The Competitive State

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A dissertation presented

Syed Shimail Reza

The Department of Government

in partial fulfillment of the requirements

for the degree of

Doctor of Philosophy

in the subject of

Political Science

Harvard University

Cambridge, Massachusetts

April 2018

Dissertation Advisor: Professor Michael J. Sandel Syed Shimail Reza

The Competitive State

Abstract

This dissertation studies competitive political institutions and institutional incentives in the context of legislative and executive politics, and asks to what extent they encourage representatives and ruling parties to always work toward advancing all their people’s welfare as best they can. Part I of the dissertation proposes a general theoretical framework for the study of competitive political institutions and processes, and argues that this framework avoids various conceptual errors in the scholarly literature – namely (i) the conflation of competitive and non- competitive political relations; (ii) the claim that political competition is analogous with market competition; (iii) the claim that competition in general produces desirable social consequences; and (iv) the claim that competition is in general normatively praiseworthy. Next, Part II applies this general framework to investigate competitive politics in modern representative democracies and democratic federations in three major contexts: (i) electoral competition; (ii) interstate competition; and (iii) competition between state and federal governments. All three forms of political competition are concluded to be significantly misaligned with the aim of encouraging representatives and ruling parties to always work toward advancing all their people’s welfare as best they can. Part III of the dissertation then considers competitive politics as it might be made to be. It proposes a schematic for a new competitive political system – population-maximizing competitive federalism – and argues that it should, in expectation, fare better. The dissertation concludes with a brief evaluation of population-maximizing competitive federalism along some additional normative dimensions, including contractarianism, liberalism, and political equality.

Here, too, there are good reasons to favor the new political system.

iii Table of Contents

Part I: Introduction and Framework 1

Chapter One: Introduction 1 1.1 Scope 8 1.2 Departures From Contemporary Political Theory 16 1.3 Departures From Contemporary Research on Political Competition 30

Chapter Two: Analytical Framework 41 2.1 Four Necessary (and Sufficient) Conditions for Competition 42 2.2 Competitive Structure 46 2.3 The Double Edge of Competition 56 2.4 Conclusion 57

Part II: Modern Democracies and Democratic Federations 59

Chapter Three: Electoral Competition 59 3.1 Majoritarian Exclusion 61 3.2 The Electoral Logic of Sabotage 81 3.3 Partially-Undisciplined Activity-Span 93 3.4 Disincentives Against Innovation 106 3.5 Conclusion 127

Chapter Four: Interstate Competition 129 4.1 What Is Not Interstate Competition 134 4.2 State Elections I: National Comparisons 146 4.3 State Elections II: Local Comparisons 159 4.4 State Elections III: Interstate Pseudo-Competition 165 4.5 Federal Elections 171 4.6 Non-Electoral Interstate Competition Over Revenues 176 4.7 Conclusion 182

Chapter Five: Interstratum Competition 185 5.1 Interstratum Electoral Competition 187 5.2 Interstratum Jurisdictional Competition 199 5.3 Conclusion 216

Part III: Population-Maximizing Competitive Federalism 217

Chapter Six: A Schematic For a New Competitive Politics 215 6.1 Stipulations 220 6.2 The Institutional Schematic 224 6.3 Competitive Sustainability 251

iv Chapter Seven: Weak Competitive Federalism 262 7.1 Majoritarian Exclusion III 262 7.2 The Electoral Logic of Sabotage III 278 7.3 Partially-Undisciplined Activity-Span III 285 7.4 Disincentives Against Innovation III 295 7.5 Further Institutional Improvements 304 7.6 Objections 310 7.7 Population-Maximization vs. Other Organizing Principles 333 7.8 Conclusion 341

Chapter Eight: Alternate Normative Frames 343 8.1 Contractarianism 344 8.2 Liberalism 350 8.3 Political Equality 357 8.4 Conclusion 364

Appendices 366 Appendix A. Derivation of Fertility-Adjustment Factor 366 Appendix B. Population Growth Correlates 367 Appendix C. Illustrative Optimization: Majoritarianism vs. Universalism 368 Appendix D. Illustrative Optimization: Sabotage 375

References 381

v Acknowledgements

I am greatly indebted to many individuals for their help, support, and suggestions during the course of writing this dissertation. Atop the list are the my dissertation committee members –

Professor Michael Sandel, Professor Eric Beerbohm, Professor Kenneth Shepsle, and Professor

Richard Tuck – whose insightful comments and suggestions, as well as their exceptional mentorship, have made this project possible. I am also extremely grateful for comments and suggestions by Theodore Becker, James Brandt, Abraham Chaibi, Jeffry Frieden, Jonathan Gary,

Sean Gray, Robin Glover, Hailey Loomis, Aseem Mahajan, Jacob Roundtree, Steven Serna,

Brendan Wright, members of the Harvard Political Theory Workshop, audience members at the

Northeastern Political Science Association Annual Meeting in 2014, and audience members at the American Political Science Association Annual Meeting in 2016.

THE COMPETITIVE STATE

PART I: INTRODUCTION AND FRAMEWORK

CHAPTER ONE: INTRODUCTION

Institutions influence social outcomes. There are few less contentious statements in political science. Certainly, institutions do not determine all that occurs; they do, however, influence social outcomes because they influence individual behavior. They give people reasons to act one way or other. Laws penalizing theft, for instance, do not necessarily determine how any specific person behaves, but they do give people a reason to not steal – the threat of punishment – which tends to deter some would-be thieves even if it does not deter all. Institutions encourage and discourage, not command. They incentivize. And in doing so, institutions influence both individual behavior and, eventually, social outcomes – all human action ultimately contributing, however minutely, to society’s prevailing conditions. Encourage and discourage the right tendencies of behavior, and society, in expectation, flourishes. Do the opposite, and it becomes mired.

This dissertation’s purpose is to study political institutions in terms of their incentives – specifically, how political institutions regulate the state via the incentives they create for public officials. For our purposes, political institutions are defined as the formal legal rules governing the delineation, allocation, and exercise of political power. These legal rules (i) define and divide political powers among public entities and offices – e.g. they define legislative, executive, judicial, or bureaucratic powers, and divide them among public entities like districts, courts, and administrative agencies, or particular offices like those of legislators, judges, and public administrators; (ii) specify the mechanisms by which control over these public entities and offices is allocated to individuals or groups – e.g. heredity, lottery, election, or appointment; and

(iii) establish the terms on which the associated political powers are exercised – e.g. rules concerning legislative voting, judicial procedures, and bureaucratic paperwork. Thus, political institutions regulate the state by regulating how its various powers may be acquired and exercised by public officials. For the most part, it is these public officials who control what the state does, since they pass and enforce laws and policies; but public officials’ decisions and actions are, in turn, influenced by the institutions within which they operate. It follows that by studying how political institutions encourage and discourage public officials, we will be studying how political institutions regulate the state.

The dissertation’s focus will be on political institutions as they pertain to competitive politics.

Competition is defined as any scenario where individuals or groups act against each other to attain logically or practically incompatible ends. Competitive politics is then politics characterized by competition over political matters – usually, competition over the delineation, allocation, or exercise of the state’s powers. Political institutions, among other things, create, channel, adjudicate, and regulate such competition – all functions whose importance is difficult to overstate:

First, the basic purpose of all political systems is to establish mechanisms for adjudicating the ever-present competitive struggles of society, but in accomplishing this purpose political institutions transform these struggles into political competition. Different people invariably desire different things and pursue different goals, not all of them compatible. Not everyone can be simultaneously satisfied in every matter, and people’s attempts to attain their mutually incompatible ends result in competition among them. Adjudicating this competition is the primary rationale for the state. If human relations had no competitive element, then there would be no need for the state because there would be no disputes; but human relations are always

somewhat competitive, so it falls to the state to assume the mantle of ultimate arbiter of social competition lest everything descend into a Hobbesian war of all against all. In taking up this mantle, however, the state transforms the underlying competition in society into political competition: disputants come to compete not only over the subject matter of their disputes but also how the state adjudicates them.

Second, all political systems are characterized by some form or other of competition over the delineation, allocation, or exercise of the state’s powers, but political institutions dictate the nature and structure of this competition. In monarchies, potential heirs and would-be usurpers compete over succession to the throne; nobles, viziers, and courtiers compete over the monarch’s favor; and factions compete over political influence. In aristocracies, houses compete over territory, power, and alliances; aristocratic factions also compete over the same; and commoners compete over ascension to honors. In single-party states, party members compete over appointments; bureaucrats compete over jurisdiction; and factions compete over leadership. In democracies, electoral candidates compete over offices; political parties compete over legislative control; and the populace competes over the direction society takes. Every political system is competitive. Political institutions, however, influence how political competition unfolds because they structure political relations and the rules governing them.

Finally, third, in many modern societies political competition is also artificially introduced as a mechanism for regulating the state. Electoral democracies are most notable in this respect, in that they rely on electoral competition to discipline representatives and parties in their exercise of the state’s powers – the idea being that competition over votes will induce them to pursue the people’s interests rather than their own to some significant degree. The division of powers also sometimes functions as a competitive system of political regulation – the idea here being that

different branches of government, given their competing interests, will check each other from concentrating power in too few hands or acting tyrannically. Competitive political institutions are, in this sense, one of the central mechanisms by which some modern societies achieve social cooperation: they rely on competition to encourage public officials to exercise power in their people’s interests, so the latter may live peaceably with each other, and with the state.

Competition, then, is always a major element in politics. Its study – specifically, how competitive politics, and the institutions surrounding it, regulate public officials and the state – will comprise this dissertation’s main subject.

Now, normatively speaking, what I want from political institutions, and from competitive politics, is what most people want from them: that they encourage public officials to always work toward advancing all their people’s welfare as best they can. Some variant of this position is espoused, implicitly or explicitly, by most major political philosophers (e.g. Aristotle 1984;

Bentham 1948; Hamilton, Madison, and Jay 1999; Locke 1960; Marx and Engels 1978; Mill

1991a; 1991b; Rawls 1971; Rousseau 1987a; 1987b). True, there is considerable controversy over what constitutes the people’s welfare; and welfare is usually not conceded to be the only worthy normative aim for politics. Still, most tend to agree that the people’s welfare is a worthy aim nevertheless, and that everything else being equal, it is better if public officials at least desire and try to advance their people’s welfare as best they can. The alternatives – where public officials are either indifferent to their people’s welfare, or work deliberately to harm them – seem decidedly inferior. Consequently, it seems uncontroversial to propose that, ceteris paribus, political institutions should encourage public officials to always work tirelessly toward advancing all their people’s welfare.

This normative proposition may be further distilled into two normative ideals concerning political institutions. The first – call it the ideal of universal benevolence – pertains to the clause that political institutions should encourage public officials to always work toward advancing all their people’s welfare as best they can. This ideal posits that, ceteris paribus, it is better if political institutions encourage public officials to be disposed benevolently toward each and every person under their jurisdiction – i.e. public officials should wish each of them to enjoy a better quality-of-life. The proposition is intended in a psychological sense. It concerns dispositions and intentions. Here, benevolence is juxtaposed against two other psychological states everyone knows: indifference and malice. Benevolence is the desire to benefit another; malice, the desire to harm; and indifference, the absence of any desire to harm or benefit.1 In its psychological sense, then, the ideal of universal benevolence simply proposes that political institutions should encourage public officials to desire to benefit each and every one of their people; they should be neither uninterested in any, nor desirous of harming any. Public officials should be well-intentioned and well-disposed toward all their people, regardless of how their good intentions and dispositions ultimately work out in terms of results. To be sure, it is not always practically possible for one to benefit everyone whom one desires to help – sometimes it is necessary to harm some to benefit others; and the road to hell is paved with good intentions, since people sometimes inadvertently harm those whom they mean to aid. All I ask, however, is that public officials at least wish for all their people to enjoy as good a life as possible, even if they cannot always do as much for each of them as they might desire, and even if they

1 More formally, A is disposed benevolently toward B if, in A’s mind, A’s utility increases when he or she perceives B’s quality-of-life to have improved and decreases when he or she perceives B’s quality-of-life to have declined. A is disposed indifferently toward B if, in A’s mind, A’s utility is unaffected by any perceptions about B’s quality-of-life. And A is disposed malevolently toward B if, in A’s mind, A’s utility decreases when he or she perceives B’s quality-of-life to have improved and increases when he or she perceives B’s quality-of-life to have declined.

sometimes inadvertently harm some; just as good parents wish for all their children to enjoy as good a life as possible even though they cannot always do as much for each of them all as they might desire – either because they must sometimes trade off one child’s interests against another’s, or because they sometimes inadvertently harm their children.

The second ideal – call it the ideal of state development – pertains to the clause that political institutions should encourage public officials to always work toward advancing all their people’s welfare as best they can. In every practical art, the best one can do is a matter of choice to some significant degree. Ability can be cultivated. It is always possible to learn and improve and do better, since in no practical art has anyone ever attained perfection. There is always room for a tinker here and a tinker there; and it is these tinkers that are ultimately responsible for the great advancements of humanity. Insofar as modern society is rich, it is because people have improved at producing goods and services; insofar as it is healthy, it is because people have improved at fighting disease; and insofar as it possesses beautiful works of art, it is because people have improved at expressing themselves. There is no reason why the state, or the public officials who control it, should not also be able to learn and improve over time – provided that public officials put their minds to it, and create and utilize new knowledge and new ideas. We should encourage them to do so with our political institutions. Hence, the ideal of state development posits that, ceteris paribus, it is better if political institutions encourage public officials to expend effort toward improving how well the state performs its functions and serves its people. If the state provides national defense, then public officials should seek to improve how effectively it does so; if the state provides public education, then public officials should seek to improve how effectively it does that; and so on. Again, of course, there is some controversy over what constitutes improved state performance. All I ask, however, is that in a psychological sense,

public officials at least desire for the state to perform better in terms of serving its people. The alternatives – where public officials deliberately try to ruin the state’s effectiveness at serving its people, or are indifferent toward it – seem decidedly inferior.

In other words, the ideal of universal benevolence concerns the extent to which public officials are willing to advance all their people’s welfare; and the ideal of state development concerns the extent to which they are able. Everything else being equal, political institutions should maximize both. I will not mount any very serious defense of this position. These twin ideals have already been defended extensively by political philosophers, and are too widely espoused for another discussion to be useful. Few, after all, argue that public officials should be indifferent toward their people, or malicious – or that it does not matter how they are disposed.

Few argue that public officials should be complacent ignoramuses – or that it does not matter whether they are or not. Universal benevolence and state development may not be the only ends worth pursuing in politics, but they are well worth pursuing nevertheless. On this virtually everyone agrees. Most readers will therefore readily see the appeal of the twin ideals, and they will find much of interest here.

The dissertation, then, is about political institutions and competitive politics and the extent to which the incentives they create for public officials are consistent with the ideals of universal benevolence and state development. The inquiry begins with politics as it exists today, at least in representative democracies and democratic federations; and ends with politics as it might be made to be. As we shall see, competitive politics today is significantly misaligned with the ideals of universal benevolence and state development; and it is possible to significantly improve this alignment with better-designed institutions.

There is a great deal to be said. The dissertation is organized into three parts. Part I is introductory. It is divided into two chapters. Chapter one introduces the subject, describes the project’s scope and methodology, and situates it within the academic literature. Chapter two establishes the general theoretical framework for studying competitive political institutions and processes upon which the entire dissertation rests. Next, Part II applies this general theory to competitive politics as it exists today in representative democracies and democratic federations.

It is divided into three chapters, each studying a major form of political competition: chapter three takes up electoral competition in representative democracies; chapter four, competition among states in democratic federations; and chapter five, competition among state and federal governments. It is concluded that all three forms of political competition are misaligned with the ideals of universal benevolence and state development. Part III then considers political institutions and competitive politics as they might be made to be. Chapter six proposes a new competitive political system: population-maximizing competitive federalism. Chapter seven explains how it improves upon representative democratic systems with respect to the ideals of universal benevolence and state development. Chapter eight, which also serves as an extended conclusion, then evaluates population-maximizing competitive federalism from a few alternate normative frames, including contractarianism, liberalism, popular sovereignty, and political equality. Here, too, there are very good reasons for favoring the new political system.

1.1 Scope

1.1.A. Institutions (Not Behavior)

This dissertation is about political institutions, not political behavior – and, more specifically, it is not a behavioral study of institutions in the sense that it does not infer propositions about

institutions from observations about patterns of behavior. Institutions influence behavior, so it is possible on occasion to fruitfully draw such inferences. Even so, the relationship between institutions and behavior can be complicated, which sometimes casts doubts on findings based on this methodology. The dissertation therefore avoids drawing any behavioral inferences about institutions, and instead studies institutions and institutional incentives directly. The approach will color the entire project – and help avoid three well-known problems with behavioral inferences that arise rather frequently in the scholarly literature (several problematic cases receive attention later):

First, behavior cannot always be straightforwardly attributed to institutions because institutional incentives are only one among the myriad (observable and unobservable) factors which motivate behavior, including norms, ideology, culture, religion, beliefs, dispositions, and so on. As such, it can be difficult to accurately distinguish behavior motivated by institutional incentives from behavior motivated by other considerations. Patterns of behavior need not always arise because of institutional encouragements and discouragements; they can equally well arise despite these encouragements and discouragements. It follows that behavior should not be attributed to institutions without reflection2 – and, as we shall later discuss at length, the reflection necessary for separating institutionally-motivated behavior from non-institutionally- motivated behavior can be extremely complicated and, in at least some cases, still inconclusive.3

2 E.g., we should not automatically attribute someone’s decision to not steal to legal penalties against theft. Other factors such as moral upbringing might be responsible.

3 Admittedly, social scientists have at their disposal numerous empirical techniques for attempting to separate institutional influences on behavior from non-institutional ones. Regardless, in many cases the resulting findings remain fraught because (i) not all cases can be clearly parsed, as we shall see later, (ii) the arrow of causality between institutions and behavior can run in both directions, and (iii) the confounding variables are legion.

Second, behavioral inferences about institutions cannot capture dormant institutional elements.4 Not every element of every institution influences behavior at every time: some can lay dormant for extended periods. Unintended legal loopholes exhibit this property – remaining unexploited until some clever lawyer notices and takes advantage. But whether some loophole is noticed or not, or acted upon or not, it is nevertheless always part of the laws. However, behavioral inferences about institutions must necessarily overlook dormant institutional elements of this sort, which again implies that such inferences cannot always paint an accurate picture of institutions.

Finally, third, we must remain mindful that the behavior elicited by institutions can vary with context: e.g. the social, cultural, and historical norms and expectations within which the institutions are embedded; how they are perceived, understood, and habituated; and the general social conditions within which everyone operates. Democratic institutions clearly exhibit such context-dependence: identical formal institutions produce markedly different patterns of political behavior and social outcomes when the sociopolitical context varies either across societies or across time within the same society. In observing how people respond to some institutional arrangement, we may only be observing how said institutions encourage and discourage in some specific context(s): a partial reflection of the institutions in behavior, and not the underlying character of the institutions themselves. The implication, again, is that behavioral inferences about institutions and institutional incentives must always be somewhat tenuous.

To avoid the above complications, this dissertation directly studies institutions and institutional incentives, and does not base its findings on inferences from behavioral observations. The main subject of inquiry will therefore be the encouragements and

4 For some historical instances of dormant institutions – albeit in a somewhat narrower sense than discussed here – see e.g. Levitsky and Murillo (2013); Thelen (1999); Zakharov (2011).

discouragements created by political institutions, and not the extent to which public officials follow these guidances at any particular time or in any particular case.

This is a fine conceptual line to walk. Reflect, once more, on laws penalizing theft. There is a conceptual difference between what they incentivize and how people respond to them. What they incentivize is fairly obvious: they discourage theft by giving people a reason to not steal. But how people respond to this incentive can vary; we can even imagine situations where laws against theft might be wholly ineffective at deterring a single thief. True, what an institution encourages or discourages is related to how people tend to respond to incentives; still, as enumerated above, institutional incentives are conceptually distinct from behavioral responses to them. The reasons a person is given to act one way or other are distinct from how he or she acts.

The dissertation’s focus will be on these reasons, and not on how people behave in response to them.

This approach will necessarily take us down a relatively theoretical path because institutional incentives are not a directly observable phenomenon. They are merely the reasons which institutions give to individuals to act one way or other. These reasons can only be theorized, inferred, or understood by tracing the logic of the institutions in question – i.e. by observing what the institutions reward and punish and theorizing how someone looking to earn rewards and avoid punishments is encouraged and discouraged to behave. These encouragement and discouragements are not the same as what the institution is, which is amenable to observation.

Nor are they the same as people’s behavior, which is likewise amenable to observation. No, institutional incentives are an intermediate theoretical construct, and they can only be theorized.

That being said, we should certainly remain cognizant of empirical observations concerning behavior. Institutional incentives do influence behavior, so it would be altogether too audacious

to advance a theory of institutions and institutional incentives that makes no reference whatsoever to observations about behavior, or that is completely inconsistent with them.

Consequently, as the dissertation proceeds, I will draw attention to the various ways in which the proposed institutional account is consistent with what we know about political behavior. In many cases, it will be possible to clearly discern the structure of political institutions and institutional incentives reflected in the behavior of public officials. In other cases, however, behavior will prove entirely inconclusive in terms of either confirming or falsifying the proposed institutional account, which is why, for our purposes, it will be more useful to theorize about institutions and institutional incentives directly instead of trying to read their properties among the tea leaves of political behavior.

1.1.B. Three Systems of Government

The institutions governing the state can, of course, take any number of forms. All the possibilities could not conceivably be examined here. The dissertation is therefore confined to three basic systems of government: representative electoral democracies, democratic federations, and population-maximizing competitive federations. The first two exist, and their study constitutes Part II of the dissertation. The third does not yet exist, and its study constitutes Part

III of the dissertation.

Other systems of government, contemporary, historical, or imagined, will not receive much attention, and only insofar as they bear relevance to understanding the above three. As indicated, the reason for this exclusion is not that other political systems are uninteresting – they are extremely interesting – but that their inclusion would stretch the project to the point of interminability. Consequently, the study of contemporary political institutions focuses on representative electoral democracies and democratic federations, since these strike me as the

most successful systems of government currently operative, the most common, the fastest growing in popularity, and the most praised. Studying them will therefore allow us to not only understand much of the political world as it stands today, but also provide the best point of departure from which to devise an even better system of political organization than those which currently exist. This better system of political organization – population-maximizing competitive federalism – is then taken up in Part III, which concerns politics as it might be made to be.

The three systems of government are defined below. Please note that the definitions for representative electoral democracies and democratic federations are not meant to encapsulate every system that may be so characterized; rather, they merely capture the basic characteristics of these political systems as they exist in our world today.5

Representative Electoral Democracy: A system of government which:

(i) grants legislative power to an assembly of men and women selected by means

of popular election, and

(ii) grants executive power to one or more individuals, likewise selected by means

of popular election, who may or may not also be members of said legislative

assembly.

Federation: An alliance of states which:

(i) possess autonomy in a number of areas of activity, and

5 E.g. elective monarchies are excluded from the category “representative electoral democracy” not because they may not in principle be so categorized, but because no representative electoral democracy today is actually an elective monarchy.

(ii) are subject to some shared alliance-wide laws that are routinely and coercively

enforced by a common federal government (as opposed to international treaties

whose enforcement is always doubtful).6

Democratic Federation: A federation in which the state and federal governments may be

characterized as representative democratic, in the sense that:

(i) each state’s legislative power is granted to an assembly of men and women

selected by means of popular election,

(ii) each state’s executive power is granted to one or more individuals, selected by

means of popular election, who may or may not also be members of the state

legislative assembly,

(iii) the federal government’s legislative power is granted to an assembly of men

and women selected by means of popular election, and

(iv) the federal government’s executive power is granted to one or more

individuals, selected by means of popular election, who may or may not also be

members of the federal legislative assembly.

Population-Maximizing Competitive Federation: A federation in which the state and

federal governments may be characterized as representative democratic, and:

(i) all individuals enjoy federation-wide freedom of movement (entry and exit),

(ii) a financial compensation scheme is used to generate interstate competition

over residents, and

6 Treaties usually operate by way of unanimity among the party states. Federations usually do not.

(iii) the federal government enforces human rights when they would be poorly

secured by the states; takes up responsibilities, such as foreign policy, best

handled nationally; and regulates interstate competition.

1.1.C. Legislative and Executive Politics

This dissertation will be restricted to legislative and executive politics: i.e. how political institutions, in the context of competitive politics, encourage and discourage legislators and executives to be disposed and to behave. Admittedly, the legislative and executive branches are not the only important pieces in the modern state’s apparatus – judiciaries, bureaucracies, militaries, etc. are extremely important as well. Even so, these other parts of the state will receive little attention here except insofar as they become relevant to the main discourse on legislative and executive politics – again, not because they are uninteresting, but because their inclusion would stretch the dissertation to the point of interminability. We will focus, therefore, on legislatures and executives, since their position atop the modern state’s decision-making apparatus tends to render their activities the most consequential for social and political outcomes.

1.1.D. Incumbents and Ruling Parties/Coalitions

Even within the context of legislative and executive politics, the dissertation mainly studies institutional incentives only as they apply to incumbent public officials and ruling parties and coalitions. Because our interest is in the relationship between political institutions, competitive politics, and the regulation of the state, it makes sense to limit the discussion to the people who actually control the state’s powers – i.e. who actually occupy public offices and control legislatures. Consequently, electoral candidates who lose will be mostly ignored except insofar as they influence the dispositions and activities of the candidates who win – i.e. incumbent representatives. Likewise, minority legislative parties not part of a majority coalition will also be

mostly ignored except insofar as they influence the dispositions and activities of the parties and coalitions who actually control legislatures – i.e. ruling parties and coalitions. In this way, then, the dissertation will be concerned only with the people who truly control the state’s powers, and not those who do not, or who do so in name alone.

1.2 Departures From Contemporary Political Theory

Political institutions are, of course, a prominent subject of study throughout political science, including the field of political theory. However, the general approach adopted by this dissertation differs substantially from those usually adopted by contemporary political theorists – although it is temperamentally quite similar to more classical approaches. Enumerated below are some key differences.

1.2.A. Arguments About Values vs. Arguments About Institutions

Political theorists have traditionally taken up two core intellectual tasks. First, to identify, conceptualize, articulate, and argue for various normative values, principles, and aims by which politics ought to abide – freedom, justice, peace, welfare, reason, equality, etc. Second, to devise and describe the political arrangements, institutions, and processes by which said normative values, principles, and aims may be best realized in the world – democracy, federalism, communism, etc. The interplay of these two intellectual tasks is readily discernible throughout the history of political thought. Plato proclaimed the normative supremacy of justice, and devised Kallipolis to realize it (Plato 2000). Hobbes prized peace above all, and defended monarchy as the best hope for maintaining it (Hobbes 1994). Rousseau feared domination, and espoused democracy to prevent it (Rousseau 1987a; 1987b). Kant desired world peace, and recommended its attainment via a global federation of republics (Kant 1991a). Mill sought equal

representation, and defended proportional representation as the mechanism for its achievement

(Mill 1991a). Marx and Engels wished human emancipation, and proposed communism as the solution (Marx 2011; Marx and Engels 1978). And so on and so forth. The pattern is clear: political theorists have traditionally been in the business of arguing about (i) the ends (values, principles, goals, etc.) that should be pursued in politics, and (ii) the means (institutions, processes, norms, etc.) by which these ends may be practically realized in the world. That is the field of political theory in a nutshell.

It is easy to see why these two aspects of political theory are necessarily intertwined: the political theory of values (ends) tends to eventually become the political theory of institutions

(means). Ends cannot be practically realized merely by being identified, articulated, or defended.

This is obviously true in political theory, since political theorists have been writing about the virtues of justice and freedom and welfare and so on for millennia, but every part of the world nevertheless remains mired in some degree or other of injustice, unfreedom, and impoverishment. We all know, for instance, that the murder of innocents is unjust, but that does not prevent innocents from being murdered all the same. Therefore, political theorists who care about bringing about some normatively good state of political affairs cannot remain content with only describing it or explaining why it should be favored; they must also investigate how the state of affairs in question might best be brought to fruition via the machinery of politics – of which formal political institutions are the most significant element.

In this respect, political theory is like most practical arts and sciences – i.e. arts and sciences engaged with bringing about some conditions in the world: it has both a normative aspect and a practical aspect. The normative aspect is concerned with what the art or science aims, or should aim, at achieving. The practical aspect is concerned with the realization of these normative aims.

Both are equally important. Take medicine, for instance. Its normative aspect concerns the value of health; the perspective being that it is better for people to be healthy rather than unhealthy. Its practical aspect – which constitutes the bulk of the field of medicine – concerns the development and use of therapeutic means for promoting health. For obvious reasons, medicine would be a poor field of study if it lacked either aspect – i.e. if it lacked a commitment to health, or if it only proclaimed this commitment but made no attempt to realize it. Or take aeronautics. Its normative aspect concerns the value of traversing the skies and space; the perspective being that it is better for people to be able to traverse so. Its practical aspect – which constitutes the bulk of the field of aeronautics – concerns the means by which people may actually traverse the skies and stars.

Again, aeronautics would be a poor field of study if it lacked either aspect – i.e. if it lacked a commitment to flight, or if it only proclaimed this commitment but made no attempt to realize it.

Political theory is no different. Its normative aspect concerns the values of freedom, justice, etc.; and its practical aspect concerns the means by which they may be realized in the world. True, questions about values tend to be much more complicated in politics than in most other subjects, which is why so much ink is spilt on them. But arguments about values must necessarily be only one half of political theory: it would be a relatively poor field of study if it only proclaimed how fine it would be to live in a world characterized by justice or freedom or peace or welfare or reason or equality or what have you, but then had nothing to say about how we might create this world.

These observations might strike the reader as fairly obvious, but they bear emphasis because contemporary political theory, especially in the postwar era, has taken a decided turn toward the normative aspect at the expense of the practical – its focus has largely been on defending and articulating various ideals of freedom, justice, equality, human rights, etc., and less on how these

ideals may be practically secured. There are exceptions, of course, and progress continues on the subject of institutions.7 But the bulk of scholarship in political theory has been more concerned with arguments about values. For laudable reasons, certainly: noble values needed reaffirmation in the postwar world, after all the atrocities. Still, as a consequence, political theory has started to lag in the area of institutions.

John Rawls’ A Theory of Justice – likely the most influential work of political theory from the latter half of the twentieth century – perfectly exemplifies this turn in the field. Rawls begins his treatise with the proclamation that “justice is the first virtue of social institutions… laws and institutions, no matter how efficient and well-arranged must be reformed or abolished if they are unjust” (Rawls 1971: 3). But then, although Rawls discusses extensively which laws may be characterized as just and unjust, he says virtually nothing about political institutions and how they might best be arranged to ensure that just laws are consistently enacted and maintained. This is a significant limitation of his otherwise brilliant work. Stating which laws are just or unjust is only half the battle, because knowing what laws are just or unjust hardly ensures that only just laws will be enacted; there is no necessity for anyone to act justly simply because they know what is just (e.g. Runciman 2012).

True, we can hardly expect politics to function well if everyone adopts the basest of values. It is possible for people to improve in character, so promoting noble values can certainly help improve social conditions – hence why political theorists have a long tradition of attempts at such ennoblement (e.g. Aristotle 2000; Cicero 1991; Kant 2012; Nietzsche 2002; 2006). But there are limits to what can be accomplished. Not everyone is a good person, let alone perfect, or likely to become so. Such is human nature, and we must be realistic about it. Like it or not, the

7 See, e.g., Dworkin 2000; Fishkin 1991; Guerrero 2014; Lessig 2011; Levison 2006; Nozick 1974; Saunders 2010; Waldron 2006; Weyl 2017.

people who wield political power will not always be nice no matter how much political theorists teach them to differentiate right from wrong, and no matter how much they try to cultivate virtues of character among them. As James Madison writes in Federalist 51:

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself (Hamilton, Madison, and Jay 1999).

People can improve in character, but they rarely if ever become angels. Nor is it clear, contra

Madison, that even angelic people could do without a well-regulated government – after all, good intentions would not end all disagreements (Kant 2012). Consequently, like Madison, we must not rely solely on virtues of character to regulate politics and the state, and should find additional means for ensuring that politics embodies noble values even in the hands of men and women as they normally are. This is where institutions enter the picture. And this is, essentially, where the current inquiry begins – with how government might be encouraged to live up to the noble value of tireless pursuit of the people’s welfare even without angels at the helm.

Consequently, given all the excellent work political theorists have already accomplished with articulating and defending noble values, this dissertation will spend little time arguing about values. It will simply take as established the values framing the investigation – universal benevolence and state development – and proceed from there. The importance of these values is almost universally acknowledged; and, in any case, there is little I could say in their defense that has not already been said by more capable scholars. Thus, although the twin ideals of universal benevolence and state development will underpin and animate all that follows, the arguments presented here will not be about these values, but about institutions – based on a commitment to said values, but focusing on how they may be realized in practice. Slightly unusual for

contemporary political theory, but, as noted, par for the course within the greater history of political thought.

1.2.B. Strategic Realism (Realpolitik)

Since one starting assumption here is that men and women are usually not angels, it follows naturally that the dissertation will be intimately involved with the subject of realpolitik – i.e. a politics in which public officials’ actions are not always motivated by ethical concerns, and in which practical, self-interested reasons play a significant part. After all, public officials do tend to have some interests of their own, and these interests do not always align with their people’s.

Consequently, the dissertation will consider how political institutions encourage and discourage men and women as they usually are, selfishness, weakness, immorality, and all, to be disposed and to behave. The approach will prove a significant point of departure with contemporary political theory.

True, realpolitik has not been completely neglected by political theorists, and the subject is currently experiencing something of a resurgence (e.g. Geuss 2008; Rossi and Sleat 2014;

Runciman 2012; 2016; Sleat 2014). Scholars understand realism in a number of ways, so let me clarify the sense in which this dissertation is realist, beginning with the senses in which it is not.

First, the claim here is not that political theorists should leave their ethical ideals at home, or at least put them on a leash, when evaluating politics, either because political actors do not actually adhere to them, or because they cannot be expected to on account of the practical demands of politics. It is not clear why this grim state of affairs, if accurate, should count as a point against ethical ideals instead of against politics – perhaps what needs alteration is not our ethical ideals but our politics. Second, the claim here is not that political actors should leave their ethical ideals at home, or at least put them on a leash, because those who refuse to do so will fail practically.

