SCHATTSCHNEIDER REVISITED: SENATE VOTING ON THE SMOOT-HAWLEY TARIFF ACT OF 1930

While scholars have devoted considerable attention to U.S. trade policy in the 1930s, particularly the Smoot-Hawley Tariff Act of 1930, little quantitative research focuses on the factors impinging upon elite decision makers who shaped Smoot-Hawley. We look at 11 votes on the Senate floor related to Smoot-Hawley to examine the impact of a variety of measures of constituency economic interests and member characteristics on elite decision making. Contrary to our expectations, the evidence does not support a pressure group model of policy making. We conclude by emphasizing the importance of political parties in making the Tariff Act of 1930.     

Voter turnout and the principle of ‘one person,one vote’: empirical evidence from the constituency freeze in India

This article uses panel data from national and state elections in India during the period 1977–2007 to examine the effect of inequality in constituency population size on voter turnout. During this period, constituency boundaries in India remained fixed. As a result, differences in population size between constituencies increased, thus changing the value of a single vote. Using this large variation in population size and informative data, this article carefully distinguishes the effect of population size from other factors. We find that an increase of one million electorates decreases voter turnout by 12–27%. In addition, we find that the share of votes gained by national political parties is greater in small-population constituencies. This suggests that political parties direct their efforts in electoral campaigns preferentially to less populous constituencies; as a result, voters in small constituencies are more likely to participate in elections.     

Who gets the goods? Moderate Voting Records,Diminishing Returns,and PAC Contributions

Assuming that a legislator representing a moderate constituency (with respect to a variety of interests) may be expected to vote moderately in general, the authors suggest a measure of the 'moderateness' of a legislator's voting behavior and use it to determine whether a relationship exists between PAC contributions and the degree of moderateness. The results suggest that PACs exhibit a tendency to give more, at the margin, to legislators with moderate voting records.     

Election systems,the “beauty premium” in politics,and the beauty of dissent

We ask three questions. First, do election systems differ in how they translate physical attractiveness of candidates into electoral success? Second, do political parties strategically exploit the “beauty premium” when deciding on which candidates to nominate, and, third, do elected MPs use their beauty premium to reap some independence from their party? Using the German election system that combines first-past-the-post election with party-list proportional representation, our results show that plurality elections provide more scope for translating physical attractiveness into electoral success than proportional representation. Whether political parties strategically use the beauty premium to optimize their electoral objectives is less clear. Physically attractive MPs, however, allow themselves to dissent more often, i.e. they vote more often against the party line than their less attractive peers.     

Determinants of voting behaviour on the Keystone XL Pipeline

After lengthy debate, the Keystone XL Pipeline bill passed in January 2015. We use this event to better understand the determinants of Senator voting behaviour. Specifically, this article attempts to examine the relative impacts of political and economic influences. This is accomplished through the use of a binary logit regression model with legislator vote as the dependent variable. Results indicate that while legislators do appear to be representing their political constituency, the role of campaign funding plays an important role as well. The economic effect of such funding, controlling for other factors, is quantitatively small.     

The Stolper–Samuelson Theorem Faces Congress

The factor–industry detachment corollary of the Stolper–Samuelson theorem predicts that the economic interests of trade policy are independent of industry and depend only on the type of factor ownership. This paper examines whether congressional voting patterns on trade policy are determined by the factor endowment of the constituency or by its industrial composition. The industry model of trade policy determination is not rejected by the empirical tests while the results for the factor model are ambiguous. This provides evidence that the literature examining congressional voting patterns on broad-based trade policy should re-evaluate the maintained assumption that factors do not matter.     

The silent success of customs unions

Globally, 81 countries are now part of a customs union (CU), following the rapid proliferation of this type of trade agreement in past decades. Much of this growth has been driven by countries “upgrading” their links from a free trade agreement (FTA) to CU. At the same time, the rapid formation of new FTAs among countries that had no prior agreement in place has largely overshadowed this growth, making CUs the silent success of regional integration. Using the canonical regionalism model, augmented to allow for political bias towards firm interests, we investigate the endogenous choice of trade agreement. We show it is generally politically viable to move from FTA to CU, because such a move is rent‐creating; but for countries without a trade agreement in place, it may be optimal to form an FTA as a stepping stone to reduce the risk of political derailment. Importantly, forming a CU is consistent with member social welfare maximization: as long as trade with the rest of the world does not cease entirely, a CU leads to higher social welfare than either FTA or no agreement. These gains come at the expense of third‐country welfare. If past trends continue, one can expect more FTAs to be upgraded to CU with associated adverse consequences for outsiders.     

