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Proportional Representation, Political Fragmentation and Political Decision-Making: an Economic Analysis

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Proportional Representation, Political Fragmentation and Political Decision-Making: an Economic Analysis Proportional Representation, Political Fragmentation and Political Decision-Making: an Economic Analysis Benny Geys Dissertation presented in partial fulfillment of the requirements for the degree of Doctor in Economic Sciences. Vrije Universiteit Brussel Acknowledgements “I am like a piece of land that of itself is dry and barren, but if you scatter manure over it and cultivate it, it will bear good fruit. By this I mean to say that your Grace’s conversation is the manure that has been cast upon the barren land of my dry wit; the time I spend in your service (…) does the cultivating; and as a result of it all, I hope to bring forth blessed fruits.” (Don Quichote, part II, Ch. XII) In the course of the past four years, I have built up a lot of debts. Consequently, I gladly take this opportunity to express my sincere gratitude to those who provided answers to my questions or, equally important, confronted me with questions about what I thought were answers. Hopefully, I’ll be able to return the favour(s) some day. First and foremost, I wish to thank my advisor Bruno Heyndels for his incessant attempts to turn the rough land into a garden-ground. Throughout my period as a doctoral student, his ever-open door (literally and figuratively) as well as the inspiration and opportunities he provided have been a great benefit to me. The same holds for the other members of my Dissertation Committee: Kris Deschouwer and Bruno De Borger. Building on their own fields of expertise they provided important feedback at various stages of the research, which brought an interesting (and necessary) change of perspective. This work has also benefited greatly from incisive comments provided at different points in time and space by Matthias Benz, Lars Feld, Norman Gemmell, Marc Hooghe, Patrick Stouthuysen, Erik Soetens, Per Tovmo and my colleagues at the department of microeconomics at the Vrije Universiteit Brussel. Special thanks are due to John Ashworth and Filip Heremans for their help at untangling econometrical problems and An Buysschaert and Ilse Verschueren for meticulously going through (parts of) previous drafts of this dissertation. Access to data is indispensable for empirical research. Hence, I am very grateful to Jo Buelens, Patrick Deboosere, Pascal De Ceuleners, Wendy Goossens, Lydia Putseys, Thibaut Stevens, Stefaan Swaels, Broos Van Buggenhout, Paul Van Herck, Magali Verdonck and staff-members of the Belgian police-courts, local and provincial governments and provincial archives for their assistance in procuring the necessary data. I owe a lot to the support of my parents. They provided me with the possibility to take this road and do something useful with my life. Though some of my friends doubt the (practical) use of my work and I myself am far from sure about how to define “useful”, my parents always helped me bear the load I placed (or found) on my shoulders. And so did my brothers and sister. Thanks for watching over me. Also, my friends (no need for names here), thanks for not caring about what I do or look like, but liking me for who I am! Finally, my colleagues – past and present: An Buysschaert, Ralph Caers, Kris De Jaegher, Cindy Du Bois, Maribel Gutierrez, Ellen Mombers, An Rommens, Frank Van Driessche, François Van Leeuw, Jan Vermeir, Ilse Verschueren and Kristien Werck. Thank you for the friendship and encouragement … and for giving me a chance to be silent about other things than work. A very special thanks here is due to our secretary, guardian angel and devil-do-all Mia Hofman. A truly exceptional person, in every respect. Benny Geys May 2004 1 Table of Contents GENERAL INTRODUCTION PART I: ON THE BELGIAN POLITICAL SYSTEM CHAPTER 1: Belgian Elections and the Level of Political Fragmentation 1. Belgian Elections 1.1. Who votes and how to vote? 1.2. The electoral system: From votes to seats 1.3. Compulsory voting 1.4. Electronic voting 2. Political fragmentation: Definition and Data 2.1. Definition and measurement 2.2. Explaining political fragmentation 2.3. The fragmentation-level of the Belgian municipal political system a) Flanders b) Wallonia c) Brussels d) Explaining the trends in political fragmentation 3. Conclusion PART II: ON VOTER BEHAVIOUR CHAPTER 2: Voter Turnout 1. General framework: voting in a multi-party context 2. Literature Review 2.1. Theory a) The number of parties b) Size inequalities between the parties 2.2. Empirical literature 3. Empirical analysis 3.1. Turnout rates in the Flemish municipalities 3.2. Empirical model 3.3. Empirical results 4. Conclusion CHAPTER 3: Ballot Layout Effects 1. Ballot Layout Effects and Ballot Position Effects: literature 1.1. Theory 1.2. Empirical literature 2. The Brussels Elections of 1995 3. Empirical analysis 3.1. Empirical model 3.2. Empirical results 4. Discussion 4.1. Political consequences 2 4.2. Expressive voting? 