Perhaps they would. But the interest here is not in evaluating how individual political actors ought, speaking ethically, to act; the interest here is in how political institutions encourage and discourage them to act.8

Rather, the sense in which this dissertation is realist, and strategically realist, consists only in the following starting assumptions: (i) many individuals act self-interestedly, at others’ expense, on at least some occasions; (ii) the strategic demands made by political institutions sometimes encourage, even require, public officials to act inconsistently with how we should encourage them to behave – here, consistently with the ideals of universal benevolence and state development; and (iii) we should remain mindful of the above two facts – realistic about them – when evaluating and designing political institutions. That is all. No deeply cynical view of human nature beyond the uncontroversial claim that few, if any, treat the well-being of others as equivalent to their own, or consistently sacrifice their own welfare for that of others.9 No commitment to putting our ethical ideals on a leash. Just the usual Madisonian approach, when considering institutions, of not taking an overly-optimistic view of what human nature is or can be like. The idea is to not consider institutions in ideal circumstances and best-case scenarios, but in non-ideal circumstances and not-best-case scenarios. Anyone can design institutions that work well when public officials are selfless angels – virtually any political system suffices. The real skill lies in designing institutions that work well even in the hands of selfish devils. Like it or

8 It seems to me that the entire point of ethical ideals is that they are ideals; they are what we try to live up to. The fact that people do not, or cannot given the state of the world, is an unconvincing argument for slackening these ideals (e.g. Kant 2012). In the first case, the conclusion to draw would be that people are not always ethical, which is no surprise, and which is never an argument against having ethical standards; and in the second, that we should try to create a better world where people can more easily behave ethically.

9 How do I know this? Because we rarely, if ever, observe individuals reducing themselves to circumstances where marginal decreases in their own quality-of-life could no longer generate larger marginal improvements in the quality-of-life of another. See Singer 1972.

not, the latter will come to eventually occupy public offices in any political system, at least for a time. Might as well plan accordingly.10

The position is not novel. It basically boils down to not burying one’s head in the sand. But the approach bears emphasis because the field of political theory has started to lag in its realist study of politics on account of the increasing focus on arguments about values over arguments about institutions. In particular, political theorists have tended not to embrace the advances in game theory which have enabled non-theorists to develop increasingly sophisticated realist accounts of political institution; and these accounts are not consistent with how many political theorists understand political institutions. Democratic theorists, especially, continue to devise numerous accounts of how democracies conform with various normative ideals, but it is not clear that the realist functioning of democracies is always or even consistently compatible with these ideals (e.g. Dworkin 2000; Kolodny 2014a; 2014b; Sadurski 2008a; 2008b; for a similar point, see Beitz 1989).

This is a decidedly Machiavellian concern. Machiavelli’s writings are especially illuminating for our purposes because they articulate the idea that political virtue and moral virtue can be entirely at odds with each other – that in the real business of politics, the morally virtuous tend to fail politically and the politically virtuous tend to fail morally (Machiavelli 1996; 2001; see also

Aristotle 2000; Bueno de Mesquita et al 2003; Runciman 2016). Consider representatives democracies. They are meant to embody the moral virtue of political equality, which is said to be achieved by giving to each person one vote. But there is no necessity, once we account for realpolitik, that the democratic state, or the public officials occupying its offices, will treat

10 “Or if we prefer to return to Adam Smith’s illustration, we may acknowledge that our butcher and our baker are occasionally, and perhaps frequently, benevolent, but surely we should all feel more secure if the institutional structure is so organized as to make their self-interest coincident with our own rather than the opposite” (Brennan and Buchanan 1980: 16).

people equally. It can perfectly well be the case that public officials who treat everyone equally would be ousted from office – as used to be the case in the American South, where for many decades it was impossible to win office without embracing racism.11 In this case, the realpolitik of elections, meant to establish political equality, undermined this very ideal by requiring that public officials who sought political success treat people unequally. The political virtues necessary for success within the system ran counter to the moral virtues meant to be embodied by it. Similarly, consider that representative democracies are meant to be characterized by popular rule, which is said to be achieved via the establishment of elections. But we can readily imagine scenarios where public officials who actually do what their people want will dig their own graves because the ensuing disastrous social consequences will result in ouster from office.

Here, again, the realpolitik of elections, meant to establish popular rule, undermines this ideal by requiring that public officials who seek political success deny their people’s wishes. Once more, the political virtues necessary for operating successfully within the political system – the system’s realist strategic demands – run counter to the moral virtues meant to be embodied by it.

Hence, just because a political system is meant to embody some set of values does not mean that these values will survive its realpolitik, and be reflected in the dispositions, decisions, and activities of public officials and, through them, the state.

Unfortunately, contemporary political theorists, and especially democratic theorists, have mostly ignored this potential tension between moral and political virtue. There are exceptions, of course, but as noted, political theory has fallen a little behind other subfields on the realist study of institutions. Perhaps this is because contemporary political theorists tend to focus on democratic politics, but in democratic politics realpolitik tends to be cloaked. Democratic

11 Arguably still true.

politicians rarely admit in public to being concerned with realpolitik, which creates the illusion that realpolitik does not reign. They speak only of the undying love of country which awakens them each morning; the responsibility to lead they have felt since the cradle; and the passion for public service that blazes so hot in their hearts that voters could fry eggs on their chests. We should obviously not take such cheap talk seriously. What else would a democratic realpolitik look like? Good luck running on the self-interest platform, where you openly admit that all you seek is personal advancement. Good luck, likewise, running on the Schumpeterian platform, where you openly proclaim that any benefits to the public arising from your candidacy and time in office will be entirely incidental to your personal struggle for power (Schumpeter 1942). One would have to be a masochist to campaign on a realist platforms – from which it follows that the patriotic and selfless proclamations of politicians mean nothing one way or other. Angels and devils alike should be expected to mouth the same words.

They say that life used to be simpler in the old days. I cannot comment on the claim’s general veracity, but it is certainly true for realpolitik. In the politics of monarchies, rulers held power by virtue of right – granted by God, heredity, or might. Because power was a matter of right and not subject to being earned, there was little need to conceal the realpolitik involved in its exercise.

Kings and queens would claim vast swaths of the state’s territory as crownlands and private property, its coffers as personal bank accounts, and the people as their subjects. Enter democratic politics. Everything becomes complicated. For a time, of course, democratic realpolitik remained unconcealed, as it still is in some countries: ballots were stuffed, rivals were assassinated, pockets were lined. But these activities are increasingly frowned upon among developed democracies, so realpolitik has become much more complicated. Admitting to the naked pursuit

of self-interest is no longer very politically viable. Now, realpolitik must be powdered, perfumed, and dressed up before it leaves the house. The simple old days are over.

We should therefore take realpolitik very seriously even if it is never part of public discourse in democratic societies today. And we should design political institutions to account for it; and ensure that they will function well in the hands not only of angels but also strategically realist actors. This, as will be argued, modern democracies and federations do not accomplish very well.

And on this front, political institutions can be significantly improved in ways that contemporary political theorists have not noticed.

1.2.C. A Developmental Political Epistemology

The dissertation will also take a slightly different approach to political epistemology from the ones usually employed by contemporary political theorists. Their primary focus tends to be on epistemic democratic theory; and the main purpose of their arguments to demonstrate that decision-making by “the many” in democratic systems may be expected to prove epistemically superior to decision-making by “the few” in monarchies, aristocracies, technocracies, etc. (e.g.

Anderson 2006; Bradley and Thompson 2012; Hong and Page 2003; Landemore 2013; see also

Austen-Smith and Banks 1996). The approach will not suffice for our purposes; nor will many of the usual arguments advanced by epistemic democrats, framed as they often are by way of these comparisons (particular cases receive attention later). All the political systems under scrutiny in this dissertation involve, in some sense or other, decision-making by the many, so comparisons against monarchies, aristocracies, and technocracies are not illuminating for the inquiry. The question of interest here is not whether the many can or do make better decisions than the few, but how decision-making by the many may be best (or at least better) organized. After all, presumably not every system involving decision-making by the many functions identically or

equally well. One system might rely on my knowledge of politics and my doctor’s knowledge of medicine; another on my knowledge of medicine and my doctor’s knowledge of politics. One system might comprise many ignorant decision-makers; another many knowledgeable decision- makers. One system might encourage innovation; another might not. And so on. We need different tools from those developed by epistemic democrats to analyze these details of epistemic organization and performance because we are not considering the many against the few, but the many organized in different ways. We need to know how different systems of collective decision-making may be epistemically organized, and the tools usually deployed by epistemic democrats do not suffice for the purpose.

Nor will it suffice, as epistemic democrats sometimes implicitly or explicitly do, to frame the inquiry in terms of “correct” answers or “wisdom.” The approach usually emanates from

Condorcet’s (2014) jury theorem and its variants and derivatives (e.g. List and Goodin 2001; see also Austen-Smith and Banks 1996). It is debatable whether the resulting accounts accurately describe politics (rather than juries). In the context of a jury, it is conceptually clear that there is always a correct answer and an incorrect one: a jury which finds the guilty to be guilty or the innocent to be innocent arrives at the correct answer, and a jury which finds the guilty to be innocent or the innocent to be guilty arrives at the incorrect answer. What is the equivalent in politics? It seems self-evident that most practical political questions do not admit of ultimately correct answers – or, at any rate, nobody ever manages to discover them. Nobody has ever achieved perfection in any practical art, and everything people do can be improved. What we can achieve, then, in practical politics as in every practical realm, are better answers, not “correct” ones. It would be rather absurd to suggest, for instance, that one has arrived at the “correct” educational policy; or the “correct” system of financial regulation; or the “correct”

environmental regime. If by “correct” is meant that the policy cannot be improved, then the likelihood of the statement being true is essentially zero. And if by “correct” is meant that the policy can still be improved, then it is not clear in what sense the policy is “correct,” and we would need further conceptual tools to epistemically evaluate it.

It is sometimes suggested that in the context of democratic politics, the political system produces the “correct” answer insofar as it selects the best among some available set of alternatives – for instance, an election produces the “correct” answer if the “best” candidate wins

(e.g. Landemore 2013; List and Goodin 2001; see also Austen-Smith and Banks 1996). This approach is also insufficient for evaluating the epistemic performance of political systems. Just because voters always select the best among the available candidates does not necessitate that the candidates are any good; voters might just be selecting the lesser evil (or dunce). And even if we grant that representative democracies always select candidates who are good or wise or some such, this tells us nothing about how these representatives are then institutionally encouraged to behave. Do democratic institutions encourage them to perform yoga at the beach? To focus on campaigning? To dupe voters? To stuff ballots? To get into petty arguments on Twitter? Or do they encourage them to devote time and effort toward cultivating their knowledge and understanding of politics so as to enact better policies, better develop the state, and better serve the people? It cannot automatically be assumed that representative democracies are doing the last, or consistently, even if they always select the most capable candidates. A university might excel at selecting the best applicants but then teach them only falsehoods and delusions. A sports team might excel at drafting the best prospects but then fail to develop their talents. A representative democracy might select the best representatives but then not encourage them to use their knowledge and ideas for the people’s welfare, or to develop new knowledge and ideas.

All this remains possible even if we attribute to the democratic people some mythical ability to always select the most capable electoral candidates.12

In light of these difficulties, the dissertation will instead take a developmental approach to political epistemology which better aligns with its focus on institutional incentives. This developmental approach ignores comparisons between the many and the few, and does not ask whether any political system produces “correct” answers. Rather, the emphasis is on institutions and institutional incentives and the extent to which they encourage governments – ruling parties and their members – to devote time, effort, and resources toward producing better answers to questions of practical politics: better systems of public education, environmental regulation, economic development, and so on. Which is the essence of the ideal of state development: practically-oriented learning aimed at improving the state’s performance in its myriad areas of activity.

In this perspective, learning, improvement, and development are no accident, but almost always the result of conscious, deliberate, directed effort aimed at becoming better in some realm. Everyday experience demonstrates the accuracy of this position. Have you ever developed expertise in any area without effort in that area or some cognate? Of course not. There are no epistemic free lunches where wisdom drops on the unwitting like manna from the skies. Past the basics, knowledge, skill, and creativity are never accidental, always cultivated.13 In this dissertation’s political epistemology, we will treat them as if they are. To do so, we will directly assess whether and how political institutions encourage or discourage investments of time, effort, and resources toward learning and improvement (and especially the creation and realization of new political ideas); and then use the resulting assessments to evaluate the extent to which

12 Itself debatable.

different political systems may be expected to perform epistemically, and to yield epistemic development.

1.3 Departures From Contemporary Research on Political Competition

Political institutions and competitive politics have also received considerable attention outside the field of political theory, especially in the footsteps of developments in game theory over the last few decades. Research on the subject now spans all subfields of political science as well as parts of economics. We cannot reasonably ignore this larger body of work and focus solely on studies in political theory. However, the general approach adopted here is notably different from those normally employed by scholars, which will in turn lead to markedly divergent conclusions. The differences will become clearer as the dissertation builds its own account, but below are a few key points of departure central to the project.

1.3.A. No Arguments From Analogy

It is a well-known historical fact that the groundwork for contemporary theories of political competition was initially laid by economists (see esp. Becker 1958; Brennan and Buchanan

1980; Downs 1957; Hotelling 1929; Schumpeter 1942; Stigler 1972; Tiebout 1956; Wittman

1995; see Barry 1975 for further intellectual history). Unsurprisingly, work in this paradigm tends to take what might be termed an “economic approach” to political science, in that it deploys insights from economics to study politics. A recurring theme in this scholarship is the claim that political competition in democracies and democratic federations is by-and-large conceptually analogous with market competition.14 On the basis of this premise, it is then usually argued that competition in these political systems may be expected to produce the same salutary

13 Excepting perhaps the rare natural genius.

social consequences as those predicted by economic theory in well-functioning competitive markets – welfare maximization, pareto efficiency, productive efficiency, etc. This intellectual tradition has produced many useful insights such as the median voter theorem, some of which will prove invaluable for our purposes. Nevertheless, politics and markets are also disanalogous in a number of respects, which raises the possibility that the economic approach to political competition sometimes misconstrues the character of politics and arrives at either specious or only incidentally-accurate conclusions. Other scholars have raised the same concern (Barry

1975; Bartolini 1999; 2000; Wagner and Yazigi 2014). Consequently, to avoid the pitfalls of analogous reasoning, this dissertation constructs its account of political competition without reliance on any analogies whatsoever.

Generally speaking, arguments from analogy are by themselves always suspect because they are logically invalid: their conclusions do not follow necessarily from their premises. Insofar as arguments from analogy arrive at sound conclusions, they do so either incidentally or because they are complemented by some secondary, non-analogous rationale (in which case it is not the analogy which justifies the conclusion). To see why, consider the basic structure of any pure argument from analogy:

Premise 1: A and B are analogous (i.e. similar).

Premise 2: A possesses Property X.

Conclusion: B possesses Property X.

The argument is invalid. The conclusion does not follow necessarily from the premises. It follows only if A and B are analogous with respect to Property X – i.e. if they both possess it.

14 This analogy makes an appearance in most of the seminal works cited above, as well as others building upon them.

Cats are analogous to tigers, but only one makes a good pet.15 For the argument from analogy to be valid, both A and B must first be demonstrated to possess Property X. However, if B is demonstrated to possesses Property X, then the analogy with A becomes a useless appendage: the conclusion already follows tautologically (see also Barry 1975). It is irrelevant whether A, too, possesses the same property. As a result, from a methodological perspective, avoiding analogies is always the superior approach because it decreases the likelihood of reading too much about the character of one thing in the character of others.

We therefore possess good prima facie reasons for skepticism over analogizing politics and markets. This skepticism should be reinforced by substantive considerations – namely, that although competition is certainly a critical element in both markets and politics, this observation tells us nothing about how far they are alike beyond the mere fact of competition. That they both involve competition is true but superficial (Barry 1975; Wagner and Yazigi 2014). What matters is not just whether there is competition in both contexts, but what form it takes.

Consider sports for a moment. Most sports are inherently competitive, but they are not all the same. Football is not boxing, which is not golf. They differ in their objectives, rules, and scoring

– which is what determines the particular character of each sport and how it is played. The different competitive dynamics of different sports make different demands on players. Hence, quarterbacks work on passing accuracy so they can move the offense; boxers on elusiveness so they can evade punches; and golfers on core strength so they can take leisurely strolls in the sun.

That all these sports are competitive tells us very little about what they are like, how they are played, and how they influence the behavior of athletes. If you asked me what football is like and

I responded that it is competitive, this would in fact tell you next to nothing about the sport. It is

15 The tiger, obviously.

not the fact of competition, but how competition is structured, which makes each sport what it is

(see Wagner and Yazigi 2014 for a similar discussion).

Likewise, merely noting the existence of competition in politics is also superficial. For example, it is sometimes tempting to define electoral democracies as competitive political systems.16 They are, but has politics ever not been competitive? As we discussed at the very outset, all systems of government are competitive in some fashion or other. What differentiates them is not that some are competitive where others are not: they are all competitive, but competition is structured differently in each. And here the dissimilarities across political systems are sufficiently well known that scholars generally do not analogize them. Not all competitive processes are sufficiently alike to transplant conclusions from one to the other. Everyone implicitly knows this, as evidenced by the fact that although scholars frequently analogize political competition with market competition, no one analogizes it with golf. No one claims that golf has much to teach about politics, or that the golf analogy bears close examination.17 Golf is obviously very different even from football or boxing, let alone elections or war, so it makes little sense to study golf to glean insights about politics: the differences are both plain and stark.

Nevertheless, for some reason, when it comes to markets and politics, scholars still often treat them as self-evidently analogous – and they do so despite the extensive differences between the two:

16 See Bartolini 1999, 2000 for further commentary on the conflation of democracy and competition.

17 With the exception of Michael Sandel (2009), who does glean insight into politics from observations about golf. Which goes to show how some people can find wisdom even in extremely unlikely places. Still, I expect Sandel would concede that the usefulness of golf for understanding politics is at best limited (which is presumably why he devotes only a few pages to it).

Politics concerns collective action; markets, individual (unilateral) action. Politics is organized around the state; markets, around the firm. Politics is inherently coercive; markets are not. Politics offers little possibility for exit; markets do. Politics pertains to public goods; markets, to private goods. Politics is centralized; markets are decentralized. Politics, at least in democratic systems, revolves around votes; markets, around money. Politics and markets address different problems in different contexts. They create and utilize knowledge differently. They divide labor differently. And so on and so forth. It should therefore come as little surprise – and this will become increasingly apparent as the dissertation proceeds – that theories of competition developed to study firm behavior in markets should not be transplanted to politics. This dissertation will diligently avoid doing so.

That being said, we will still speak on occasion about competition in markets – and also in sports. We did so above. However, readers should never interpret these discussions as arguments from analogy – i.e. arguments that infer propositions about politics from facts about markets or sports. I wholeheartedly deny that politics is analogous with either. Consequently, in many cases, we will be contemplating differences, not similarities; and even discussions of similarities are always only meant to be illustrative: they only instantiate in different contexts the underlying principles which govern competitive phenomena generally. These discussions are never inferential: they never derive claims about politics from claims about markets or sports (or vice versa). Thus, for instance, when it was stated above that in both sports and politics it is uninformative to note just the fact of competition and not its form or structure, I was merely illustrating the same problem in two different situations, not claiming that the issue arises in politics because it arises in sports, or that it can be inferred in politics from its existence in sports.

Illustration, not inference. In this way, despite occasional forays into non-political competitive

processes, the theory of politics provided here does not rely on any analogies, and its conclusions in no way depend upon facts about markets or sports. These are included only to aid the reader in grasping the general concepts and ideas that will be used to analyze political competition.18

1.3.B. Social Relations vs. Social Outcomes

The dissertation will also draw a sharp conceptual distinction between the social relation of competition and the social outcomes to which it leads. This line is frequently blurred in the scholarly literature. Current theories of political competition predict various social outcomes which may be expected to arise with it: e.g. enhanced social welfare, productive efficiency, population-sorting, etc. But the literature then sometimes conflates what competition is – a kind of social relationship – with its predicted social consequences. Several cases will receive attention as the dissertation proceeds. For now, let’s take Stefano Bartolini’s (1999; 2000)

“Collusion, Competition, and Democracy” as exemplar. Bartolini’s work is laudable in that it carefully avoids analogies; and he even defines competition as “a social relationship characterized by a system of interaction among consciously rival actors” (1999: 438). But then, in his further conceptualization of competition and its differences with other kinds of social relations, Bartolini bundles what competition is with what it is thought to result in:

The final and most distinctive feature of competition concerns its unintended consequences on third parties…. Competition is different [from other social relations] because it is widely held that the unintended consequences of competitive enterprises are beneficial to third parties which are indirectly affected by them. The basic tenet is that the net result of competition among individuals… produces an overall result which is advantageous to ‘third parties’…. Thus competition is legitimized from the collective point of view through its capacity to overcome, and indeed to deny, the tension between subjective and collectivist goals…. The example of the global beneficial effects of competitive interaction could be multiplied in almost all fields of human interaction (Bartolini 1999: 440-442).

18 In principle, I could be completely wrong about markets and sports and still right about politics (or vice versa – although hopefully not).

It is prima facie odd to conceptualize competition in terms of its alleged social consequences, rather than what it is: a kind of social relation, interaction, or process. Conceptualizing social relations in terms of consequences seems a straightforward category mistake – which is why social relations are usually conceptualized by the nature of the relation and not what it engenders.

Take cooperation. Nobody conceptualizes it by its consequences – perhaps division of labor or welfare enhancement. Instead, cooperation is conceptualized by what it is: a relationship where individuals or groups act together to attain some shared end. Or take marriage. It is usually not conceptualized by its consequences – perhaps marital bliss or offspring – but by what it is: a certain kind of companionship governed by particular rights and responsibilities. Or take employment. It is not defined by what it produces – goods and services, or stress – but by what it is: a relationship where one person pays another to work. Prima facie, it makes sense that competition should be treated similarly, and conceptualized solely as a relationship – specifically, one where individuals or groups act against each other with a view to attaining incompatible ends. Its predicted consequences for society should be left out of the basic concept.

This is, in any case, the only appropriate methodology given the dissertation’s subject matter.

The dissertation’s entire purpose is to investigate how various existing and potential competitive political systems may be expected to influence social outcomes, so any conceptual assumptions about the social consequences of competition would beg the question. As we shall see, such question-begging thoroughly plagues the scholarly literature. It will not plague this dissertation, because we will begin by assuming nothing about what competition results in. Instead, we will start at the beginning, with what competition is and when it can be said to occur; as well as the core elements which structure various competitive relations. Next, once competitive relationships and their structure have been clearly conceptualized, we will consider how they may be expected

to influence competitors’ actions in different contexts. Then we will derive, not assume, when competition can be expected to produce what social outcomes. And on this last front, the answer will turn out much more ambiguous than the optimistic claims advanced by much of the literature: insofar as its social consequences are concerned, competition should be seen as an inherently double-edged process that can both greatly benefit and greatly harm society. But more on this later. For now, the point to bear in mind is that the dissertation’s conclusions about the social consequences of various systems of political competition will be derived, not assumed.

1.3.C. No Normative Assumptions About Competition

Relatedly, the dissertation will also make no normative assumptions about competitive relations. The scholarly literature tends to sometimes do so when it bundles normative assessments into the basic conceptualization of competition. Bartolini, for instance, not only conceptualizes competition in terms of social consequences, but also further states that these consequences are in some sense legitimate or good. Again, methodologically, this will not do.

Normative evaluations, like social consequences, seem entirely external to the underlying social relation of competition: whether we think competition is good or bad or some such should not enter into what it is. This is how social relations are normally treated: cooperation is cooperation, employment is employment, and marriage is marriage regardless of whether we consider them to be good or bad. In addition, again, given the dissertation’s aims, it would be wholly inappropriate to conceptualize competition normatively. The goal is to investigate what normative stance we should adopt toward different forms of political competition, so any normative evaluations built into the conceptualization of competition would beg the question.

The dissertation will therefore adopt a normatively-neutral definition of competition as a kind of social relation, interaction, or process, and leave out its social consequences or normative

evaluations of these. The normative evaluations will come later, once we better understand competition, not at the beginning.

1.3.D. Appearances vs. Reality

In An Introduction to Wittgenstein’s Tractatus, G. E. M. Anscombe recounts the following encounter with the great philosopher:

He once greeted me with the question: ‘Why do people say that it was natural to think that the sun went round the earth rather than that the earth turned on its axis?’ I replied: ‘I suppose, because it looked as if the sun went round the earth.’ ‘Well,’ he asked, ‘what would it have looked like if it had looked as if the earth turned on its axis?’… My reply was to hold out my hands with the palms upward, and raise them from my knees in a circular sweep, at the same time leaning backward and assuming a dizzy expression. ‘Exactly!’ he said. (Anscombe 1959: 151).

As Wittgenstein (1961) always reminds us, neither appearances nor our interpretations of them are necessarily reality itself – not even when they strike with the immediacy and urgency of absolute truth. This fact will prove critical in this dissertation. We have already discussed one context in which appearances may deceive: namely, that a democratic politics driven by realpolitik might in many ways be indistinguishable from one not so driven. More importantly, though, the very phenomenon of competition is sometimes characterized by deceptive appearances because people sometimes appear for all intents and purposes to be competing even though they decidedly are not. Call it pseudo-competition. We will return to it over and over again.

For now, suffice to say that pseudo-competition is very much a real phenomenon. Its paradigmatic case is match-fixing in sporting contests (when a player or team throws a game in exchange for money). Match-fixing is virtually impossible to detect by only observing players’ actions on the field, unless they do something completely egregious. Did the player drop the ball because even professional athletes sometimes make mistakes, or was it deliberate? One cannot

tell from only observing the drop. But if the drop was deliberate – if the player was throwing the game – then he or she would be implicitly cooperating with the other team, not competing with them. They would all be on the same side, not working to achieve incompatible ends. In this scenario, it would still appear as if there was competition, but the appearance would be deceptive.

Pseudo-competition, then, is a real phenomenon. To my knowledge, it has been completely ignored by social scientists. This dissertation aims to change this state of affairs. Although empirically distinguishing competition and pseudo-competition is usually extremely difficult,19 we can still conceptually and theoretically separate the two. And this distinction will become increasingly critical as the dissertation proceeds because, in at least some cases, what passes in modern politics for competition is most likely only pseudo-competition – a possibility which casts doubts on a substantial proportion of scholarly work on the subject.

1.3.E. A Theory From First Principles

The essence of all these observations is this: we need a general theory of political competition from first principles – one that does not rely on analogies, uses parsimonious assumptions and concepts, distinguishes competitive and pseudo-competitive processes, and separates competition from its social consequences and people’s normative evaluations of these.

This dissertation provides such a theory. The next chapter lays out the basic analytical framework at its foundation, which delineates what is (and is not) competition; when it occurs

(and when not); what distinguishes different competitive processes; and which factors influence the social consequences of competition. Then, once the analytical framework is established, the remainder of the dissertation will use it to analyze various forms of political competition.

19 Any fan of cricket who witnessed the match-fixing scandals can attest.

In this promised theory from first principles, the devil will be in the details. As noted, there is a tendency in the scholarly literature to focus on the fact of competition rather than the form it takes. But there is a difference between saying that “Process A is competitive” and that “Process

A is competitive, with the competition characterized by Properties X, Y, and Z.” Constructing a theory from first principles will allow us to consistently attain this second level of depth, which will make the dissertation more complex and detail-oriented than existing research on political competition. This last claim, however, is more readily demonstrated by doing rather than arguing. It is time, therefore, to begin in earnest. From scratch.

CHAPTER TWO: ANALYTICAL FRAMEWORK

Competition is a social relation in which individuals or groups act against each other to attain logically or practically incompatible ends. The analytical framework being deployed to study it is fairly straightforward, and mostly just a systematization of common sense. It begins with what a competitive relation is and when it obtains; and then outlines various factors which structure competition and differentiate, for instance, competition in golf from competition in football, war, markets, or elections. In doing so, the framework develops the basic concepts which will enable us to systematically distinguish competitive, non-competitive, and pseudo-competitive relations; and which will serve as the main building blocks in the subsequent account of competitive political institutions and incentives.

It should be emphasized here that the analytical framework, and the dissertation more generally, are in equal parts about competition and about competitive discipline. Competition is always characterized by mutual discipline because competitors oppose each other. It is more difficult to attain one’s goals when opposed than when unopposed,20 so competition encourages competitors to strive harder than they otherwise would, and elicits from them effort in ways that other social relations do not (e.g. Kant 1991b; Krugman 1979; Schumpeter 1942). But not every competitive relation disciplines identically. A friendly game of golf is not war, nor are golfers disciplined as soldiers are. Consequently, we must study not only the fact that competition disciplines, which everyone knows, but also how it disciplines in different contexts, which is often only vaguely understood, and about which are advanced numerous unfounded assumptions

– e.g., as discussed, that competition generally disciplines so as to enhance social welfare. The analytical framework provided here will allow us to tread more systematically.

2.1 Four Necessary (and Sufficient) Conditions for Competition

We have defined competitive relations as scenarios where individuals or groups act against each other to attain logically or practically incompatible ends. By this definition, all competitive relations possess the following characteristics: (i) action, (ii) against one another, and (iii) with a view to attaining incompatible ends. For all three characteristics to manifest in a social relation, four necessary (and jointly sufficient) conditions must be satisfied:

2.1.A. Rivalry (Incompatible Preferences)

Every competitive relation begins with individuals or groups experiencing rivalry, defined as a situation where they wish to satisfy mutually incompatible preferences – i.e. preferences that cannot be simultaneously satisfied (e.g. Bartolini 1999; 2000).21 Without such incompatible preferences, everyone could be satisfied at the same time and there would be nothing over which to compete against each other. Thus, at the heart of every competitive relation must lie some source of rivalry, some set of incompatible preferences, that motivates the competitors and gives them something to compete over.

For example, sports teams in the same league experience rivalry over winning the championship: they all wish to lift the trophy, but cannot simultaneously. Armies at war experience rivalry over winning battles: they all wish to vanquish each other, but cannot simultaneously. Firms in the same market experience rivalry over profits: they all wish to capitalize all consumer surplus, but cannot simultaneously. Candidates in the same election experience rivalry over the office being allocated: they all wish to occupy it, but cannot simultaneously. And so on and so forth. Every competitive relation everywhere begins with some rivalrous preferences that motivate the competitors to struggle against one another.

20 Excepting opposition by a confederacy of dunces who, in opposing, only manage to aid.

2.1.B. Salience

Incompatible preferences are the first step toward a competitive relation. Action oriented toward satisfying them is the second. One cannot be said to be competing merely for sitting on one’s hands. I do not compete for the presidency just because I wish to occupy the Oval Office; nor do I compete for the Super Bowl just because I daydream about the Lombardi Trophy. To compete, I must, in the first case, put my name on the ballot, and in the second, play professional football. Competition requires action.

Action, in turn, requires both willingness and ability to act, which gives us two further necessary conditions for competition. The first is the salience condition, which concerns the willingness to act. For any set of rivalrous preferences, it asks whether the rivals consider these preferences sufficiently important to be willing to act to satisfy them. The answer separates idle preferences from action-oriented ones. My preference for winning the Super Bowl is idle if I refuse to leave the couch; and my preference for winning the presidency is idle if I refuse to put my name on the ballot. To go beyond idleness, preferences must be sufficiently important, in rivals’ minds, for them to be ready to act upon them. The salience condition captures this requirement.

2.1.C. Strategy Determinacy

The strategy determinacy condition concerns rivals’ ability to act to satisfy their incompatible preferences (e.g. Strom 1992). Willingness is insufficient for action if one’s actions do not affect the prospects of attaining one’s goals. Suppose Ann and Betty both desire to be the first person to step onto Pluto – incompatible preferences, since they cannot both be first.

Suppose also that each cares sufficiently to be willing to act to get to Pluto. Even so, if nothing

21 All competitors are rivals in the sense that whatever ends they work to attain cannot simultaneously obtain.

either does could take her to Pluto, then neither possesses sufficient reasons to act on her rivalrous preferences. The strategy determinacy condition is not satisfied because Ann and

Betty’s strategic actions do not determine their outcomes.

Hence, for rivalry to translate to action, it is necessary that rivals be able to influence their prospects of attaining their goals (or at least they must perceive this to be the case). In most instances, the requirement is easily satisfied because people’s actions usually exert some influence, however small, on the satisfaction of their preferences. But not always. In sports, for instance, a team that has been eliminated from playoffs can no longer influence its prospects for winning the championship. We say, therefore, that it no longer competes for the championship.

In markets, firms separated by embargo cannot influence their prospects for winning each other’s customers. We say, therefore, that they do not compete against each other over customers. And in politics, individuals in a lottocracy cannot legally influence their prospects for winning office.

We say, therefore, that in lottocracies individuals do not compete over offices.22 Competition requires rivals to act to satisfying their mutually incompatible preferences. When they cannot do so, they also cannot compete.

2.1.D. Relative Performance

Finally, in competitive relations, rivals act against each other. If Ann works to attain

Outcome A and Betty Outcome B, and if A and B are incompatible – i.e. if they cannot simultaneously obtain – then Ann implicitly works to attain Outcome Not B and Betty implicitly works to attain Outcome Not A. They act against each other because what one tries to achieve the other opposes and tries to prevent (see also Chowdhury and Gürtler 2015).

22 Obviously, there are illegal options for influencing one’s odds of winning office in a lottocracy, so strategy determinacy is only null with respect to legal actions.

When individuals or groups act, thus, in mutual opposition, then the eventual outcome – whose preferences are satisfied and whose not – is determined not by their individual actions, but by their actions relative to each other. Whether Ann wins a tug-of-war against Betty depends not on how well she pulls at the rope in absolute terms, but how well compared to Betty. Whether a firm earns profits depends not on the absolute quality and prices of its products, but their quality and prices relative to substitutes offered by competing firms. Whether an electoral candidate wins office depends not on how much he or she is liked or disliked by voters in absolute terms, but how liked or disliked compared to other candidates. Competitive outcomes always depend on how competitors perform relative to each other.23

Emphasis on relative performance is the hallmark of competition. It is also responsible for the phenomenon of competitive discipline. Competitors must care about their performance relative to each other, which elicits effort from them that they would otherwise not expend (e.g.

Kant 1991b; Krugman 1979; Schumpeter 1942). If Ann just enjoys riding a bike around France, then she has no very pressing reason to constantly learn and improve past the point of proficiency; but if Ann rides competitively in the Tour de France, then she has very good reasons to learn and improve beyond proficiency because the goal is not only to ride, but to ride better than others who, in turn, seek to ride better than her. Without the competitive concern with relative performance, Ann need not worry about how she compares to others; but when she competes and becomes concerned with relative performance, then she acquires a new incentive to learn and improve and do better, lest she be outdone.

23 Note that competitors need not engage in the same actions for us to meaningfully say that competitive outcomes depend on their relative performance. E.g., in baseball, the pitcher and batter do very different things, but who succeeds still depends on how they perform, at throwing and swinging respectively, relative to each other.

Competition thus encourages competitors to do more, and to do better (e.g. Kant 1991b;

Krugman 1979; Schumpeter 1942; see also Hayek 1945; Hunt 2000 for more). The opposition they face encourages them to constantly cultivate the proficiencies and attributes that they expect will help them outdo their opponents; to better understand the game and its environment; to imitate each other’s successes and avoid each other’s mistakes; and to develop new ideas and new stratagems. Competition disciplines competitors. And in doing so, it produces precisely the kind of incentives for conscious learning and improvement that this dissertation is eyeing with its developmental epistemology.24

2.2 Competitive Structure

The above four conditions must be satisfied for all competitive relations, and so are common to them all. But not every competitive relation is the same – football is not boxing, golf, war, or an election – so we must identify not only what is common to all competitive relations but also what varies across them. Provided here are eight concepts that capture the structure of different competitive relations. These concepts are not exhaustive, since the list would be endless; but they are sufficiently broad to encapsulate the major elements of competitive structure that endow different competitive relations with their distinct characters.

