GV101 Week 15

Levels of Government:
Federalism and Decentralisation
 Catalonia should
be free to declare
independence
from Spain

or

The declaration
of independence
was an illegal
coup d’état
 Balancing Democracy and Diversity
Small nations have always been the cradle of liberty; and the fact that many of them
have lost their liberty by becoming larger shows that their freedom was more a
consequence of their small size than of the character of their people …The federal
system was created with the intention of combining the different advantages which
result from the magnitude and the littleness of nations.
Alexis de Tocqueville (1835-40)

Federalism is the main alternative to empire as a technique for aggregating large

areas under one government … The essential institutions of federalism are … a
government of the federation and a set of governments of the member units, in
which both kinds of governments rule over the same territory and people and each
kind has the authority to make some decisions independently of the other.
William H. Riker (1987)

For how long will English constituencies and English Honourable members tolerate
... at least 119 Honourable Members from Scotland, Wales and Northern Ireland
exercising an important, and probably often decisive, effect on English politics while
they themselves have no say in the same matters in Scotland, Wales and Northern
Ireland? [The “West Lothian Question”]
Speech on 14 November 1977, by Tam Dalyell, Labour MP for West Lothian
 Outline
1. Models of Territorial Organisation of the State
Unitary vs. Federal, Centralised vs. Decentralised

2. Examples: USA, Germany, India, United Kingdom, France

3. Why Decentralise?
Democratic accountability / checks and balances
Ethnic divisions / divergent policy preferences
‘Fiscal federalism’

4. Consequences of Decentralisation
Accommodating or Exacerbating Ethnic Conflict?
‘Market-Preserving Federalism’
Parties and Decentralisation
Malapportionment
 What is Federalism?
A definition of federalism (cf. Elazar 1997; Bednar 2009)

1) Geopolitical division – the country is divided into regional governments that

are constitutionally recognised and that cannot be unilaterally abolished by the
central government

2) Independence – regional and central governments have independent bases

of authority, e.g. separate elections, courts, laws etc.

3) Direct governance – policy-making is divided between the regional and

central governments, such that each has some ‘exclusive competences’ over
their citizens, e.g. as set out in a ‘catalogue of competences’

4) Territorial representation – regional sub-units are represented in the upper

chamber of the central legislature, and so have power over central
government policy
 Other Forms of Territorial Organisation
Unitary State
- geopolitical divisions decided by central government
- may have independent elections, but not separate courts or laws
- no direct governance, i.e. no ‘exclusive competences’ of sub-units
- no territorial representation in central legislature

Devolution / Decentralisation (within a unitary state)

- existence and powers of geopolitical divisions decided by central government
- (some) sub-units have independent courts and legal traditions
- (some) sub-units have direct governance, i.e. exclusive power over some policies
- over-representation of (some) territorial sub-units in upper house

=> Where only some regional sub-units have exclusive policy-making power and
special representation, this is sometimes called ‘asymmetric federalism’
Federal Countries
according to wikipedia!

India?

South Africa?
Case 1: United States of America
 Design of Federalism in the USA
Geopolitical division
50 “states”, recognised by the US constitution

Independence
Separate state elections, constitutions, courts, laws etc.

Direct governance
Constitution preserves “states’ rights” over all policies not explicitly
allocated to the federal government & protected by the Supreme Court

Territorial representation
Each state has 2 members of the Senate, who are directly elected =>
Wyoming has 280,000 people per Senator
California has 18,630,000 people per Senator
 Case 2:
Germany
 Design of Federalism in Germany
Geopolitical division
16 states (Länder), recognised by the German constitution (‘Basic Law’)

Independence
Each state has its own elections, constitutions, judges, laws etc.

Direct governance, Catalogue of competences in the constitution:

Federal: defence, foreign affairs, immigration, transportation etc.
Shared: civil law, public welfare, public health, higher education etc.
State (with federal ‘framework laws’): media, environment etc.
State: primary & secondary education etc.

Territorial representation
State governments sit in upper house (Bundesrat), with votes by pop’n:
Baden-Württemberg, Bavaria, Lower Saxony, North Rhine-Westphalia = 6 votes
Hessen = 5 votes
Berlin, Brandenb’g, Rhineland-P., Saxony, Saxony-An., Schl.-Holst., Thuringia = 4 votes
Bremen, Hamburg, Mecklenburg-Vorpommern, Saarland = 3 votes
Case 3:
India
 Design of Territorial Government in India
Geopolitical division
28 states & 7 union territories, set up by constitution and legislative statute

Independence
States: separate governments, elections, laws, courts etc.
Union territories: governed directly from the centre

Direct governance
Constitutional division of powers:
Union: defence, foreign affairs, citizenship, income & company taxes etc.
State: police, justice, health, agriculture, money lending, land taxes etc.
Concurrent: marriage, education, labour rights, media etc.

