This provides another potential interpretation for the reduced-form model of democratic politics in Chapter 4, where the equilibrium policy was the solution to a weighted utilitarian social-welfare maximization problem. We summarize this result as the following proposition:
Proposition A.5 (Policy Nonconvergence with Partisan Politics and Probabilistic Voting): Suppose that P(qA, qB) is a continuous function because of probabilistic voting, and political parties represent the preferences of one of the groups. Then, the political equilibrium is given by maximizing the weighted utilitarian social-welfare function (12.19), which places greater weight on the social group whose preferences are reflected in the party platforms.
The reason this proposition is important is that it suggests that certain groups can be quite powerful in democratic politics if they can manage to control the ideological leanings of the parties. In terms of our two-class model, we can think of democratic politics sometimes as captured by the rich - for example, because they control the political parties.
4.3 Commitment and Convergence
An important assumption so far is that parties announce policy platforms and then they can commit to the policies they announced in those platforms. This way, parties could basically compete by varying the policies that they implement when in office. However, as emphasized byAlesina ( 1988), Osborne and Slivinski ( 1996), and Besley and Coate (1997), the assumption of commitment is not necessarily plausible. In these one-shot models, what is there to stop the politicians from changing policies to their ideal point once they come to power? Nothing; there is no potential punishment. (There would be some punishment if we were in the world with repeated elections, but this is beyond the scope of our treatment.)
To see what happens when we remove this commitment assumption, consider the model of the previous section but assume that parties can choose whichever policy they like when they come to office. Suppose also that P(qA, qB) is given by ( 12.1 ). Announcements before the election are nothing more than cheap talk and in a subgame perfect equilibrium, voters realize that once they come to power, parties implement their ideal points. Therefore, they simply compare Vn(qA) and Vn(qB) and vote for whichever party has an ideal point closer to theirs. The result is that the party with an ideal point closer to that of the median voter wins. Therefore, we have the following proposition:
Proposition A.6 (Policy Nonconvergence with Partisan Politics and No Commitment) : Suppose that there is no commitment to policy platforms in this model of partisan politics. Then, in the unique equilibrium, we have that if VM(qA) > VM(qB), party A comes to power with probability 1 and the equilibrium policy is qA; ifVM(qB) > VM(qA), party B comes to power with probability 1 and the equilibrium policy is qB; and if VM(qA) = VM(qB), each party comes to power with probability ½ and the equilibrium policy is qAwith probability ½ and q Bwith probability ½
Consequently, in this model of partisan politics without commitment, we see that parties’ policy preferences matter even more. This implies that the control of the political agenda and the parties’ internal structures becomes more important in determining equilibrium policies and, thus, more valuable when parties cannot perfectly commit to policies at the election stage. In this case, if both parties’ platforms are totally captured by a social group, equilibrium policies are always at the ideal point of one of those groups. For example, consider a situation in which the poor control one political party and the rich the other. If the ideal point of the rich is closer to the ideal point of the median voter, the equilibrium democratic policy is always the ideal point of the rich.
In summary, the models discussed in this appendix provide a microfoundation for the reduced-form model of political power used at the end of Chapter 4. The models suggest that the rich may have more power in some democracies because they either are less ideological in their voting than the poor or have been able to form effective lobbies for their interests or are able to capture or influence party platforms.
Bibliography
Abrams, Lynn (1995) Bismarck and the German Empire, 1871-1918; New York: Routledge.
Acemoglu, Daron (2002) “Technical Change, Inequality, and the Labor Market,” Journal of Economic Literature, 40, 7-72.
Acemoglu, Daron (2003a) “Why Not a Political Coase Theorem?” Journal of Comparative Economics, 31, 620-52.
Acemoglu, Daron (2003b) “Patterns of Skill Premia,” Review of Economic Studies, 70, 199- 230.
Acemoglu, Daron, Simon Johnson, and James A. Robinson (2001) “The Colonial Origins of Comparative Development: An Empirical Investigation,” American Economic Review, 91, 1369-401.
Acemoglu, Daron, Simon Johnson, and James A. Robinson (2002) “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,” Quarterly Journal of Economics, 118, 1231-94.
Acemoglu, Daron, Simon Johnson, and James A. Robinson (2005) “The Rise of Europe: Atlantic Trade, Institutional Change and Economic Growth,” American Economic Review, 95, 546-79.
Acemoglu, Daron, Simon Johnson, and James A. Robinson (2004) “Institutions as the Fundamental Cause of Long-Run Growth,” NBER Working Paper # 10481, forthcoming in Philippe Aghion and Steven Durlauf (eds.), Handbook of Economic Growth; Amsterdam: North-Holland .