24 Of course, as Joseph Schumpeter writes, competition “acts not only when in being but also when it is merely an ever-present threat…. [that] disciplines before it attacks” (1942: 85). Still, as he acknowledges, actual competitors are different from hypothetical ones. Hypotheses about potential competitors are necessarily limited by one’s own imagination, and not based – as an actual competitor’s actions are – on countless hours devoted to undermining one’s efforts at every turn. It is also impossible to surprise oneself, as actual competitors sometimes do. Real competition is therefore different from hypothetical competition. Both, however, discipline by way of concern with relative performance, whether it be against an actual opponent or an imagined one.

2.2.A. Prevalence

Concept number one is prevalence. It is a property of networks of competitive relations.

When we consider groups of competitors such as political parties and legislatures, we see that not all their members are necessarily involved in the same competitive relations with the same people. There is, consequently, need for a concept that captures who is competing against whom and in what way.25 This initial specification will fall under the concept of prevalence, which captures what competitive relations are prevalent – i.e. obtain – among which individuals.

Consider, by way of illustration, the prevalence of electoral competition among legislators.

We can make a few offhand observations about it. First, not all legislators compete electorally: e.g. some members of the House of Lords are appointed, not elected. Second, not all legislators are subject to the same system of election: e.g. only some members of the German Bundestag are elected via proportional national election. Third, not every legislator competes with every other legislator over controlling a legislative majority: e.g. Democrats do not compete against other

Democrats over winning a majority in the House. These observations may be filed under prevalence as follows: (i) electoral competition is not prevalent among the unelected; (ii) electoral competition by way of national proportional vote is prevalent only among some members of the Bundestag; and (iii) competition over legislative control is not prevalent among legislators from the same political parties. In this way, the concept of prevalence helps systematize who is engaged in competition of what sort against whom, and in doing so captures the structure of networks of competitive relations.

25 E.g., when theorizing how competition influences legislative politics, it is necessary to first specify which legislators are engaged in which forms of competition (electoral competition, interstate competition, etc.) against whom (electoral challengers, other legislators, legislators from other states, etc.).

2.2.B. Competitive Relevance

Concept number two is competitive relevance. In every competitive struggle, some activities and attributes are competitively relevant and others not, in the sense that some influence competitive outcomes and others do not (see also Wagner and Yazigi 2014). With respect to activities, for instance, accurately putting a ball is competitively relevant in golf but not in war: how well golfers putt influences their prospects of winning games, but how well soldiers putt never influences their prospects of winning battles. Likewise, with respect to attributes, strength is competitively relevant in war but not in chess: it influences soldiers’ odds of winning battle, but not chess players’ odds of winning games. Different competitive relations reward and punish different activities and attributes. Which activities and attributes a competitive relation rewards and punishes will fall under the concept of competitive relevance.26

In many ways, the distribution of competitive relevance across activities and attributes is what endows different competitive relations with their distinct characters. Golf is golf because it attaches competitive relevance to striking a ball into a hole in fewer strokes than others – which, in turn, attaches competitive relevance to form, core strength, etc. War is war because it attaches competitive relevance to defeating one’s enemies in battle – which, in turn, attaches competitive relevance to tactics, logistics, etc. Market competition is market competition because it attaches competitive relevance to making profits against other firms trying to do the same – which, in turn, attaches competitive relevance to product design, marketing, etc. Electoral competition is electoral competition because it attaches competitive relevance to winning more votes than other

26 In a sense, competitive relevance is an offshoot from the concept of stakes: competitively relevant activities and attributes are those which help win whatever is competitively at stake, and competitively irrelevant activities and attributes are those which do not help win whatever is competitively at stake.

candidates – which, in turn, attaches competitive relevance to platform selection, charisma, campaigning, etc.

This distribution of competitive relevance across activities and attributes is a key determinant of how a given competitive relation disciplines. Competition encourages competitors to engage in, and to be disciplined with respect to, not just any activities, nor to cultivate just any attributes, but only those which are competitively relevant and help secure competitive success (see also

Wagner and Yazigi 2014). There is no point spending one’s days putting balls if the aim is to win battles; nor is there any point cultivating strength if the aim is to become a chess champion.

It is better to devote time and energy, instead, to what is useful for achieving one’s aims. Thus, golfers have good competitive reasons to putt balls, and to hone the skill of putting, but soldiers do not. Soldiers have good competitive reasons to shoot guns, and to hone the skill of shooting, but golfers do not. And this is why golf is not war, and why golf and war produce very different social consequences.

2.2.C. Activity-Span

Concept number three is activity-span. It is closely related to competitive relevance.

Competitive relevance captures what competitors are encouraged and discouraged to do; activity-span captures what proportion of competitors’ actions are influenced or disciplined by competition. After all, not everything a competitor does is competitively-motivated. For instance, competitive concerns influence athletes’ gym routines and diets, but usually not their musical tastes, or whom they marry, or what they name their children. We can file these observations under activity-span: competitive influence and discipline span athletes’ gym routines and diets, but not their musical tastes, spousal selection, or child-naming decisions.

Activity-span will become increasingly important as the dissertation proceeds. Even in competitive political systems, political competition does not necessarily influence everything states do: a significant proportion of state activity is not competitively relevant for the public officials who wield the state’s powers – e.g. not every state activity necessarily influences representatives’ electoral prospects. Hence, when investigating how political competition regulates the state, we must first establish which state activities are subject to competitive discipline and which not. The concept of activity-span will allow us to doing so.

2.2.D. Competitive Demandingness

Concept number four is competitive demandingness. It captures the difficulty of attaining competitive success – i.e. satisfying one’s rivalrous preferences. Competitive demandingness depends primarily on the number and quality of competitors.27 Usually, and everything else being equal, the more opponents one has, and the more capable, the more difficult it is to succeed. For instance, ceteris paribus, it is easier to win a championship in a league with ten teams rather than ten thousand, and when they are incompetent rather than competent. Likewise, ceteris paribus, it is easier to win election against a single opponent than against a hundred, and against opponents who know nothing of campaigning rather than ones who do. Such considerations will fall under the concept of competitive demandingness.

Competitive demandingness is important because it influences the degree to which a competitive relation disciplines competitors – i.e. the degree to which competitors must work hard, and not slack off, to succeed. When competitive demandingness is low and success all but assured, there is room to slack and not work hard to learn and improve. When competitive demandingness is high and competitive success precarious, every detail matters and every

27 Barriers to entry also fall under competitive demandingness, since they influence the number and quality of actual and potential competitors.

mistake is a peril, so there is little room to slack and every reason to work hard to learn and improve. This is common sense. Were a tennis player scheduled to play Roger Federer in a year, he would likely train diligently every day. Were he scheduled to play a toddler instead, he would spend his days as he pleases.

True, in the extreme, competition can become so demanding that a competitor may not even bother with being disciplined because failure is guaranteed.28 If our hypothetical tennis player were scheduled to play Federer but had never before held a racquet, he would likely again spend his days as he pleases because training would make no difference. However, in this case, the player does not compete at all because the strategy determinacy condition is not satisfied: nothing he does would secure success, so he does not act to satisfy his rivalrous preference to win against Federer. He has given up. For this reason, scenarios of extreme competitive demandingness are of little interest to us. We are interested in people who actually compete, not in those who do not, or who give up; and there is usually enough actual competition, at least in politics, to keep us occupied without worrying about non-competitors as well.

2.2.E. Returns to Strategy

Concept number five is returns to strategy. In most competitive scenarios, competitors may select among many possible strategies, and in doing so prioritize among various competitively- relevant activities and attributes. Such prioritization tends to be necessary because the resources available to competitors – capital, time, personnel, etc. – are always limited, so they cannot do all that they might wish to succeed competitively. Hence, in war, armies prioritize between infantry and navy, or select to engage on one front over another; in markets, firms prioritize between product design and setting rivals’ factories afire, or select to participate in one market over

28 A graph of competitively-motivated effort against competitive demandingness would therefore resemble an inverted-U.

another; and in elections, candidates prioritize between solving voters’ problems and stuffing ballots, or select among different possible platforms. Which particular strategy some competitor selects depends on how relevant or useful each is to competitive success – i.e. how the returns to the the possible strategies are distributed. Consequently, when studying the structure of competitive relations, we should identify not only which activities and attributes are competitively relevant, but also the relative returns they can be expected to yield in terms of competitive success. This variance in returns to strategy will then guide us as to how competitors are encouraged to compete, since it will point to where their efforts bear the most (and least) fruit.

2.2.F. Returns to Effort

Concept number six is returns to effort. It may be understood in two related senses: (i) the distribution of (private) expected returns generally yielded by competitors’ efforts; and (ii) the distribution of (private) expected returns yielded by competitors’ efforts with respect to particular activities and attributes.

In the general sense, returns to effort capture the extent to which competitors’ efforts – their expenditures of time, resources, hard work, etc. – improve their prospects for competitive success and increase their expected utility. Ceteris paribus, the more competitors stand to gain from effort, the more effort they should be expected to expend. In turn, what competitors’ stand to gain depends on a number of factors, including: (i) stakes (the rewards and punishments associated with competitive success and failure); (ii) strategy determinacy (how far competitors actions influence competitive outcomes); and (iii) competitive demandingness (how far competitive success requires hard work).29 Usually, the weightier each factor, the greater a

29 Strom 1992 uses a similar approach.

competitor’s returns to effort, and the more effort we should expect to see devoted to the attainment of competitive success.

For example, in sports, ceteris paribus, professional athletes train more seriously than amateurs because the stakes are higher; and they play most vigorously in scenarios where there is most to gain (e.g. a championship) or lose (e.g. relegation). In markets, ceteris paribus, firms devote the greatest resources and efforts toward large rather than small markets, because success in the former yields more profits. In elections, ceteris paribus, candidates compete most vigorously for the highest political offices, because they are the most valuable: presidential elections therefore involve more money and effort than mayoral elections, which are more serious affairs than school board elections.

This is the influence on competitive structure and discipline of general returns to effort. We should also be mindful of returns to effort as distributed across various competitively-relevant activities and attributes. This idea is related to returns to strategy, but not identical with it.

Returns to strategy pertain to how the prioritization of different competitively-relevant activities and attributes may be expected to yield competitive success; returns to effort as distributed across these activities and attributes captures how the returns to any given strategy are not fixed but instead vary with the degree of effort expended toward its execution. For instance, it might be the case that a military, at its current level of deployment, should expect the highest competitive returns if it prioritizes navy over infantry; but the same military might be able to more easily build capacity in infantry over navy because sailors are harder to train, and so should actually prioritize infantry over navy. In this way, the returns to effort as distributed over competitively-relevant activities and attributes influence the returns to various strategies, and thereby influence, once again, how competitors compete in any given context – e.g. an army’s

prioritization between infantry and navy, a firm’s prioritization between product design and arson, and an electoral candidate’s prioritization between policy design and ballot-stuffing. And, for the same reason as with returns to strategy, this variance in returns to effort will then guide us as to how competitors are encouraged to compete, since it will point to where their efforts bear the most (and least) fruit.

2.2.G. Competitive Advantage

Concept number seven is competitive advantage (e.g. Hunt 2000; Hunt and Morgan 1995;

König 2017; Porter 1979). In any competitive relation, different competitors tend to possess different comparative strengths and weaknesses. The distribution of these strengths and weaknesses influences how they compete. Competition encourages competitors to adopt strategies that showcase their comparative strengths and downplay their comparative weaknesses; and that showcase their opponents’ comparative weaknesses and downplay their comparative strengths. In war, for instance, militaries whose navies are comparatively stronger than their infantries try to fight at sea, and to keep war off their shores, whereas militaries whose infantries are comparatively stronger than their navies try to fight on land.30 In markets, firms with comparative strength in meticulous craftsmanship tend to specialize in high-end products, whereas firms with comparative strength in mass production tend to specialize in low-end products. And in democratic politics, candidates who are comparatively more ethical than their opponents try to make the contest about character, whereas candidates who are comparatively stronger in policy expertise try to make it about platform. In this manner, how a competitive

30 E.g., during the second world war, the British focused on keeping the Germans off their shores because their competitive advantage was by far at sea; whereas the Soviets retreated indefinitely and preferred to engage in the heart of their country because their competitive advantage was in their climate and supply lines.

relation encourages and discourages competitors depends on their relative competitive strengths and weaknesses, which shape how they engage each other.

2.2.H. Sustainability

Finally, concept number eight is sustainability. How far a competitive relation influences behavior over time depends on how well it can be sustained. There are many potential threats to competition, most common among them: (i) decisive victory; (ii) surrender; (iii) collusion; and

(iv) exit. Competition ends with decisive victory when a competitor wins so thoroughly against the rest that they can no longer compete, as in war when an empire massacres its enemies and salts the earth. Competition ends with surrender when a competitor overwhelms the rest sufficiently that they promise to no longer work toward satisfying their rivalrous goals, as when an athlete gives his or her opponent such a tough time that the latter resigns. Competition ends with collusion when competitors make a pact to cooperate instead of compete, as with market cartelization. And competition ends with exit when competitors remove themselves from their competitive situation, as when a couple with irreconcilable differences divorces.

Often (but not always), competitors have a vested interest in bringing an end to competitive relations because doing so frees them from the rigors of competitive discipline.31 This is why competitive social institutions sometimes require protective measures like antitrust to ensure that competition is sustained over time. Consequently, when investigating political competition, it will be important to consider the sustainability of various competitive political systems, and the measures that may secure them.

31 There are exceptions. In sports, for instance, competitors usually have little interest in achieving a permanent end to competition because competition is the entire point of most sports, and what makes them worthwhile.

2.3 The Double-Edge of Competition

These observations about competition and competitive structure should also explain the dissertation’s reluctance to make assumptions about the general social consequences of competition or the normative evaluations they deserve. The general social consequence of competition is that competitors compete. Everything else depends on competitive structure.

Structure determines whether competition revolves around putting balls, or killing enemies, or selling goods, or collecting votes. And even within any given competitive struggle, structure influences which strategies competitors adopt, and whether the results of their competition are praiseworthy or deplorable. In sports, athletes can compete by improving their prowess or by injuring rivals.32 In markets, firms can compete by improving product quality or by engaging in unsavory practices like espionage, bribery, or frivolous lawsuits (e.g. Acemoglu and Robinson

2012; Baumol, Litan, and Schramm 2007). And in elections, candidates can compete by catering to voters’ needs or by assassinating rivals, stuffing ballots, intimidating voters, or gerrymandering. Competition is not one thing that always works the same way or produces the same sorts of results. It is a general conceptual category under which fall a legion of social relations and processes, some good for society and others not, some normatively praiseworthy and others not. Competition is not, as it is sometimes portrayed to be, an unqualified good: it can produce immense social benefits, when well-structured, but it can equally well prove ruinous, when not. Competition is double-edged.

32 As the New Orleans Saints allegedly did during the “Bountygate” scandal.

2.4 Conclusion

We are armed, then, with the basic conceptual tools using which this dissertation will study political competition. The four necessary conditions will allow us to systematically distinguish competitive and non-competitive social relations; and the eight elements of competitive structure will allow us to conceptualize the particular characters of various competitive relations and their influence on behavior and social outcomes. There will be no need for analogies, nor for assumptions about the social consequences or normative desirability of competition, because the dissertation proceeds from first principles – starting with the rivalrous motivations at the heart of all competition, continuing with the structural elements that influence how competitors act on these motivations, and then deriving from these the behavioral incentives and social outcomes that particular competitive struggles may be expected to generate.

I know, of course, that the analytical framework does not look especially groundbreaking, and in many ways merely restates common sense. This is precisely its purpose – it is meant to be as simple and obvious as possible. Scholars tend not to theorize about competition from its most primitive first principles, which is what leads them into the systematic errors recounted earlier in

1.3. These initial errors are then compounded as scholars follow the implications of their theories further afield, as we shall see extensively in coming chapters. We need a simple and obvious analytical framework so we can avoid the same problems, and precisely because the ongoing discussion will gradually become extremely complicated. Readers should therefore not be deceived as to the complexity of what follows by the simplicity of the framework: building a complex structure does not require that the structure’s building blocks also be complex – in fact, it is normally easiest when building something complex to begin with the simplest building

blocks, lest they wobble.33 Hence, if readers will bear with me, the subsequent application of the analytical framework to a variety of competitive political processes will vindicate its superiority over the approaches usually adopted in the academic literature, and lead to markedly different conclusions from it.

33 E.g. virtually all material objects in the universe are ultimately just made of protons, neutrons, and electrons, but with these simple building blocks nature fashions the most complicated and marvelous things, including, of course, the human body and consciousness.

PART II: MODERN DEMOCRACIES AND DEMOCRATIC FEDERATIONS

CHAPTER THREE: ELECTORAL COMPETITION

Let’s begin the investigation of competition in modern politics with electoral competition, widely regarded as the most significant competitive element in democratic political systems. The main purpose of elections is allocative, and twofold: (i) elections allocate legislative and executive offices to individuals; and (ii) elections allocate legislative control to political parties and coalitions.34 Accordingly, incumbent representatives who desire to retain office, and ruling parties and coalitions who desire to retain legislative control, possess very good reasons to take elections seriously, to compete against challengers for votes, and to wield political power with a view to electoral success. Elections thereby regulate the state by regulating these representatives, parties, and coalitions – giving them reasons to act (and not act) in a variety of ways. But how, exactly, do elections encourage and discourage them to behave, and to what extent are electoral incentives compatible with the ideals of universal benevolence and state development?

The discussion is confined to well-functioning democratic systems in which, as Joseph

Schumpeter puts it, there is “free competition for the free vote” (1942: 271). The clause is interpreted broadly to include freely contestable and contested elections; no electoral violence or fraud; high voter turnout; freedom of speech; and a substantial degree of political transparency.35

Both plurality and proportional systems are admissible, and the discussion applies to both except where specified. The objective is then to trace the logic of electoral competition and evaluate

34 Elections also allocate executive control, but this allocative function will get folded under the first category in presidential systems and the second category in parliamentary systems – in the former, executive control is allocated via an individual contest; in the latter, via legislative control.

35 Powell Jr. 1982 utilizes a similar list.

how it incentivizes incumbent representatives and ruling parties and coalitions – and through them the democratic state – to be disposed and to behave.

Elections are characterized by two kinds of competitive relations: (i) candidates compete over offices (individual electoral competition); and (ii) parties and coalitions compete over legislative control (electoral party competition). Each relationship readily satisfies the four necessary conditions for competition.

With individual electoral competition, candidates compete over office. Candidates contesting the same election experience rivalry because their preferences are incompatible: they cannot all simultaneously win the office(s) under contestation. This rivalry is salient whenever winning office matters sufficiently to the candidates for them to be willing to act accordingly – which is almost always the case. The strategy determinacy condition is satisfied because candidates’ actions influence their electoral prospects. And the relative performance condition is satisfied because electoral success depends on candidates’ relative performance in terms of winning votes

– which, in turn, depends on their relative appeal to voters on metrics such as platform, past performance, charisma, etc. It follows that candidates contesting the same election compete against each other for office.

Likewise, with electoral party competition, parties and coalitions compete over (exclusive) legislative control – i.e. over commanding a majority or supermajority of legislative seats, whichever suffices for legislation. They experience rivalry because their preferences are incompatible: they cannot each simultaneously command a legislative majority or more. This rivalry is salient whenever legislative control matters sufficiently to a party or coalition’s members for them to be willing to act accordingly – which is almost always the case. The strategy determinacy condition is satisfied because parties and coalitions’ actions influence their

prospects for winning seats. And the relative performance condition is satisfied because success at winning legislative control depends on the relative performance of the parties and their members in terms of winning votes. It follows that parties and coalitions who seek (exclusive) legislative control compete against each other.

It is official, then: under the analytical framework, elections generate competition. For obvious reasons, this competition usually also exhibits a high degree of prevalence among representatives, parties, and coalitions. But what encouragements and discouragements does electoral competition create for them? Do elections encourage them to be disposed benevolently toward all their people; and to be disposed to learn and improve in order to develop as much of the state as possible? The answer depends on the structure of electoral competition.

My contention is that electoral competition is deficient with reference to both universal benevolence and state development. Four significant issues are identified, pertaining respectively to the “universal,” “benevolence,” “state,” and “development” aspects of the two ideals. Hence:

(i) elections do not encourage representatives and ruling parties and coalitions to be disposed benevolently toward every person under their jurisdiction; (ii) elections sometimes encourage malevolence instead of benevolence; (iii) electoral discipline does not encourage development of the entirety of the state; and (iv) electoral incentives for development are lukewarm with respect to the creation and realization of new ideas. These claims are elaborated below, in order.

3.1 Majoritarian Exclusion

Majoritarian exclusion pertains primarily to the “universal” aspect of universal

benevolence. Electoral competition revolves around majoritarianism: in individual

plurality contests, half the first-choice votes always suffice for winning office; and in both

plurality and proportional systems, half the legislative seats usually suffice for winning

legislative control. Additional votes and seats bring few marginal electoral rewards, so

representatives and ruling parties/coalitions have little electoral incentive to seek

support from more constituents than needed to win a majority (with some allowances).

Elections thereby permit representatives and ruling parties/coalitions considerable room

to exclude the welfare and interests of many individuals in their decisions and actions,

and to be disposed indifferently or malevolently toward them. Furthermore, any attempts

to expand political inclusion by moving from majority-rule toward unanimity-rule are

accompanied by an increased propensity for governmental gridlock and inflexibility.

The ideal of universal benevolence posits that, ceteris paribus, it is better if political institutions encourage public officials wielding the powers of the state to be disposed benevolently toward each and every person under their jurisdiction. Majoritarian exclusion pertains to the “universal” aspect of this ideal. The analysis proceeds from the following question: insofar as electoral competition encourages representatives and ruling parties and coalitions to be disposed benevolently toward constituents, does it encourage them to direct this benevolence toward all or only some? The conclusion is that electoral competition permits considerable room for indifference and malice toward many because it is organized around majoritarianism, not universalism.

At the foundation of the argument is the observation that in electoral competition, margin of victory is mostly irrelevant (with some allowances, examined presently). Whether a candidate wins office by one vote or one million makes little difference, since in either case the reward – office – is the same; and whether a political party or coalition wins legislative control by one seat or one hundred makes little difference, since in either case the reward – legislative control – is

the same. Since the marginal electoral rewards for winning votes or seats beyond the majoritarian mark are very limited, electoral competition only encourages representatives and ruling parties and coalitions to seek support from enough constituents to win a majority of votes or seats, which leaves democratic governments considerable room to be disposed indifferently, even malevolently, toward a substantial proportion of people.

This is an obvious point, but it is misunderstood or denied with sufficient frequency as to deserve explicit affirmation. Perhaps the error arises because the word “democracy” means “rule by the people,” which suggests, superficially, that democratic governments cater to everyone’s welfare and interests since everyone gets to participate. For instance, to Ronald Dworkin it

“seem[s] self-evident that a society committed to equal concern must be a democracy,” (2000:

185) where a commitment to equal concern requires a government which acts “to make the lives of citizens better… with equal concern for the life of each member” (2000: 184). The assessment is inaccurate, as we shall see. Democratic institutions do not encourage governments – i.e. ruling parties and coalitions – to be concerned with everyone’s life. They only encourage concern with the lives of sufficient numbers to win a majority.

There is also some confusion as to whether trying to win a majority of votes or seats is functionally any different from trying to maximize votes or seats. In An Economic Theory of

Democracy, Anthony Downs even conflates the two in the same breath, writing: “Since none of the appurtenances of office can be obtained without being elected, the main goal of every party is the winning of elections. Thus, all its actions are aimed at maximizing votes” (1957: 34-35). This assessment is also inaccurate, as we shall see. Elections do not incentivize maximizing votes; they incentivize winning a majority. The two incentives are not identical. Representatives and parties incentivized to maximize votes would be encouraged, for the most part, to be more-or-

less benevolently disposed toward all their constituents, or at least as many as possible; representatives and parties incentivized only to win a majority have no reason to be benevolently disposed toward everyone, and can be indifferent or malicious toward large swaths of their electorates.

Provided below is the detailed rationale for these claims.

3.1.A. Majoritarian Exclusion in Individual Contests

Let’s begin with electoral incentives as they pertain to individual contests in plurality systems and work our way from there. Contemplate the position of an incumbent representative

– call him Charlie – looking to win reelection. How does the reelection motive encourage Charlie to be disposed toward the people from his district or other electoral unit? When he wields the powers of his office and makes legislative decisions and policies, does electoral competition encourage him to account for and try to advance the welfare and interests of all of them?

It is true that elections encourage representatives to be disposed more-or-less benevolently toward voters whose support they seek: usually, in expectation, the more a representative accomplishes to advance some given voter’s welfare, the more likely the voter should be to vote for him or her.36 Representatives thereby have an interest in advancing the welfare of voters whose support they seek – i.e. an electoral encouragement to be benevolently disposed toward them. However, elections do not encourage representatives to direct this benevolence toward every single voter because they need not seek support from them all to retain office. Reelection does not require it, or even reward it. Reelection only requires, at most, a majority of votes.

36 Broadly speaking. Exceptions apply. First, a voter’s support can also be won by means besides benevolent dispositions and actions – e.g. duping, threatening, etc. One major instance of malicious vote-gathering receives attention in 3.2. Second, there is no guarantee that a representative who improves some voter’s quality-of-life will actually receive his or her support at the ballot box: the voter might perceive another candidate to be an even better alternative; or not attribute improvements in quality-of-life to the representative; or just be ungrateful.

Margin of victory is competitively irrelevant, so there is little incentive for winning additional votes past the majoritarian mark. Consequently, there is little reason for Charlie, a representative looking to be reelected, to seek support from more voters than whatever number suffices for winning a majority of votes.

Naturally, just because electoral competition encourages Charlie to win a majority of votes does not imply that he should, speaking strategically, seek support from only a majority. Not everyone he targets to build a majoritarian voter-coalition will respond favorably to his courtship. There are also some limited benefits to winning votes beyond the bare fifty-percent- plus-one, such as the deterrence of potential challengers. Electoral competition therefore usually encourages Charlie to wield political power so as to court a sufficient number of voters to comfortably win a majority of actual votes – in practice, usually about sixty, maybe seventy percent of the electorate. But beyond this point, the marginal benefits of seeking additional support are strictly decreasing, and should fairly quickly hit zero. Thus, electoral competition leaves Charlie considerable room to be indifferently or maliciously disposed toward significant parts of his electorate, since not everyone is needed, or even needs to be courted, to win reelection. Many can be ignored, or worse.

That electoral competition permits representatives to ignore the welfare and interests of substantial portions of their electorates is easiest to spot in American presidential elections.

American presidential elections conform to majoritarian victory but with the electoral college as the relevant electorate. Since almost every state allocates electoral votes on a winner-take-all basis to whoever wins a plurality within the state, there is no point for candidates to try to win support in states where they will almost certainly fail to reach plurality, or whose electoral votes are not needed in the candidate’s electoral strategy: additional votes in these states confer no

electoral advantage and so are not worth the trouble. As predicted, we observe that presidential candidates devote essentially no effort whatsoever to courting support in many states, which are thereby excluded from their strategy for winning the presidency (e.g. Kriner and Reeves 2014;

Levinson 2006; Strömberg 2008; see also Gelman, Silver, and Edlin 2012). For instance,

Democratic presidential candidates rarely campaign in Alabama because they can afford to completely neglect its people: they can win a majority of electoral votes despite excluding

Alabama. Republican candidates rarely campaign in Massachusetts, for the same reason. From which it is clear that presidential candidates do not work to maximize popular support; instead, they do not even bother seeking support in some states because these states are not part of their strategy for winning a majority of electoral votes.37 Candidates can afford to ignore them, and to exclude considerations about their residents’ welfare and interests from their decisions and actions.38

Obviously, presidential candidates never publicly admit to this strategy in so many words. It is not a good look to acknowledge that one is happy to ignore half or one-thirds of the people.

Still, the evidence is entirely clear (Kriner and Reeves 2014; Strömberg 2008). Such is democratic realpolitik: rarely acknowledged, ever present. And so, for instance, Mitt Romney was excoriated during the 2012 presidential election when a video caught him red-handed

37 During the 2000 presidential election, about half the states received not a single visit from either major party’s nominee; during the 2004 election, about a third (Strömberg 2008).

38 Presidential candidates also tend not to campaign in states that are part of their strategy for winning a majority of electoral votes but which they will carry with ease. E.g. Democrats tend not to campaign in Massachusetts either, or Republicans in Alabama. However, in these cases the absence of campaigning does not signify indifference or malice – instead, it implies that the candidate has already taken the welfare and interests of voters from these states sufficiently into account in building his or her platform as to not need to do more to carry the states. The candidate very much needs these voters to win, and is courting their support. But the lack of campaigning does signify that candidates understand that there is no point winning more than a

making the following statement at a private gathering: “there are 47 percent of the people who will vote for [Barack Obama] no matter what… my job is not to worry about those people….

[w]hat I have to do is convince the 5 to 10 percent in the center” (New York Times 2012). The comments proved a major gaffe – Romney was duly chastised by everyone, and apologized – but

Romney’s real strategic error was only that he failed to keep his strategy private. Otherwise, his strategy was no different from any other presidential candidate’s. When Democratic candidates do not bother campaigning in Alabama, or Republican candidates do not bother campaigning in

Massachusetts, they might as well be shouting from the mountaintops that they only need a majority of electoral votes to win office and do not need support from voters in Alabama or

Massachusetts, as the case may be, to achieve this. They can afford to ignore them.

There is no reason why American presidential elections should be unique in this majoritarian exclusion, where those seeking election can afford to be indifferently or maliciously disposed toward large parts of their electorates. American presidential elections just provide especially clear evidence for the phenomenon. But in all plurality systems, representatives seeking reelection have little electoral incentive to wield the powers of their offices with a view to winning more than a majority of votes, or targeting more than sixty or maybe seventy percent of the relevant voters. The rest they can ignore, or worse. As a result, even representatives who want more than anything to retain office can afford to not receive, or even seek, support from a great many individuals without electoral consequence – which implies that insofar as electoral competition encourages them to wield political power with a view to advancing their constituents’ welfare, it encourages them to do so with only about half to two-thirds in mind.

majority in these states, and so do not bother trying to do so. Which provides further evidence for majoritarian exclusion. See also Cervas and Grofman 2017.

Nor do proportional electoral systems resolve majoritarian exclusion, although they do sometimes greatly complicate it. Contemplate the position of a legislator – call her Dee – seeking reelection in a proportional election. How many voters’ support should she seek, for herself or her party, to be reelected? In a fully open-list election with a legislature comprising n seats, Dee need only win support from a little over 1/n of national voters.39 In a closed-list election, Dee’s calculus depends on her position on the party’s electoral list. If Dee is slated to receive the tenth percentile of votes, then her individual reelection motive encourages her to win for her party support from a little over ten percent of the national population; if slated to receive the twentieth percentile of votes, then a little over twenty percent of the national population; and so on. Dee can also focus, instead, on moving up the party list. Either way, the bottom line remains: to be reelected, Dee need not court support from everyone – there is still plenty of room to exclude the welfare and interests of significant proportions of the people.40

3.1.B. Majoritarian Exclusion in Legislative Politics

So far, we have inspected the first aspect of electoral competition: competition over individual offices. There is a second aspect as well: competition over legislative control. This second aspect is the more important for our purposes. We are investigating how electoral competition regulates the state via the incentives it creates for public officials, but the state – or at least the legislative branch – is controlled not by individual representatives but groups of them.

The lone legislator can do precious little without assistance from other members of the assembly,

39 Plus whatever is required for her party to pass the electoral threshold.

40 True, representatives close to the bottom of a party list – slated to receive, say, the ninetieth percentile of votes – will tend to court support from essentially the entire population. But people so far down the party list tend not to be actual representatives in the first place; and in any case, parties as a whole tend not to bother with trying to win as many legislative seats as possible, so the point is relatively moot. See 3.1.B.

since only a majority can accomplish anything. Legislators therefore form alliances, either pre- election (political parties) or post-election (legislative coalitions),41 so they can help each other achieve their political goals, some shared, some not (e.g. Duverger 1963; Laver and Shepsle

1999; Miller 1977; Riker 1982; Wilson 1969). Accordingly, representatives have an incentive to retain individual offices, yes, but in the case of legislators, they also have an incentive to be part of the government rather than the opposition – i.e. to be part of the political party or legislative coalition which actually controls the legislative branch. This desire for legislative control expands the number of voters whose support legislators are encouraged to court beyond whatever suffices for retaining their individual seats – they are encouraged to also court support from sufficient numbers for their party to retain legislative control.

How does this competition over legislative control regulate those who control democratic legislatures, namely ruling parties and coalitions? Contemplate the position of the members of a ruling party or coalition looking to retain legislative control. When they collectively wield the state’s legislative powers and make decisions and policies, does electoral competition encourage them to be disposed benevolently toward everyone over whom they exercise power, or only some? Only some. Competition over legislative control is also subject to majoritarian exclusion, and this is true regardless of electoral system.

It is tempting, sometimes, to conceptualize political parties and legislative coalitions – henceforth for brevity just denoted political parties – as maximizing votes or seats (e.g.

Battaglini 2014; Downs 1957; see also Strom 1990). The conceptualization is inaccurate (e.g.

Robertson 1976; Riker 1962; Stigler 1972; Strom 1990). Elections only encourage political parties to maximize their prospects for winning a majority of seats, since this is what allocates

41 The distinction is not always sharp, especially when legislative politics is characterized by party-switching.

legislative control (excepting supermajoritarian legislatures, examined presently). Margin of victory is competitively irrelevant, so there is little incentive for winning additional seats past the majoritarian mark. Hence, although competition over legislative control expands the number of voters whose support a ruling party’s members have an incentive to court beyond whatever suffices for retaining their individual offices, this expansion is constrained by legislative majoritarianism. In plurality systems, competition over legislative control encourages them to seek support from enough constituents to win for their party a majority of votes in a majority of districts/electoral units; and in proportional systems, to win a majority of votes nationally.

Now, as before, just because electoral competition encourages a ruling party and its members to win a majority of legislative seats does not mean that they should, speaking strategically, seek support from only the bare minimum necessary for this end. Not everyone they court will respond favorably. There are also some limited benefits to winning seats beyond the bare fifty- percent-plus-one – e.g. doing so makes it easier to whip votes, and to retain legislative control despite deaths and retirements.42 Accordingly, competition over legislative control usually encourages ruling parties, when they wield legislative power, to do so with a view to courting support from enough voters to comfortably maintain a legislative majority – in practice, in expectation, usually roughly about sixty or seventy percent of voters nationally.43 Which leaves them considerable room to be disposed indifferently or maliciously toward significant parts of the electorate, since not everyone’s support is needed, or even needs to be courted, to retain

42 There can also be disadvantages, since the larger a party’s share of legislative seats beyond the majoritarian mark, the more diluted each individual member’s power (Riker 1962; see also Stigler 1972).

43 The number can vary quite a bit in plurality systems.

legislative control. Many can be ignored, or worse. Competition over legislative control does not encourage ruling parties and their members to be disposed benevolently toward all their people.

Again, there is some fairly clear behavioral evidence reflecting this majoritarian exclusion.

