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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