Acemoglu, Daron, Simon Johnson, James A. Robinson, and Pierre Yared (2004) “Income and Democracy,” Unpublished Paper.
Acemoglu, Daron, and James A. Robinson (2000a) “Why Did the West Extend the Franchise? Growth, Inequality, and Democracy in Historical Perspective,” Quarterly Journal of Economics, CXV, 1167-99.
Acemoglu, Daron, and James A. Robinson (2000b) “Repression or Democratization?” European Economic Review, 44, 683-93.
Acemoglu, Daron, and James A. Robinson (2001) “A Theory of Political Transitions,” American Economic Review, 91, 938-63.
Acemoglu, Daron, and James A. Robinson (2002) “The Political Economy of the Kuznets Curve,” Review of Development Economics, 6, 183-203.
Acemoglu, Daron, and Fabrizio Zilibotti (1997) “Was Prometheus Unbound by Chance? Risk, Diversification, and Growth,” Journal of Political Economy, 105, 709-51.
Acemoglu, Daron, and Fabrizio Zilibotti (1999) “Information Acquisition in Development,” Journal of Economic Growth, 4, 5-38.
Ades, Alberto (1995) “Economic Development with Endogenous Political Participation,” Economics and Politics, 7, 93-117.
Ades, Alberto, and Thierry Verdier (1996) “The Rise and Fall of Elites: A Theory of Economic Development and Social Polarization in Rent-Seeking Societies,” CEPR Discussion Paper #1495.
Aguilera Peña, Mario (1985) Los Comuneros: Guerra Social y Lucha Anticolonia, Bogota: Universidad Nacional de Colombia.
Alesina, Alberto (1988) “Credibility and Political Convergence in a Two-Party System with Rational Voters,” American Economic Review, 78, 796-805.
Alesina, Alberto, and Roberto Perotti (1996) “Income Distribution, Political Instability, and Investment,” European Economic Review, 40, 1203-25.
Alesina, Alberto, and Dani Rodrik (1994) “Distributive Politics and Economic Growth,” Quarterly Journal of Economics, 109, 465-90.
Alesina, Alberto, Edward Glaeser, and Bruce Sacerdote (2001) “Why Doesn’t the United States Have a European-Style Welfare State?” Brookings Papers on Economic Activity, Fall 2001, 187-278.
Alesina, Alberto, and Edward Glaeser (2004) Fighting Poverty in the U.S. and Europe: A World of Difference; New York: Oxford University Press.
Almond, Gabriel A., and Sidney Verba (1963) The Civic Culture; Political Attitudes and Democracy in Five Nations; Princeton: Princeton University Press.
Alonso, Paula (2000) Between Revolution and the Ballot Box: The Origins of the Argentine Radical Party in the 1890s; New York: Cambridge University Press.
Altimir, Oscar (1986) “Estimaciones de la Distribucion del Ingreso en la Argentina, 1953-1980,” Desarollo Económico, 25, 521-66.
Aminzade, Ronald (1993) Ballots and Barricades: Class Formation and Repu
blican Politics in France, 1830-1871; Princeton: Princeton University Press.
André, Catherine, and Jean-Philippe Platteau (1997) “Land Relations under Unbearable Stress: Rwanda Caught in the Malthusian Trap,” Journal of Economic Behavior and Organization, 34, 1-47.
Arcinegas, German (1938) Los Comuneros; Bogotá: Editorial ABC.
Arrow, Kenneth J. (1951) Social Choice and Individual Values; New York: Wiley.
Ascher, Abraham (1988) The Revolution of 1905, Volume 1; Stanford: Stanford University Press.
Ascher, Abraham (1992) The Revolution of 1905, Volume 2; Stanford: Stanford University Press.
Attanasio, Orazio, Pinelopi K. Goldberg, and Nina Pavcnik (2004) “Trade Reforms and Wage Inequality in Colombia,” Journal of Development Economics, 74, 331-66.
Austen-Smith, David (2000) “Income Redistribution under Proportional Representation,” Journal of Political Economy, 108, 1235-69.
Austen-Smith, David, and Jeffrey S. Banks (1999) Positive Political Theory I: Collective Preferences; Ann Arbor: University of Michigan Press.
Austen-Smith, David, and Michael Wallerstein (2003) “Redistribution in a Divided Society,” Northwestern University, J. L. Kellogg School of Management, CMS-EMS Discussion Paper #1362.
Baloyra, Enrique A. (1982) El Salvador in Transition; Chapel Hill: University of North Carolina Press.
Barro, Robert J. (1979) “On the Determination of the Pubic Debt,” Journal of Political Economy, 87, 940-71.