Territorial representation
28 states and 2 of the union territories directly elect members of the upper
house (Rajya Sabha), in proportion to population:
Uttar Pradesh (pop’n 190,890,000): 31 seats => 6,160,000 per seat
Sikkim (pop’n 540,000): 1 seat => 540,000 per seat
 Case 4:
United Kingdom
 Design of Territorial Government in UK
Geopolitical division
UK divided into 4 nations (England, Scotland, Wales, Northern Ireland)
England divided into regions, counties, and local councils
All set up by UK legislative statutes

Independence
Scottish parliament, and Welsh, N.Ireland & London assemblies elected
Scotland has separate legal tradition and courts
English regional assemblies (non-elected) were abolished in 2008-10

Direct governance
Scotland: direct power in some areas (e.g. education), limited tax powers
Wales, N.Ireland, London: policy implementation powers, no tax powers

Territorial representation
Scotland, Wales & N.Ireland slightly over-represented in H.of Commons
England (pop’n 53,012,456): 533 MPs => 99,500 per MP
Wales (pop’n 3,063,456): 40 MPs => 76,600 per MP
 Support for Scottish Independence
YouGov tracker poll

Yes No
60

55

50

45

40
Referendum, 18 Sept 2014
Yes: 44.7%, No: 55.3%
35 Turnout: 85%

30
27-Mar-14

27-Jan-15
27-Mar-15
27-May-15
27-Jul-15

27-Sep-15
27-Nov-15

27-Mar-16
27-May-14
27-Jul-14

27-May-16
27-Jul-16
27-Sep-14
27-Nov-14

27-Sep-16
27-Nov-16
27-Jan-14

27-Jan-16

27-Jan-17
Note: “Don’t Know” responses included, but not shown
Case 5:
France
Design of Territorial Government in France
Geopolitical division (in metropolitan France)
13 regions, 96 departments, 342 arrondissements, 3,883 cantons, and
36,569 communes – all set up by legislative statute

Independence
All levels of government are elected, but no independent legal authority

Direct governance
Regions have no legislative authority, but can raise taxes (but then
receive less from central government)
Some discretion on the implementation of laws/spending on secondary
education, public transport, universities, and business subsidies

Territorial representation
No separate territorial representation. Upper house (Sénat) is indirectly
elected, by 150,000 grands électeurs (regional, departmental and city
councilors, members of the National Assembly etc.). The system is
biased to favour rural areas.
 Why Decentralise?
Democratic accountability / checks and balances
Decentralisation -> ‘government closer to the people’
Decentralisation -> vertical division of power / constraints on the centre

Ethnic divisions / divergent policy preferences

Geographically defined ethno-linguistic groups demand ‘autonomy’
Geographically defined socio-economic groups have divergent policy
preferences from the ‘median’ of the country as a whole

‘Fiscal federalism’
‘Local public goods’ (e.g. schools) should be funded locally
‘National public goods’ (e.g. defence) plus redistributive public spending
(e.g. pensions) should be funded centrally
 Democratic accountability /
checks and balances
Principle of Subsidiarity
A central authority should have a subsidiary function, performing only
those tasks which cannot be performed effectively at a more local level

-> question: what does ‘performed effectively’ mean?

e.g. there are ‘externalities’ of decentralising most policies,
such as environmental protection, education, transport etc.

Vertical ‘Checks and Balances’ (e.g. Lijphart 1999; Tsebelis 2002)

Dividing powers between the centre and sub-states is analytically the
same as dividing powers between the executive & the legislature
(presidentialiam), or between two legislative chambers (bicameralism)

-> question: how much should a national majority be constrained by

local ‘preferences’ / interests ?
 Ethnic divisions /
divergent policy preferences
Ethnic divisions
If ethno-linguistic groups in a society are geographically concentrated,
then decentralisation of power can give these groups autonomy over the
issues they care about (e.g. education, media, language etc.)
Example: Canada, Belgium, UK, Spain

Divergent policy preferences

More generally, some geographically concentrated social groups might
have significantly divergent policy preferences from the national majority,
and so prefer decentralised powers on these issues
e.g. median Scottish voter is to the left of the median UK voter
median Catalan voter is to the right of the median Spanish voter
State of Oregon and euthanasia
 Fiscal federalism
e.g. Oates 1972, 1999
‘Fiscal federalism’ is a normative theoretical framework for understanding
which functions and instruments should be centralised and which should
be decentralised =>

Central government should be responsible for:

Macro-economic stabilisation (e.g. interest rates, currency intervention)
Income redistribution (e.g. pensions, welfare spending)
National public goods (e.g. defence)

Regional/Local government should be responsible for the provision of

goods and services whose consumption is limited to their own jurisdictions
e.g. schools (?), hospitals (?), roads (?), local public housing (?)
-> Question: are these really ‘local goods’?
 Consequences of Decentralisation

Accommodating/Exacerbating Ethnic Conflict

Does decentralisation reduce or increase demands for independence?

Market-Preserving Federalism
Does decentralisation increase economic performance or lead to a ‘race
to the bottom’ in regulatory standards?

Parties and Decentralisation

Is decentralisation a “left-wing” or a “right-wing” project?

