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Essays on Political Parties, Their Organization, and Policy Choice

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Essays on Political Parties, Their Organization, and Policy Choice Essays on Political Parties, their Organization, and Policy Choice By Nicolas-Guillaume M. Martineau A thesis submitted to the Graduate Program in the Department of Economics in conformity with the requirements for the Degree of Doctor of Philosophy Queen's University Kingston, Ontario, Canada November 2011 Copyright ©Nicolas-Guillaume M. Martineau, 2011 Abstract The primary aim of this thesis is to advance economics' understanding of the organization of political parties, for the purpose of explaining the policy choices that result from collective decision procedures. Motivating this inquiry is the benign neglect that the political party as an organization has long suffered from in economics, in a manner that mirrors depictions of the firm in early neoclassical analysis. Accordingly, this thesis first considers the question of the relative influence of different contributors to the political parties' electoral activities, i.e. special-interest groups contribut- ing money and individual party activists volunteering their time, on their choice of policy platforms. It is found that the presence of activists induces parties to offer differentiated policy platforms, even in the presence of a special-interest group whose contributions are perfectly substitutable with those of activists. Concurrently, the special interest's influence is to bias the parties' platforms towards its preferred policy. Second, the internal dynamics of parties organized into factions sharing common goals are investigated. It is studied how they affect the party leader's choice of policies while in office and her accountability to voters, through the threat of her removal from the party's helm. While occasionally acting as a distortion on the election mechanism's effectiveness for keeping politicians accountable, the presence of the politician's party is accountability- enhancing especially in the presence of other distortions. This contributes to a second-best theory of politics. This thesis' secondary aim is to contribute to restoring the use of moral and ethical concerns in normative analysis and political economy. This is warranted by the fact that moral and ethical motives matter more in such contexts than in most market transactions, ii where rational self-interested behaviour largely prevails. This objective is primarily represented in this thesis' study of normative analysis as conditioned on a societal consensus. This study asks how redistributive policies are to be optimally-chosen when the extent of societal co-operation regarding work participation depends on a social norm. Its main finding is that constraining the social planner's choices on the extent of societal cohesion restricts the scope of redistribution compared with an unconstrained social planner. iii Co-authorship Chapter 5 of this thesis was co-authored with Professor Robin W. Boadway at Queen's University. iv Acknowledgements I wish to thank first and foremost my supervisor, Robin W. Boadway, for his unrelenting support, boundless knowledge and precious advice throughout the writing of this thesis. I wish to also thank the following faculty members at Queen's University for having given me valuable comments and advice: Sumon Majumdar, Dan Usher, Gregor W. Smith, Marco Cozzi, Jano Jabojnik, Ruqu Wang, and Marie-Louise Vierø. I am also grateful for the comments received from various discussants (notably Al Slivinsky and Arianna Degan) and participants at conferences, visiting speakers (Steve Coate and Marina Azzimonti in partic- ular), and receptive audiences on the job market (participants at the University of Waterloo, the Universit´ede Sherbrooke, Carleton University, and the University of Winnipeg) which helped shape these papers. Finally, a hat tip goes to my fellow doctoral colleagues, espe- cially those with whom I discussed many of the ideas contained therein: Jean-Denis Garon, Louis Perrault, Alex Armstrong, Ryan Webb, and Afrasiab Mirza. Il va sans dire que cette th`ese de doctorat n'aurait pas pu ^etre compl´et´ee sans le soutien de ma famille: Papa, Maman, Alexandra et Jean-Christophe. And many thanks to my friends (a particular shout-out to: Justin S., Clara S., Chris V., Yolande P.-S., Julien J., Silvia B., and Chlo¨e M.) for making my stay in the occasional doldrums of the doctorate generally more tolerable. v Table of Contents Abstract.......................................... ii Co-authorship . iv Acknowledgements . v TableofContents..................................... vi List of Tables . ix List of Figures . xi Chapter 1: Introduction 1 1.1 Political parties and their organization: why look inwards? . 1 1.2 W(h)ither homo economicus?........................... 