Barro, Robert J. (1997) The Determinants of Economic Growth: A Cross-Country Empirical Study; Cambridge, MA: MIT Press.
Barro, Robert J. (1999) “The Determinants of Democracy,” Journal of Political Economy, 107, SI58-S183.
Barro, Robert J., and Jong-Wha Lee (2000) “International Data on Educational Attainment: Updates and Implications,” CID Working Paper #42.
Barzel, Yoram (2001) A Theory of the State: Economic Rights, Legal Rights, and the Scope of the State; New York: Cambridge University Press.
Bates, Robert H. (1991) “The Economics of Transition to Democracy,” PS: Political Science and Politics, 24, 24-7.
Bates, Robert H., and Da-Hsiang D. Lien (1985) “A Note on Taxation, Development and Representative Government,” Politics and Society, 14, 53-70.
Beard, Charles A. (1913) An Economic Interpretation of the Constitution of the United States; New York: The Free Press.
Becker, Gary S. (1983) “A Theory of Competition among Pressure Groups for Political Influence,” Quarterly Journal of Economics, 98, 371-400.
Benabou, Roland (2000) “Unequal Societies: Income Distribution and the Social Contract,” American Economic Review, 90, 96-129.
Benabou, Roland, and Efe Ok (2001) “Social Mobility and the Demand for Redistribution: The POUM Hypothesis,” Quarterly Journal of Economics, 116, 447-87.
Bergquist, Charles (2002) “The Left and the Paradoxes of Colombian History,” Unpublished Paper; Department of History, University of Washington at Seattle.
Bernheim, B. Douglas, and Michael Whinston (1986) “Menu Auctions, Resource Allocation, and Economic Influence,” Quarterly Journal of Economics, 1010, 1-31.
Berry, Albert R., and Miguel Urrutia (1976) Income Distribution in Colombia; New Haven: Yale University Press.
Bértola, Luis (2000) Ensayos de historia economica: Uruguay y la region en la economia mundial, 1870-1990; Montevideo: Ediciones Trilce.
Bértola, Luis, and Jeffrey G. Williamson (2003) “Globalization in Latin America before 1940,” NBER Working Paper #9687.
Besley, Timothy, and Robin Burgess (2000) “Land Reform, Poverty Reduction and Growth: Evidence from India,” Quarterly Journal of Economics, 115, 389-430.
Besley, Timothy F., and Steven T. Coate (1997) “An Economic Model of Representative Democracy ,” Quarterly Journal of Economics, 112, 85-114.
Besley, Timothy F., and Steven T. Coate (1998) “Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis,” American Economic Review, 88, 139-56.
Binswanger, Hans P., Klaus Deininger, and Gershon Feder (1995) “Power, Distortions, Revolt and Reform in Agricultural Land Relations,” in Jere Behrman and T. N. Srinivasan (eds). The Handbook of Development Economics, Volume III; Amsterdam: North-Holland.
Black, Duncan (1948) “On the Rationale of Group Decision-Making,” Journal of Political Economy, 56, 23-34.
Blackbourn, David (1998) The Long Nineteenth Century: A History of Germany, 1780-1918; New York: Oxford University Press.
Blume, Lawrence, and Carl P. Simon (1994) Mathematics for Economists; New York: W.W. Norton & Co.
Boix, Carles (2003) Democracy and Redistribution; New York: Cambridge University Press.
Boix, Carles, and Sebastián Rosato (2001) “A Complete Data Set of Political Regimes, 1800- 1999,” Unpublished, Department of Political Science, University of Chicago.
Bollen, Kenneth A. (1979) “Political Democracy and the Timing of Development,” American Sociological Review, 44, 572-87.
Bollen, Kenneth A. (1990) “Political Democracy: Conceptual and Measurement Traps,” Studies in Comparative International Development, 25, 7-24.
Bollen, Kenneth A. (2001) “Cross-National Indicators of Liberal Democracy, 1950-1990” [computer file]. 2nd ICPSR version. Chapel Hill, NC: University of North Carolina [producer], 1998. Inter-university Consortium for Political and Social Research [distributor].
Bollen, Kenneth A., and Robert W. Jackman (1985) “Political Democracy and the Size Distribution of Income,” American Sociological Review, 60, 438-57.
Bollen, Kenneth A., and Robert W. Jackman (1995) “Income Inequality and Democratization Revisited: A Comment on Muller,” American Sociological Review, 60, 983-89.
Bourguignon, François, and Thierry Verdier (2000) “Oligarchy, Democracy, Inequality, and Growth,” Journal of Development Economics, 62, 285-313.