The institutional incentives can most readily be discerned when we observe uncontested elections in the American system. They are quite common. Gary Jacobson (2006) finds that between 1952 and 2004, one major party or other did not even field a candidate for, on average, about ten to fifteen percent of federal House seats (see also Squire 1989). Numbers at the state level are still more staggering. Per David Konisky and Michiko Ueda: “[i]n 10 states across the country holding state legislative elections in 2004, at least half of the seats were determined in uncontested races. In the cases of Arkansas and Florida, approximately 75% of state legislative seats were uncontested” (2011: 200). There we have it: majoritarian exclusion reflected plainly in behavior. Parties do not even bother trying to win support from many parts of the electorate because their support is not needed to win legislative control. And so, for instance, when the

Democratic Party does not bother fielding a candidate in some district, it might as well be shouting from the mountaintops that it only needs a majority of seats for legislative control, and does not need support from voters in that district to achieve this end. The party can afford to ignore them, and does.44

44 For further evidence of majoritarian exclusion in legislative politics, this time in the Italian parliament, see Galasso and Nannicini 2011. The authors find that political parties tend to allocate their best candidates to districts with the most demanding (but still winnable) elections, which demonstrates that political parties have no strategic reason to waste their best people winning additional votes in districts where less impressive candidates could comfortably win, or where even the most impressive candidates would lose. This behavior implies that political parties understand that what matters is winning seats and legislative control, and so do not squander their resources toward courting support from voters whose support does not further this end.

Ronald Dworkin’s characterization of democratic systems is therefore inaccurate. Far from it being self-evident that a state which exhibits equal concern for all its people must be democratic, and even setting aside the question of equality, it is not clear that democratic states should be expected to show any concern for all their people. Elections only encourage democratic governments – the ruling parties and coalitions who command the state’s legislative power – to be concerned with the welfare of enough people to win a legislative majority. Which is not everyone. The rest they can ignore, or worse. Even ruling parties and coalitions who want more than anything to retain legislative control can afford to not receive, or even seek, support from a great many individuals without electoral consequence – so insofar as electoral competition encourages them to wield political power with a view to the people’s welfare, it encourages them to do so with only about half to two-thirds in mind.

In fact, if elections encouraged representatives and ruling parties to maximize popular support, as per Downs, then this phenomenon would very much need explanation. Why should they keep trying to gather more votes than needed for comfortable reelection and retention of legislative control? There is no point. It seems a wasteful, even counterproductive, use of time, effort, and resources – and of political power. Better to concentrate and direct all these toward courting a proportion sufficient for reelection and legislative control, than to dilute and disperse them toward courting more. Elections neither necessitate nor reward the latter strategy, so it is not clear what, electorally, is supposed to encourage representatives and ruling parties to maximize support rather than build a majoritarian coalition. Which is what the behavioral evidence suggests they do.45

45 One possibility is that ambition to higher offices could induce representatives to be benevolently disposed toward more voters than necessary for retaining their present seats, or even legislative control. This is true, but it just pushes majoritarian exclusion “up one step.” Detailed explanation is provided in 4.3 and 5.1.

Naturally, this is not the first time a political theorist has noticed that democracies are majoritarian. However, most discussions of democratic majoritarianism tend to focus on the problem of tyranny by the majority (e.g. Aristotle 1984; Dworkin 2000; Hamilton, Madison, and

Jay 1999; Tocqueville 2000; see also Dahl 1956). But tyranny by the majority is just one incarnation of majoritarian exclusion; and it is, in a sense, the easiest to resolve because a commitment to minority rights in the form of written constitutions, judicial review, etc. can often prove quite effective at preventing outright tyranny. It is much more difficult to rectify indifference. Preventing someone from violating my rights is not the same as encouraging them to be disposed or to act benevolently toward me. This second issue – indifference, rather than oppression – is ignored too frequently by scholars, and represents the thornier aspect of majoritarian exclusion in democratic politics.

What follows from this indifference? Contemplate the strategic electoral calculus from a ruling party’s perspective – what electoral competition leaves it room for (see also Bueno de

Mesquita et al 2003). First, when the party is deciding what policies to enact or how to deploy the state’s resources, there is no real reason for it to care about how its actions affect everyone – society at large, if you will. The ruling party just needs to care about how its actions affect the voters whose support it seeks. Will the rest be better off? Worse off? Terribly off? Electorally, it is all irrelevant so long as the majoritarian coalition is sufficiently happy. Worry about keeping them happy. Deploy the state’s resources, as far as possible, to this end. Second, there is also no real electoral reason for the ruling party to care about issues that matter only to the excluded – i.e. those not being targeted to form the party’s majoritarian coalition (further explanation in 3.3).

Are their neighborhoods crumbling? Their schools awful? Their water polluted? Electorally, it is all irrelevant so long as the majoritarian coalition is sufficiently happy. Worry about keeping

them happy. Third, while all this is happening, why not also consider extracting some rents from the excluded, either for your personal benefit or the benefit of your majoritarian coalition? After all, the excluded cannot vote against you twice. Obviously, be smart about it and do everything under the guise of ostensibly neutral policies that theoretically affect everyone.46 But why not extract? Might as well. And so on. The point being this: from a strategic point-of-view, the electoral regulation of the state leaves substantial room for indifference and malice on the part of democratic governments, and this room should tend to at least sometimes influence their actions, as well as social outcomes. Electorally, democratic governments are usually only encouraged to be disposed benevolently toward at most about two-thirds of the people; and to wield the powers and resources of the state with a view to the welfare of only about two-thirds.

3.1.C. Every Dog Has Its Day

One silver lining to majoritarian exclusion in democratic systems is that it is often temporary, not permanent. At any given time, elections leave democratic governments – i.e. the representatives and ruling parties who control the legislative and executive branches – considerable room to be disposed indifferently or even maliciously toward a significant proportion of people under their jurisdiction. But over time, the excluded tend to eventually be included (while the included are eventually excluded), since elections tend to eventually empower different representatives and political parties who seek support from different sub- sections of voters. This is the Aristotelian (1984) understanding of democratic politics. Citizens rule and are ruled in turn – or, more accurately in electoral systems, legislatures and executives care about some citizens’ welfare some years and other citizens’ welfare other years, as electoral

46 Just as “the law, in its majestic equality, forbids the rich as well as the poor from sleeping under bridges, from begging in the streets, and from stealing bread” (Anatole France, The Red Lily). See also Sepielli 2012.

fortunes shift and empower different representatives and parties who seek support from different voters. As a result, democratic citizens who find themselves victims to indifference or malice by their legislature or executive can usually take solace that shifting electoral tides will likely eventually empower new representatives and parties who seek their support and are benevolently disposed toward them. In this sense, in democratic politics, every dog has its day. Eventually.

Provided there are no persistent minorities.47

Democratic turn-by-turn empowerment has certainly been a welcome historical development when contrasted with conditions in monarchies, autocracies, aristocracies, etc., where many individuals are susceptible to being permanently excluded, ignored, or oppressed by the powerful

(e.g. Acemoglu and Robinson 2012; Bueno de Mesquita et al 2003). Comparatively, modern democracies are more politically inclusive. Still, turn-by-turn empowerment is not fully satisfactory: it implies that most individuals are intermittently included, but it also implies that most individuals are intermittently excluded. The inclusion is laudable, the exclusion is not.

Hence, monarchies, autocracies, and aristocracies are akin to a family with a Cinderella whose welfare is permanently ignored, and representative democracies are akin to a family with a revolving Cinderella-for-a-year, where at different times a different daughter’s welfare is ignored. The latter family or society might be superior to the former, but neither is healthy. It would be best if nobody’s welfare were ever ignored, and if the representatives and ruling parties who control the legislative and executive branches cared for all their people’s welfare at every time. This is not the case in electoral democracies, even though they are more inclusive than their historical predecessors, because democratic politics is subject to majoritarian exclusion. This exclusion may only be intermittent, not permanent, but it is exclusion nevertheless.

47 Which is hardly guaranteed.

3.1.D. More Inclusive Decision-Rules

One strategy for addressing majoritarian exclusion is to establish more demanding decision- rules for legislative and/or executive action than mere majoritarianism. Many contemporary democracies do so. Three main approaches are popular: (i) supermajoritarianism, (ii) multicameralism, and (iii) division of powers. All operate by the same principle: they all add veto-players beyond the majoritarian mark, where veto-players are defined as “actors whose agreement is required for a change of the status quo” (Tsebelis 2002: 17). With supermajoritarianism, state action requires assent from more than a legislative majority; with multicameralism, from majorities in multiple legislative chambers; and with the division of powers, from other branches of government besides the legislative. All options bring the political system closer to unanimity-rule, since they all increase the degree of consensus required for legislative and/or executive action.

As far as they go, these moves away from majority-rule and toward unanimity-rule tend, in expectation, to enhance the inclusiveness of governmental decisions and actions. Enhanced consensus requirements expand the proportion of constituents toward whom the representatives comprising the decision-making coalition are benevolently disposed, since the decision-making coalition is enlarged. If, for instance, the majority party needs assent from a minority party to enact policies, then policies will tend to reflect not just the majority’s inclusion of constituents whose support it seeks but also the minority’s inclusion of (presumably different) constituents as well. Hence, in expectation, fewer constituents’ welfare and interests should be excluded in the state’s decisions and actions.

But there are limits to what can be accomplished, and downsides. In terms of limits, although the establishment of supermajoritarianism, multicameralism, or division of powers increases the

proportion of people included in governmental decisions, it does not eliminate all room for indifference or malice on part of the decision-making coalition. For instance, supermajoritarianism is still subject to supermajoritarian exclusion. Multicameralism and division of powers also do not necessarily encourage everyone’s inclusion, particularly when the legislative chambers or the branches of government are controlled by the same party or coalition.

As a result, these more inclusive decision-rules do not necessarily encourage the representatives controlling the state’s apparatus to care about the welfare and interests of all their people. There can still be considerable, albeit less, room for indifference or malice.

Even more problematic are the downsides to these decision-rules beyond majoritarianism.

Requiring consensus past the majoritarian mark increases the propensity for governmental gridlock and inflexibility (Tsebelis 2002). The closer we move to unanimity-rule, the more difficult it becomes to achieve sufficient consensus for any state action – and especially for

“important shifts in policy” (Tsebelis 2002: 221). In a sense, decision-rules beyond majoritarianism bring the political system closer to minority-rule, since in empowering minorities to say “no” they also empower them to stop government in its tracks. The political system becomes increasingly biased toward the status quo.48 Consequently, although the decision-rules in question tend to make democratic politics more inclusive, they simultaneously sap the government’s ability to act, and to respond effectively to new circumstances, new problems, new opportunities, new information, and new ideas. It is therefore unclear to what

48 Which is why most polities reserve the most demanding consensus requirements for constitutional changes. This is the situation where the correlative status quo bias is generally believed to be desirable, or at least tolerable. Everyday policy decisions, on the other hand, are usually subject to less demanding consensus requirements because otherwise nothing would ever get done – which is fine with respect to constitutional changes, but usually not with respect to normal politics. It makes sense to entrench the basic rules of the political game, as well as people’s human rights; but not to entrench, say, education policy, transportation policy, economic regulations, etc.

extent moving closer to unanimity-rule advances the overall aim of encouraging representatives and ruling parties to pursue the welfare of all their people as best they can: there is an improvement on the “all their people” front, but a deterioration on the “as best they can” front

(since it becomes more difficult to do anything). At the very least, certainly, the added inclusion comes at a (potentially heavy) price, in the form of an increased propensity for governmental gridlock and inflexibility.

3.1.E. The Market Comparison

In majoritarian exclusion, then, we encounter the first major substantive reason for skepticism over analogizing electoral competition with market competition. As previously noted, economists tend to be especially fond of the approach. For example, Gary Becker writes: “an ideal democracy is very similar to an ideal free enterprise system in the market place” (1958:

105-106).49 George Stigler: “political competition, even between parties, basically resembles economic competition…. even in a democracy no special significance is to be attached to a majority of the vote (or the seats in a legislature)” (1972: 91). Richard Wagner: “political practice is a peculiar form of business practice” (2016: vii). Katherine Gehl and Michael Porter:

“[m]ost people think of politics as its own unique public institution…. Not so. It is, in fact, an industry…. The industry competes, just like other industries…” (2017: 12). And so on. All these views overstate the similarities. Electoral competition is not essentially market competition, and should not be studied as such.

One key distinction is that electoral competition is subject to majoritarian exclusion but market competition is not. The difference arises because elections allocate the state’s political

49 Where an ideal democracy is defined as “an institutional arrangement for arriving at political decisions in which individuals endeavor to acquire political office through perfectly free competition for the votes of a broadly based electorate” (1958: 106).

capacity differently from how markets allocate an industry’s economic capacity. The state’s capacity is allocated via winner-take-all to whoever commands support from roughly a majority of voters (even in proportional systems); but an industry’s capacity is not allocated via winner- take all to whoever commands patronage from a majority of consumers. If the Tories win a majority of seats, they control the state’s entire legislative and executive powers. Labour and the rest control none. On the other hand, if Coca Cola wins patronage from a majority of consumers,

Coca Cola does not control the cola industry’s entire productive powers. Pepsi and the rest still control their shares.

This difference in the allocation of capacities then produces a difference in how they are encouraged to be deployed. Competing firms seek to win patronage from different segments of consumers, as competing political parties seek to win support from different segments of voters.

In this, firms and political parties are alike. However, “minority firms” actually get to deploy some of their industry’s productive capacity toward advancing their consumers’ welfare and interests, not just in words or platforms, but actions. They control their own productive capacities regardless of market share. Minority political parties are in a completely different position. They get to deploy none of the state’s political capacity toward advancing their voters’ welfare and interests because the state’s entire capacity is granted to the ruling party or coalition. Only it decides how the state’s capacities are deployed for any purpose.

Which is why elections are subject to majoritarian exclusion but markets are not. The democratic state’s entire capacity is granted to a ruling party with ample room to exclude the welfare and interests of large groups of the electorate, so electoral competition does not encourage the state’s political capacities to be deployed with a view to the interests of all voters, or even as many as possible. Not so in markets. An industry’s economic capacities are not

subject to majoritarian exclusion because they are divided among firms who cater to different consumer segments. A majority firm might only look to advance the welfare and interests of, say, sixty percent of consumers; but minority firms can then still deploy economic capacity to advance the welfare and interests of the rest. Pepsi still gets to serve its consumers’ interests even though Coca Cola is far more popular. The industry’s entire capacity is not devoted to serving only consumers who prefer Coca Cola. There is no majoritarian exclusion.50

Here, then, we have one important reason why it is problematic to analogize electoral competition with market competition. The approach misses majoritarian exclusion altogether, since markets are not subject to it but democratic politics is. To avoid such oversights, it is crucial that politics be studied as politics, and not as a market.

In this spirit, let’s take up Donald Wittman’s challenge to detractors in the epilogue to The

Myth of Democratic Failure: Why Political Institutions Are Efficient. Wittman argues that electoral competition is not subject to various forms of market failure, and so concludes that democracies function essentially as a well-functioning market. Having (allegedly) established this conclusion, he finishes by suggesting that the burden of proof for denying it rests with detractors, since it is they who argue against the grain of traditional economic reasoning:

Behind every model of government failure is an assumption that voters are poorly informed, serious competition is lacking, and/or transaction costs are excessively high. Economists are very suspicious of similar assumptions regarding economic markets. The skepticism should be carried over to models of political-market failure (1995: 192).

This challenge reflects a fundamentally narrow conception of politics which assumes that political failures must essentially be market failures – that politics can only fail in the same ways

50 Obviously, it is no objection to point out that markets exclude individuals based on ability-to- pay but elections do not. The claim here is not that markets are perfect, or in some sense superior to elections; only that electoral competition is disanalogous with market competition because it is subject to majoritarian exclusion. The claim remains true even though markets are subject to

markets can. This is not at all obvious. It is perfectly possible for politics to be subject to uniquely political failures with no market correlates because the two are not identically structured; as with majoritarian exclusion, which has nothing to do with lack of information, unserious competition, or transaction costs, and which has no correlate in markets. Majoritarian exclusion has only to do with the basic structure of electoral competition, which markets do not share. Hence, even if voters were all as wise as Aristotle, electoral competition as serious as a funeral, and transaction costs zero, democracies would still be majoritarian, and still subject to majoritarian exclusion. We can apply Wittman’s “market metaphor” to electoral politics all day if we please, as he does, and conceptualize electoral competition as market competition, but no amount of doing so will transform democratic politics into a market – just as no amount of conceptualizing the earth as a disc riding atop a turtle’s back makes it so. Reality takes precedence over theory. Wittman’s political theory, and the political theory of other scholars who conflate political competition with market competition, paints an extremely stylized (and incorrect) picture of democratic politics, in which politics is imagined to not be politics but a market, whereas in reality it is only ever politics. In taking this approach, scholars miss entire categories of issues which are unique to democratic politics, and never arise in markets – the first of which we have now encountered.

3.2 The Electoral Logic of Sabotage

Electoral sabotage pertains primarily to the “benevolence” aspect of universal

benevolence. Competitive success depends on relative performance, so competitors

always have an incentivize to sabotage each other. Electoral democracies combine this

exclusion based on ability-to-pay. The additional difference just provides another reason against analogizing electoral competition with market competition. Well and good.

incentive with opportunity: rival political parties enjoy voice in each other’s decisions,

and electoral turnover grants them intermittent control over each other’s plans and

projects. As a result, democratic governments sometimes possess both incentive and

opportunity for deliberate malevolence toward their people via the sabotage – repeal,

neglect, mismanagement, etc. – of policies they themselves consider good for the people.

The previous section argued that electoral competition is misaligned with the “universal” aspect of universal benevolence: although representatives and ruling parties are encouraged to be more-or-less benevolently disposed toward voters whose support they seek, electoral competition does not encourage this benevolence to be directed toward everyone because there is no strategic reason for representatives and ruling parties to seek everyone’s support. Now we turn to the

“benevolence” aspect of universal benevolence. The discussion emphasizes the proviso that electoral competition encourages representatives and ruling parties to be more-or-less benevolently disposed toward voters whose support they seek. In this section, it is argued that electoral competition sometimes actively encourages representatives and ruling parties to be deliberately malevolent – specifically, to knowingly sabotage policies they themselves consider good for the people, including those whose support they seek.

3.2.A. The Competitive Incentive for Sabotage

Competitors look with anxiety upon each other’s most promising plans and projects, and hope for them to fail.51 The anxiety and hope are directly implied by the nature of the competitive relationship. When one competitor takes actions expected to improve his or her prospects for attaining competitive success, these actions in expectation worsen prospects for all the rest. Such is rivalry. Accordingly, for instance, sports teams feel anxious when another team

51 Where a plan or project is promising insofar as it is expected to help its originator attain competitive success.

drafts an excellent rookie, and hope the selection turns out poorly; firms feel anxious when another industry player introduces a sleek new product likely to prove popular among consumers, and hope it flops; and political parties feel anxious when another party devises a well-designed policy likely to prove popular among voters, and hope it fares badly. It is always unpleasant for competitors to watch opponents succeed, or lay the foundation for future success.

The anxiety and hope for failure straightforwardly become an incentive for competitors to sabotage each other’s most promising plans and projects (e.g. Chowdhury and Gürtler 2015).

Why merely hope for opponents to fail if you can help them fail? Since competitive success depends on relative performance (with reference to competitively-relevant activities and attributes), there are necessarily two strategies by which it may be attained: (i) by improving one’s own (absolute) performance, and (ii) by worsening one’s opponents’ (absolute) performance. For instance, sports teams can compete by improving their play or by injuring opposing athletes; firms can compete by improving their products or by setting opponents’ factories afire; and electoral candidates can compete by advancing voters’ welfare or by assassinating electoral challengers. The second option in each case is sabotage, and unless prevented or penalized, it works just as well as the first for attaining competitive success. Hence, the incentive for sabotage inheres in all competitive relations – competitors always possess good reasons to sabotage each other if the opportunity arises, and if they can get away with it (if it hurts rivals more than it hurts them).

3.2.B. The Democratic Opportunity for Sabotage

Nothing unusual, then, about competitors wishing to sabotage each other. They all have an incentive to do so. But not all enjoy the same degree of opportunity. Most well-designed competitive processes ensure considerable independence across competitors, which prevents

them from interfering with and sabotaging each other’s plans and projects even should they wish to.52 In markets, for example, firms can look upon competitors’ plans and projects with anxiety all they like, and wish to sabotage them all they like, but they usually enjoy no say in opposing firms’ decisions and actions, nor any control over their capital allocation, management, or production lines. Property rights secure independence across firms, and protect them against each other.53 The same is true in most sports leagues: teams can look upon competitors’ plans and projects with anxiety all they like, and wish to sabotage them all they like, but they usually enjoy no say in opposing teams’ decisions and actions, nor any control over their front offices, management, or game-planning. League rules secure independence across teams, and protect them against each other.

Not so in democratic politics (e.g. Moe 1990). Competing political parties enjoy far less independence, and far greater opportunity to interfere with each other’s plans and projects. First, they enjoy voice in each other’s decisions and policies. Second – more importantly – they enjoy intermittent control over each other’s plans and projects as electoral fortunes shift, since a change in electoral fortunes places the execution and management of one party’s policies and projects entirely in another’s hands. Thus, for example, Tories need not stop with mere anxiety over Labour policies, or mere hope that they will fail, or a mere wish to sabotage them – the

Tories can influence the design and implementation of Labour policies, and are likely eventually to even wrest control over their management and execution at some future date. Electoral politics

52 Not always perfectly. For elaboration, see Chowdhury and Gürtler 2015).

53 True, firms can acquire competitors. However, acquisition usually nullifies the sabotage incentive because sabotaging a firm one has just acquired usually amounts to sabotaging oneself. There are exceptions, of course, where a firm acquires a competitor only to shut it down, but this is usually not financially feasible or optimal – especially when considering relatively large firms. It makes more sense, normally, to acquire and grow, not acquire and shut down.

therefore affords competitors substantial opportunity to interfere with and sabotage each other’s plans and projects, in ways that many well-designed competitive processes do not.

Elections, after all, allocate the powers of government, which include the power to reverse predecessors’ policies and projects, and to deliberately mismanage or neglect them. Where sabotage in markets usually requires violations of property rights (and the law), and where sabotage in sports usually requires violations of league rules, in democratic politics, electoral victors can sabotage their predecessors’ work without violating any laws or rules whatsoever.

Such is the nature of electoral empowerment. And its consequence is that democratic politics complements incentives for sabotage with opportunity (see also De Figueiredo 2002). An inadvisable combination.

3.2.C. Good for the People, Bad for the Party

Contemplate, then, the position of a minority legislative party whose members, one day upon arrival at the legislative chamber, are confronted with the majority party unveiling a new policy for economic growth. Suppose members of the minority study the policy and conclude that it is innovative, well-crafted, and likely to greatly improve people’s lives for years to come, provided it is enacted and executed well. Is the unveiling cause for triumph or trepidation? From an electoral standpoint, the answer is clear: it is cause for trepidation. In expectation, the new policy should enhance voter support for the majority and thereby reduce the minority’s odds of future legislative control. The policy is good for the people, even in the minority’s judgment, but bad for the party.

Better for the minority if the new policy is stopped in its tracks. The minority has various options even when not in power, since it enjoys voice in the majority’s decisions, and influence over voters (see also Moe 1990). Members of the minority can dissemble that the policy seems to

them catastrophic. They can misportray the policy to voters, spread false rumors about it, and build popular opposition against it. They can protest it. They can challenge it in the courts. They can place bureaucratic hurdles to its enforcement. And all can be accomplished under the guise of having the public’s best interests at heart. There is always some plausible excuse. The policy represents government overreach. It is too costly. There are more pressing issues. Some hack claimed it would fail. It goes against tradition. It is immoral. There is not enough information. It ain’t broken, don’t fix it. And so on. The options are endless, and many do not require the minority to reveal its true motives (see also Mayhew 1974).54

Moreover, should the policy become law, there is still the likelihood that the minority party will eventually wrest control over its management and execution when electoral fortunes shift.

Should this transpire, then the minority-become-majority will be empowered to repeal the policy, defund it, neglect it, or mismanage its execution. Again, most of the same excuses are available as before, and everything can be accomplished under the guise of public interest.55

The point is not, of course, that electorally-motivated sabotage is always strategically optimal, or always occurs (more on this presently). The point is just that, in electoral politics, what is good for the people is not necessarily good for every party. A party’s electoral prospects deteriorate when its competitors accomplish anything likely to benefit the people. Which amounts to a straightforward incentive for malice toward the people, since parties have good strategic reasons to hope that competitors’ most promising policies will fail, and to bring it about whenever possible. A perverse incentive if ever there was one – and necessarily combined, in democratic institutions, with some degree of opportunity.

54 Democratic realpolitik. Again.

55 Perhaps the ultimate master stroke: let the policy stand, but make some minor but disastrous modification which ensures that it turns out poorly for the people – and then blame the policy’s

Now, much of what is stated is well known. There is considerable literature on policy discontinuity and sabotage in democratic politics (e.g. De Figueiredo 2002; Horn 1995; Moe

1990; 1991). De Figueiredo (2002: 321) even makes essentially the same general statement:

“political uncertainty creates an opportunity and incentive for opposed groups to sabotage each others’ policies.” Often, however, policy discontinuity and sabotage are presented as arising from genuine policy disagreements, not deliberate malice – or, at least, this last part is not explicitly acknowledged (e.g. McCubbins, Noll, and Weingast 1989; Moe 1990; 1991).

Certainly, genuine disagreements are a major part of democratic politics, so in many cases a new government’s reversal of its predecessor’s policies will not be malicious. But the foregoing discussion suggests that the incentive for sabotage can run deeper, and electoral competition can encourage democratic governments to sabotage policies they themselves consider good for society, even for members of their own electoral coalitions, simply because someone else would receive credit for them. Electorally-induced malicious sabotage, if you will, rather than sabotage arising from honest disagreements, differences in preferences, or courtship of different constituencies. Electoral competition encourages this sort of malicious sabotage even if political parties share the same preferences, cater to the same constituencies, and consider the same projects best for their people. The forces behind electorally-motivated sabotage can thus be operative even in societies which have achieved complete political consensus.

Note that the problem is institutional. It can be traced directly to the structure of elections and electoral incentives. Lottocracies, for instance, create no incentive for malicious sabotage, since in lottocracies the relative performance of different representatives or parties does not influence their prospects for future empowerment. Lottocracies have other problems, obviously, but not

creators. All while proclaiming how you did what you could, and tried to warn everyone.

this one. This problem comes from elections. Electoral democracies encourage malicious sabotage because they are competitive in a way that lottocracies are not.

3.2.D. Benevolent Intentions, Malicious Actions

The bad news continues. The electoral logic of sabotage goes further. Elections can encourage even genuinely benevolent representatives and parties to sometimes sabotage policies they consider good for the people. Contemplate the position of a political party – call it the

Benevolence Party – whose members genuinely wish to benefit all their people as best they can, and who therefore believe that it would be in the people’s best interests for the Benevolence

Party to control the legislative branch. Suppose, for argument’s sake, that the assessment is honest and accurate, and not mere vainglory. Then, given the structure of electoral competition, there should arise some situations where even the Benevolence Party is encouraged to sabotage policies its members consider good for their people, if these policies would bring more credit to electoral rivals and thwart the Benevolence Party from controlling the legislature for its people’s benefit. Better to sabotage and be empowered. Better to be malicious, in this small matter, to be benevolent later, in greater matters. Better to harm the people for the infamous greater good.

Accordingly, in electoral politics sometimes even benevolent intentions can recommend malicious actions. In this scenario, the structure of electoral politics creates conflict between representatives and their people, when it encourages even well-intentioned representatives to sometimes deliberately harm the people, lest the people come to greater harm after an unfavorable election. Elections thereby misalign political virtue and moral virtue, since electoral competition sometimes encourages or requires even the morally virtuous, upon entering the realm of politics, to act distastefully. A perfect Machiavellian dilemma. Ethically, of course, there is some excuse for benevolently-motivated malice along these lines, since it still aims at the

people’s welfare. But it is lamentable, nevertheless, that electoral considerations sometimes place even perfectly benevolent representatives and parties in this bind, where they are encouraged to deliberately harm their people. It would be better if the structure of competitive politics in representative democracies had no such implication.

3.2.E. Mitigation

Now, of course, incentives only encourage and discourage, not command. Consequently, electorally-motivated sabotage will not always prevail behaviorally, even though the incentive and opportunity for it inhere in the basic logic of electoral competition. Two categories of circumstances can mitigate it: (i) diminution of opportunity, and (ii) countervailing incentives.

Let’s consider them in turn.

The first form of mitigation – diminution of opportunity – usually concerns the insulation of policies via institutional or other mechanisms that make it difficult for subsequent governments to interfere with the current government’s plans and projects (e.g. De Figueiredo 2002; Horn

1995; Moe 1991). Policy insulation tends to involve either delegation to some entity which subsequent governments cannot easily control – e.g. independent agencies, bureaucracies, etc.; or the establishment of complex rules and procedures that must be followed prior to any further changes – e.g. reviews, hearings, public commentary, etc. The basic point of all these mechanisms for policy insulation is the same: to make it difficult for subsequent governments to change the course adopted by the current government.

As far as it goes, policy insulation can prove fairly successful at preventing electorally- motivated sabotage. Unfortunately, it usually also prevents other useful, well-intentioned policy changes too (e.g. Horn 1995; Moe 1991). With policy insulation come the same worries about governmental gridlock and inflexibility discussed earlier in the context of more inclusive

political decision-rules – raising concerns about how much better the cure is than the disease.

Furthermore, policy insulation can also never be fully successful at deterring electorally- motivated sabotage. Legislators and executives are notoriously difficult to restrain (e.g. Hobbes

1994; North and Weingast 1989). Their wills tend to find ways, given the breadth of their powers and the many avenues which must remain open to governments for any effective exercise of political power to be possible. As long as elections allocate the powers of government, it is difficult to see how the electoral opportunity for sabotage could be completely constricted. It must always be the case that a ruling party or coalition possesses some control over not only its own plans and projects, but those of competing political parties as well.56

Countervailing incentives can help further mitigate sabotage, and help ensure that representatives and parties find something besides sabotage strategically optimal. For example, in some scenarios, a party may be able to do better by just stealing credit for its opponents’ policies instead of sabotaging them. In others, somewhat cooperative long-term equilibria might emerge to discourage competing parties from sabotaging each other (e.g. De Figueiredo 2002).

Finally, in some scenarios voters may punish sabotage sufficiently to offset the electoral benefits gained by preventing one’s rivals from realizing their best plans and projects.

We need not discuss these forms of mitigation in too much detail. Suffice to say that they are useful but imperfect. Credit-theft, for example, is not always easy, or even possible (not all policies are amenable to being claimed by just anyone); and should it become easy, then no party would have much incentive to devise any interesting policies, just so it could bask in the glory of not being rewarded because someone else stole credit for its work. In other words, either the electoral logic of sabotage is usually crowded out by credit-theft, in which case there is little

56 Nor can policy insulation prevent the use of overarching strategies like “Starve the Beast” – arguably the most prominent contemporary instance of democratic sabotage.

reason for ruling parties to do much that would prove popular among the people; or the electoral logic of sabotage is not usually crowded out by credit-theft, in which case we return to where we started and are left with considerable incentive for sabotage whenever credit-theft does not prevail. Similarly, cooperative long-term equilibria do not always arise; and even when they do, they are not set in stone. Finally, voters can certainly punish sabotage, but they will not always be willing or able to (see 3.1); and even when they do, they will not necessarily punish it enough to offset the benefits to the saboteur arising from its competitors being thwarted from seeing their plans and projects realized or well-executed.

But all this is, to some extents, besides the point. The bottom line that cannot be mitigated or argued away is this: competitors cannot reasonably be expected to manage and execute each other’s policies, plans, and projects with the same diligence with which they do their own. Once the (endogenous) process of credit-claiming has played out, it does remain the case in all democracies that some policies and projects come to be associated with some parties and others with other parties. But electoral competition places in the ruling party’s hands not only projects associated with its own good name, but also those associated with its opponents’ good names.

Why should the ruling party direct its efforts toward ensuring that the latter are managed and executed well, and in doing so vindicate its adversaries, when it could direct the same efforts toward policies, plans, and projects associated with its own good name, and vindicate itself?

Vindicating one’s adversaries and doing their work for them is not a good strategy for attaining competitive success. The ruling party should avoid doing so. Nor does it need to act in any blatantly nefarious manner. All it need do is show a relative lack of concern for ensuring that plans and projects associated with its adversaries are doing well. Treat them, if you will, like the proverbial red-headed stepchild.

Think about it. Were, say, Ford granted occasional control over Tesla’s projects or production lines, would anyone expect it to manage them with the same diligence with which it does its own – so Tesla could then steal Ford’s customers and profits? Or were the Texans granted occasional control over the Colts’ game-planning or front office, would anyone expect the them to manage their affairs with the same diligence with which they do their own – so the

Colts could then thrash the Texans? Surely not.57 The first arrangement should, in expectation, result in a lower quality of car on the market; and the second, a lower quality of football on the field. Both arrangements are inadvisable if we want better cars and better football.58

Unfortunately, democratic politics is open to exactly this problem, because competitors are given voice in, and sporadic control over, each other’s plans and projects. Competing political parties cannot reasonably be expected to manage their adversaries’ work with the same diligence with which they do their own. The result this time should, in expectation, be a lower overall quality of state policy and execution, as ruling parties and coalitions focus on their own policies, plans, and projects instead of ensuring that the state advances its people’s welfare as best as possible regardless of who will receive credit for it. Which amounts to an incentive for deliberate malice,

57 Would we conclude differently if Tesla also occasionally got to control Ford’s projects and production lines, or if the Colts also occasionally got to control the Texans’ game-planning and front office? Again, surely not.

58 Readers who disagree with the assessment should try a little experiment, and grant control over their life plans and projects to rivals and enemies and report back the results. I even permit drawing extensive legal agreements against sabotage, even though these do not obtain in democratic politics. We can also make it so you have control over your rivals’ plans and projects some years, and he or she over yours other years. No doubt each of you will turn out to be a modern-day Cyrano de Bergerac who manages adversaries’ lives with the same diligence as his or her own. The prospect is not appealing? Very well then. I rest my case.

in that ruling parties are discouraged from advancing their people’s welfare to the best of their abilities for no reason besides electoral ambition.59

Naturally, it is difficult to empirically measure the prevalence of electorally-motivated sabotage, especially when it manifests simply as a preference for one’s own plans and projects’ over one’s competitors. Nobody admits to such behavior, since it is not a good look to say that one cares more for reelection than for the people. Nevertheless, the incentive and opportunity for sabotage are part and parcel of democratic politics; and even if the sabotage they produce is not always egregious, they should still influence state behavior. And this influence should, in expectation, manifest as a subtle malice among representatives toward their people – as now explained.60

3.3 Partially-Undisciplined Activity-Span

The problem of partially-undisciplined activity-span pertains primarily to the “state”

aspect of state development. Electoral discipline does not span all areas of state activity

because the state’s performance in every area is not necessarily competitively relevant

for ruling parties’ electoral prospects; and even within the areas of activity spanned by

electoral discipline, returns to effort for improving state performance can be relatively

constricted. Three reasons are provided: (i) ruling parties look to form only majoritarian

59 The logic of electoral sabotage should also produce substitution effects, giving representatives and ruling parties a reason to not pursue long-term projects – especially those likely to win great acclaim – because these are most likely to at some point fall under the control of political adversaries and potentially be sabotaged by them. Moreover, the possibility of sabotage increases the overall uncertainty surrounding legislative or executive projects (e.g. De Figueiredo 2002; Horn 1995; Moe 1991), so we should expect representatives and parties to respond by devoting more of their efforts to alternate strategies for electoral success over which they enjoy greater control, and where the returns to effort are more secure: fundraising, campaigning, posturing, etc.

issue-coalitions; (ii) they look to form only majoritarian assessment-coalitions; and (iii)

voters have incentives to be rationally ignorant toward electoral politics. Together, these

three factors leave considerable room for ruling parties to be competitively

undisciplined, and to not pursue development as far as possible, with respect to a

significant proportion of state activities.