Malapportionment
Is (over)representation of territorial units in the central legislature
undemocratic?
 Accommodating or Exacerbating
Ethnic Conflict?
Conflicting evidence (see special issue of Regional & Federal Studies,
2009, vol. 19, no. 2)

Decentralisation -> decreased separatist demands

Some voters strategically support separatists, then when some
decentralisation is granted, they go back to mainstream/national parties
e.g. Basque Country, Belgium (in 1990s), Canada

Decentralisation -> increased separatist demands

Limited autonomy is granted -> separatists win regional election, and use
their powers to demonstrate that they can be trusted in government ->
more demands for autonomy/independence
e.g. Scotland (?), Malaysia, Catalonia, Belgium (in 2000s)
 Market-Preserving Federalism
Weingast (1995) argues that
“Thriving markets require … political institutions that credibly commit the
state to honor economic and political rights. … Federalism proved
fundamental to the impressive economic rise of England in the 18th
century and the United States in the 19th and early 20th centuries …
federalism [also] underpins the spectacular economic growth in China
over the past 15 years.”

Federalism can also lead to ‘regulatory competition’: competition

between states for better policies and better regulatory standards (e.g.
Californian environmental standards, known as a ‘California effect’)

But, regulatory competition might also lead to a ‘race to the bottom’, as

states cut their regulatory standards, welfare costs, and taxes to attract
businesses (the ‘Delaware effect’)
 Parties and Decentralisation
Preferences over decentralisation (an “institution”) should follow from
(left-right) preferences over policy =>

Toubeau & Wagner (2015) argue that (national-level) parties’ attitudes to

decentralisation is influenced by these parties’ positions on:

Economic redistribution/efficiency -> decentralisation limits the

redistributive capacity of central government, and increases local
economic “accountability”
=> economically right parties more pro-decentralisation

Cultural identity -> decentralisation of power undermines “national”

cultural homogeneity
=> socially liberal parties more pro-decentralisation
 Key Results
Dependent variable: party position on 1-20 anti-/pro-decentralisation scale
Least pro-decentralisation

(econ left-right)
(social lib-con)

Most pro-decentralisation
 Malapportionment
One common consequence of decentralisation is ‘malapportionment’ in
the central legislature, because representation is based on territorial
units rather than based on the representation of people
e.g. Samuels and Snyder (2001) develop a ‘malapportionment index’:
 Correlates of
Malapportionment
in Upper
Chambers
 In Sum
There are growing demands for more decentralisation in many
established democracies (e.g. UK, Italy, Belgium, Brazil, Canada, India,
USA)

Federalism is a formal (and permanent) territorial division of power

between the centre and the states

Decentralisation of power can lead to more political accountability,

more checks and balances, decreased ethnic conflicts, policy
innovation, and better economic performance

But, decentralisation of power can also lead to policy gridlock/

conflict, increased separatist demands, concerns about over-
representation of some regions/states, negative policy spillovers,
and pressure to reduce taxes and regulation
 References
Bednar, Jenna (2009) The Robust Federation: Principles of Design, Cambridge: Cambridge
University Press.
Elazar, Daniel J. (1997) ‘Contrasting Unitary and Federal Systems’, International Political
Science Review 18: 237-251.
Erk, Jan and Lawrence Anderson (2009) ‘The Paradox of Federalism: Does Self-Rule
Accommodate or Exacerbate Ethnic Divisions?’, Regional & Federal Studies 19(2) 191-202.
Lijphart, Arend (1999) Patterns of Democracy: Government Forms and Performance in Thirty-
Six Countries, New Haven, CT: Yale University Press.
Oates, Wallace E. (1972) Fiscal Federalism, New York, NY: Harcourt.
Oates, Wallace E. (1999) ‘An Essay on Fiscal Federalism’, Journal of Economic Literature 37(3):
1120-1149.
Riker, William H. (1987) The Development of American Federalism, Norwell: Kluwer.
Samuels, David and Richard Snyder (2001) ‘The Value of a Vote: Malapportionment in
Comparative Perspective’, British Journal of Political Science 31: 651-671.
de Tocqueville, Alexis (1835-40) Democracy in America, London: Saunders and Otley.
Toubeau, Simon and Markus Wagner (2015) ‘Explaining Party Positions on Decentralization’,
British Journal of Political Science 45: 97-119.
Tsebelis, George (2002) Veto-Players: How Political Institutions Work, Princeton, NJ: Princeton
University Press.
Weingast, Barry (1995) ‘The Economic Role of Political Institutions: Market-Preserving
Federalism and Economic Development’, Journal of Law, Economics and Organization 11(1):
1-31.
 To Do
What is the territorial structure of government in your adopted
country?
e.g. unitary, decentralised, federal

What explains this structure?

e.g. historical divisions, ethnic divisions, imposition by a foreign power

What do you think are the consequences of this structure?

e.g. demands for separation, economic performance etc.

Do you prefer a unitary, a decentralised, or a federal system of

government, and, if so, why?