and democratic regimes

Frank R. Baumgartner, Marcello Carammia

, Derek A. Epp, Ben Noble, Beatriz Rey and Tevfik Murat Yildirim

ABSTRACT

We compare patterns of change in budgetary commitments by countries during periods of democracy and authoritarianism. Previous scholarship has focused almost exclusively on democratic governments, finding evidence of punctuated equilibria. Authoritarian regimes may behave differently, both because they may operate with fewer institutional barriers to choice and because they have fewer incentives to gather and respond to policy-relevant information coming from civil society. By analysing public budgeting in Brazil, Turkey, Malta and Russia before and after their transitions from or to democracy, we can test punctuated equilibrium theory under a variety of governing conditions. Our goal is to advance the understanding of the causes of budgetary instability by leveraging contextual circumstances to push the theory beyond democracies and assess its broader applicability.

Punctuated equilibrium theory (PET) describes how, as a consequence of disproportionate information processing, public policies alternate between long periods of stasis where negative feedback forces maintain the status quo and brief but dramatic periods of change. While the theory accurately describes a broad range of policy activities, studies of PET have looked almost exclusively at Western democracies, where the wide availability of public budgets and other policy indicators facilitate longitudinal analysis. For example, the 2009 article ‘A General Empirical Law of Public Budgets’ (Jones et al. 2009) focused on only European and North American democracies.

We test PET across different political regimes. First, in the context of authoritarianism and democracy, we analyse public budgeting in Russia from 1998 to 2014, Turkey from 1970 to 2004, and Brazil from 1964 to 2010 – periods including episodes of democracy and non-democracy in each country. We then look at historical data from Malta during periods of colonial rule by the British (1826–1921), colonial self-government (1922–1936), and during a more recent period (2001–2011) since that country’s 1964 independence.

Democratic and other regimes might differ with regard to budgeting in two opposite ways. On the one hand, autocrats face fewer public and formal checks and balances, possibly allowing them to respond quickly in reaction to shifting contexts; this could be called the ‘institutional efficiency’ hypothesis. One the other hand, democracies may have higher capacity to gather information about social and other issues because of mechanisms associated with electoral accountability, as well as stronger and more independent civil society organizations including the press; the ‘informational advantage’ hypothesis.

Under the efficiency hypothesis, an autocrat, working with few institutional constraints such as generating a majority in a democratically elected and independent legislature, should be able to shift spending priorities when advisors recognize the need to do so. This decision-making efficiency would lead us to expect fewer punctuations in regimes where power is concentrated in a decision-making élite who can operate with broad institutional latitude. Institutional and decision-making frictions are lower, so decisions should be more efficient. Indeed, ‘making the trains run on time’ is one of the main justifications for authoritarian rule, and democracies are often criticized for high decision costs if not deadlock and stalemate.

Democracies have an advantage however when it comes to gathering information: they have many uncensored sources of demands, information, and feedback about the impact of current policies through a more vibrant network of civil society organizations, including political parties staffed by officials anxious to ‘feel the pulse’ of various constituencies. Furthermore, a bureaucratic network gives democratic leaders the capacity to respond to information once it has been processed. By contrast, authoritarian regimes may be less capable of gathering, processing and responding to information about societal problems because they have fewer independent sources of information, and indeed they may suppress certain kinds of information or have highly focused policy priorities. Subsequently, we would expect that the magnitude of punctuation in public budgets during periods of authoritarianism would be greater, as governments either fail to gather or ignore signals for longer than would be possible in democracies, only acting when problems grow so large that they threaten the stability of the regime.

Budget data for each country is compiled from various public records and to our knowledge the datasets assembled here are the longest and most accurate publicly available account of budgeting in any, of the four countries. Empirical tests are straightforward and designed to distinguish between the two hypotheses. Using Freedom House scores, we classify regimes as either ‘Not Free’, ‘Partly Free’, or ‘Free’ for each year of data. Then, for each country, we draw a distribution of budgetary changes corresponding to the different freedom scores. (For Malta, where our data pre-dates the Freedom House scores, we consider the period of self-government as more politically open relative to the period of British colonial rule.) Since our tests are pre- and post-transition within four countries that have experienced changes in forms of government, we effectively control for many other factors, including culture, size of the budget and complexity of the social issues facing the nation.