The emphasis so far has been on universal benevolence, and the conclusion has been that electoral competition is misaligned with both the “universal” aspect of the ideal and the

“benevolence” aspect. The emphasis now shifts to state development. This ideal posits that, ceteris paribus, it is better if political institutions encourage public officials to try, or at least wish, to improve as far as possible the state’s performance at all its functions – national defense, public education, economic regulation, and so on. State development also has two aspects: the

“state” aspect and the “development” aspect. The first receives attention in this section; the second in the next. Here, we ask to what extent electoral competition encourages democratic governments (ruling parties) to wish to develop as far as possible the entirety of the state – i.e. to improve the state’s effectiveness or performance in every area of activity. The conclusion is that electoral competition is deficient in this regard as well.

The core idea underlying the analysis is as follows: electoral competition cannot encourage a ruling party to develop any area of state activity which electoral discipline does not span for it – i.e. in which the ruling party is not electorally encouraged to improve state performance. Label the state’s areas of activity A1 through An. Then, for electoral competition to encourage the ruling party to learn and improve in some particular area, Ai, it must be the case that the state’s performance in Ai influences the ruling party and its members’ future electoral prospects. They

60 And even if the logic of sabotage is sometimes behaviorally dormant, we should still lament it because it can always awaken.

must not be able, from a strategic electoral point-of-view, to neglect state performance in Ai costlessly. Otherwise, the ruling party will have no incentive to improve state performance in Ai because electoral discipline will not span it.

The question then becomes: does electoral discipline for a democratic ruling party span all areas of state activity, and encourage the improvement of state performance in all of them? The answer, in expectation, is no. Usually, electoral competition should leave ruling parties and their members considerable room to ignore many aspects of state activity. Moreover, even within the areas of activity spanned by electoral discipline, incentives for development can remain constricted due to epistemic weaknesses in the structure of electoral politics. Consequently, with reference to competitive discipline and its activity-span, the democratic state should tend to be partially undisciplined. The conclusion is explicated below.

3.3.A. Majoritarian Issue-Coalitions

Let’s begin the analysis by focusing on one voter, Ann, and one area of activity (issue), Ai.

Under what conditions will the state’s performance in Ai be competitively relevant for winning

Ann’s vote, such that if the ruling party improves the state’s performance in Ai then Ann’s likelihood of voting for its members increases? Two requirements must be met. First, Ann must care sufficiently about the state’s performance in Ai to reward improvements at the ballot box.

Second, there must exist some mechanism by which improvements in the state’s performance in

Ai influence her vote – she must either know about them or feel their effects. Neither condition is automatically satisfied; the satisfaction of each depends on who Ann is, and what Ai is.

And so, first of all, not every voter cares about everything the state does, or how well – usually because not all state activities appreciably affects every voter’s life. Suppose Ai is transportation policy. Will Ann be more likely to vote for New York’s governor if his or her

policies reduce traffic congestion in Manhattan? If she lives in New York City, probably; if she lives in Buffalo, probably not. Or suppose Ai is environmental policy. Will Ann be more likely to vote for the ruling party if it improves the regulation of CFCs? If she cares about the ozone, probably; if not, probably not. And so on. The point being that not everyone cares about every area of state activity, especially once we zoom into the nitty-gritty. Most people, for example, care about financial regulation, but they do not necessarily care about every aspect of it – e.g. laws regulating reserve requirements; insider trading; corporate audits; IPOs; investor relations; payday loans; currency design; annuities; weather derivatives; and so on, almost endlessly. Is

Ann likely to care about all these aspects of financial regulation, and the hundreds not listed?

Doubtful. Is she likely, in addition, to care about every aspect of the countless other areas of state activity beyond financial regulation? Almost certainly not. In all probability, Ann only cares about some limited subset of issue-areas A1 through An.

Moreover, even within this subset, improvements in state performance will not always influence Ann’s voting behavior. For an improvement in state performance in some Ai to influence Ann’s vote, she must either know of the improvement, or perceive its effects (in her life or society generally). Unless Ann is omniscient, the requirement will not be met in every issue-area she cares about. The modern state is involved in so many facets of society that it is virtually impossible for anyone to observe or know what it does or how it performs in more than a small proportion (e.g. Mayhew 1974; Mettler 2011; Somin 2013). Did the state enact new regulations to reduce wait times for trials, or to curb patent trolls? In many cases, most people will not notice. Nor does retrospection fully remedy this lack of information, since not all state activities have consequences one can or does readily perceive. Suppose, for instance, that Ann votes retrospectively based on improvements or deteriorations in her own quality-of-life. Then

competition over her vote will not encourage the ruling party to improve state performance even in some areas of activity Ann cares about because these improvements will have no appreciable effect on her life. Will her life improve because wait times for trials have declined (unless she frequently finds herself facing a judge)? Will her quality-of-life vary with the patent-trolling industry’s ups-and-downs? In most cases, probably not. Or perhaps Ann votes retrospectively based on improvements or deteriorations in overall social conditions as she perceives them.

Again, her evaluations will not encompass every area of state activity. Although every state activity influences social conditions in some manner or other, Ann cannot know of every social condition in her society. People barely know what their neighbors’ lives are like, how are they supposed to know how society is doing except in the broadest terms? But the broadest terms do not suffice for electoral competition over Ann’s vote to discipline the nitty-gritty substance of state activity. Social conditions will, presumably, improve if wait times for trials decline, or if patent-trolls are better regulated. But will Ann notice these improvements? Not necessarily.61

All of which leads us to the bottom line, which should be fairly uncontroversial: competition over any given voter’s support generally does not discipline ruling parties to wish to improve state performance in more than a subset of its areas of activity. Any given voter neither cares

61 Consider, for example, the American public’s recently-increased awareness of police brutality. There is little reason to believe that police brutality has risen to unprecedented levels over the past handful of years. What has changed is cell phone penetration, which has made it infinitely easier for video evidence to be recorded and disseminated. The result has been a marked increase in most individuals’ awareness of the extent of police brutality. Presumably, many voters, retrospective or otherwise, just did not know much about state performance in this area, since it did not affect anyone they knew, and the overall effects society-wide were simply invisible to them. Now, these voters do know, and can take state performance in the area correctly into account at the ballot box. Previously, ruling parties had no reason to reduce police brutality when courting most voters because most voters would not have noticed. Now they do. In this way, police brutality has become competitively relevant with respect to many voters where it previously was irrelevant. Which demonstrates how in a democratic society there can persist significant gaps in individuals’ knowledge of state performance in many areas, even ones they

about improvements in state performance in every area, nor can he or she account for them at the ballot box.

Now, of course, the competitive discipline induced by electoral politics does not depend on a single voter – and for any given area of state activity, there is usually someone who cares about, and knows about, the state’s performance in that area. Ann might not, but Betty might, or Charlie might, or Dee might, and so on. Someone, somewhere, knows and cares. Hence, if ruling parties were electorally encouraged to court support from every voter, then electoral discipline would, with relative certainly, span all areas of state activity, and encourage them to wish to improve state performance in as many as possible. Unfortunately, this is not how electoral competition is structured, due to its underlying majoritarianism; it only encourages ruling parties to court support from a sufficient proportion of voters to win a legislative majority. As a result, although every area of activity matters to someone or other, every person does not matter to the ruling party, so every area of activity also does not necessarily matter to it. Elections leave room for ruling parties to sideline some issue-areas because they can afford to sideline the voters who care about them – provided they can win sufficient support without worrying about that issue-area.

Thus, speaking strategically, should an American president take an interest in how the federal government responds to the unique needs and interests of Californians? Not necessarily, if he or she can win a majority of electoral votes from other states whose voters mostly care and know about other matters. Should the ruling party in the French Assemblée Nationale take an interest in the development of the Parisian banlieues? Not necessarily, if it can win a legislative majority with support from voters who care for other issues. Should the majority in the British House of

Commons try to improve foreign policy toward Brazil? Not necessarily, if it can win a majority

care about, which prevent them from rewarding or punishing improvements and deteriorations in state performance.

without support from voters who care or know about foreign policy toward Brazil. And so on and so forth. Ruling parties can safely ignore state performance in many areas of state activity because different voters care about different issues and not all voters are needed to retain power.62

In this way, electoral competition leaves ruling parties considerable room to not care about improving state performance – i.e. pursuing state development – in a significant proportion of issue-areas: they are electorally encouraged only to care about state performance in a sufficient proportion to win a majority of votes. In other words, elections only encourage ruling parties to form majoritarian (not universalist) issue-coalitions. Every issue matters to someone or other, but every person does not matter to the ruling party, so the majoritarian exclusion of people translates into the majoritarian exclusion of issue-areas as well. Consequently, when we contemplate the state’s areas of activity A1 through An, electoral discipline for the ruling party should tend to span only some subset of them.63 The ruling party should tend to be electorally

62 Something similar occurs with firms in the context of market competition when consumers either do not care or do not know about some aspect of firm performance (e.g. Baron 2003). Should a firm care about its negative environmental impact? Not necessarily, if consumers do not care or do not notice that it emits noxious gases. Should it care about paying workers a living wage? Not necessarily, if consumers do not care or notice that it runs sweatshops.

63 Of course, whenever there is some disaster or scandal in some previously-ignored area of state activity, then the ruling party often takes an interest in it since the voters whose support it seeks usually start to take an interest – the “fire alarm” model of government (e.g. McCubbins and Schwartz 1984; Zaller 2003). But paying attention only upon scandal or disaster is not quite in line with the ideal of state development. We are interested in encouraging constant learning and improvement with or without disasters – the unceasing pursuit of better. The fire alarm approach to governance does not accomplish this – it is mostly about ensuring that nothing is going too badly, not that anything is going as well as possible.

undisciplined in some significant proportion as well, and relatively free to do there as it pleases, because the voters who would mind need not be courted.64

3.3.B. Majoritarian Assessment-Coalitions

Related to majoritarian issue-coalitions are majoritarian assessment-coalitions. Majoritarian issue-coalitions pertain to the room that electoral competition leaves ruling parties to not take interest in developing some areas of state activity. Majoritarian assessment-coalitions pertain to the room, even within the areas of activity spanned by electoral discipline, that electoral competition leaves in connection with returns to effort. Specifically, elections leave ruling parties considerable room to not take interest in developing the state sufficiently to win support from voters who are least enthusiastic about the state’s performance: a ruling party’s majoritarian coalition tends naturally to comprise voters in whose eyes the state performs well rather than poorly. Suppose, for instance, that electoral competition encourages Arizona’s ruling party to take an interest in improving transportation in Phoenix. Even in this realm, its coalition of supporters will, in expectation and ceteris paribus, tend to be compositionally biased toward voters who are relatively pleased with the state’s performance on this front. The worst critics will tend to not be part of, or targeted to form, the ruling party’s coalition. The ruling party therefore enjoys some room to ignore their experiences, criticisms, and ideas, since electoral competition only encourages it to win support from roughly a majority. Majoritarian exclusion thereby translates to the exclusion of certain assessments of state performance – which, in turn,

64 True, more inclusive decision-rules like supermajoritarianism and division of powers can serve to expand issue-coalitions past the majoritarian mark. However, as noted earlier, the approach has its limits, and tends also to increase propensity for governmental gridlock and inflexibility – which can then obstruct representatives and ruling parties from actually accomplishing much in terms of improving state performance in any areas of activity. It is therefore unclear whether establishing more inclusive decision-rules is an overall improvement with reference to state development: doing so expands issue-coalitions, but also makes it more difficult for the state to actually develop because consensus requirements for political action are increased.

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epistemically biases democratic politics and weakens incentives for state development even within the issue-areas spanned by electoral discipline.

Many epistemic democrats praise representative democracies on the grounds that they rely on the people’s cognitive diversity and distributed knowledge (e.g. Anderson 2006; Aristotle 1984;

Bradley and Thompson 2012; Hong and Page 2004; Landemore 2013; Ober 2012). The evaluation is inaccurate: democratic institutions only encourage democratic governments to account for, and rely on, the cognitive diversity and distributed knowledge of whatever proportion of the people are being courted to win legislative and/or executive control. The rest can safely be ignored, diversity, knowledge, and all. Do economists think the ruling party’s fiscal policy is catastrophic but people who know nothing about the economy think it is brilliant? No problem, so long as the ruling party can win a majority without support from economists. It need not take seriously everyone’s assessments of its performance, regardless of the cognitively diverse perspectives or distributed knowledge at their foundation. The epistemic democrats’ picture of representative democracies is incomplete because it only points out that these systems rely on people’s cognitive diversity and distributed knowledge but not how they do so. Here, a closer inspection of democratic institutional incentives reveals that the first strategic step, in this praised reliance, is for the ruling party to disregard assessments of its performance emanating from people not being targeted to form its electoral coalition – regardless of merit, and based solely on whose assessments they are and how favorable toward the ruling party.

Consider the common refrain among many epistemic democrats – that a political system’s epistemic performance (the extent to which it generates and utilizes knowledge to produce useful or effective state policies)65 depends on its reliance upon the people’s cognitive diversity and

65 This definition is similar to the one in Ober 2012.

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distributed knowledge. If we take this refrain seriously, then it follows that, ceteris paribus, a political system should be expected to epistemically underperform insofar as it does not rely on all its people’s cognitive diversity and distributed knowledge. Representative democracies are such a system, since their institutions permit ruling parties considerable room to costlessly disregard the political evaluations of about one-third to half of the people.

Hence, first, as far as cognitive diversity is concerned, certain kinds of perspectives – those which lead individuals to be comparatively less pleased with the ruling party – should tend to be systematically sidelined. People with higher standards, for example, or who see room for improvement others do not, should find themselves more likely to be ignored by ruling parties.

Second, as far as socially-distributed knowledge is concerned, democratic systems throw away a great deal of it. Ann concludes that the state is performing well in the area of transportation policy because her neighborhood has subways and the roads are uncongested; whereas Betty concludes the opposite because her neighborhood has no subways and the roads feel like a battle royal. Ann and Betty are both correct, in a sense, but arrive at different conclusions based on different experiences with society and the state. However, Betty’s perspective, experiences, and knowledge will tend to more often be sidelined by the ruling party just because they do not lead her to sing its praises. Why bother with her, when a sufficient coalition may be built with support from people more easily won over, and more enthusiastic about the state’s performance?

Majoritarian assessment-coalitions thus introduce an epistemic bias to democratic politics, whereby ruling parties are permitted room to sideline and disregard assessments of state performance belonging to voters who do not sing their praises. In expectation, this epistemic bias should weaken incentives for state development even in the issue-areas spanned by electoral discipline (in comparison with the hypothetical counterfactual where ruling parties are

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encouraged to care about and take to heart everyone’s assessments). Critics will tend to be ignored – as well as the perceptive who see faults others do not, individuals with high standards, and those whose experiences with the ruling party’s decisions and policies have been unpleasant.

Were ruling parties encouraged to win these people’s support as well, they would have good reasons to improve state performance and pursue state development to a greater degree. They would be encouraged to aim for the higher mark of winning over as many as possible of those least enthused by the state’s performance – a naturally more difficult and more demanding task.

Unfortunately, in democratic systems, the effort needed to hit this higher mark bears no returns, at least electorally, since winning support past the majoritarian mark is competitively irrelevant.

Ruling parties’ efforts toward developing the state should therefore tend to be directed at satisfying the fifty-percent-plus-one of the people who can most easily be satisfied – picking the

“lowest-hanging fruit” until a majority is achieved – and calling it a day. Which provides another reason to be displeased with the epistemic performance of democratic systems, and with their encouragement of state development.66

3.3.C. Rational Ignorance

Both the above problems are further compounded by rational ignorance in electoral politics.

The theory of rational ignorance is the well-known idea that, in the realm of electoral politics, voters have little incentive to acquaint themselves with (let alone master) knowledge and ideas relevant to making informed decisions at the ballot box, since each voter’s influence on electoral

66 Again, more inclusive decision-rules like supermajoritarianism and division of powers can serve to expand assessment-coalitions past the majoritarian mark. However, as noted, the approach has its limits, and tends also to increase propensity for governmental gridlock and inflexibility – which can then obstruct representatives and ruling parties from actually accomplishing as much in terms of improving state performance in any areas of activity. It is therefore unclear whether establishing more inclusive decision-rules is an overall improvement with reference to state development.

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outcomes is negligibly small (e.g. Schumpeter 1942; Downs 1957; see also Achen and Bartels

2016; Gelman, Silver, and Edlin 2012). The probability of being electorally pivotal is essentially zero, as is the probability of influencing legislative composition.67 Why devote time and effort to learning about and pondering political issues when one’s vote matters very, very, very little?

There is no point. Nor is there any private cost or penalty borne by individuals who vote on the basis of little information or understanding; or oversimplify complex political questions; or vote on a single issue; or just roll dice. Ultimately, it is all mostly irrelevant because each individual’s vote has a negligible expected marginal electoral consequence. Might as well be (rationally) ignorant. But this rational ignorance at the individual level then makes it difficult for voters to collectively discipline the state, and to discipline more of it – further weakening electoral incentives for state development, and eroding the proportion of state activities they span.

With reference to majoritarian issue-coalitions, rational ignorance in expectation shrinks the activity-span of competitive discipline because each voter comprising the ruling party’s majoritarian coalition is acquainted with fewer issue-areas, and retrospects on the basis of less information (see also Achen and Bartels 2016). If Ann directly or indirectly accounts for ten issue-areas at the ballot box, then a ruling party courting her support is encouraged to be disciplined in these ten; if she accounts for only one, then the ruling party is encouraged to be disciplined in only the one. The less Ann knows about society, politics, and the state, the smaller in expectation the span of discipline induced by competition over her vote. And when we aggregate this line of reasoning across the ruling party’s majoritarian coalition, it follows that the less each voter knows about politics, the smaller in expectation should be the activity-span of

67 Any given vote not only has a negligible expected marginal effect on which candidate wins election or which party commands a legislative majority; it also has a negligible expected marginal effect on how many seats each legislative party wins. This is true in both plurality and proportional systems.

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electoral discipline induced by competition over winning a majority, since, ceteris paribus, attention to state performance in fewer areas of activity should tend to suffice. If electoral politics were not characterized by incentives for rational ignorance, and instead voters were encouraged to devote time and effort toward learning about politics, then they would, in expectation, be able to discipline ruling parties with respect to a larger proportion of the state’s areas of activity. But electoral politics is characterized by incentives for rational ignorance, so a comparatively smaller proportion of state activities should tend to be competitively disciplined relative to the above counterfactual.

A similar logic prevails with reference to majoritarian assessment-coalitions. Rational ignorance should, in expectation, weaken incentives for state development because it should tend to diminish returns to developing the state in any given area of activity, Ai. The less Ann knows about society, politics, and the state, the more likely she should be, in expectation, to misjudge the state’s performance in any given area. The more likely she is to misjudge, the less the expected returns to effort, in terms of winning her support, for a ruling party which works hard to improve state performance in Ai. There is a greater chance, should the ruling party work hard and improve state performance, that its efforts will go unrewarded because Ann will misjudge its accomplishments; as well as a greater chance, should the ruling party accomplish nothing, that

Ann will still reward it because she will misjudge its lack of accomplishments. The ruling party therefore has less to gain, in terms of winning Ann’s vote, by developing the state in Ai. And when we aggregate this line of reasoning across voters, it should follow, in expectation, ceteris paribus, that rational ignorance weakens incentives for state development by undermining returns to effort. Fewer voters will make good judgments and reward effort and improvement. If electoral politics were not characterized by incentives for rational ignorance, and instead voters

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were encouraged to devote time and effort toward learning about politics, then they would, in expectation, be able to create stronger incentives for state development because they would more consistently be able to reward improvements in state performance.

In general, then, rational ignorance should tend to further constrict the electoral discipline of ruling parties and weaken electoral incentives for them to develop the state. Rational ignorance thus provides additional reasons for pessimism about the degree to which the structure of electoral competition conforms with the ideal of state development. We should expect elections to leave considerable slack, and to not give ruling parties good reasons to wish to develop as far as possible the entirety of the state. Electoral discipline – such as it is – depends on the knowledge, ideas, and assessments of voters who have no institutional incentive to devote any effort toward making informed and thoughtful decisions, or to thereby provide expansive electoral discipline for democratic governments.

3.4 Disincentives Against Innovation

Democratic disincentives against innovation pertain primarily to the “development”

aspect of state development. In democratic politics, the private costs for innovators who

devise and realize useful new ideas are extremely daunting, and the private rewards

relatively meager and uncertain. Four reasons are provided: (i) the persuasion

requirements for collective democratic action are immense; (ii) innovators must receive

permission before action, rather than acceptance after the fact; (iii) there are no

intellectual property rights in democratic politics; and (iv) innovation in the context of

electoral competition is necessarily subject to a perverse logic of vote share

cannibalization. Together, these four obstacles deter state development and encourage

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epistemic stagnation by discouraging the creation and realization of useful new political

ideas.

This section extends disagreements with contemporary epistemic democratic theory. Political theorists have a long tradition of inquiry on the epistemic merits of representative democracies – the extent to which democratic institutions and processes generate and utilize knowledge to produce useful or effective state policies.68 In recent years, many scholars have concluded that democracies are epistemically high-performing in terms of successfully arriving at correct or good answers to the policy questions which constitute the bulk of everyday politics – e.g. what laws to enact, what foreign policies to adopt, how to regulate the economy, how to provide public education, etc. (Anderson 2006; Bradley and Thompson 2012; Cohen 1986; Hong and

Page 2004; Landemore 2013; List and Goodin 2001). However, one important aspect of the subject has been mostly overlooked in the scholarly literature: the extent to which representative democracies promote political innovation – the creation and practical realization of new ideas in politics, such as new schemes and strategies for the conduct of foreign policy, public education, economic regulation, law enforcement, etc.69 The purpose of this section is to evaluate the extent to which, in the context of electoral and legislative politics, democratic institutions encourage or discourage political innovation – i.e. encourage or discourage representatives and ruling parties to (i) devise and (ii) practically realize new political ideas. The contention is that on both fronts there are good reasons, overlooked by scholars, for suspecting that representative democracies discourage innovation (or at least do not encourage it very well). The picture of democratic systems painted by many epistemic democrats is incomplete: democratic systems have serious epistemic weaknesses which often go unacknowledged, and which provide good reasons for

68 This definition is similar to the one in Ober 2012.

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pessimism about the developmental strengths of democratic systems – innovation naturally being a key element of development.

In the context of political epistemology, innovation deserves special attention for two major reasons. First, it is impossible to adequately gauge democratic institutions and their epistemic performance without evaluating the extent to which they encourage and discourage political innovation. Without the creation and realization of new ideas, any political system is epistemically stagnant. Consider, for instance, the position adopted by various epistemic democrats who argue that democracies are epistemically praiseworthy and high-performing because they excel at selecting the best among some available set of political choices (e.g.

Anderson 2006; Bradley and Thompson 2012; Cohen 1986; Condorcet 2014; List and Goodin

2001; Landemore 2013; see also Austen-Smith and Banks 1996). Condorcet’s jury theorem or some variant thereof is often deployed in defense of the position. But being able to discern the best among some set of choices is not the same as adding to those choices with new ideas and new possibilities. There is a conceptual difference. With reference to Condorcet’s jury theorem, for instance, even if juries excel at discerning guilt and innocence, it does not necessarily follow that they are innovative: it is not clear that innovation has much at all to do with discerning guilt and innocence. Similarly, even if I can always distinguish correctly- and incorrectly-played music, it does not follow that I am capable of creating new works of composition; and even if I can always distinguish effective and ineffective medical treatments (via controlled trials), it does not follow that I am capable of creating new treatments for diseases. It is therefore perfectly possible for a culture whose members can always distinguish correctly- and incorrectly-played music to still be musically stagnant in the sense of not creating new masterpieces; and for a

69 With the exception of Ober 2012, although he only considers direct democracy in ancient Athens.

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society whose members can always distinguish effective and ineffective medical treatments to still be be medically stagnant in the sense of not devising any new treatments. The same logic applies to democratic institutions and processes. Even if we grant the epistemic democrats' claim that democratic institutions and processes excel at selecting the best among some known, available set of political choices, it does not necessarily follow that they also encourage the creation and realization of new political ideas and possibilities – in which case democratic theorists should be more circumspect in their praise of democratic institutions on epistemic grounds. Without innovation, democracies would be epistemically stagnant.

Second, innovation deserves special attention because it frequently constitutes a collective action problem. In virtually all practical arts, devising and realizing new ideas tends to require substantial investments of time, effort, and resources directed toward learning, research, and development. The extent to which individuals make the requisite investments influences the extent to which they innovate. Seen in this light, innovation often constitutes a collective action problem because without remedial institutions, the returns often do not justify the investments.

Devising new ideas requires costly investments by the innovator, but once devised, these ideas become available to everyone. Consequently, the costs of research accrue solely to the innovator, but the benefits, should there be any, disperse across society: a classic collective action problem

(e.g. Acemoglu and Robinson 2012; North and Thomas 1973; Olson 1965). To my knowledge, there is no existing study of how representative democracies fare with respect to this collective action problem, and the oversight raises further doubts about the scholarly consensus on their epistemic merits.

As discussed earlier, it is commonly argued that democracies are epistemically high- performing because they rely on society’s cognitive diversity and distributed knowledge

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(Anderson 2006; Aristotle 1984; Bradley and Thompson 2012; Hong and Page 2004; Landemore

2013; Ober 2012). They do, but it is still perfectly possible that they fail to sufficiently encourage people to make investments toward devising and realizing new political ideas. Just because I rely on my doctor’s knowledge and ideas about medicine does not mean that he or she bothers to innovate at the hospital. Similarly, just because democracies rely on their people’s knowledge and ideas does not mean that the people have anything novel (or even useful) to contribute. Not unless they make the requisite investments. Which cannot be assumed just because the political system relies on them – it is perfectly easy to let society down even though it relies on you.70

And in this context, there is overwhelming evidence at least in markets that reliance on society’s cognitive diversity and distributed knowledge does not guarantee innovation. Despite their reliance on these, markets tend to encourage the requisite investments toward innovation far more effectively when they resolve the associated collective action problem via remedial mechanisms such as patents or prizes (Acemoglu and Robinson 2012; North and Thomas 1973; see also Hayek 1945). It is possible that this collective action problem remains unresolved in democratic politics. Hence, the issue is not whether democracies rely on society’s cognitive diversity and distributed knowledge, but how. Unless they encourage investments toward innovation, representative democracies may well still exhibit a significant degree of epistemic stagnation – which would again call into question the praise showered on them by epistemic democrats.

This section therefore directly studies democratic incentives for innovation – returns to investments toward it – in the context of electoral and legislative politics; and evaluates the extent to which democratic institutions and processes may be expected to overcome the

70 The second part basically summarizes most of political history.

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collective action problem of innovation by encouraging investments toward the creation and realization of new political ideas.71 This time, the discussion will proceed directly by way of comparison between democracies and markets. As always, the claim is not that the two are analogous – in fact, the point is precisely that they are disanalogous. The argument could be made entirely without reference to markets, but the comparison should aid readers with understanding precisely what institutional features are under scrutiny. In both democratic politics and markets, individuals and groups face choices about investing resources toward innovation, but they make these choices in the face of very different institutional incentives. Comparing the two settings will therefore allow us to identify and highlight several overlooked features of democratic politics, absent in markets, which suggest that democratic institutions and processes discourage investments toward innovation. The private costs for innovators are daunting and the private benefits limited and uncertain. The collective action problem of innovation may well remain unresolved in democratic politics, and representative democracies may for this reason be epistemically stagnant and developmentally constricted to a significant degree. True, the analysis does not settle the issue; but it does point to a few institutional elements in democratic politics to which scholars have paid little attention, and which should give rise to qualms about democratic politics. At the very least, the epistemic democrats’ position is far less ironclad than acknowledged, and there is substantial room for institutional improvement.

3.4.A. Caveats

A few points ought to be clarified at the outset:

First, the discussion should not be understood as adopting any normative stance toward political innovation in general. Innovation is by no means always an unqualified social good.

71 See also Mohr 1969.

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Novelty does not necessarily imply benefit to society – not every new idea is good – so not all innovations are praiseworthy. It is also possible that a politics characterized by constant innovations and changes would produce an unacceptable degree of social instability. These are reasonable observations. The contention, however, is simply that democracies should be assessed to be epistemically stagnant, and to deter state development, if they discourage innovation – which there are reasons for suspecting – regardless of whether this epistemic stagnation also produces some social benefits. I might be better off ignorant rather than learned, but that does not change my epistemic situation: ignorance. Likewise, there might be benefits to democratic societies discouraging political innovation, but that would not change their epistemic situation: stagnation. And if stagnation obtains, then democracies at least do not align well with the ideal of state development, since without new ideas development must naturally be constricted.72

Second, the account provided here is not intended to be an exhaustive evaluation of innovation in representative democracies. There are many aspects of democratic institutions and processes which may be expected to influence political innovation, but we will focus only on electoral and legislative politics – and, even here, only on a few key issues usually overlooked by scholars. There is no attempt to provide a complete theory of democratic innovation, nor any examination of democratic institutions beyond electoral and legislative politics (judiciary, bureaucracy, etc.). The aim is not to provide some final verdict on the epistemic performance of representative democracies, either in connection with innovation or otherwise, but rather to (i) challenge the ease with which political philosophers accept that democracies are epistemically high-performing; (ii) explicate a few major institutional elements of democratic politics that tend

72 If political innovation does tend to introduce instability or other social costs, then this still does not amount to a sufficient argument against it. The correct conclusion may be that we should develop more resilient institutions that can mitigate the instability and social costs associated

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to discourage innovation; and (iii) offer some reasons for suspecting that the contrary position from the one adopted by many epistemic democrats might be more accurate. But settling the matter one way or other is not the goal.

Third, relatedly, I do not wish to imply that only democracies face difficulties with respect to encouraging political innovation. Some of the concerns raised below apply to many political systems – perhaps even most or all. Nevertheless, considerations about alternate political systems are not relevant to the question at hand: i.e. to what extent representative democracies, in the context of electoral and legislative politics, encourage and discourage political innovation. For example, whether other people can or cannot play Bach has no bearing on whether I can or cannot. Similarly, whether other political systems encourage or discourage innovation has no bearing on whether democracies do or do not. The aim is only to assess what democracies are like, not what other political systems are like, so we will evaluate democratic institutions and processes by themselves and not in relation to any other political system.

Fourth, it is true that states often possess capacities market actors do not. The state’s power of eminent domain, for instance, has been crucial in the development of railroads in most parts of the world, and without it market actors in the industry would be hard pressed to realize their innovations at the scale made possible by state intervention. However, this comparative advantage re: certain kinds of capacities is not a property of electoral or democratic politics, but politics generally; and, in any case, we are interested here in the incentives surrounding how states are encouraged and discouraged to use the capacity, not its mere existence. The ability to innovate, or to facilitate innovation, does not imply willingness. The focus here is on the latter, not the former.

with political innovation. Just because democratic institutions struggle to always deal well with innovation does not mean that all possible institutions must as well.

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Finally, of course, the claim is not that there is never any innovation in democratic politics. A casual glance at history easily falsifies this claim, since virtually every aspect of how states perform their functions has evolved over time as new ideas have arisen and old ones have declined – e.g. how states defend borders, enforce the laws, regulate the economy, protect the environment, and so on, has all changed drastically over time. In the area of national defense, for instance, the idea of mutually-assured destruction was quite absent prior to the development of nuclear weapons; in law enforcement, the idea of mass electronic surveillance was impossible to achieve until recently; in economic regulation, central banks were only devised a little over three hundred years ago; and in environmental protection, cap-and-trade regimes have been established only over the past few decades. There are certainly some innovations in democratic politics, as in every political system. But it remains debatable whether these innovations have arisen because democratic institutions encourage them, or whether they have done so despite discouragement. For addressing this question, our best recourse is to directly assess how far democratic institutions and processes, in terms of their structure, encourage or discourage innovation. Which is the usual approach employed by scholars when studying the epistemic properties of different political systems – for instance, when they derive epistemic claims about democracies from the nature of majoritarian decision-making, or from democratic reliance on cognitive diversity and socially-distributed knowledge.73 We will, likewise, derive epistemic claims about democratic systems by studying their basic structure.

These caveats clarified, let’s jump straight to the matter at hand – electoral and legislative politics in representative democracies, and their relationship with the creation and realization of

73 E.g. when it is argued that majoritarianism implies epistemic excellence on the basis of Condorcet’s jury theorem, the argument proceeds by assessing the structure of democratic decision-making, and infers from this that the mechanisms of democratic social choice may be expected to usually select the best available option.

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new ideas, as highlighted by some key contrasts between democracies and markets. Since the interest lies in considering innovation as a process of investment, the focus will be on how democracies and markets differ in terms of encouraging investments of time and effort toward devising and realizing new ideas – i.e. how the private costs and returns for innovators differ in the two contexts. Four major differences are explored. The first and second pertain to the innovator’s costs, and the third and fourth to the returns.

3.4.B. Collective vs. Unilateral Action

Let’s begin with the private costs and difficulties for the political innovator who devises and wishes to realize some new political idea. On this front, note, first, that democracies are a system of collective action whereas markets are a system of unilateral action. In democracies, legislative decisions are made collectively by society – mediated by an assembly of representatives – but in markets, firm decisions are made independently and unilaterally. This difference between democratic action and market action implies a difference in the persuasion requirements that must be satisfied by the innovator looking to realize some useful new idea in the world. In democratic politics, the innovator who devises some novel idea – e.g. a new scheme of financial regulation – can only realize this idea by convincing half the legislature of its viability and desirability. Normally, in order to convince them, it is necessary to also convince a significant proportion of the general population. Contrast with markets. To be sure, the innovative entrepreneur needs help from other people to practically realize his or her ideas. Lenders, investors, and employees must be won over. Still, a small number of supporters almost always suffices: sometimes, even a single wealthy investor will do, and in virtually all cases the market innovator need not convince a significant proportion of society to try out his or her ideas. The persuasion requirements for collective action in democratic politics are thus much more

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demanding than those for unilateral action in markets – due to which the costs of persuasion for the democratic innovator to realize his or her ideas are substantially greater than those for the market innovator.