Regional Trade Agreements and Cross‐border Lobbying: Empirical Evidence from the Canada–US Free Trade Agreement Negotiations

This paper documents participation of special interest groups in negotiations of the Canada–US Free Trade Agreement. Using data on the tariff reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tariff reduction paths in both countries: phase‐out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.     

National borders matter … where one draws the lines too

Abstract The fact that crossing a political border dramatically reduces trade flows has been widely documented in the literature. The increasing number of borders has surprisingly attracted much less attention. The number of independent countries has indeed risen from 72 in 1948 to 192 today. This paper estimates the effect of political disintegration since World War II on the measured growth in world trade. We first show that trade statistics should be considered carefully when assessing globalization over time, since the definition of trade partners varies over time. We document a sizeable resulting accounting artefact, which accounts for 17% of world trade in 2007. Second, based on a structural gravity equation, we estimate that since World War II political disintegration alone has raised measured international trade flows by 7% but decreased actual trade flows (including inter‐regional trade) by 2%.     

WESTERN RANGELANDS REFORM: AN ANALYSIS OF THE 1996 SENATE VOTE ON FEDERAL GRAZING FEES

Grazing of livestock on public lands is a controversial environmental issue, despite a long history of federal regulation of this activity. Environmentalists and economists have argued that grazing fees charged by the Bureau of Land Management subsidize livestock operators and that higher fees would help bring rangeland usage in line with environmental and economic goals. In 1996, the U.S. Senate voted to determine whether higher fees would be charged for use of federally owned land. Based on a theoretical model, probit regressions are used to analyze this vote with respect to the influences of the general electorate, special interests, party affiliation, senatorial preferences, and electoral security. We find that political competition among producers utilizing federal lands was a crucial factor in determining voting decisions. However, environmental interests had a smaller direct impact on the grazing fee vote.     

Building Trade Barriers and Knocking Them Down

This paper examines the dynamic behavior of trade protection and liberalization. Consistent with evidence on the development of trade policies, policy decisions are modeled as the outcome of a political contest between import-competing interests and exporters. Uncertainty about the success of political contests yields a dynamic equilibrium in which tariffs gradually increase over time. Eventually, increasing tariffs reduce profits in the exporting sector to such a degree that exporters enter the political arena and lobby actively against protection. Depending on the market characteristics, a political contest may generate a liberalization or a move toward autarky.     

The incidence of,and returns to overeducation in the UK

Drawing on German data we look for evidence of a supply-side political business cycle. The hypothesis suggests that centralized trade unions with political interests and some degree of monopoly power may fine-tune their collective wage bargaining strategies so as to help preferred or to harm rejected parties in power. The regression results confirm that between 1960 and 1988 German trade unions exercised additional wage pressure before general elections under a Christian Democratic incumbent drew closer, trade unions pursued a restrictive wage policy to promote the government' chances for re-election.     

Annual Index

The author of this article expands the background theory of voting to incorporate the undergraduate majors of members of Congress. Examining nine votes on trade across the 109th and 110th Congresses reveals that economics majors are the only category of college major to vote in favor of free trade in a predictable way. Controls for a variety of factors including ideology, race, campaign contributions, and the inclusion of votes specifically on Cuba fail to diminish the effect. While economics majors are more likely to take a free trade position, not every vote that presupposes a free trade outcome is supported by economics majors. On the issue of sugar subsidies, being an economics major does not influence the direction of a congressional member's vote.     

Minority positions in the German Council of Economic Experts: A political economic analysis

I study diversity in views expressed by economists regarding appropriate economic policies. The dataset is for voting by economists on the German Council of Economic Experts, over the period 1971–2011. The results show that the best predictor of minority voting is having been nominated by the trade unions, which results in being some 70 percentage points more likely to vote against the majority opinion. The voting pattern confirms that ideological identity through the channel of political appointment influences economists' voting behavior.     

