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Political Institutions
Democracy, Constitutionalism and
Federalism
Examples
• Britain: path to consolidated democracy without
any significant reversals;
• Argentina: possibility of transition to na
unconsolidated democracy with reversals;
• Singapore: nondemocratic regime can survive
with minor concessions and minor repression;
• South Africa (apartheid): nondemocratic regime
that survives by repression.
Questions
• Why are some democracies consolidated
and others not?
• Can nondemocracies survive forever?
– China?
Economic Model
•
•
•
•
Two types of agents: elites and citizens;
Citizens are more numerous than elites;
Social choices are conflictual;
Model to explain political and economic
inequality;
• Economic and political inequality can only be kept
by repression (in the broad sense);
• Democracy can only be consolidated if the costs
of revolution are too high.
Determinants of Democracy
• Civil society
– Solving collective action problems and
externalities.
• Economic shocks and crises
– Affects the distribution of wealth
– Affects the sources of income
Determinants of Democracy
• Political Institutions
– Agregation of Preferences
– Redistribution
• The Middle Class
– Vested interests
• Globalization
– Affects redistribution and wealth
Back to the Examples
LOW
INEQUALITY
HIGH COSTS
OF
REPRESSION
LOW COSTS
OF
REPRESSION
HIGH
INEQUALITY
DEMOCRACY
(Britain)
HYBRID
(Argentina)
HYBRID
(Singapore)
NONDEMOC
RACY
(SA)
Back to the Examples
LOW
INEQUALITY
HIGH COSTS
OF
REVOLUTION
LOW COSTS
OF
REVOLUTION
HIGH
INEQUALITY
CONSOLIDATED
DEMOCRACY
(Britain)
NONCONSOLIDATED
DEMOCRACY
(Argentina)
What do We Know About
Democracy?
• Measuring Democracy
• Patterns of Democracy
• Democracy and Economics
– Democracy and Income
– Democracy and Education
– Democracy and GDP Growth Rates
What do We Know About
Democracy?
• Democracy and Inequality
– Democracy and Economic Equality
– Democracy and Tax Revenues
– Democracy and GDP Growth Rates
General Comments of
Democratizations
• Nineteenth-Century Europe
• The Latin American Experience
• Asian Tigers
Constitutionalism
• Constitution:
– Durable institution
– Regulates future allocation of political power
– Credible commitment to future pro-majority
policies
• Types of political power:
– De jure political power;
– De facto political power.
Constitutionalism and Economics
• Longer Constitutions:
– Developing economies.
• Separation of powers
– Quality of Judiciary
• Independence
• Accountability
• Quality of Government
– Empowerment
– Accountability
Constitution
• Constitution is an Economic Document
• Flexibility vs. Security
– Role of Constitutional Court
– Protection of Rights
Federalism
• Benefits of Federalism
– Decentralization: better aggregation of
preferences; breakes monopoly power of
government
– Competitive Federalism
– Consolidated Democracies
Federalism
• Costs
–
–
–
–
Capture
Duplication of costs (diseconomies of scale)
Externalities
Conflict (of Law, of Jurisdiction, etc.)
• Need of Referee: Judiciary