Presumably, some new ideas are so compelling that they can indeed satisfy the persuasion requirements of democratic legislative politics. Nevertheless, many innovations are novel precisely because they are not obvious to the vast number of people. Ideas which go on to transform the world often begin this journey amidst scorn and ridicule, and in such situations the degree of persuasion required for democratic action is an almost insurmountable deterrent against political innovation. In markets, on the other hand, the innovator need only persuade a far smaller proportion of people, so upon being faced with scorn and ridicule from detractors and naysayers, the market innovator can respond by simply implementing his or her ideas more-or- less unilaterally. It follows that not only are costs and difficulties of persuasion more demanding for the democratic innovator than for the market innovator, the former is also substantially less likely to ever be given the opportunity to try out his or her ideas even after great persuasive efforts.

Finally – again owing to the collective nature of democratic politics – the democratic innovator is also more likely than his or her market counterpart to face active opposition to his or her work. In a market, if Ann enjoys some new flavor of ice cream but Betty does not, then Anne can purchase it while Betty ignores it. Nobody is forced to participate, so nobody has reason to actively oppose new flavors of ice cream if they dislike them. Not so in democratic politics, where there is no exit from state policies and everyone is forced to participate whether they like it or not (e.g. Hirschman 1970). Those who do not appreciate some new political idea cannot simply ignore it, and so are more likely to oppose its realization with protests and attacks and so

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forth. The result, again, is that the democratic innovator’s job is, in expectation, much more difficult than the market innovator’s.

Hence, the collective nature of decision-making and action in representative democracies poses a serious obstacle to would-be innovators in terms of both the creation and realization of new political ideas. Innovators are obstructed from realizing their ideas, as discussed, directly – because they cannot act unilaterally and must first convince at least half the legislature (and, usually, also a substantial proportion of society). Moreover, these difficulties associated with realizing new ideas should also, in expectation, tend to discourage political innovators from investing time and effort toward devising new ideas in the first place. If new ideas, even when extremely well-constructed, face extremely long odds of realization, then the investments toward devising and then attempting to realize them are relatively unlikely to bear fruit – and, by backward induction, to be worthwhile. As a result, the collective nature of democratic action, in expectation, discourages both the creation and realization of new ideas in politics.

3.4.C. Permission vs. Acceptance

Related to collective and unilateral action are the concepts of permission and acceptance.

Social institutions are permission-based to the extent that the individual needs consent from others prior to action, and acceptance-based to the extent that the individual may act first and face reward or sanction later. For obvious reasons, democracies are by-and-large permission systems but markets are by-and-large acceptance systems in connection with innovation. The political innovator who devises some new scheme of, say, environmental policy cannot implement it without consent from a great many people – i.e. without their permission prior to action; but the market innovator who devises some new product or process needs very little prior

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consent to act – his or her actions are instead assessed after the fact, so rather than seeking permission, the market innovator seeks acceptance.

That democracies operate by way of permission and not acceptance has significant ramifications for their promotion of innovation. Specifically, in democratic politics, not only are persuasion requirements for realizing novel ideas extremely daunting, it is also necessary that much of this persuasion occur before a single step may be taken toward the idea’s implementation and, thus, before the innovator may provide any direct evidence of viability or desirability (see also DeCanio 2014). Contrast with markets, where persuasion requirements are lower, and the innovator can convince most lenders, investors, employees, and consumers about the worth of his or her idea after it has already begun traversing the road from theory to implementation and, thus, after the innovator can provide some direct evidence of viability or desirability. Consequently, the democratic innovator’s job is again much more difficult than the market innovator's. And this difficulty should again tend to discourage both the creation and realization of new political ideas. The realization of new ideas is discouraged directly, as discussed, because it is naturally easier to act without permission. But this difficulty of realizing ideas should then also discourage their creation, since the difficulties of receiving permission, in expectation, make it less likely that investments toward devising new ideas will bear fruit – and, by backward induction, be worth undertaking in the first place.

There is some empirical evidence, at least in markets, for the above claims concerning both collective vs. unilateral action and permission vs. acceptance. In an extensive comparative study on the varieties of capitalism, Peter Hall and David Soskice (2001) find that markets where firms and executives can act unilaterally – i.e. without permission or persuasion – better encourage innovation, particularly with respect to radically new ideas, whereas markets that require

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cooperation, consensus, and consent from a large number of decision-makers tend to only enjoy a comparative (but not necessarily absolute) advantage at incremental innovation. These findings lend further credence to the position that the degree to which social institutions permit unilateral action without permission influences how far they promote innovation – especially radical innovation, but likely more generally as well. Hence, we possess good reasons, both theoretical and empirical, to conclude that the structure of democratic politics – where the persuasion and permission requirements are greater than even in the most consensus-based markets – discourages investments toward innovation, and in doing so encourages epistemic stagnation.

The costs of innovation are extremely daunting, and unlikely to bear fruit.

3.4.D. Intellectual Property Rights

The private costs and difficulties for democratic innovators, then, are immense in comparison with those for market innovators. What about private returns? In markets, the primary mechanism by which innovation is rewarded or punished is financial: consumers allocate money.

In representative democracies, the primary mechanism by which innovation is rewarded or punished is electoral: the democratic people allocate political offices with their votes. Votes, in this sense, are the currency of democratic politics, but of course they function and are allocated quite differently from money – which leads to differences in how innovators who create and implement new ideas are rewarded and punished in democracies versus in markets.

We can begin with the obvious difference, which is that intellectual property rights protect and grant ownership over new ideas in markets but not in democratic politics. In markets, those who devise some new idea are granted the legal right – at least when the idea is patentable – to prevent others from copying it or taking advantage of it without the innovator’s consent. Such consent is normally granted only in exchange for remuneration, which ensures that those who

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copy or benefit from the market innovator’s work cannot do so without rewarding him or her.

Intellectual property rights thus enable market innovators to extract with relative ease some of the dispersed social benefits of their work, and even minor innovations can sometimes leave the innovator fabulously wealthy (e.g. Acemoglu and Robinson 2012; North and Thomas 1973;

Rosenberg 2004). In this way, intellectual property rights help ensure that those who devise and realize new ideas which people find useful are adequately rewarded for bearing the private costs of learning, research, and development needed to do so, and that these ideas are not simply co- opted by others without recompense for their originator.74

Meanwhile, in democratic politics, the innovator possesses no property rights over new ideas, nor any corresponding legal right to prevent others from copying or taking advantage of them.

Policy ideas new and old can be co-opted even by political rivals without any reward for their originators. This is, for instance, what happened with the Affordable Care Act, which Democrats adopted as part of their platform even though it is based on a Republican plan from

Massachusetts. The Democratic Party was not required to receive consent from the Republican

Party prior to this co-optation; nor was it required to pay royalties, either in money or votes; and it broke no laws. In democratic politics, thus, nothing prevents innovative ideas – and especially those likely to prove popular among voters – from being freely co-opted by others, including electoral rivals. The democratic innovator should therefore, in expectation, find it more difficult and uncertain to extract the dispersed social benefits of his or her work even when the innovation in question proves extremely beneficial for society (since popular policies can be costlessly incorporated in rivals’ platforms). Hence, the costs of learning, research, and development which

74 This is not to say that intellectual property regimes like patents and copyright are without flaws. It is simply to say that, perfectly or imperfectly, they still perform the function of ensuring that innovative ideas that people appreciate are rewarded.

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must be borne to devise and realize innovative ideas should, in expectation, be less likely to be offset and made worthwhile by the sufficient and relatively certain rewards that intellectual

property rights help guarantee.

The issue, in essence, has to do with product differentiation and competitive advantage. With intellectual property rights, innovators are guaranteed that their ideas will, for some specified period of time, belong solely to them. This intellectual property then ensures that innovators possess the legal right to differentiate their products from those of competitors with respect to their novel ideas, and to thereby, under force of law, gain a competitive advantage against them.

Democratic politics does not work like this, so there is no guarantee that novel ideas will result in any differentiation for the representative, party, or coalition who devises them – ideas that confer a competitive (electoral) advantage can be freely and openly co-opted by other competitors. And although representatives and parties can try to claim credit for their ideas and attempt to differentiate themselves from their opponents in this manner, such credit-claiming still does not legally guarantee differentiation of platforms because there is no obstacle to others claiming the same ideas and making them part of their platforms as well. Credit-claiming also cuts both ways: there is some chance that an innovator’s ideas will come to be associated more closely with rivals if they manage to steal credit for it. As a result, there is less incentive, in democratic politics, to devise or realize novel ideas: should they improve people’s lives and prove popular among voters, they will then likely also be co-opted by rivals and not confer much competitive advantage in terms of platform differentiation.

3.4.E. Cannibalization

Finally, returns to political innovation are further complicated and diminished by the logic of cannibalization in democratic systems. Cannibalization has traditionally only been studied in

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markets, so let’s start there. Contemplate the position of a firm that can undertake research and development to update its product line from widget 1.0 to widget 2.0 – as, for example, car manufacturers update their lineups every few years. Cannibalization is the phenomenon whereby, ceteris paribus, the larger a firm’s market share, the weaker its incentive to innovate because larger firms are more liable to, as it were, eat into their own market shares. Extreme cases illustrate the phenomenon most effectively. A firm that serves one hundred percent of its market by definition cannot increase market share via innovation. The customers it would “win over” by introducing widget 2.0 would simply be its existing customers. On the other hand, if the same firm commanded no market share, then the same innovation would offer greater potential returns in terms of increased market share because the firm could not possibly already serve the customers it would win over by innovating. Ceteris paribus, then, a smaller firm stands to gain more market share by innovating than a larger firm. In addition, by the same logic, the larger a firm’s market share, the more customers it also stands to lose by innovating. When a large firm introduces widget 2.0, those who dislike the innovation are more likely to be its existing customers. The firm therefore stands to lose them. But if the same firm commanded no market share, then it could not possibly lose customers with widget 2.0 because it would have no customers to lose. Ceteris paribus, then, larger firms not only have less to gain by innovating, but also more to lose. Consequently, small firms will find some innovations worthwhile that large firms will not, because the cost-return profile for their investments toward innovation will be more favorable than the cost-return profile for a larger firm. This is the calculus of cannibalization, and it is fairly well-documented in the scholarly literature as one major determinant of market incentives concerning investments toward innovation (e.g. Chandy and

Tellis 1998; 2000; Copulsky 1976; Conner 1988).

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To my knowledge, cannibalization has never been studied in the context of democratic politics, elections, and vote share. The same logic as above applies here as well. Contemplate the position of a political party or legislative coalition implementing some new scheme of, say, public education. If this party or coalition commands the entirety of the vote share, then introducing the new policy could not possibly win it any additional votes at the margin. By contrast, if the party or coalition commands no support among voters, then it could obviously grow its vote share more significantly on the basis of the same policy innovation. Likewise, the larger party or coalition is also more likely to lose vote share by introducing the new education policy, since the voters who dislike the idea are more likely to belong to its existing voter- coalition. The party or coalition with no vote share, on the other hand, avoids the problem completely because it has no voter-coalition to begin with. Ceteris paribus, then, larger political parties also stand to lose more by innovating. This is the logic of cannibalization as it applies to parties, coalitions, and vote share, and it implies that, everything else being equal, smaller parties will find some innovations worthwhile that larger parties will not, because they will face a more favorable cost-return profile on their investments toward devising new political ideas.

At its core, cannibalization is about patterns of upside and downside. In markets, when a firm is deciding whether to innovate and change its product lineup, the larger its market share, the smaller its upside in terms of increasing market share and the greater its downside. It stands to gain less market share, and could even lose some. A firm with no market share, by contrast, faces more upside because it cannot eat into any existing market share, and no downside because it has no market share to lose. Its returns on the same innovation are more favorable and more certain.

In democratic politics, by the same logic, when a party or coalition is deciding whether to innovate and change its policies, the larger its vote share, the smaller its upside in terms of

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increasing vote share and the greater its downside. It stands to gain less vote share, and could even lose some. A party or coalition with no vote share, by contrast, faces more upside because it cannot eat into any existing vote share, and no downside because it has no vote share to lose. Its returns on innovation are, again, more favorable and more certain. And this is what cannibalization is ultimately about: the larger a firm’s share of its market, or a party’s share of votes, the smaller the potential upside to innovating and the larger the potential downside, and the less certain its expected returns on investment.

So far, electoral competition is similar to market competition. There is, however, one crucial difference. In markets, new ideas can be realized by firms irrespective of market share, but in democracies they cannot be realized by parties or coalitions irrespective of vote share. A firm that controls five percent of its market is normally just as free to introduce a new product as one that controls ninety-five percent. Consequently, even when cannibalization leads to large firms being deterred from bearing the costs of innovation, small firms can pick up the slack because they face a more favorable innovative calculus. Not so in democratic politics. A political party that controls, say, five percent of the legislature gets to make no policies. Only ruling parties and coalitions – i.e. parties and coalitions that command a legislative majority – possess the legal authority to make any policies at all (and this is true regardless of electoral system). As a result, any party or coalition in the position to realize some novel political idea must necessarily command approximately half the national vote share. When such a party is deterred from innovation by the calculus of cannibalization, there is no recourse in small parties and coalitions because they do not make policies in the first place. And when small parties and coalitions do acquire legislative control, they by definition become large parties and coalitions and must then face the same unfavorable logic of cannibalization.

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It follows that in democratic politics, any party or coalition in a position to realize some innovative idea must also necessarily be in a position to worry about cannibalization (because it must necessarily command half the seats in the legislature and roughly half the national vote share). This necessary cannibalization – itself simply a consequence of legislative majoritarianism – should, in expectation, discourage investments toward political innovation because it limits the upside and expands the downside to such investments, and makes it less certain that innovative ideas will bring sufficient electoral returns to be worth developing in the first place. Hence, the logic of necessary cannibalization provides one further reason to suspect that the structure of democratic politics deters innovation and encourages epistemic stagnation.75

3.4.F. Innovative Returns to Effort

The overall picture that emerges of democratic incentives surrounding innovation is that returns to effort are relatively meager. In this context, representative democracies are not at all like markets. The conclusion is hardly surprising; but the contrasts help pinpoint the structural factors that make incentives in democratic politics different from those in markets. Democratic institutions and processes discourage investments toward political innovation because the private costs for innovators are immense and the private returns uncertain. Given the persuasion and permission requirements of democratic politics, innovators should find it extremely difficult to realize their ideas in the first place; and even when they succeed, and even when their ideas

75 There is a further difference between market competition and electoral competition with reference to cannibalization. In markets, cannibalistic incentives are somewhat mitigated by the fact that if a large firm does not innovate out of concern for cannibalization, smaller firms can still innovate and eat into its market share. There is an innovative threat from minority players. Less so in electoral politics, because minority parties cannot actually realize innovative ideas. All they can do, at best, is propose innovative ideas. But if a minority party proposes an innovative idea and the crowd goes “hurrah!”, the majority can then immediately just steal the idea and largely unwork the innovative threat to its vote share (there being no intellectual property rights in democratic politics). Which, by backward induction, undermines incentives for

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greatly benefit the people, the electoral returns are still uncertain due to the potential for co- optation and cannibalization. Therefore, it is very much possible, maybe even likely, that the collective action problem of innovation remains in many cases unresolved in democratic politics.

Innovators face unfavorable investment-return prospects.

Admittedly, other elements of democratic politics might somewhat alleviate some of these concerns. It is possible that some representatives find investments toward political innovation worthwhile simply because they confer a sense of service to their fellows. Presumably, bureaucrats and other public officials face a different innovative calculus, which the dissertation’s focus on legislative and executive politics naturally overlooks. Perhaps some other features of electoral and legislative politics, unexplored here, encourage political innovation. Fair enough. At the same time, however, the concerns raised here are also quite serious, and although they do not paint a complete picture of innovation in democratic politics, they raise substantial doubts about the encouragement of innovation in democracies, and especially in democratic legislatures. It is not unreasonable to conclude that democratic institutions and processes discourage and deter innovation at least in the enumerated ways, and that it would be better from the perspective of state development if there were better encouragements for investments toward devising and realizing new political ideas. The foregoing discussion also provides good reasons to resist the optimistic claims advanced by many epistemic democrats, and to suspect that representative democracies may be epistemically stagnant. The epistemic case for democracy requires much more defense; and perhaps abandonment.

minority parties to innovate. Which in turn undermines the mitigation of cannibalization incentives surrounding innovation via the mechanism of fear of innovation by competitors.

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3.5 Conclusion

The incentives generated by electoral competition, then, are not particularly well-aligned with the ideals of universal benevolence and state development. With reference to universal benevolence, they are misaligned with the “universal” aspect because electoral majoritarianism permits substantial room for indifference and even malice toward parts of the population; and with the “benevolence” aspect because elections sometimes encourage representatives and parties to act maliciously by deliberately sabotaging policies they themselves consider good for the people. With reference to state development, electoral incentives are misaligned with the

“state” aspect because electoral discipline, in expectation, only spans a part of the state’s areas of activity; and with the “development” aspect because the structure of electoral and legislative politics poses serious obstacles to political innovation.

Of course, democratic representatives and ruling parties are still free to go above and beyond what elections incentivize them to do. Institutions only encourage and discourage, not command.

But the observation provides little solace. Public officials are free to go above and beyond institutional incentives in any and all political systems; if history demonstrates anything, it is that the freedom to govern well rarely suffices for producing good governance. Freedom is not willingness, and so does not ensure that public officials will care about all their people or work toward advancing their welfare as best they can. The willingness element is what elections are meant to fix. They even usually perform better on this front than the alternatives in monarchies, aristocracies, and so on. Nevertheless, elections have their own limitations and deficiencies, and create some new problems of their own as well, which have now been distilled into the four categories explicated above.

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These four major misalignments between competitive political incentives and the ideals of universal benevolence and state development will guide the remainder of the dissertation. The next step will be to ask if other forms of political competition in modern democratic systems may be expected to rectify them. The results will disappoint. Then we will ask whether competitive politics may be redesigned to better align with the twin ideals. The results here will be more promising, and yield a new competitive political system – population-maximizing competitive federalism – that should, in expectation, perform better.

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CHAPTER FOUR: INTERSTATE COMPETITION

If electoral competition disappoints in its regulation of the state, then we can try pinning our hopes on interstate competition in democratic federations.76 States, of course, do not possess wills of their own, and are instead controlled by the public officials given authority over their apparatuses. Hence, interstate competition – at least in the context of legislative and executive politics – signifies a situation where state representatives and ruling parties compete against counterparts from other states, and wield the powers of their respective states with a view to success in said competition. This is similar to how electoral competition regulates the state: representatives compete over offices, and ruling parties over legislative control, both wielding the state’s powers with a view to attaining electoral success. Interstate competition just disciplines with reference to a different competitive struggle than the electoral. Or so, at any rate, goes the theory.

Since the interest here lies in the competitive regulation of the state, the focus will be on major competitive interstate relations. Only these can reasonably be expected to regulate states in democratic federations across a significant proportion of their myriad areas of activity.

Accordingly, policies such as No Child Left Behind and Race to the Top receive no attention here: the political relations to which they give rise can only be expected to discipline state activities within the limited realms at which these policies are targeted, and not more broadly.

We are interested, instead, in the competitive regulation of the state generally, so the focus here will be on competitive interstate relations whose discipline could be expected to span a large

76 The discussion is confined to democratic federations largely for the sake of simplicity. The arguments provided here – like most arguments in the literature on interstate competition – should be applicable (sometimes with minor modifications) to devolved democratic systems more broadly (e.g. to relations among provinces, cities, etc.). However, all these possibilities will not receive attention here so as to avoid extending the discussion to the point of interminability.

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proportion of states’ areas of activity. As such, we will consider only competitive interstate relations which seem like fairly big and obvious elements in interstate politics.77

Now, there is broad agreement among scholars that states in democratic federations compete against each other. The position has numerous variants – e.g. interstate competition over people

(Grossman 1990; Kerber 1999; Stigler 1972; Tiebout 1956); over firms and financial capital

(Kerber 1999; Oates 1999); and over taxes and budget surpluses (Baybeck, Berry, and Siegel

2011; Brennan and Buchanan 1980; Brueckner 2000; Brueckner and Saavedra 2001; Stigler

1972). Depending on the variant, this interstate competition is then believed to give rise to numerous important political outcomes. The optimists argue that interstate competition maximizes productive efficiency among states (Stigler 1972; Tiebout 1956; Weingast 1995); minimizes tendencies for extraction (Brennan and Buchanan 1980; Sinn 1992); and optimizes political variety (Tiebout 1956; Stigler 1972). The pessimists argue that interstate competition misallocates resources (Keen and Marchand 1997); undermines redistributive policies (Peterson

1995; Rom, Peterson, and Scheve 1998; Rubinfeld 1987); and leads to the under-provision of local public goods (Zodrow and Mieszkowski 1986). Conclusions vary, then, but there is general consensus that interstate competition influences some of the most basic and far-reaching aspects of state activity in democratic federations.

However, as a matter of intellectual history, it is a curious fact that many of the early proponents of the theory of interstate competition in democratic federations offered little more defense of its descriptive accuracy – its conformity with actual conditions in the world – than mere assertion. One approach has been to assume at the outset that state representatives and ruling parties compete against counterparts from other states because they seek to maximize their

77 A very technical definition, I know.

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people’s welfare (e.g. Tiebout 1956; Kerber 1999; Oates and Schwab 1988). As others have noted (e.g. Qian and Weingast 1997; Weingast 2009), the approach is unsatisfactory because it assumes away the central – and thorniest – problem of politics: motivating representatives to consistently pursue their people’s welfare. Once this assumption is made, then one is usually no longer discussing actual politics, but something else, an idealized, sanitized politics free of its basic problems. The approach will not do, particularly in light of the findings from chapter three.

Accordingly, instead of assuming at the beginning that representatives and ruling parties consistently look to maximize their people’s welfare, and then compete against each other and trip over each other to attain this end, we will directly examine institutional incentives for state representatives and ruling parties to evaluate what sorts of competitive relations they may be expected to generate, whether by way of encouraging pursuit of the people’s welfare or some other mechanism.

In this context, the early scholarship on interstate competition provides little institutional justification for the theory’s descriptive accuracy – i.e. little reason to conclude that the structure of institutions and institutional incentives in democratic federations gives rise to interstate competition (if it does not, then why should we consistently expect states to compete against one another?). Charles Tiebout (1956) is most commonly associated with the theory, but his groundbreaking work provides exactly one footnote defending its descriptive accuracy on institutional grounds (the footnote receives close examination presently). Similarly, George

Stigler (1972: 93) maintains that “[the] traditional economic definition of competition applies directly and exactly to one area of political life: local government.. [In the context of] competition of local governments for citizens… [w]e may… deny the existence of qualitative differences between the competition of private enterprises and public enterprises.” But Stigler

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again provides no institutional defense for the claim that local governments compete over citizens, and merely asserts that the situation constitutes “a direct political analogue” (1972: 91) to economic competition.

Nevertheless, despite its shaky intellectual-historical roots, the theory of interstate competition has gained immense popularity, and has become a fixture of contemporary political science. It is no mystery why. It plainly looks as if states in democratic federations compete against each other. The appearance is well-documented, and will receive further attention as the chapter proceeds. But appearances, per the warning at the outset, can be deceptive (1.3.D). As it turns out, the purported evidence for interstate competition is perfectly compatible with states in democratic federations only pseudo-competing with each other – i.e. only appearing to compete even though they decidedly do not. Social scientists have no general concept of pseudo- competition, and so have entirely missed this possibility. The oversight is significant. As shall be argued, pseudo-competition is not only a theoretical possibility, but also the likely correct description of most interstate relations that the current paradigm of scholarship characterizes as competitive.

Given the pseudo-competition possibility, this chapter will start at the beginning, with what interstate competition is and when it occurs. Readers should by now be familiar with how this goes. In the context of legislative and executive politics, relations among state representatives and ruling parties from different states are competitive only if they satisfy the four necessary conditions for competition. First, there must exist some source of rivalry – some set of incompatible preferences possessed by representatives and ruling parties from different states – which provides them something to compete over. Second, this rivalry, and the preferences underlying it, must be sufficiently salient in representatives’ and ruling parties’ minds for them

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to be willing to wield the powers of the state accordingly. Third, state representatives and ruling parties must enjoy strategy determinacy – their actions must influence their prospects for satisfying their rivalrous preferences. Finally, fourth, representatives’ and ruling parties’ prospects for competitive success must be influenced by their performance relative to each other.

As shall be seen, these four necessary conditions are not as readily satisfied in the context of interstate relations in democratic federations as might initially appear to be the case.

For tractability, the discussion is largely confined to the United States and European Union as exemplars of democratic federations more generally.78 The chapter proceeds as follows. First, it clarifies some common misconceptions regarding what interstate competition is and what constitutes evidence for it. Next, it asks whether state representatives and ruling parties possess good institutional reasons – incentives – to engage in interstate competition. Several options receive attention. State elections come first. It is argued that state elections do not encourage interstate competition, but do encourage interstate pseudo-competition. Federal elections come next. They do encourage interstate competition, but the prevalence of interstate competition founded in federal elections tends to be low, at least in the US and EU. Furthermore, even when federal elections generate interstate competition, the structure of this competition is still broadly misaligned with the ideals of universal benevolence and state development because the resulting interstate competition is still electoral (this part of the argument is completed in chapter five).

Finally, this chapter contemplates non-electoral institutional incentives for state representatives and ruling parties to engage in interstate competition, particularly in the context of competition over tax revenues. Here, again, there is room for doubt – or at least for pessimism. It is concluded, therefore, that much of what passes for interstate competition in modern democratic

78 The findings should tend to apply to other devolved democratic polities as well, but little attempt is made here to establish their generality, or the limits of their general applicability.

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federations is likely only interstate pseudo-competition; and the instances of actual interstate competition are likely not much cause for celebration. At least as far as institutions and institutional incentives in democratic federations are concerned, we have good reasons to suspect that states in democratic federations tend not to compete against one another, at least not as frequently as the literature alleges; and even when they do, the alignment of competitive political incentives with the ideals of universal benevolence and state development is not much improved.

4.1 What Is Not Interstate Competition

Let’s begin the investigation by distinguishing interstate competition from a few other social relations and processes with which it is sometimes incorrectly conflated, and which are conceptually distinct from it: (i) mobility, (ii) sorting, (iii) policy diffusion, (iv) comparative self- evaluation, and (v) welfare improvements.

4.1.A. Mobility

First, the interstate mobility of firms, capital, people, etc. does not necessitate or imply interstate competition over them. The erroneous line of reasoning appears, for example, in

Wolfgang Kerber’s (1999) “Interjurisdictional Competition Within the European Union,” where he writes: “mobility between Member States and decentralization of economic policies

(subsidiarity) imply that Member States… necessarily are in competition with one another… decentralization + mobility = interjurisdictional competition” (S217-218). This is not true. Air is mobile across borders, but there is no reason to believe that states have been competing over sucking it into their territories. Likewise, animals are always free to roam as they please, but nobody theorizes that competition over animals is a serious force in interstate politics. Just because air and animals are mobile – free to cross state borders – does not imply that state public

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officials compete against each other to attract them into their territories. Mobility does not imply the satisfaction of the four necessary conditions for competition – and, specifically, it does not imply any rivalry among state public officials over attracting to their states that which is mobile.79

The conceptual difference between mobility and competition is readily apparent with air and animals, but the same logic also applies to firms, capital, people, etc. In modern federations, they are usually free to cross borders, but it does not necessarily follow that public officials from the constituent states wish to attract them to their territories – which is necessary for the rivalry condition to be satisfied. If public officials can take them or leave them, then there can be no interstate competition over them either. Which is easily seen in the politics of the European

Union, where borders are open but far from competing to attract foreigners, many parliamentarians from the constituent states strongly oppose the influx of migrants. Britain is even seceding over the matter. Clearly, then, interstate competition cannot be inferred solely from mobility. The two are not the same; nor does the latter necessarily imply the former.80

79 To be fair to Kerber, he does realize that something is amiss with his argument, and so mentions in passing that states compete over firms, capital, people, etc. “because the influx of resources usually has wealth-enhancing effects leading to more jobs and an extension of the tax base” (S220). We have already touched upon this line of reasoning, and it will receive further attention a little later. For now, the point to bear in mind is just that Kerber’s main inference of interstate competition from only mobility and decentralization is entirely too quick.

80 Naturally, states could not compete over, for instance, capital if the latter could not cross borders, so the mobility of capital is necessary for interstate competition over it. But mobility is not sufficient because it does not guarantee that the necessary conditions for interstate competition are satisfied.

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4.1.B. Sorting

Second, interstate sorting is not interstate competition, nor evidence for it. Consider, for example, Philip Grossman’s (1990) study of death duties and migration patterns in Australia.81

He finds that variations in death duties drive a significant proportion of interstate migration, and concludes that the finding provides some empirical evidence for competition over people among the Australian states.82 The inference is invalid. Sorting occurs regardless of competition. If Ann hangs up expensive artwork in her home, her actions provide no evidence that she is trying to attract burglars even if they come in droves. And if Ann’s neighbor Betty also hangs up expensive artwork in her home, then burglars might sort themselves by how much they like

Ann’s impressionist pieces versus Betty’s contemporary ones, but the sorting of burglars would not somehow demonstrate that Ann and Betty are competing over attracting them. Perhaps they are strange people who compete over attracting burglars to their homes, but at any rate the conclusion cannot be inferred from the sorting of burglars. Sorting only signifies how others respond to Ann and Betty’s actions, not why Ann and Betty act as they do.

The same logic applies to the interstate sorting of firms, capital, people, etc. In the Australian case, perhaps it is true that some states set death duties with a view to competing over people and attracting people from other states, but perhaps they do so for entirely different reasons such as lobbying by the wealthy. Sorting only tells us how people respond to state policies, not why public officials enact those policies. Hence, the fact that firms, capital, or people sort across states does not imply that states are trying to attract them. They would sort regardless.

81 For a not-quite-recent overview of studies on sorting, see Dowding, John, and Biggs 1994. The authors of the overview also mistakenly believe that interstate sorting constitutes evidence for interstate competition.

82 As in Tiebout 1956.

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Accordingly, in the Australian case, states which set low death duties might even be doing so despite the migrants their actions attract. Interstate sorting neither necessitates nor implies interstate rivalry or competition. Sorting is consistent with interstate rivalry and competition, but it is also perfectly consistent with their absence: sorting arises with or without competition.

Once again, the difference between sorting, rivalry, and competition may be readily observed in the context of attitudes toward migration in the European Union and United States. In Europe, individuals certainly sort themselves across the member states, and tend to move to the states they find most attractive; but it does not follow that public officials from the member states wish to attract migrants, or experience rivalry or competition with counterparts from other states over attracting them. Quite the contrary. As noted, in many states, large numbers of public officials strongly oppose immigration, and Britain is even seceding over this opposition. Likewise, in the

US, the same pattern may be observed in the context of legal and illegal immigration from

Mexico. Many Mexicans sort themselves between Mexico and the US, both legally and illegally; but it does not follow that public officials in the US are trying to attract Mexican immigrants, or experience rivalry or competition against counterparts in the Mexican government over attracting them. Quite the contrary. If anything, many American public officials are rather eager to kick

Mexican immigrants from their homes and send them packing. Thus, attitudes toward migration in the EU and US clearly demonstrate that interstate sorting occurs regardless of interstate competition, and provides no evidence for it.

4.1.C. Policy Diffusion

Third, policy diffusion is not interstate competition, nor evidence for it. Scholars have unearthed considerable empirical evidence that policies tend to diffuse geographically – i.e. states tend to imitate or mimic each other’s policies, especially their neighbors’. This policy

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diffusion is then sometimes offered as evidence for interstate competition (e.g. Baybeck, Berry, and Siegel 2011; Brueckner and Saavedra 2001; Butler 1985). By itself, it is not, as others have also noted (e.g. Bailey and Rom 2004; Heyndels and Vuchelen 1998; Revelli and Tovmo 2007;

Volden, Ting, and Carpenter 2008). Competition is neither necessary nor sufficient for policy mimicking and diffusion.

It is not necessary because people mimic not only those against whom they compete, but also those whom they observe, admire, or learn from. If a high school quarterback watches Tom

Brady and mimics his throwing mechanics, or if an author reads P. G. Wodehouse and mimics his prose, or if an American presidential candidate watches Angela Merkel and mimics her gravitas, the imitation does not by itself make them competitors. The mimicker and mimicked need not be trying to attain any incompatible goals – which is why people mimic not only their adversaries, but also those with whom they cooperate, as an apprentice mimics his or her mentor.

Nor is competition sufficient for policy mimicking and diffusion. True, competitors sometimes copy each other’s successes, as with knockoff goods, but competition also often encourages them to differentiate products and strategies, and to specialize along the lines of competitive and comparative advantage (which is the main thrust of Tiebout’s seminal theory) (Heyndels and

Vuchelen 1998). Consequently, interstate competition is not sufficient for policy mimicking and diffusion either. It could equally well be expected to produce policy differentiation. Accordingly, it follows that interstate policy mimicking and diffusion by themselves provide no evidence for interstate competition. Policy diffusion can arise with or without interstate competition, and interstate competition can arise with or without policy diffusion.

Thus, it is possible to provide a variety of non-competitive explanations for the observed phenomenon of interstate policy diffusion, and these have not been sufficiently eliminated by the

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literature. First, as argued by Volden, Ting, and Carpenter (2008), it is entirely possible in some cases that state public officials only observe their own states, face their own problems, and learn from their own successes and mistakes, but appear to mimic each other because this self- referential learning leads them down similar epistemic and policy paths.83 Second, as argued above, it is also possible for state public officials to observe and learn from the experiences of other states and their public officials, and even to mimic them, but still not compete against them, as our hypothetical quarterback mimics Tom Brady but does not compete against him.

Third, it is possible that in many cases states tend to adopt policies similar to their neighbors’ simply because states in the same region tend to face similar problems: for instance, people in

Florida tend to put screens on their windows whereas people in England tend not to, not because anybody is competing against anybody else, but because Florida has a lot of bugs and England does not (Volden, Ting, and Carpenter 2008). Finally, it is possible that what looks like policy diffusion may in some cases be explained with reference to a geographic element in the popularization and evolution of political ideologies and policy preferences, which leads nearby states to adopt similar policies even though they do not compete. Since these alternate explanations remain live with reference to many, perhaps most, of the observed instances of interstate policy diffusion, interstate competition cannot be safely inferred from these

83 They offer an excellent illustration. “Consider the following stylized example of U.S. state policy making. In the latter part of the twentieth century, the adverse effects of tobacco smoking became widely known, scientifically verified, and commonly accepted. State policy makers adopted laws restricting smoking in public and private places, banning cigarette advertising, adopting larger excise taxes, and implementing youth access restrictions. What would the pattern of these adoptions have looked like had each state acted independently of the others? Because they faced a common problem at about the same time, each state would likely act within a few years of one another. States with similar public or interest group pressures or similar ideological leanings would be more likely to act simultaneously with similar antismoking restrictions” (Volden, Ring, and Carpenter 2008: 319).

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observations. Diffusion is certainly consistent with interstate competition, but it is also perfectly consistent with its absence.