Trade Agreements in the Shadow of Lobbying

This paper presents a model of international trade agreements in which the executive branches of each government negotiate agreements while the legislative branches, subject to political pressure from firms, can disrupt them. Lobbying is in the style of Grossman and Helpman's ‘Protection for Sale’ model with a new feature: all actors face uncertainty arising from the complexity of the legislative process. I demonstrate that the higher the executives set tariffs in a trade agreement, the less effort lobbies put forth to prevent its ratification. Thus trade agreements act as a domestic political commitment device: executives set relatively high tariffs to discourage lobbying and increase the chance that the agreement will be ratified. The model sheds light on the empirical puzzle surrounding governments’ welfare weights in the Grossman and Helpman model and provides a new explanation for failures to ratify trade agreements.     

Varying Political Economy Weights of Protection: The Case of Colombia

In this paper, we examine trade policy determinants and trade reform in a developing country setting using a political economy model. The government determines tariffs by balancing the political support from producers vs. consumers, while placing a higher political weight on producers’ welfare relative to average citizens. We then expand the model in several directions to guide our subsequent estimations at the three‐digit industry level for Colombia between 1983 and 1998. We account for import substitution motives for protection but describe how the government's move away from these policies leads to unilateral trade liberalization. We innovatively allow the political weights to vary based on key industry variables beyond a common denominator. The sectors with higher employment, labor cost, and preferential trade agreement (PTA) import shares receive a larger political weight compared to otherwise similar sectors. The novelty of our approach is estimating the effect of sectoral characteristics on protection filtered through the political weights. We obtain more realistic estimates for these weights and provide some evidence for a slowing down effect of PTAs on trade liberalization.     

The Politics of Inequality as Organised Spectacle: Why the Swiss Do Not Want to Tax the Rich

In 2015, Swiss voters had the opportunity to impose a tax on the super rich in a popular vote and thereby fund a redistributive policy. However, a large majority voted against its seemingly obvious self-interest and rejected the tax. We propose an explanation for this puzzling outcome, bridging the usually separate behavioralist and institutionalist perspectives on the politics of inequality. We start from the observation that political economy tends to neglect processes of preference formation. Theorising preferences as socially constructed, we show that interest groups played a major role in shaping the outcome of the vote. Business frames were multiplied through allied parties and the media and had a major impact on individual voting behaviour. In addition, we demonstrate that interest groups representing business interests derive the content of their communication from business’s structurally privileged position in the capitalist economy. Specifically, creating uncertainty about possible perverse effects of government policies on jobs and growth is a powerful tool to undermine popular support. Frames based on this structural power ultimately explain why the Swiss refrained from ‘soaking the rich.’     

PROFIT SHIFTING AND TRADE AGREEMENTS IN IMPERFECTLY COMPETITIVE MARKETS*

Do new rationales for trade agreements arise once imperfectly competitive markets are allowed? We consider several trade models that feature imperfectly competitive markets and argue that the basic rationale for a trade agreement is, in fact, the same rationale that arises in perfectly competitive markets. In all of the models that we consider, and whether or not governments have political–economic objectives, the only rationale for a trade agreement is to remedy the inefficient terms‐of‐trade‐driven restrictions in trade volume. We also show that the principles of reciprocity and nondiscrimination continue to be efficiency enhancing in these settings.     

The political determinants of government spending allocation and growth

I study the allocation of spending, and the impact of politics on regional growth in Greece, using a large dataset that covers the period between 1959 and 2010. I find that electoral districts that vote for the majority party and are represented by majority MPs receive more spending from the central government, and grow faster. Districts do not seem to enjoy any additional benefits when their elected representatives also occupy positions in the executive branch of the government.     

Political favoritism by powerful politicians: Evidence from chief ministers in India

We study whether in single-member-district legislative systems, powerful politicians engage in political favoritism towards their constituents. The focus is on the chief ministers of Indian state governments. Using night light intensity as a measure of economic activity, we find that a constituency represented by a sitting chief minister exhibits about 13 percentage increase in luminosity relative to all other constituencies. The effect comes predominantly from the cases where the chief minister's constituency lies outside their birth region. Neighboring constituencies, particularly those with strategic political value, also benefit from this windfall, suggesting the mechanism at play is likely to be political expediency rather than in-group favoritism.