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 INEQUALITY HIGH COSTS OF REPRESSION DEMOCRACY (Britain) HYBRID (Argentina) LOW COSTS OF REPRESSION HYBRID (Singapore) NONDEMOC RACY (SA)

Back to the Examples LOW INEQUALITY HIGH INEQUALITY HIGH COSTS OF REVOLUTION CONSOLIDATED DEMOCRACY (Britain) LOW COSTS OF REVOLUTION 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