Evidence strongly supports the information hypothesis, suggesting that any advantage authoritarian regimes gain through institutional efficiency is outweighed by informational constraints. We replicate these findings in the online appendix using alternative regime-classification systems to divide the data, rather than Freedom House. These include Polity IV’s assessment of political competition, Unified Democracy Scores (U-Dem), Varieties of Democracy scores (V-Dem), and, finally, by simply using the historical record to identify periods of regime transition. Collectively the results favour the information hypothesis; evidence that our findings using Freedom House scores are robust.

The relative advantage that democratic regimes with a free system of the press and active social mobilizations have with regard to signal detection and problem recognition are poorly understood. Indeed, we know of no budgetary research that systematically compares political regimes with regard to these issues. Our contribution is to develop punctuated equilibrium theory by looking at the impact of institutional forms on patterns of budget reallocations. For all the regimes we examine there is a combination of policy stability and punctuations, implying that the distinction between authoritarianism and democracy (or different forms of democracy) is, in a sense, not fundamental for understanding budget allocations.¹ The levels of punctuation observed differ substantially, however. Theoretically we would expect democracies to have greater informational capacity than other political regimes, and this idea finds support in the data. Indeed, the findings suggest that democratic informational efficiency is more important than non-democratic institutional efficiency. Relative budgetary stability can be added to the long list of attributes that favour democratic governance over its alternatives.

Punctuated equilibrium

Baumgartner and Jones developed PET in 1993 through in-depth case studies of particular policy issues, such as nuclear energy and pesticide use. They found that policy changes in these areas were predominately incremental, but that occasionally radically new ideas would gain momentum, causing a tidal shift in government policies toward these issues. In later work (Jones and Baumgartner 2005) they introduced a more generalized model to demonstrate that government policy-making is a fundamentally erratic process; it is characterized by long periods of equilibrium intermittently punctuated by dramatic changes. Their argument was this: because policy-makers are boundedly rational and the processing capacity of political institutions is constrained by rules, governments are disproportionate processors of information. The effects on policy change are two-fold. On one hand, an extreme allegiance to the status quo is built into the system. If attention is scarce, most issues most of the time will be ignored, and it is difficult to justify changing the status quo in the absence of attention. But, on the other hand, issues cannot be ignored indefinitely; societal problems will grow worse over time and eventually need to be addressed. When an issue finally receives attention, policy-makers may be forced to enact dramatic policy changes, if only to catch up for the lack of moderate adjustments they failed to make as the problem slowly developed. Thus, the model describes a system characterized by friction, where negative feedback forces are predominant, but occasionally give way to periods of rapid self-reinforcing change. With policy-makers responding only to a limited number of urgent problems at any given time, issues beneath a threshold level of urgency are put on the back burner as attention is focused on the most pressing issues; there are always more issues that deserve attention than time to attend to them.

The implications of the model are that policy changes will fall into one of two categories: incremental when the status quo prevails; and dramatic during rare periods of imbalance. Empirical support for this prediction is substantial. A long line of scholarship finds that distributions of changes in public budgets display a punctuated equilibrium pattern, characterized by high central peaks, ‘weak shoulders’, and very long tails (Baumgartner et al. 2009; Breunig and Koski 2006; Breunig et al. 2010; Jones and Baumgartner 2005; Jones et al. 200...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Contents
• Citation Information
• Notes on Contributors
• ‘Introduction: Political Budgeting from a Comparative Perspective’
• 1. Budgetary change in authoritarian and democratic regimes
• 2. Representative systems and policy punctuations
• 3. Interpreting fiscal accounting rules in the European Union
• 4. The politics of fiscal rules within the European Union: a dynamic analysis of fiscal rules stringency
• 5. Public opinion on policy and budgetary trade-offs in European welfare states: evidence from a new comparative survey
• 6. A new approach to the study of partisan effects on social policy
• 7. The effects of immigration and integration on European budgetary trade-offs
• Index