7 1.3 Organization of the thesis . 13 Chapter 2: Literature Review 14 2.1 Chapter 3: The Influence of Special Interests and Party Activists on Electoral Competition . 15 2.2 Chapter 4: The Effect of Party Discipline on the Electoral Accountability of Politicians . 29 2.3 Chapter 5: Normative Analysis with Political Constraints . 35 Chapter 3: The Influence of Special Interests and Party Activists on Electoral Competition 45 3.1 Introduction . 45 3.2 Political competition: benchmark . 51 3.3 Political competition with a special interest . 56 3.4 Political competition with activists . 61 vi 3.5 Political competition both with a special interest and activists . 74 3.6 The decline in high-intensity participation and special-interest influence . 94 3.7 Conclusion . 104 Chapter 4: The Effect of Party Discipline on the Electoral Accountabil- ity of Politicians 108 4.1 Introduction . 108 4.2 Benchmark . 113 4.3 Adding party discipline . 122 4.4 Pandering welfarist politicians and party discipline . 134 4.5 The effect of information and far-sightedness on the effectiveness of the party's discipline . 149 4.6 Conclusions and summary: The decline in political participation, and the decline in the relevance of parties . 158 Chapter 5: Normative Analysis and Societal Consensus 162 5.1 Introduction . 162 5.2 Labour market participation, social norms, and optimal redistribution . 165 5.3 The welfare state, redistribution, and social cohesion . 183 5.4 Discussion and Conclusions . 206 Chapter 6: Conclusion 211 Bibliography 219 Appendix A: The Influence of Special Interests and Party Activists on Electoral Competition 233 A.1 Further explanations . 233 A.2 Proofs . 235 Appendix B: The Effect of Party Discipline on the Electoral Accountabil- ity of Politicians 248 vii B.1 Pandering reduces ex-ante voter welfare relative to the no-pandering, second- best benchmark: A simple proof . 248 B.2 Proof of Proposition 4.21 on page 144 . 249 B.3 Ranking the preferences of far-sighted factions in the choice of an ex-ante policyline......................................251 B.4 Ranking the preferences of far-sighted factions in an ex-post leadership review 256 B.5 The preferences of far-sighted putschist factions, and the politicians' problems 259 viii List of Tables 3.1 Fixed-point approximations for equilibrium platforms and their differential, s = 0:1:::0:9, h = 2h^,κ = 2, ι = 1=2........................ 81 4.1 Expected payoffs for factions, for each choice of a policy line, in s1 = 0, given rational expectations and full commitment, and assuming Ψ δe . 128 ≥ 2 4.2 Expected payoffs for factions, for each choice of a policy line, in s1 = 1, given rational expectations and full commitment, and assuming Ψ δe . 128 ≥ 2 4.3 Preference rankings for factions under no-pandering, for each choice of a policy line, in each state, given rational expectations and full commitment, and assuming Ψ δe . (An asterisk denotes an ex-æquo ranking.) . 128 ≥ 2 4.4 Expected payoffs for factions with pandering, for each choice of a policy line, in s1 = 0, given rational expectations and full commitment, and assuming Ψ δe ........................................141 ≥ 2 4.5 Expected payoffs for factions with pandering, for each choice of a policy line, in s1 = 1, given rational expectations and full commitment, and assuming Ψ δe ........................................141 ≥ 2 4.6 Preference rankings for factions under no-pandering, for each choice of a policy line, in each state, given rational expectations and full commitment, and assuming Ψ δe ................................142 ≥ 2 4.7 Expected payoffs for factions with pandering, for each choice of a policy line, with the state being unknown, given rational expectations and full commit- ment, and assuming Ψ δe ............................151 ≥ 2 ix 4.8 Preference rankings for factions with pandering, for each choice of a policy line, with the state being unknown, given rational expectations and full com- mitment, and assuming Ψ δe . 152 ≥ 2 4.9 Preference rankings for the reformist faction with pandering, for each choice of a policy line, with the state being unknown, given rational expectations and full commitment, and for different parameter values, assuming Ψ δe . ≥ 2 (A asterisk denotes an ex-æquo ranking.) . 152 B.1 Expected payoffs for factions with pandering, for each choice of a policy line, in s1 = 0, given rational expectations, full commitment and far-sightedness, and assuming Ψ δe ................................252 ≥ 2 B.2 Expected payoffs for factions with pandering, for each choice of a policy line, in s1 = 1, given rational expectations, full commitment and far-sightedness, and assuming Ψ δe ................................255 ≥ 2 x List of Figures 3.1 The entry decision, followed by which party to be active in . 63 3.2 Ranges of activists for both parties, drawn from the informed voters' ideal points over the policy
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