Bourguignon, Francois, and Christian Morrisson (2001) “Data Sources for Inequality among World Citizens, 1820-1992,”Unpublished, www.delta.ens.fr/XIX.
Bourguignon, François, and Christian Morrisson (2002) “Inequality among World Citizens, 1820-1992,” American Economic Review, 92, 727-44.
Bowman, Larry W. (1991) Mauritius: Democracy and Development in the Indian Ocean; Boulder: Westview Press.
Brainard, Lael, and Theirry Verdier (1997) “The Political Economy of Declining Industries: Senescent Industry Collapse Revisited,” Journal of International Economics, 42, 221-38.
Bratton, Michael, and Nicolas van de Walle ( 1997) Democratic Experiments in Africa: Regime Transitions in Comparative Perspective; New York: Cambridge University Press.
Brenner, Robert ( 1976) “Agrarian Class Structure and Economic Development in Pre-industrial Europe,” Past and Present, 70, 30-75.
Brenner, Robert (1993) Merchants and Revolution: Commercial Change, Political Conflict, and London’s Overseas Traders, 1550-1653; Princeton: Princeton University Press.
Briggs, Asa (1959) Chartist Studies; London: Macmillan.
Bueno de Mesquita, Bruce D., James D. Morrow, Randolph M. Siverson, and Alastair Smith (2003) The Logic of Political Survival; Cambridge, MA: MIT Press.
Bunce, Valerie (2003) “Rethinking Recent Democratization: Lessons from the Postcommunist Experience,” World Politics, 55, 167-192.
Burkhart, R. E., and Michael S. Lewis-Beck (1994) “Comparative Democracy-The Economic Development Thesis,” American Political Science Review, 88, 903-10.
Bushnell, David (1993) The Making of Modern Colombia: A Nation in Spite of Itself; Berkeley: University of California Press.
Calvert, Randall L. (1985) “Robustness of the Multidimensional Voting Model: Candidate Motivations, Uncertainty, and Convergence,” American Journal of Political Science, 29, 69-95.
Calvo, Ernesto, Juan Carlos Torre, and Mariela Szwarcberg (2001) “The New Welfare Alliance,” Unpublished; Department of Political Science, Universidad di Tella, Buenos Aires.
Cardenas Acosta, Pablo E. (1960) El Movimiento Comunal de 1781 en el Nuevo Rei
no de Granada, 2 Volumes; Bogota: Editorial Kelly.
Case, William (2002) Politics in South-East Asia: Democracy or Less; Richmond: Cruzon Press.
Cavarozzi, Marcelo (1986) “Political Cycles in Argentina since 1955,” in Guillermo O’Donnell, Philippe C. Schmitter, and Lawrence Whitehead (eds.). Transitions from Authoritarian Rule: Latin America; Baltimore: Johns Hopkins University Press.
Chalker, Cynthia H. (1995) “Elections and Democracy in Costa Rica,” in Mitchell A. Seligson and John A. Booth (eds.). Elections and Democracy in Central America Revisited; Chapel Hill: University of North Carolina Press.
Coate, Stephen, and Stephen E. Morris (1999) “Policy Persistence,” American Economic Review, 89, 1327-36.
Coatsworth, John H. (1993) “Notes on the Comparative Economic History of Latin America and the United States,” in Walter L. Bernecker and Hans Werner Tobler (eds.). Development and Underdevelopment in America: Contrasts in Economic Growth in North and Latin America in Historical Perspective; New York: Walter de Gruyter.
Cohen, Youssef (1994) Radicals, Reformers, and Reactionaries: The Prisoner’s Dilemma and the Collapse of Democracy in Latin America; Chicago: University of Chicago Press.
Cole, Alistair, and Peter Campbell ( 1989) French Electoral Systems and Elections since 1789; Aldershot: Gower Press.
Collier, David (1979) The New Authoritarianism in Latin America; Princeton: Princeton University Press.
Collier, David, and Steven Levitsky (1997) “Democracy with Adjectives,” World Politics, 49, 430-51.
Collier, Ruth Berins (1999) Paths Towards Democracy: The Working Class and Elites in Western Europe and South America; New York: Cambridge University Press.
Colomer, Josep M. (2000) Strategic Transitions: Game Theory and Democratization; Baltimore: Johns Hopkins University Press.
Conley, John P., and Akram Temimi (2001) “Endogenous Enfranchisement When Groups’ Preferences Conflict,” Journal of Political Economy, 109, 79-107.
Coughlin, Peter J. (1992) Probabilistic Voting Theory; New York: Cambridge University Press.
Economic Origins of Dictatorship and Democracy Page 53