4.1.D. Comparative Self-Evaluation

To get around the fact that policy-mimicking and diffusion do not necessarily imply interstate competition, Revelli and Tovmo (2007) test whether mimicking is correlated with survey responses where local government bureaucrats in Norway were “asked whether they aim at increasing knowledge and improving own performance by systematically comparing the performances of own specific units with the performances in “benchmark” units” (129).84 The authors find the correlation they were looking for: not only do local jurisdictions tend to mimic their neighbors (in terms of governmental productive efficiency), this mimicking is correlated with responses on the survey – jurisdictions whose bureaucrats profess comparing their governments against others are more likely to mimic their neighbors.

Suppose the empirical findings are accurate.85 Does it follow that local jurisdictions in

Norway compete against each other, or that bureaucrats in these jurisdictions compete against counterparts from others?86 No. Who, after all, should we expect to be more likely to mimic neighboring jurisdictions – bureaucrats who look at what other jurisdictions are doing and compare their own jurisdictions against others, or bureaucrats who have no idea what goes on anywhere else? Obviously the first. Think about it. Who would we expect to be more likely to

84 I would make a wisecrack about taking seriously people’s responses to being asked whether they try to improve their job performance or, presumably, sit on their hands, but cannot because the original survey was in Dutch and I am not certain exactly how the questions were phrased.

85 There is some room for doubt given how Revelli and Tovmo coded survey respondents who had not answered the relevant questions about interjurisdictional comparisons (the survey asked many different things). Non-respondents on the relevant questions comprised about half the sample, and Revelli and Tovmo assumed that a non-response implied an answer of “no.”

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cook scrambled eggs in Gordon Ramsay’s signature style – people who have seen eggs cooked that way and compared their own cooking against his, or people who know nothing about his way of scrambling eggs? Obviously the first. But just because Ann observes Gordon Ramsay, compares cooking against him, and then copies his cooking style does not mean that she competes with Ramsay over anything. It just means she now knows how to make some excellent scrambled eggs, and learned it, directly or indirectly, by comparing her cooking against

Ramsay’s. Thus, if we observe that those who profess to being familiar with Ramsay’s work, and to having compared their cooking against his, are more likely to cook similarly, we should not conclude from the observation that these imitators are competing with Ramsay. They are learning from him. There is a conceptual difference, as there is a difference between a student who learns from a professor and a student who competes against a professor.

It is naturally true that people are more likely to copy those whom they observe, and against whom they compare their own actions and performance; as Ann might compare her cooking against Gordon Ramsay’s so she can make better food, or Betty might compare her jokes against

Monty Python’s so she can be more popular among friends, or Charlie might compare his driving against his driving instructor’s so he can avoid accidents. Observation and comparison do not imply competition. Hence, in the case of the Norwegian bureaucrats, of course bureaucrats who compare what their jurisdiction is doing against what other jurisdictions are doing will be more likely to copy others’ work compared to bureaucrats who never look. But whether there is competition among bureaucrats from different jurisdictions is a separate question. Those who cooperate also tend to compare against each other, and to copy each other, as rowers match the timing of each other’s strokes. The same is true of those who neither compete nor cooperate, as

86 Even just in the case of bureaucrats who profess to comparing against other jurisdictions (interestingly, only about half of those who answered the questions).

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with Betty and Monty Python. Observation and comparison are not unique to competition, and therefore constitute no evidence for it. They can arise with or without competition.

4.1.E. Welfare Improvements

Finally, improvements in social welfare should not be mistaken as evidence for competition, or straightforwardly attributed to it. Competition is neither necessary nor sufficient for welfare improvements. Competition is not necessary because it is not the only social relation which can improve social conditions – cooperation, learning, imitation, friendship, play, and so on can all likewise improve welfare. Competition is not sufficient because, being double-edged, it does not always improve social conditions – war and gang violence being the obvious instances, although it is not as if competition in democratic politics and capitalist economies has always ended well.87 Accordingly, we should not infer competition simply from improvements in social welfare: social welfare can improve due to any number of other factors. Nor should we impute to competition observed welfare improvements until other alternatives can be sufficiently eliminated.

Unfortunately, this is precisely what some of the scholarly literature does. For example, numerous empirical studies purport to demonstrate that public schools close to each other, and presumably their administrators, compete over students – based on the view, as Belfield and

Levin (2002: 281) put it, that “an education market exists where[ever] parents have a set of feasible alternatives.” The authors try to walk back this conceptualization a little later, but ultimately just assume that the Herfindahl Index may be used to measure school competition in an area; which essentially amounts to assuming that the more students are dispersed across a

87 The insufficiency of competition for social welfare improvements is, of course, the basic contention of various pessimistic accounts of interstate competition which argue it to produce perverse social outcomes (e.g. Keen and Marchand 1997; Peterson 1995; Rom, Peterson, and Scheve 1998; Rubinfeld 1987; Zodrow and Mieszkowski 1986).

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large number of schools, the “more” competitive are schools in the area. Other studies use variants of the same approach, and similarly adopt student dispersion and the number of schools as measures of competition (e.g. Borland and Howsen 1992; Belfield and Levin 2002; Hoxby

2000; see also Blair and Staley 1995). All this is conceptually incorrect. It cannot simply be assumed that schools compete against each other over students simply be virtue of being near each other; just as it cannot be assumed that Ann and Betty compete against each other simply by virtue of being neighbors.88

The studies in question then all arrive at similar findings: localities with more schools, and students more dispersed across schools, tend to exhibit superior outcomes in terms of student performance and school productivity. The responsibility is then invariably pinned on competition among schools. There is no particular reason for taking this last step. For all we know (and for all these studies can distinguish), any number of other mechanisms might be responsible. First of all, schools might be cooperating. Schools near each other might be able to more easily share facilities, resources, etc., and thereby to improve productivity and student performance. Second, administrators in localities with more schools might more easily be able to learn from each other’s mistakes and successes, avoiding the former and imitating the latter. Third, students in localities with a larger number of schools might perform better simply because they are able to sort into institutions that best match their educational tastes and needs – a possibility the literature completely neglects because it recognizes no conceptual distinction between sorting

88 Especially since it is not clear, institutionally, why administrators would compete over students in the first place, or find such competition salient. The literature tends to simply assume this, but if anything, having fewer students would reduce administrators’ workloads and allow them to provide better education to the rest. Parents and school boards may also prefer the schools their children attend to keep class sizes small, in order to secure for them more individual attention. Hence, there is at least a very good case to be made against the assumption that schools compete over students.

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and competition.89 None of these mechanisms implies competition among schools over students, but the cited literature does not even try to eliminate them. Consequently, scholars’ eagerness to identify competition as the underlying mechanism for welfare improvements is speculative at best – not evidence-based reasoning, but question begging. The observed welfare improvements are consistent with competition; but they are also perfectly consistent with its absence.90

4.1.F. The Core Problem

The core problem underlying the last four of the above five misunderstandings is essentially the same: they all infer causes from (behavioral) consequences. In other words, they attempt to infer the social relation of competition from the theorized social consequences of competition – sorting, policy diffusion, comparative self-evaluation, and social welfare improvements. All these inferences are invalid because they affirm the consequent (if P, then Q; Q; therefore P).

Even if it were conceded that competition always yields the theorized social outcomes

(debatable), it still would not follow that competition is the only social relation or process capable of yielding them. Many alternate explanations may be advanced, and they have not been sufficiently eliminated. Accordingly, although observations regarding interstate sorting, policy diffusion, comparative self-evaluation, and social welfare improvements are all consistent with interstate competition, they are all also perfectly consistent with the absence of interstate competition. Because interstate competition is not necessary for any of these observations to arise, it cannot be inferred from any of them either.

89 Sorting should also be more “effective” with a larger number of schools because schools are usually not identical. With more schools, students would have more options (variety) on the basis of which to sort.

90 See e.g. Dilorenzo 1983 for a similar study about local government concentration and state efficiency. Similar objections apply to it – e.g. the observed improvements in productive efficiency may just arise from sorting, not competition; or from cooperation, learning, or imitation.

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Chapter one had outlined several theoretical reasons why behavioral inferences about institutions and underlying social processes can prove problematic. Now, readers can see these theoretical reasons in action. Moreover, for obvious reasons, the same issues are likely to persist more broadly with reference to behavioral studies purporting to demonstrate the existence of interstate competition. Which is not to say that behavioral studies of interstate competition are necessarily intractable; but the problems associated with making them tractable are extremely thorny. These problems will also become thornier by the end of this chapter, since it will be argued that our current empirical observations about interstate relations are largely compatible with interstate pseudo-competition, and need not be explained with reference to interstate competition at all, nor with a mixed bag of alternate hypotheses. But more on this presently.

The aforesaid thorny issues are one of the major reasons why this dissertation is organized around directly studying institutions and institutional incentives rather than trying to read their properties among observations about behavior (or social outcomes). Patterns of behavior and social outcomes can be extremely complicated, and it can be even more complicated to validly infer from them propositions about institutions and institutional incentives. The dissertation therefore looks, instead, at institutions themselves, and attempts to infer from their structure the incentives they may be expected to generate. This is also what Tiebout does, for example, in his seminal study – although, as we shall see momentarily, it is not clear that his institutional theory is plausible. But the general approach makes sense, because it altogether avoids the complications of behavioral inferences. Accordingly, from here on, this chapter will focus on institutions, and ask whether their structure in modern democratic federations encourages or necessitates interstate competition (and, if so, what structural properties may be ascribed to the

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resulting interstate competition). Several institutions receive attention, beginning with state elections.

4.2 State Elections I: National Comparisons

It is easy to see that there is no direct electoral rivalry among representatives and ruling parties from different states. They do not contest the same offices, or look to control the same legislatures, so their electoral preferences are not straightforwardly rivalrous (representatives from different states can all simultaneously hold the offices they seek; ruling parties from different states can all simultaneously control their legislatures). Accordingly, there is also no straightforward electoral reason why the relative performance condition should be satisfied for relations among state representatives or ruling parties from different states. However, although there is no straightforward interstate electoral competition, it is possible that state elections could still give rise to interstate competition indirectly. Two accounts along these lines receive attention here. The first proposes that state elections generate interstate competition because voters make national comparisons at the ballot box. The second proposes that state elections generate interstate competition because they encourage state representatives and ruling parties to compete against counterparts in other states over “scarce resources” such as firms, capital, taxes, people, etc. This section pertains to the first account; the next section to the second.

The first theory – that state elections generate interstate competition because voters make national comparisons at the ballot box – comes straight from Tiebout’s groundbreaking work:

On the production side it is assumed that communities are forced to keep production costs at a minimum either through the efficiency of city managers or through competition from other communities. [Continues in footnote] In this model and in reality, the city manager or elected official who is not able to keep his costs (taxes) low compared with those of similar communities will find himself out of a job. As an institutional observation, it may well be that city managers are under greater pressure to minimize costs than their private-

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market counterparts – firm managers. This follows from (1) the reluctance of the public to pay taxes and, what may be more important, (2) the fact that the costs of competitors – other communities – are a matter of public record and may easily be compared (Tiebout 1956: 422).91

It has already discussed why we should not simply assume, without explanation or justification, what Tiebout refers to as “the efficiency of city managers” – inducing productive efficiency is one of the central problems of politics, and we should not assume it away. The relevant question, then, is whether Tiebout’s institutional account of state efficiency is a compelling description of politics in modern democratic federations like the US and EU. The view seems plausible enough on its surface, and rests mainly on two premises:

P1: State representatives and ruling parties care about reelection and legislative control

respectively.

P2: Voters decide their electoral fates by comparing the productive efficiency of their

home states with the productive efficiency of other states.

If the two premises are sound, then the four necessary conditions for interstate competition should, in expectation, be satisfied, and we could safely conclude that interstate competitive discipline spans state productive efficiency. The rivalry condition would be satisfied because the preferences of representatives and ruling parties from different states would be incompatible: all could not simultaneously avoid the electoral sanctions of interstate underperformance or reap the electoral rewards of interstate outperformance (excepting the scenario where everyone performs about equally well or badly). The salience condition would be satisfied if national comparisons

91 Note that this is not Tiebout’s primary account of interstate competition. Tiebout’s theory actually comprises two accounts of interstate competition. The famous one concerns interstate competition over people, and is grounded in the assumption that governments look to maximize social welfare. We have already refused to accept this assumption as a starting point. Tiebout’s second account of interstate competition is somewhat implicit, and argues that interstate competition is grounded in state elections, and disciplines state productive efficiency.

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were a significant enough element in electoral politics for state representatives and ruling parties to be willing to wield the powers of their states accordingly. The strategy determinacy condition would be satisfied because state representatives and ruling parties’ actions would influence how voters evaluate their performance against counterparts in other states. And the relative performance condition would be satisfied because whether representatives are reelected or fired would depend on their performance relative to counterparts from other states.

Why not accept this account? My contention is that Tiebout’s second premise is, for the most part, false: even if voters were privy to, and attentive to, all the relevant information (debatable), it would still be extremely implausible that they employ national comparisons at the ballot box.

They can always do better by voting solely on the basis of local comparisons because all nationally-comparative voting strategies are characterized by (i) subgame imperfection and (ii) counterproductive signaling and incentive-creation.

4.2.A. Subgame Imperfection

Contemplate the position of a voter, Ann, who evaluates the performance of her incumbent state representatives and/or ruling party on the basis of some metric or metrics m (individual welfare, social welfare, economic growth, state efficiency, etc.). Ann’s voting strategy is locally- comparative – designate it Lm – if she votes for or against the incumbent representative or party on the basis of comparisons, on metrics m, against the viable, available local alternatives (other candidates or parties running for election in her state). Ann’s voting strategy is nationally- comparative – designate it Nm – if she also includes in her decisions comparisons, on the same

92 metrics m, against representatives or ruling parties from other states. Lm and Nm then

92 As per Tiebout.

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“correspond” to each other, in the sense that they rely on the same metrics to evaluate incumbent performance but differ in who the incumbents are compared against.

I contend that all nationally-comparative voting strategies are subgame imperfect. The voter can always do better by playing the corresponding locally-comparative strategy. To see why, let’s examine a locally-comparative strategy alongside three corresponding nationally- comparative strategies that use percentile cut-points. This is a stylized thought experiment, but it will reveal a general argument for the subgame imperfection of nationally-comparative voting strategies.

Figure 1 specifies the four strategies. For each, it lists the voter Ann’s decision – either voting to reelect or to fire the incumbent – conditional on comparisons on metrics m against (i) available and viable local alternatives, and (ii) counterparts from other states. Strategy A is locally-comparative, so in playing it Ann ignores comparisons across states and simply picks the best available option among the candidates or parties contesting election in her state. The nationally-comparative Strategy B deviates from Strategy A in only one respect: Ann always votes to fire the incumbent for underperformance in comparison with counterparts from other states93 even when there is no better local alternative. The nationally-comparative Strategy C also deviates from Strategy A in only one respect: Ann always votes to reelect the incumbent for outperformance in comparison with counterparts from other states94 even when there is a better available local alternative. The nationally-comparative Strategy D combines both these

93 I.e. for falling in the bottom x percentiles on metrics m when compared against counterparts from other states.

94 I.e. for rising to the top (100-x) percentiles on metrics m when compared against counterparts from other states.

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Figure 1. Four Voting Strategies

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deviations, which means that in playing Strategy D Ann no longer compares the incumbent against local alternatives, and instead votes solely on the basis of interstate comparisons.95

Only Strategy A is subgame perfect because the nationally-comparative strategies are all stagewise irrational – i.e. they all require voters to make promises and threats which it is not in their interest to honor. Let’s consider each strategy individually.

Strategy A. Strategy A is subgame perfect because it only compares the incumbent to other available (and viable) local alternatives. When playing this strategy, the voter Ann threatens to fire the incumbent representative or ruling party only if there is a better candidate running for that office or better party running for election in her state; and promises to reelect only if there is no better alternate candidate or party available. Hence, she only threatens to fire when she has a better option, and only promises to reelect when she has no better option. The locally- comparative Strategy A is therefore stagewise rational and subgame perfect: Ann cannot do better by reneging on any threat or promise because she always simply votes for the best available candidate or party – i.e. the candidate or party she expects to perform best on the metrics m that she cares about.

Strategy B. Strategy B differs from Strategy A in that Ann threatens to fire the incumbent for poor performance relative to counterparts from other states even if she has no better alternative – i.e. even if no other candidate running for that office, or other party running for election in her state, is expected to outperform the incumbent on metrics m. Strategy B cannot be subgame perfect because it is stagewise irrational to fire the incumbent absent a better replacement.

Should the governor of Massachusetts underperform the governor of California on metrics m,

95 These are the three “correct” ways of structuring a nationally-comparative voting strategy, in that they reward incumbents for performing well in comparison with counterparts from other states and/or punish them for performing poorly (rather than the other way around).

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this underperformance does not by itself imply that a voter in Massachusetts can actually elect someone who will do better. Maybe a better candidate is available, maybe not. Whenever not, it makes little sense to oust the incumbent, who is still the best available option. The voter can therefore do better by reneging on the threat to fire the incumbent for underperformance relative to counterparts from other states whenever there is no better alternative. However, if the voter makes this alteration to her voting strategy, then she will be playing the corresponding locally- comparative Strategy A – which thus weakly dominates the nationally-comparative Strategy B.

Strategy C. Strategy C differs from Strategy A in that Ann promises to reelect the incumbent for good performance relative to counterparts from other states even if there is a better available alternative – i.e. even if some other candidate running for that office, or other party running for election in her state, is expected to outperform the incumbent on metrics m. Strategy C cannot be subgame perfect for similar reasons to why Strategy B cannot: it is stagewise irrational to reelect the incumbent when a better replacement is available. Ann can do better by reneging on the promise to reelect the incumbent for outperformance relative to counterparts from other states when there is a better available option. However, if she makes this alteration, then she will again be playing the corresponding locally-comparative Strategy A – which thus weakly dominates the nationally-comparative Strategy C.

Strategy D. Strategy D combines Strategy A’s threat of punishment for poor performance relative to counterparts from other states with Strategy C’s promise of reward for good performance relative to counterparts from other states. Together, these two transformations imply that Strategy D altogether ignores the locally-available candidates and parties and only considers incumbent state representatives and ruling parties’ performance against counterparts from other states. Strategy D cannot be subgame perfect for the same reasons that Strategies B

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and C cannot. Ann can do better by reneging on the threat to fire the incumbent for interstate underperformance when there is no better alternative, and by reneging on the promise to reelect the incumbent for interstate outperformance when a better alternative is available. However, if she makes these alterations, then she will again be playing the corresponding locally- comparative Strategy A – which thus also weakly dominates the nationally-comparative Strategy

As we can see, the core problem with nationally-comparative strategies is that they all by definition require the voter Ann to in some way privilege incumbents’ performance relative to counterparts in other states over their performance relative to available and viable local candidates or parties – i.e. to either sometimes reelect the incumbent over a better available candidate or party, or to sometimes fire the incumbent absent a better available candidate or party. All nationally-comparative strategies must possess this property because otherwise the voter would only be comparing available and viable local candidates, in which case she would be playing the corresponding locally-comparative strategy. But in privileging national comparisons over local ones, all nationally-comparative voting strategies are subgame imperfect and stagewise irrational. They all require the voter to sometimes not vote for the best available candidate or party on her favored metrics m, and she can always do better by playing the corresponding locally-comparative strategy, since it always selects the best available candidate or party.

In other words, locally-comparative strategies always weakly dominate their corresponding nationally-comparative strategies because they never ask the voter Ann to make decisions on the basis of irrelevant information about options not available to her – i.e. information about the performance of representatives or parties in other states whom she does not get to select. To my

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knowledge, ignoring irrelevant information about unavailable options is how people make decisions in every facet of life. For instance, when filling up at the gas station, I am usually aware that gas prices are likely lower somewhere else in the country. But because these alternate prices are not readily available to me, the information is completely irrelevant to my purchasing decisions, which are thus based solely on the local market conditions I actually experience.

Similarly, when deciding whether to retain their executives, firms do not fire their CEOs for underperformance relative to Elon Musk if they cannot hire Musk or someone comparable as a replacement. Firms make decisions in light of the actual pool of CEOs available to them, and not the pool they wish were available. Likewise, when making roster decisions, football teams do not fire their quarterbacks for underperformance in comparison with Tom Brady if they cannot acquire Brady or someone comparable as a replacement. Again, unavailable options do not matter. In fact, to my knowledge, there is no common situation where people make decisions based on information about alternatives unavailable to them. Everything we know about people suggests that they make decisions solely on the basis of actually available alternatives. The theory that voters make national comparisons in state elections runs afoul of this universal tendency of human behavior, so it is at best a highly unusual claim that requires a mountain of evidence before it could be accepted as an accurate depiction of politics in modern democratic federations.

As a result, the second premise in Tiebout’s institutional account is doubtful: voters almost certainly do not make national comparisons at the ballot box. If so, then state elections will not generate interstate rivalry or satisfy the relative performance condition across states – at least not on account of national comparisons by voters. Incumbent state representatives’ and ruling parties’ desire to retain power will not be incompatible with the same desire among counterparts

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from other states. If voters only make local comparisons at the ballot box, then incumbents in all states can retain power simultaneously, and the success or failure of incumbents in one state does not (directly) influence electoral prospects for incumbents in other states. Incumbents therefore possess no reason, at least no reason founded in national comparisons in state elections, to care about performance relative to counterparts from other states – electoral competition only encourages them to care about performance relative to local electoral challengers.

4.2.B. Counterproductive Signaling and Incentive-Creation

The conclusion is further strengthened by considerations about signaling and incentive- creation. All nationally-comparative strategies send counterproductive signals and set counterproductive incentives.

From one perspective, the foregoing discussion about subgame imperfection is essentially a discussion about credible (sovereign) commitment. Voters cannot credibly commit to nationally- comparative strategies because they involve stagewise-irrational decisions. Because voters cannot commit, state elections in turn cannot encourage state representatives and ruling parties to care about their performance relative to counterparts from other states – at least not on account of voters making national comparisons. Such sovereign commitment issues are as old as politics

(Hobbes 1994; Hamilton, Madison, and Jay 1999; North and Weingast 1989), so it should come as little surprise that, like all sovereigns – and even if they are only sovereign on election day – the democratic people also experience commitment problems. However, scholars have paid little attention to sovereign commitment problems as they pertain to the democratic people, and have therefore not considered that one of their manifestations might be to prevent voters from credibly committing to nationally-comparative voting strategies in state elections.

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Can the commitment problem be overcome? The usual way of resolving commitment problems is to introduce legally-enforceable contracts or other legal stipulations. Obviously, this avenue is closed in democratic politics: for good reasons, no well-functioning democracy in the world would enforce contracts over voting, or enact legal stipulations on how voters should vote.

Perhaps it could be argued, instead, that on a longer view of politics voters might be able to commit to nationally-comparative voting strategies if doing so were to improve representatives’ and ruling parties’ incentives (and through them political outcomes) in the long term. How likely is this scenario?

Unfortunately, not very likely. Nationally-comparative strategies should tend to worsen representatives’ incentives, and to produce worse political outcomes, because they send counterproductive signals and set counterproductive incentives. Prima facie, it is unlikely that voters would benefit in the long term from sometimes refusing the best available candidate or party on their favored metrics m… as a strategy for establishing a government that succeeds on these very metrics. If any strategy seems self-defeating, it is this one. And, as discussed, people do not seem to employ such a strategy in any other realm of life, where doing so might similarly be justified in the abstract as a means of improving long-term incentives.

More specifically, nationally-comparative voting strategies are all informationally ambiguous because they all ask voters to sometimes vote against their favorite candidate or party. If a voter prefers Candidate A to Candidate B but then votes for Candidate B, does this mean that the voter would like representatives to be more like Candidate A or like Candidate B? Apparently, in playing a nationally-comparative strategy, the voter would be trying to signal to representatives to be more like Candidate A… by voting for Candidate B. The voter’s revealed preferences would thus send entirely the opposite signal from the one intended. Representatives can be

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forgiven for being confused about the meaning of the vote – and for interpreting it altogether incorrectly, and moving in the opposite direction than the one intended by the voter. Which makes all nationally-comparative voting strategies counterproductive with reference to signaling and incentive-creation. It is unlikely that voters would benefit, even in the long term, from adopting a nationally-comparative voting strategy because any such strategy would send entirely the wrong signals to representatives, and in doing so create perverse incentives for them.

It might be argued that voters who select third-party candidates in plurality systems choose to

“waste their vote” in the short term as a way of improving political outcomes in the long term.

The rise of the Tea Party may be used as an example. When far-right voters refused to select the most electable Republicans in primaries, they were risking short-term electoral success for long- term gains in terms of moving the Republican Party to the right. Suppose we accept this account, or some such. What follows with reference to nationally-comparative voting strategies? Not much. The Tea Party strategy, like any third-party voting strategy, is very different from a nationally-comparative strategy. First, voters who support a third party like the Tea Party still only select among the alternatives actually available to them. Second – more importantly – unlike nationally-comparative voting, third-party voting is informationally unambiguous. Votes for the Tea Party unambiguously signaled to Republicans that Tea Partiers preferred more right- wing representatives, and a more right-wing Republican Party. Voting for the Tea Party would have been similar to nationally-comparative voting if Tea Partiers had started voting Democrat as a way of getting Republicans to move to the right. There is, to my knowledge, no evidence whatsoever for such behavior. Thus, voting for a third party in a plurality system is fundamentally different from voting on the basis of a nationally-comparative strategy.

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Accordingly, the theory that voters make national comparisons at the ballot box – and in doing so encourage state representatives and ruling parties to engage in interstate competition – is not compelling. National comparisons require voters to adopt subgame imperfect voting strategies that base decisions on irrelevant information, which we never see people do in any other facet of life. Moreover, nationally-comparative voting strategies also send counterproductive signals and set counterproductive incentives for state representatives and ruling parties, and so are unlikely to be adopted even with the long term in mind.96

Consequently, voters most likely do not vote in state elections on the basis of national comparisons.

4.2.C. A Tidbit of Behavioral Evidence

Some indirect behavioral evidence against Tiebout’s account of nationally-comparative elections has recently begun to emerge (although the researchers who produced it have not realized this implication of their work). Two studies are noteworthy for our purposes. The first is

Besley, Personn, and Sturm’s (2010) study of the American states since 1880, where they examine the relationship between electoral competitiveness (as measured by one party’s dominance of state offices) and economic growth. The second is Ashworth et al’s (2014) examination of political competition (as measured by electoral turnover) and local government productive efficiency in Flanders, Belgium. Both studies find essentially the same observational correlation: jurisdictions where the ruling political party is “safer,” in the sense of being less in danger of losing its grip over the government, tend to underperform on the specified metrics of state performance.

96 Or to benefit the voters adopting these strategies in the long term, since they end up sometimes voting against the best available candidates and parties (as they see it).

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The aforesaid studies had different aims from the present inquiry, so their analyses were not performed with reference to Tiebout’s theory. However, the important point for our purposes is that the authors’ findings at least prima facie contradict Tiebout’s theory of nationally- comparative state elections. Per Tiebout, we should expect to see the opposite observational correlation. Ruling parties who underperform, or whose states underperform, should find themselves in the hot seat; they should be in the greatest danger of being ousted by voters, not the least danger. The empirical evidence suggests exactly the opposite.

Now, of course, the studies in question do not settle the matter (this not being their aim), and further research is required. But these studies do cast some further doubt on Tiebout’s account – suggesting at least that national comparisons in state elections are not a central element in the politics of devolved democratic systems, since apparently in practice relative performance across jurisdictions proves far less electorally consequential for ruling parties than Tiebout proposes.

We should therefore be wary of accepting Tiebout’s institutional account as an accurate description of politics in democratic federations – the behavioral evidence suggests that voters either do not make national comparisons at the ballot box, or these comparisons seem not to be sufficiently relevant to electoral outcomes for us to confidently draw the broad conclusions imputed to them. Hence, the theory that nationally-comparative state elections generate interstate competition not only requires voters to act in ways they never do in other realms of life; it also run afoul of the (admittedly limited) relevant behavioral evidence.

4.3 State Elections II: Local Comparisons

Given the implausibility of voters making national comparisons at the ballot box, we may ask if state elections could generate interstate competition even if voters cast ballots only on the basis

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of local comparisons. After all, elections at least sometimes encourage state representatives and ruling parties to try to attract “scarce resources” such as firms, capital, tax revenues, or people from other states as a means of courting electoral support. The phenomenon is well documented

(e.g. Baybeck, Berry, and Siegel 2011; Brueckner and Saavedra 2001; Butler 1985; Kerber 1999;

Oates 1999; Oates and Schwab 1988; Qian and Weingast 1997; Sinn 1992; Tiebout 1956;

Wilson 1999). It would therefore seem that if state elections encourage representatives and ruling parties to attract scarce resources from other states, then the result should be interstate competition over said scarce resources. The rivalry condition would appear to be satisfied if voters evaluate state representatives on their performance at attracting, say, firms, since firms are scarce across states so it may be impossible for voters in every state to be satisfied with how many are in their particular state. The salience condition would be satisfied if attracting firms is sufficiently important to electoral success for state representatives and ruling parties to be willing to wield the powers of the state accordingly. The strategy determinacy condition would be satisfied because representatives and ruling parties’ decisions and actions would influence their success at attracting firms. And the relative performance condition would appear to be satisfied because each state’s success at attracting firms would depend on its relative attractiveness to firms compared to other states. Why not accept this account of interstate competition generated by locally-comparative state elections?

The issue is again relative performance. If state representatives and ruling parties seek to improve electoral prospects by attracting scarce resources but voters only make local comparisons at the ballot box, then the result will not amount to interstate competition because the relative performance condition will not be satisfied across states. Think back to the thought experiment where Ann and Betty display expensive artwork in their homes. How many burglars

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each attracts depends on the relative appeal to burglars of the pieces in her collection. Burglars who prefer impressionism should throng to Ann’s house, and those with contemporary sensibilities to Betty’s. It still does not follow, however, that Ann and Betty care about how their collections compare in the eyes of burglars. That is, presumably, not a consideration when they acquire artwork. Consequently, even though burglars should tend to sort themselves according to the relative attractiveness of the art across the two homes, Ann and Betty need not care about these relative comparisons. The relative performance condition will therefore not be satisfied in their relations, and Ann and Betty will not compete over burglars just because burglars sort themselves according to the relative attractiveness of each collection.

A similar but modified rationale applies to relations among representatives and ruling parties from different states if voters only make local comparisons at the ballot box. Suppose voters in

Massachusetts care very much about boosting economic growth by attracting firms to the state, and vote accordingly – i.e. they vote for whichever (available and viable) local candidate they expect would best succeed at attracting firms to Massachusetts. Now, the sorting of firms – which firms locate factories where – will depend on each state’s relative attractiveness to firms, which will in turn depend on how well its representatives and ruling party perform compared to counterparts elsewhere with respect to enacting policies which attract firms. But if voters only make local comparisons at the ballot box, then the electoral success of Massachusetts’ representatives and ruling party will not depend on their performance relative to counterparts in other states, but only on performance relative to the available local alternatives (with reference to activities and attributes relevant for attracting firms). It will not matter how representatives or ruling parties compare to counterparts elsewhere, but only how they compare to local challengers.

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Hence, as far as reelection is concerned, it will not matter one bit to Massachusetts’ representatives and ruling party if their counterparts in other states start performing drastically better with reference to activities and attributes which attract firms. What matters is whether voters can find a better replacement, which is conceptually distinct from the caliber of representatives and ruling parties in other states. All that matters for reelection, then, is the performance of state representatives and ruling parties relative to actual and potential local challengers, not relative to counterparts in other states. Consequently, even though state elections can motivate state representatives and ruling parties to attract scarce resources like firms, capital, taxes, or people from other states, they cannot make them care about performance relative to counterparts from other states if voters only make local comparisons at the ballot box. The relative performance condition is not satisfied across states, so the relations across states do not satisfy the conditions necessary for being regarded as competitive. In a sense, then, even though state elections can encourage state representatives and ruling parties to attract scarce resources from other states, elections cannot make them compete over these scarce resources, but only over state offices and legislative control.

An illustration from sports should further clarify this position. Consider international men’s soccer, and the circumstances of a forward on the US national team who only wishes to retain his job – i.e. his position on the team. Now, when the US plays Argentina, the outcome of the game certainly depends on the forward’s performance relative to Lionel Messi on the other side.

However, whether the forward keeps his job depends not on performance relative to Messi, but only on performance relative to anybody he could be replaced with: local (American) soccer players. Therefore, from the perspective of job-retention, it does not matter one bit for the forward’s prospects if Messi starts playing even better than he already does, or if players in

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Brazil or France start doing so. They do not contest spots on the US team. As a result, the job retention motive cannot make the American forward care about his relative performance across teams or across countries. For job-retention, only local competition matters: how the forward compares to American players. Similarly, with interstate politics, it is true that whether some firm goes to Massachusetts or Vermont depends on how well each state’s representatives and ruling party perform relative to each other in terms of making their states attractive to firms. But whether these representatives and ruling parties retain office or legislative control does not depend on their performance at making the state attractive in comparison with each other, but only in comparison with local electoral challengers. The relative performance condition is not satisfied because state boundaries protect state representatives from electorally-generated interstate competition over scarce resources; just as state boundaries protect forwards on the US soccer team from having to compete for their jobs against players from other countries.

On this note, folk wisdom colorfully recognizes and illustrates the importance of the relative performance condition, and of paying attention to whose relative performance matters in some set of social relations. It is said that if you and a friend are being chased by a bear, you need not outrun the bear to survive; you need only outrun the friend (the implicit assumption here being that the bear is faster than both and will eventually maul one). This is exactly right. It might look as if each person is competing against the bear, but in the battle for survival they are only competing against one another. True, the bear influences competitive structure, especially in terms of stakes (life or death) and the activities and attributes to which competitive relevance is attached (being fast, running away from the bear, etc.). But once this is done, the entire situation is just a race – albeit an odd one – between you and your friend. In this race, your performance relative to the bear does not matter one bit; only your performance relative to your friend. It

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would not matter at all for your odds of survival if the bear started running faster, but it would be disastrous for you if your friend started running faster. And so, from the perspective of survival, you should ultimately not worry about how you compare against the bear, but how you compare against your friend.

Something similar happens with interstate relations in democratic federations. When state elections are only locally-comparative, it may look as if representatives and ruling parties are competing over scarce resources against counterparts from other states, but they are really only competing against local electoral challengers. True, other states influence the structure of this ultimately local electoral competition, by influencing how a state’s representatives and ruling party should act to succeed electorally (i.e. competitive relevance gets attached to acting in ways that attract firms). But once this is done, what we are left with is just good old electoral competition – which we have already been disappointed in. Elections attach competitive relevance to all sorts of things – platform, charisma, etc. To this, they sometimes append activities and attributes which help attract, say, firms to the state as well. But when elections are only locally-comparative, then the comparison being made, with reference to these competitively relevant activities and attributes, is between incumbents and available and viable local alternatives, not incumbents and counterparts in other states. What is being gauged is how well incumbents fare with reference to the activities and attributes relevant for attracting firms in comparison with those by whom they could be replaced. Hence, the social relation that ultimately arises is not interstate competition at all, but still just local electoral competition.