4.3. Ballot scanning 5. Conclusion PART III: ON GOVERNMENT BEHAVIOUR CHAPTER 4: Tax Innovation 1. Tax Innovation: A Review of the Literature 2. Theory on Tax Introduction 2.1. A graphical exposition 2.2. Hypotheses 3. Environmental Taxes in Flemish Municipalities 4. Empirical analysis 4.1. Empirical model 4.2. Empirical results 5. Conclusion CHAPTER 5: Municipal Debt Development 1. Review of the Literature 1.1. Theory a) Government inaction b) Common pool problems 1.2. Empirical literature 2. Municipal Debt in Flanders: data and measurement 3. Empirical analysis 3.1. Hypothesis and method 3.2. Empirical results 4. Conclusion GENERAL CONCLUSION Appendices References 3 4 General Introduction “Whatever you do will be insignificant, but it is very important that you do it.” Mahatma Ghandi Elections in different countries take different forms. Besides a number of differences in practical arrangements (e.g. registration formalities), dissimilarities also exist with respect to the more technical elements in the election. Especially with reference to the way in which the seats in parliament are distributed after the election, numerous methods are employed. In fact, the electoral system – i.e. “the means by which votes are translated into seats in the process of electing politicians into office” – is never the same in two countries (Farrell, 2001, 4). Still, given the abundance of different systems that are currently in use, two main categories can be discerned: non-proportional and proportional systems. Non-proportional systems aim to achieve a clear majority for one of the parties. As such, one hopes to create strong and stable government. Proportional systems on the other hand allocate seats more or less in line with the electoral result (in terms of votes) obtained by each party. This has the advantage of lowering voter alienation and politically motivated violence, but the ensuing multiparty systems tend to be less stable (Mueller, 2003). A key difference between both types of electoral systems is the number of parties they allow to develop and/or sustain. Non-proportional systems tend to support two-party regimes while proportional systems tend to lead to multiparty systems (e.g. Duverger, 1954/1972; Riker, 1982 and Lijphart, 1994). Importantly, the proportionality of the electoral system is a necessary but not a sufficient condition to obtain more fragmented political systems. There should also be sufficient socio-economic diversity within the population (Taagepera and Shugart, 1989). This diversity tends to create opposing views about “optimal” policies, which can give rise to the emergence of (and competition between) various political parties. The electoral system functions as a crucial intermediary factor in the rise (and continuation) of these political parties. In general, it holds that a more proportional electoral system and a more heterogeneous population will tend to be associated with a more fragmented the political system (Powell, 1982; 1 Ordeshook and Shvetsova, 1994; Amorim-Neto and Cox, 1997; Cox, 1997; Mozaffar et al., 2003). Proportional Representation (PR) is not only conducive to fragmented party systems. Casual observation also shows that the number of candidates that a party proposes to the voter in a given electoral district is larger under PR. For example, no party proposed more than one candidate in any of the 659 constituencies during the 2001 UK general elections, where a non-proportional system (i.c. the plurality rule) is used. Proportional systems on the other hand usually witness more than one candidate per party. An evident reason for this difference is that the number of representatives to be elected in a given district (the so- called “district magnitude”) is generally higher under PR relative to plurality systems (Lijphart, 1994; Farrell, 2001). This district magnitude is most often equal to 1 in plurality systems. There is only one seat to be gained and in such a context it clearly makes little sense for a party to bring forward two, three or more candidates. If the voter is only allowed to cast 1 vote – as is the case in all single-member plurality systems (Farrell, 2001, 22) – each vote gained by a given candidate is a vote lost by all other candidates. Hence, parties presenting more than one candidate split “their” votes over several candidates, which lowers their chance of winning the seat in the given district.1 Under (list) PR, a larger number of seats is to be divided among the competing parties in each district. Hence, each party has an incentive to propose more than one candidate to the voter. This incentive is reinforced by the fact that all candidates in list PR-systems obtain votes for the party as well as for themselves.2 The electoral system thus contributes to the existence and level of political fragmentation in the elections and in parliament and/or government. The effects of this level of fragmentation on decision-making at several stages in the political process are the focal point of this work.
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