Negotiating Change: Approaches to and The

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Negotiating Change: Approaches to and The NEGOTIATING CHANGE: APPROACHES TO AND THE DISTRIBUTIONAL IMPLICATIONS OF SOCIAL WELFARE AND ECONOMIC REFORM A DISSERTATION SUBMITTED TO THE DEPARTMENT OF POLITICAL SCIENCE AND THE COMMITTEE ON GRADUATE STUDIES OF STANFORD UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY Carol Diane St. Louis March 2011 © 2011 by Carol Diane St Louis. All Rights Reserved. Re-distributed by Stanford University under license with the author. This work is licensed under a Creative Commons Attribution- Noncommercial 3.0 United States License. http://creativecommons.org/licenses/by-nc/3.0/us/ This dissertation is online at: http://purl.stanford.edu/rw793bx2256 ii I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of Philosophy. Isabela Mares, Primary Adviser I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of Philosophy. Terry Karl, Co-Adviser I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of Philosophy. David Laitin I certify that I have read this dissertation and that, in my opinion, it is fully adequate in scope and quality as a dissertation for the degree of Doctor of Philosophy. Jonathan Rodden Approved for the Stanford University Committee on Graduate Studies. Patricia J. Gumport, Vice Provost Graduate Education This signature page was generated electronically upon submission of this dissertation in electronic format. An original signed hard copy of the signature page is on file in University Archives. iii iv ABSTRACT Throughout the last decades, advanced industrial democracies have been confronted by the long-term pressures of globalisation, rising and persistent unemployment, ageing populations, rising health care costs, and the severe, but shorter-term shocks of recession, currency runs, and other troubles. The international political economy literature is rife with observations that states are under increasing pressure to reduce taxes and to trim their budgets, and recent austerity efforts in Europe and the United States support the view that governments are responding to these intensifying economic and political incentives by constraining their spending. Simultaneously, governments encounter political pressures to maintain or expand their social welfare safety nets in order to meet the needs of their most vulnerable populations – the unemployed and underemployed, the sick and disabled, pensioners, and the poor. Despite these common pressures, there has been a great degree of divergence over the last decades. Variation endures in terms of the aggregate levels of taxation and expenditures and the distribution of costs and benefits among the citizenry. Reforms have differed in regard to whether they are approached in a confrontational manner by the government alone or in consensual, negotiated process that includes the parliamentary opposition, trade unions, and employers’ associations. Some painful reforms have been met with massive strikes and protests, while other painful reforms have been accepted with relative equanimity. Finally, there has been a great deal of variance in the ability of various governments to adopt and implement their reform packages and to survive the potential backlash in response to these reforms. Considering the cases of France, Italy, and Germany during the 1990s, this dissertation sheds new light on the factors determining the approach to reform, the distribution of costs and benefits, and the likelihood that governments will succeed in their attempts to adopt and implement reforms. Chapter 1 introduces the core questions, presents a brief overview of the theory, and explains the methodology and case selection. Chapter 2 develops a theoretical framework for understanding: (a) the factors that lead governments to adopt a particular approach to a reform, (b) the role that partisanship plays in determining the distributional implications of reform, (c) the effect that the approach and the distributional implications of the reform have upon how the parliamentary opposition, the social partners, and the public respond to the reform, and (d) the role that response plays in determining the ultimate fate of reform – and, in some cases, the fate of that government. Chapter 3 considers the experiences of France, exploring the theory’s ability to explain a case of a typical state facing conflicting economic and political pressures to reform its economic, fiscal, and social welfare policies. Chapter 4 tests the theory’s applicability to Italy, a country undergoing a particularly high level of economic and political stress. Chapter 5 focuses upon the apparently deviant case of Germany, where both the reform approach and the distributional implications of the reform seem to run counter to the theory’s predictions. Deep examination of the role of party factions and shifts in the balance of power within the governing coalition reveals the importance of considering the preferences of the reform leadership rather than the coalition as a whole in order to generate accurate predictions and interpretations. Chapter 6 concludes with an overview of generalisable conclusions and future research directions. v vi ACKNOWLEDGEMENTS No dissertation is the product of the author alone. I am immeasurably indebted to a vast number of people and institutions that provided me with the personal, intellectual, and financial support to pursue and complete this project. An easy to place to begin the acknowledgements is with my committee. I benefited greatly from Isabela Mares’ insights into European social welfare policy, which inspired me as I first started my plunge into the topic. I am also immensely grateful for her playing an instrumental role in setting me on my way along the roads of Europe for field research. Terry Karl provided me with an unending stream of positive reinforcement and moral support, and I am profoundly in her debt for her helping me to understand where the project was going without ever imposing a particular perspective. Heartfelt thanks go to David Laitin and Jonathan Rodden for asking interesting questions that made me think and stretch beyond my preconceptions. Graduate school and writing a dissertation can be a frustrating process, but first in Stanford’s classrooms and conference rooms and then in diverse locations across the world, Lou Ayala, Anu Kulkarni, Erin Jenne, and Marie-Joëlle Zahar have been there with whatever was needed – an ear, a shoulder, a spare room and bed, dinner, wine, and food for thought. I adore you all. Immense thanks go to Ora Hurd, Jeanette Lee-Oderman, Judit Sarossy, and Eliana Vásquez of the Stanford University Political Science Department for their administrative skills, their logistical support, and most especially their open doors and warm hearts. Immeasurable help during the big push to write the dissertation was provided by Laura Thal, the counsellors, and the other participants in the Humanities Writing Center’s Dissertation Bootcamp, as well as by the Office of the Vice Provost of Graduate Education for sponsoring the HWC’s wonderful services. I received financial support from a number of sources during my time as a doctoral student. Without funds from Stanford’s University Doctoral Fellowship, the Littlefield International Graduate Fellowship from the Institute for International Studies at Stanford University, the German Academic Exchange Service (Deutscher Akademischer Austauschdienst, DAAD), and a research position with the Wissenschaftszentrum-Berlin für Sozialforschung (funded by the Hans- Böckler-Stiftung), this dissertation would never have been written. One of the greatest pleasures of this project was working with other researchers and academics who were fascinated by the interplay of economics and European politics. The Wissenschaftszentrum Berlin für Sozialforschung (WZB) provided me with an office, research facilities, and a vibrant intellectual atmosphere that I have never stopped missing. I thank David Soskice and Bob Hancké for allowing me to join your research project on the political economy of the Economic Monetary Union and for being my impromptu mentors during my time in Europe. I learned more from you than you’ll ever know. My colleagues and friends from Berlin – Lutz Engelhardt, Robert Fannion, Joe Foudy, Alexandra Hennessy, Kathleen Kollewe, and Mark Vail – made my time there incredibly memorable, instructive, and enjoyable. (Hmm….. I think we need to plan a reunion!) Last, but not least the logistical support and administrative skills of the WZB’s Ilona Köhler, Hannelore Minzlaff, and Christoph Albrecht were invaluable in helping me negotiate German bureaucracy. vii Terry Cole, Michael Penn, and Terry Moe provided welcome encouragement and excellent advice on the trick to finishing a dissertation. I only wish that I had internalised that advice sooner. Particular thanks go to Anu Kulkarni, RobertFannion, Mark Vail, and Shaun Deacon, who had the patience to read my unending drafts of the dissertation, the fortitude to give feedback, and the forbearance to not be too sharp-tongued about its many problems. I am immensely grateful to you for willingness to read my work and to provide apt criticism, useful suggestions, and encouragement. Finally, I thank my parents, William and Judith St. Louis, my grandmother,
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