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4.4 State Elections III: Interstate Pseudo-Competition

We are brought, thus, to the theory of electorally-generated interstate pseudo-competition in democratic federations – the theory that state elections encourage states to act in ways that make it appear as if they compete even though they do not. In fact, the theory has now already been discussed. The account of locally-comparative elections just provided is the theory of interstate pseudo-competition. This account explains, without recourse to interstate competition, much of the evidence traditionally advanced for the theory of competitive interstate relations. In the pseudo-competitive paradigm, even without interstate competition, locally-comparative state elections would still, in expectation, give rise to the following observations: (i) interstate mobility of firms, capital, people, etc.; (ii) interstate sorting of firms, capital, people, etc.; and

(iii) state representatives and ruling parties working to attract firms, capital, people, etc.

Moreover, there is little reason why we should not also observe policy diffusion and mimicking, comparative self-evaluation, and even social welfare improvements (from devolution, sorting, etc.), since none of these require interstate competition. Finally, we should even see states interacting strategically with each other, strategic interactions not being limited to competitors – e.g. an NFL quarterback interacts strategically not only with players on the other team against whom he competes, but also players on his own team with whom he cooperates. In the pseudo- competition paradigm, state representatives and ruling parties will also pay attention to counterparts in other states, learn from them, and account for their decisions and actions in their own decisions and actions. All this will happen, but the underlying process will not be interstate competition, and there will be no interstate competitive discipline for state representatives and ruling parties. Hence, the behavioral observations concerning interstate relations usually

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advanced as evidence for interstate competition in devolved democratic systems would still persist in democratic federations characterized only by interstate pseudo-competition.

If this theory is accurate, then state elections generate incentives which encourage state representatives and ruling parties to behave in ways that make it appear as if states in democratic federations compete against each other even though they do not. All the purported evidence for interstate competition would still arise, making it look as if interstate relations are competitive, but state representatives and ruling parties would face no interstate competitive discipline because they would have little reason to care about their relative performance across states.

Rather, in a pseudo-competitive federation, representatives and ruling parties would only be competitively disciplined by local competitive (electoral) relations, not interstate competitive relations. But without interstate competitive discipline, many of the optimistic conclusions advanced by the literature on interstate competition cannot be supported (being dependent on interstate competitive discipline and an emphasis among state representatives and ruling parties on relative performance across states).

Social scientists have not seriously looked for pseudo-competitive interstate relations, so the current empirical literature is largely inconclusive as to the relative significance of competitive and pseudo-competitive interstate relations in modern democratic federations; and it is not clear how much, if any, of what passes for interstate competition truly is interstate competition.

Moreover, empirically separating the two kinds of interstate relations is likely to prove difficult, although not necessarily impossible. The major difference between interstate competition and pseudo-competition pertains to representatives’ unobservable motivations – i.e. do state representatives, when they engage in activities such as attracting scarce resources, care about

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relative performance across states or only relative performance within-state? Hard to say. Very hard to tell.97

What we can conclude, however, is this: the institutional incentives arising from state elections clearly suffice to encourage pseudo-competitive interstate relations, but it is doubtful if they suffice to encourage real competitive interstate relations. Consequently, we can reasonably expect many interstate relations in modern democratic federations to be pseudo-competitive – this conclusion following straightforwardly from the incentives generated by electoral competition – but we must remain agnostic about whether there are any “big and obvious” competitive interstate relations arising from the logic of state elections. Hence, in light of the clear institutional support for the theory of interstate pseudo-competition, alongside the doubtful institutional support for the theory of interstate competition, it seems reasonable to expect that a good proportion of what passes for interstate competition in democratic federations today is likely only pseudo-competition. At the very least, the scholarly literature has almost certainly overstated the significance of interstate competition in modern democratic federations because it has been categorizing pseudo-competitive interstate relations in this category as well – there being nowhere else for pseudo-competitive relations to go in the current scholarly paradigm. But the fact remains: there are very clear institutional reasons to believe in the existence of electorally-generated pseudo-competitive interstate relations, but no clear reasons to be so certain about electorally-generated interstate competition. The first category of interstate relations has received no scholarly attention, so it must be the case that pseudo-competitive interstate relations

97 Obviously, it is fruitless to straightforwardly ask state representatives about their motivations. They have good reasons, founded in the nature of democratic realpolitik, to always profess the desire to outperform every representative federation-wide.

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are being miscategorized somewhere. The obvious explanation is that they are being miscategorized as interstate competition.

4.4.A. Significance

Why does it matter if the relative performance condition is not satisfied across states? What is the difference between interstate relations where relative performance matters and ones where it does not? The answer has to do with competitive discipline. As discussed in chapter two, competition has a disciplining effect because competitive success depends on the relative performance of competitors with reference to competitively relevant activities and attributes.

This emphasis on relative performance is what encourages them, via mutual fear, to cultivate as far as possible the virtues that help secure competitive success. If the relative performance condition is not satisfied across states, then there will be no interstate competition and no interstate competitive discipline – only local competition and local competitive discipline.

However, the optimistic conclusions drawn by the academic literature regarding the political consequences of interstate competition depend largely on the existence of interstate competitive discipline – e.g. that interstate competition disciplines with respect to productive efficiency, economic growth, variety, etc. If there is no interstate competitive discipline, then interstate relations will not necessarily encourage or produce the outcomes expected by the literature.

Moreover, interstate competition and competitive discipline would be more demanding than local electoral competition and competitive discipline alone, with respect to both aspects of demandingness (number and quality of competitors). It is obvious why the number of competitors faced by state representatives and ruling parties engaged in interstate competition would be greater. The quality would be as well. The rationale is straightforward enough. For any profession, it is always easier, in expectation, to outperform the best members of the profession

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locally rather than nationally. In expectation, it is easier to be the best doctor, or the best soccer player, or the best political scientist in one’s city or one’s state than across the federation or across the world. A city or state’s population is only a subset of the federation’s or the world’s, so the latter by definition includes all local members of the profession as well as others.

Consequently, the best members of any profession locally will, in expectation, be less impressive than the best across the federation simply because the latter group is a superset. Politics is no different. The best candidates in some given state election will, in expectation, not be as formidable as the best incumbent representatives across all state elections.98 Therefore, competing only against local candidates should, in expectation, prove significantly less demanding compared to competing against representatives from all states. If state representatives cared about relative performance across states, then they would seek to outperform even the best politicians anywhere in the federation – e.g. in terms of productive efficiency, economic growth, etc. If, on the other hand, competition is only local, then state representatives need not aim for this more difficult target, and need only outperform the best politicians locally on said metrics, which is in expectation easier.

John Stuart Mill makes essentially the same point with respect to local competition under territorial representation and national competition under proportional representation:

[In proportional representation] majorities [from any given district] would be compelled to look out for members of a much higher calibre. When the individuals composing the majority would no longer be reduced to Hobson’s choice, of either voting for the person brought forward by their local leaders, or not voting at all; when the nominee of the leaders would have to encounter the competition not solely of the candidate of the minority, but of all the men of established reputation in the country who were willing to serve; it would be impossible any longer to foist upon the electors the first person who presents himself with the catchwords of the party in his mouth, and three or four thousand pounds in his pocket (Mill 1991: 312-313).

98 And not just because incumbent representatives across the federation are the candidates who won, and because they tend to be more experienced, but because they represent a superset.

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This logic remains operative even once interstate learning and imitation are accounted. It is true that an increase in the quality of local competitors in one state can also increase the quality of local competitors elsewhere, since candidates in other states can imitate successes – e.g. candidates in Massachusetts could imitate candidates or representatives from California and thus become more formidable challengers to incumbents in Massachusetts. There is, as discussed, considerable empirical evidence for interstate learning along these lines. Nevertheless, at the close of any such endogenous process of interstate learning and imitation, local competition will still be less demanding than federation-wide competition because the local population will still be a subset of the federation’s, and so the best politicians locally will still not be as impressive, in expectation, as the best federation-wide.

Consider international soccer again. It is doubtlessly true that soccer players across the world watch film on Lionel Messi so as to improve their game via imitation. However, imitation is itself difficult – if only it were easy to imitate the most impressive people – which is why the world is not overrun by soccer players as skilled as Messi despite no lack of would-be imitators.

Even with learning and imitation, it still turns out to be the case that some soccer players are better than others, and so the best players locally will, in expectation, still be less skilled than the best players nationally or worldwide (because the latter groups are supersets). Accordingly, despite learning and imitation, it is still in expectation easier to be the best soccer player in one’s city or state than in one’s federation or the world.

Politics works in the same fashion. Interstate learning and imitation might lead to candidates in some given state becoming more formidable simply because the quality of candidates or representatives in some other state has improved. Nevertheless, it will still be the case at the end of the day that (i) some candidates and representatives are better than others, and (ii) it is easier,

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in expectation, to be the best candidate in some given state than across the federation because the state’s population is a subset of the federation’s. All this cannot be helped, and I can think of no likely scenario in the politics of democratic federations where circumstances would be otherwise.

As a result, despite interstate learning and imitation, local competition will still be less demanding than interstate competition, and will exert a weaker discipline. Which is why it is a conceptual mistake to categorize as interstate competition situations where the relative performance condition is not satisfied across states: doing so misleads as to competitive discipline – who is disciplining whom, and how demanding the discipline. Without the relative performance condition being satisfied across states, representatives and ruling parties from different states cannot competitively discipline each other; nor can they subject each other to the greater demandingness of interstate competition.

4.5 Federal Elections

If state elections do not generate interstate competition, then we can consider another option: federal elections. It is easy to see how ambitions for federal offices may lead to competition among state representatives from different states when they contest the same elected offices. The rivalry condition is satisfied because state representatives contesting the same federal office cannot simultaneously win it; the salience condition is satisfied whenever state representatives are sufficiently motivated to win federal office to be willing to act accordingly; the strategy determinacy condition is satisfied because state representatives’ actions influence their federal electoral prospects; and the relative performance condition is satisfied because electoral success depends on state representatives’ relative performance in terms of winning votes. In principle,

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then, federal elections can generate competition among state representatives from different states

– but only when these representatives are ambitious for the same federal offices.

This last condition is actually not as easily satisfied as might initially appear to be the case – at least not in the US and EU, where, consequently, interstate competition founded in federal elections is not very prevalent. Furthermore, even when federal elections generate interstate competition, the resulting competitive incentives remains subject to most of the limitations of electoral competition from chapter three (in somewhat modified form). This section establishes the first claim. Chapter five establishes the second.

Let’s begin by noting that not just any ambitions to federal offices suffice to induce competition among state representatives from different states. Only ambitions for the same offices do so. Usually, this requirement is satisfied only for nationally-elected offices – i.e. offices not pre-allocated by state. Consider seats in the European Parliament. They are not nationally-elected because they are pre-allocated to the member states proportional to population

(i.e. it is pre-specified, for any given seat, which state’s representatives can and cannot occupy it). Due to this pre-allocation, there is little likelihood that MPs from, say, France and Germany will find themselves contesting the same federal seat. True, carpetbagging is permitted, but in practice it occurs only rarely. For straightforward reasons: state representatives’ political capital

– supporters, donors, networks, staff, know-how, etc. – tends to be tied to their home states, and are usually not fully transferable. State representatives therefore possess good reasons against carpetbagging. From which it follows that, for example, French and German MPs wishing to join the European Parliament normally do not contest the same seats, and therefore do not compete against each other for federal offices. Their ambitions to the European Parliament are compatible, so the rivalry condition is not satisfied and MPs from different states have little

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reason, based in ambitions to the European Parliament, to compete against each other, or to worry about how they compare against each other.

In fact, at least in the US and EU, there are precious few nationally-elected legislative or executive offices at the federal level. The EU has none: seats in the European Parliament are pre- allocated by state, and the EU presidency is pre-allocated to rotate among the federal governments of the member states. Consequently, in the EU, state representatives from different states should generally not be expected to compete against each other on account of ambitions to federal positions, and the prevalence of interstate competition grounded in federal elections should be expected to essentially be zero. The picture in the US is only slightly better. Seats in both chambers of Congress are similarly pre-allocated by state, so they also tend to not be contested by state representatives from different states. But the presidency and vice presidency are indeed nationally-elected.99 Even in the US, then, the prevalence of interstate competition founded in federal elections should tend to be low, although certainly not negligible.

Specifically, in the US, only ambitions to the presidency and vice presidency could generate competition among state representatives from different states, but ambitions to these offices are far from universal. True, many governors do seriously aspire to the presidency or vice presidency, and may be expected to at least sometimes act accordingly. But most state legislators likely do not. There are about 7,400 of them, after all. What proportion are likely to be sufficiently influenced, when still state legislators, by ambitions to the presidency or vice presidency to wield the powers of their offices accordingly? Probably not a large proportion.

First, presumably not all state legislators are ambitious for the presidency or vice presidency.

Note that we are not speaking of idle ambition where one merely wishes to be king of the world

99 Cabinet positions are nationally-selected but not nationally-elected.

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or a Hollywood star; but ambition salient enough to substantially regulate how state legislators wield the powers of their offices. In this context, it seems reasonable that some significant proportion of state legislators would be content with their positions. There must also be some who would like to become president or vice president, but who have given up on the ambition.

Competition for the presidency and vice presidency tends to be extremely daunting, to say the least. It should scare many away. For instance, even if every college football player wishes to play professionally, many still recognize either that they have no chance of securing a professional position, or that they are unwilling to put in the requisite effort. The same should happen in politics, where some proportion of state representatives should bow out of actively seeking the presidency or vice presidency, either because chances of success are too low, or because the requisite effort is not worthwhile when they already have a nice thing going. The scholarly literature broadly agrees in principle, and documents quite extensively how politicians make precisely these sorts of calculations in connection with their political ambitions (e.g. Black

1972; Brace 1984; Fox and Lawless 2004; Hibbing 1986; Maestas et al. 2006; Rohde 1979).

Furthermore, even within the subset of state legislators who are ambitious for federal offices, many likely do not look to ascend to the presidency or vice presidency when they are still state legislators – i.e. when competition against counterparts in other states over ascension to the presidency or vice presidency could discipline their actions as state legislators. Most state legislators are likely to aim, for the time being, only for the next rung in the career ladder – other state offices, perhaps, or a seat in the federal House or Senate (e.g. Black 1972; Rohde 1979).

However, in such cases, as discussed, ambition will not generate interstate competition because these offices are pre-allocated by state.

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The dominant theory of political ambition suggests that such step-by-step trajectories should tend to be the typical situation even among ambitious state representatives (e.g. Black 1972;

Rohde 1979). It is argued that ambitions for the highest offices such as the presidency and vice presidency are usually the culmination, over extended periods of time, of step-by-step ambitions for slightly higher offices, and not of an overarching grand strategy for becoming president or vice president adopted at the outset of one’s career. As Gordon Black writes:

As a politician invests in one office, even if he has little desire at the time to seek higher offices, he is altering his evaluation of other offices in a potential career sequence. This alteration occurs because some part of his investment in politics is transferable to the pursuit of other offices, and the ability to transfer investments increases his expected return from higher offices. Thus, each step in a political career sequence alters one's evaluation of the other step: in that sequence, especially in regard to nonpolitical alternatives. As the politician's investment increases, his evaluation of political alternatives is likely to become more positive while his evaluation of nonpolitical alternatives is likely to remain about the same. The net effect is the development of higher levels of ambition in the politician. This description of the development of ambition differs markedly from the view that sees the politician as a driven man who decides his course early and plans his whole life accordingly. Perhaps there are such men, but we suspect they are a distinct minority. The tides of politics are too great to permit men to chart an undeviating route through the uncertain and troubled waters of political life (1972: 159).

In this way, even ambitious state legislators should normally not be expected to act with a view to competition over the presidency or vice presidency when they are still state legislators. If so, then they should also not be expected to compete, on the basis of their federal ambitions when they are still state legislators, against counterparts from other states. It follows that ambitions to federal offices should not be expected to generate interstate competitive relations among many state representatives, or to thereby competitively regulate their decisions and actions. The political ambitions necessary for generating interstate competition should tend to not be very prevalent, at least in the US and EU. In the EU, MPs from the member states have essentially no reason to compete for federal offices against counterparts from other states. In

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America, a significant proportion of governors may be expected to engage in interstate competition over federal offices; but most state legislators may not. Therefore, even though politicians tend to be ambitious, it still does not follow that their ambitions consistently and prevalently generate interstate competition, since these ambitions are not always directed at the pertinent federal offices. Ambitions for federal offices should certainly explain some state representatives’ behavior some of the time, but such interstate competition founded in federal elections should tend to be limited in prevalence, at least in the US and EU.

Even more disappointingly, interstate competition founded in federal elections would also remain subject to the concerns about electoral competition raised in chapter three (in somewhat modified form). Federal elections are still elections. This part of the argument, however, is better suited for chapter five, which directly studies competition across strata of government. For now, the key point to note is that interstate competition fueled by federal elections is likely not very prevalent, at least in the US and EU, and presumably other similarly-organized federations100 – and so its disciplinary or regulatory influence on state representatives and governments in modern democratic federations should prove to be relatively limited.

4.6 Non-Electoral Interstate Competition Over Revenues

If electorally-generated interstate relations are unsatisfactory, then we can consider a prominent non-electoral account of interstate competition: Geoffrey Brennan and James

Buchanan’s (1980) influential theory, which proposes that states in federations are inherently revenue-maximizing “Leviathans” which compete against one another over revenues, and are then disciplined by these competitive relations.

100 Although it should be more prevalent in federal systems with proportional federal legislatures. More on this in chapter five.

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We can begin by noting that interstate competition as envisioned by Brennan and Buchanan did indeed obtain historically, especially in the context of North American colonization – which perhaps also helps explain why the idea of interstate competition has been so prominent in

American political thought. Colonies, after all, were for-profit governments with investors and financial beneficiaries (e.g. Acemoglu and Robinson 2012; Ferguson 2008). Their very purpose was to earn profits for their principals.101 This for-profit character of colonial governments provides straightforward institutional support for conceptualizing them as engaged in financially- motivated interstate competition, as proposed by Brennan and Buchanan. From the point-of-view of their financial principals, each colony’s financial success depended on its ability to (i) harness natural resources and human capital to produce (mostly primary) goods which were then shipped across the Atlantic and sold in Europe, and (ii) raise revenues via direct taxation of subjects.

Because many colonies produced the same goods and supplied the same buyers, it seems fair to conceive of them as one would conceive of competitive firms generally (although the firms in this case established governments). They vied for market share and revenues and profits like any other firm, and relations among them readily satisfied the four necessary conditions for interstate competition. There was rivalry over revenues and profits – each colony could not simultaneously have as much of these as its principals wanted. This rivalry was salient since profit-generation was the primary purpose of colonization. The strategy determinacy condition was satisfied because each colony’s actions influenced its financial success. And the relative performance condition was satisfied because each colony’s financial success depended to some degree on its

101 As evidenced also by the fact that colonies were frequently bought and sold, in some cases even on stock exchanges (e.g. the Dutch East India Company), but more generally as well even when they were not publicly-traded (e.g. the Louisiana Purchase).

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performance relative to other colonies (with reference to activities and attributes relevant to financial success).

We also know that the pursuit of revenues and profits gave rise to second-order competition among the North American colonies over people. To generate profits, the colonies required people to pay taxes and produce goods for trade. Maintaining the requisite labor force proved especially difficult in the somewhat sparsely-populated North America (Acemoglu and Robinson

2012). Hence, given their low-population densities, the profit-maximization incentive made the

North American colonies effectively population-maximizing as well. One strategy was to enslave the natives, although North American colonists enjoyed comparatively little “success” on this front compared to their South American counterparts (Acemoglu and Robinson 2012).

Another was the Atlantic slave trade, which grew rapidly. But still the North American colonies often needed to attract (free) people, especially during their early histories – which straightforwardly gave rise to interstate competition over people. The North American colonies experienced rivalry over people since they could not all simultaneously have as many as they wished. The rivalry was salient because the financial success of each colony depended on the amount of labor it commanded. The strategy determinacy condition was satisfied because each colony’s policies affected its population size. And the relative performance condition was satisfied because (free) people selected where to live on the basis of each colony’s relative attractiveness as a place of residence, as well as its relative attractiveness compared to simply moving farther West. Oppress too much relative to others and people would leave, taking with them the colony’s financial success (e.g. Acemoglu and Robinson 2012).

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In other words, exit was far more central than voice when it came to how the American states interacted with their people.102 Suffrage was hardly universal, so there was little electoral reason for the colonies to care about the welfare of most of their people; but colonial governments did care if these people left, so it was exit and not voice which encouraged the colonies to care about their people (to the extent that they did), to make policies to attract inhabitants, and to engage in interstate competition over people.

These concerns are reflected clearly, for example, in John Locke’s political philosophy.

Locke was closely involved with American colonization, especially in Carolina, and had much to say on the subject. In the Second Treatise, Locke justified American colonization on grounds of underpopulation, arguing that the natives neither needed nor used their vast territories (Locke

1960; Tully 1980). Arguably his theory of slavery was also written to justify the enslavement of

Native Americans (Hinshelwood 2013). And when Locke did write about the colonies directly, underpopulation was one of his primary concerns. In The Fundamental Constitutions of Carolina

(1997), Locke proposed the establishment of a class of “leet men” who would have been indentured to noble manors. Likewise, in his essay on Virginia – of which he wrote at least the first sentence – Locke named underpopulation the foremost problem behind the colony’s economic woes (Locke and Blair 1966). In John Locke’s writings, then, we see clearly that the account of North American colonial governments presented here is not only theoretically convenient but also an accurate description of the behavior of at least some colonists.

Now, obviously, the political institutions and processes that used to generate interstate competition over revenues and people among the North American colonies no longer exist. With reference to revenues, state surpluses no longer go into the pockets of investors, executives, or

102 For a general discussion of exit and voice, see Hirschman 1970.

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representatives, so there is no longer any straightforward profit motive in governance – at least insofar as representatives relate to their states’ coffers (e.g. Wagner and Yazigi 2014). Moreover, the logic of electoral competition also generally recommends against conceiving of states in the

US (or EU) as inherently trying to maximize revenues or budget surpluses. Voters often loathe taxes, and tax policy tends to be one of the most salient issues in elections. Indeed, taxation is an area where elections control representatives rather well, as evidenced especially by the popularity of strategies such as “Starve the Beast” among Republicans in America. Furthermore, representatives who expand their state’s revenues are always playing a somewhat dangerous game because their electoral rivals will also later benefit from those revenues and use them for their own projects. Accordingly, the structure of political institutions in democratic federations today suggests that states do not straightforwardly compete over revenues or surpluses (except in the pseudo-competitive sense from earlier) – or, at least, it is not clear how salient such competition is today.

This conclusion actually aligns perfectly well with Brennan and Buchanan’s theory.

Although the subsequent literature on interstate competition has taken to heart their starting assumption that states in federations compete over revenues, Brennan and Buchanan never claimed their account to be an accurate conceptualization of states in modern democratic federations. Presumably because they realized that other institutions such as elections can curtail revenue-maximization by states, Brennan and Buchanan conceded that they were only

“analyz[ing] the properties of the political process under the assumption that citizens exercise relatively little control over governmental fiscal outcomes except at the initial constitutional decision stage, where the basic fiscal arrangements are chosen” (1980: xii). They go on to say that “[t]he monopoly-state model of government may be acknowledged to be useful, not

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necessarily because it predicts how governments always, or even frequently, work, but because there are inherent tendencies in the structure of government to push it toward that sort of behavior [revenue-maximization] implied in the monopolistic model, tendencies that may emerge in settings where constraints are wholly absent. That is, natural government is monopoly government, with all the implications that the word “monopoly” suggests” (1980: 16).

This is all fair enough. The colonies, for example, were unconstrained governments of the sort envisioned by Brennan and Buchanan, and consistent with their arguments, competition over extraction and revenues and profits among the colonies did indeed discipline these governments

(see also Acemoglu and Robinson 2012). However, as Brennan and Buchanan admit, their theory is not intended as an accurate description of governments subject to popular control, such as the modern United States and European Union. Consequently, there is little clear institutional basis for conceiving of them in the same way, or for believing that non-electoral competition over revenues is sufficiently salient in the minds of today’s state representatives and ruling parties to discipline much of their behavior.

Nor is there much clear institutional foundation for assuming that state representatives and ruling parties inherently compete over people. Again, elections sometimes discourage them from doing so, as discussed earlier in the case of the European Union – immigrants are often unpopular with voters. Moreover, whereas colonial governments had good financial reasons to fight to retain even unhappy residents, in the context of electoral politics unhappy residents who leave signify a boon for incumbent ruling parties since they can no longer cast opposing ballots.

Consequently, it is not clear that there is much institutional basis for thinking that states in the

US and EU inherently compete over people either (except in the pseudo-competitive sense from

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earlier); or that such competition is sufficiently salient in the minds of today’s representatives and ruling parties to discipline much of their behavior.

Brennan and Buchanan’s theory of interstate competition, then – as well as the subsequent literature that has since emerged from the starting point established by their revenue- maximization assumption – lacks clear institutional support in modern democratic federations; and it is not clear whether all that is imputed to interstate competition over revenues by scholars is imputed justly. There is at least substantial room for debate over the idea that modern institutions encourage states to behave as envisioned, even though in prior times they certainly did.

At any rate, insofar as states in modern democratic federations do approximate Brennan and

Buchanan’s conceptualization, and do engage in interstate competition over revenues or budget surpluses, we should find the prospect worrisome. Brennan and Buchanan’s states are, at their core (and by their own admission), extractive; as is the underlying structure and organization of the interstate competition in which they engage. This interstate competition should certainly discipline them, but it cannot entirely remove the underlying extractiveness of the political system as conceived by Brennan and Buchanan. This discussion, however, will be more fruitful in chapter seven (7.7.A), once we have introduced, in population-maximizing competitive federalism, an anti-extractive system of interstate competition.

4.7 Conclusion

Interstate competition in modern democratic federations, then, is not quite satisfactory with reference to the competitive regulation of the state. In fact, it is not clear to what extent institutions in such polities actually encourage interstate competition rather than only interstate

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pseudo-competition. At first glance, state elections appear to offer straightforward institutional grounds for conceptualizing relations among states as being competitive, but a closer inspection suggests that they only – or at least largely – encourage pseudo-competitive interstate relations that ultimately reduce, for the most part, simply to local electoral competition. Federal elections do generate some interstate competitive relations, but the prevalence of these relations, at least in the US and EU, should tend to be low – and the resulting competitive relations are, as will be argued in chapter five, still subject to the basic deficiencies of elections from chapter three (in modified form). Finally, it is not clear that non-electoral competition over revenues is a significant element in the politics of modern democratic federations either, and as shall be argued in chapter seven, insofar as such competitive interstate relations do obtain, they are worrisome.

Of course, I do not mean to suggest that pseudo-competitive interstate relations of the sort discussed here are an unimportant element in the behavior of state representatives and ruling parties, or in the determination of social outcomes. Nevertheless, conceptualizing these relations as interstate competition misunderstands them, and leads scholars to conclusions that are likely too strong, since interstate pseudo-competition is not characterized by interstate competitive discipline. Theories of interstate competition are therefore systematically overstating its role in politics. In accounts where interstate competition is believed to enhance social welfare (as with much of the scholarship on the subject), the literature paints a systematically too-rosy picture of politics in democratic federations. In accounts where interstate competition is believed to undermine social welfare (as with some scholarship on tax competition), the literature paints a systematically too-bleak picture of politics in democratic federations. Pseudo-competitive interstate relations are not characterized by the interstate competitive discipline required to produce most of the results envisioned by scholarship on the subject.

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Nor do I wish to cast aspersions on federalism generally. All I claim is that democratic federations today do not necessarily accomplish all that is imputed to them by scholars, especially with reference to theories of interstate competition. If we want interstate competition – and especially if we want well-structured interstate competition that transcends the limitations of elections, and of extractive politics – then it would likely be easiest to design institutions that directly accomplish this aim. This we shall do presently, in Part III of the dissertation. And there, readers will also find good reasons for altering and formalizing the structure of competitive interstate relations even if interstate competition does obtain today, and even if it works more-or- less as envisioned by the academic literature. But more on all this a little later. First, let’s investigate competition between state and federal governments.

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CHAPTER FIVE: INTERSTRATUM COMPETITION

To what extent does political competition in modern democracies and democratic federations, in the context of legislative and executive politics, live up to the ideals of universal benevolence and state development? So far, the question has been considered in two contexts: electoral competition and interstate competition. Both have proven disappointing. Electoral incentives for representatives and ruling parties do not align with the twin ideals as well as one might hope. Interstate relations in democratic federations generally do not amount to competition in the first place, and when they do, are still deficient with respect to the twin ideals.

Consequently, the search for competitive political institutions that live up to the twin ideals continues. This time, political competition is studied in a third and, for the purposes of this dissertation, final context: competition among state and federal governments in democratic federations such as the US and EU. For brevity, the phenomenon will be referenced as interstratum competition, since it concerns competition across strata of government.

As always, intergovernmental relations are at their core relations among people. Neither state nor federal governments possess wills of their own, so in speaking of competition among them, we will be speaking in reality of competition among the representatives and parties who control their respective apparatuses. Hence, in the US, interstratum competition references governors, state legislators, and state ruling parties competing against members of Congress, the president, and the federal ruling party; and in the EU, interstratum competition references executives, MPs, and ruling parties from the constituent states competing against the EU presidency, members of the European Parliament (MEPs), and the EU ruling coalition. The subject of inquiry, then, is whether these state and federal representatives and ruling parties compete against one another, and if so, how interstratum competition encourages them to wield political power.

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As before, we will not assume at the outset – as the scholarly literature sometimes does (e.g.

Crémer and Palfrey 1996; Musgrave 1959; Oates 1972; Volden 2005) – that interstratum competition arises because state and federal representatives always look to maximize their constituents’ welfare or some approximation thereof. Again, encouraging representatives to consistently do so is the thorniest problem of politics, and we should not assume it away (e.g.

Bednar 2007; Lockwood 2008; Oates 2005; Weingast 2009). Instead, we should directly examine institutions and institutional incentives to see if and how they generate interstratum competition, whether by way of welfare-maximization or some other mechanism.

The analytical framework should by now be familiar. Interstratum competition requires relations among state and federal representatives and ruling parties to satisfy the four necessary conditions of rivalry, salience, strategy determinacy, and relative performance. Thus, they must possess some mutually incompatible preferences over which they can compete; the satisfaction of these incompatible preferences must be sufficiently salient in their minds to motivate action; they must perceive their actions to influence the satisfaction of said preferences; and they must care about their performance relative to each other. As we shall see, these four conditions are at least sometimes satisfied in the interstratum context. Whenever they are, we will then consider how the ensuing competition may be expected to incentivize and discipline representatives and ruling parties with respect to the ideals of universal benevolence and state development.

The chapter focuses on two general forms of interstratum competition: electoral and jurisdictional. Interstratum electoral competition occurs when state and federal representatives vie over the same elected offices (e.g. Berkman 1994; Black 1972; Hobolt and Høyland 2011;

Maestas et al 2006; Mariani 2008; Myerson 2006; Rohde 1979; Scarrow 1997). Interstratum jurisdictional competition occurs when state and federal representatives vie over political

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authority – i.e. which stratum of government controls which areas of state activity and in what fashion (e.g. Bednar 2007; Cai and Treisman 2004; Oates 2005; Orford 2008; Volden 2005).

Both cases raise significant concerns about competition vs. pseudo-competition, prevalence, and the two normative ideals. Overall, interstratum competition in democratic federations also does not live up to our hopes.

5.1 Interstratum Electoral Competition

Let’s start with elections as the first potential source of interstratum competition. In the US, state legislators and governors contest congressional seats and the presidency; and in the EU, state MPs and executives contest seats in the European Parliament (but not the EU presidency since it is not directly contestable).103 This career trajectory across strata of government is well- documented (e.g. Berkman 1994; Hobolt and Høyland 2011; Maestas et al 2006; Mariani 2008;

Myerson 2006; Scarrow 1997). It gives rise to interstratum competition. State and federal representatives who contest the same federal elections necessarily become rivals because they cannot win simultaneously. This rivalry is salient whenever the rivals are sufficiently interested in winning election to shape their decisions and actions accordingly – which is almost always the case. The strategy determinacy condition is satisfied because the rivals’ decisions and actions influence their electoral prospects. And the relative performance condition is satisfied because electoral success depends upon relative performance at winning support from voters. Thus, state

103 The converse scenario (federal representatives contesting state offices) is also possible, although in practice it is uncommon. On account of its relative infrequency, the converse case will not receive direct attention here. However, most of the argument that follows, and the conclusions drawn, will also apply fairly well to the converse case, with some adjustments that should be obvious to readers.

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and federal representatives who contest election for the same office are very much engaged in interstratum electoral competition.

There are some limits to the prevalence of such competition. Prevalence among state representatives has already been discussed in chapter four. We noted that not all state representatives aspire to federal positions, and among those who do, some are only idly ambitious – they wish to ascend to a federal office but are not interested in acting to achieve this goal, either because the likelihood of success is too low, or the effort required too high. For obvious reasons, interstratum electoral competition cannot discipline state representatives falling into either category, since they do not actually participate. In addition, even those who do participate in interstratum competition usually only compete against federal representatives from their own states. Although would-be carpetbaggers in both the US and EU can change state-of- residence,104 to my knowledge it is still uncommon for someone to simultaneously occupy a state office in one state and run for a federal office in another. Hence, state representatives engaged in interstratum electoral competition tend to only compete against federal representatives from their own states, and not federal representatives more broadly.

Prevalence among federal representatives raises similar concerns. True, unlike state representatives who can refuse to participate in interstratum electoral competition, most federal representatives are quite likely to have to defend their seats against challenges from state representatives. They can be subject to electoral challenge from at least one state representative even if the vast majority of state representatives do not compete for federal offices. Still, as above, and for the same reasons, federal representatives in the US and EU in practice usually only face interstratum electoral competition from their own states (with the exception of

104 With varying degrees of difficulty.

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American presidents, since the presidency is not pre-allocated by state). Consequently, in most cases, federal representatives also tend to only compete electorally against state representatives from their own states, and not state representatives more broadly.

It follows from these observations that interstratum electoral competition is characterized by a patchwork, not complete network, of competitive electoral relations across strata of government. Competitive relations among state and federal representatives are usually confined to their own states, and do not extend to the entire federation. In this sense, interstratum electoral competition is local, not national. We already discussed in chapter four the importance of this detail: local competition tends, in expectation, to be less demanding and disciplining than national competition because the best competitors from some given state tend, in expectation, to be less formidable than the best from across the federation. Because state boundaries tend to protect state and federal representatives from federation-wide interstratum electoral competition, such competition is not as demanding as it would be were these protections not in place.

Still, despite these bounds on its prevalence and demandingness, interstratum electoral competition is very much a real phenomenon. What can be expected from it in terms of political incentives and their alignment with the ideals of universal benevolence and state development?

Not much, I contend, beyond what can be expected from elections generally. Whether the candidates in some election hail from different strata of government has little bearing on the inherent shortcomings of electoral competition, explored at length in chapter three. There are, however, some differences this time around, so let’s briefly revisit the four major deficiencies of electoral incentives in the interstratum context.

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5.1.A. Majoritarian Exclusion II