Scholars should further study how each of the scholars we read for this week could learn from the other. For instance, Morrison presents an analysis where he tests his hypotheses concerning what he would expect to find to explain the impact of nontax resources in democratic and authoritarian regimes. He finds support for his hypotheses that an increase in nontax resources should be associated with 1) less taxation of elites in democracies and 2) more social spending in dictatorships. However, what are some other ways he can test for the effect of nontax resources? Bates et al. argue that in representative systems, governments strike a bargain with citizens that they want to tax; in return for the tax, the government defers to the citizens’ policy preferences. Bates et al. differentiate between sectors based on the level of mobility of assets. Instead of or in addition to examining whether the elites in a democracy have less taxation, one could also empirically test Bates’ argument by examining the impact that the elite’s preferences (particularly the preferences of more mobile elites) have in policy outcomes of the polity. What then determines whether elites will agree to democracy? Is it because they believe they will receive lower taxes (as Morrison argues) or is it because they are willing to pay more taxes if they have more control over policy? Does the outcome differ from place to place and what explains this divergence? Do sectors with more mobile factors have both greater control over policy and less taxation than sectors with less mobile factors? Morrison could also have considered Dunning’s argument about how elite preferences are shaped. Dunning argues that political outcomes depend on the extent of resource dependence and the level of inequality in the private sector. How could Morrison have incorporated Dunning’s theory into his analysis to offer a more nuanced account as to when elites are willing to give into the poor redistributive demands? Further, Morrison does not believe that distinctions among non-tax resources is important; for most of his analysis, he lumps together foreign aid, state-owned resources and a residual indicator of other nontax revenue. Dunning, however, believes that it is important to consider the specific resource in order to ascertain whether it contributes to the emergence of a “rent” state. How would Morrison’s analysis have changed if he used the value of specific resources, such as oil or diamonds, instead of just considering all non-tax revenue?
Moore (2004) argues that one effect of a rentier state apparatus is that “[t]here is little incentive to establish an effective public bureaucracy” since the collection of revenue from natural resource rents is easier than the management of a complex tax system (p. 307). Furthermore, Egorov et al. (2009) provide a compelling argument that, in the presence of significant natural-resource endowments, non-democratic regimes have less of an incentive to allow partial freedom of media in order to incentivize bureaucrats to act competently. An implication of both of these papers is that the presence of nontax revenues is detrimental to the development of well functioning of bureaucracies, many of which result from the revenue need of non-rentier states to enforce taxation.
An interesting extension of this work would be an examination of the effect of oil revenues on the effective management of welfare state bureaucracies, and pension programs in particular. If revenues from nontax sources are associated with ineffective bureaucratic management, why would countries such as Norway be so concerned with the fiscal health of pension programs and make genuine attempts to undertake structural reform (see Iskhakov 2008)? Couldn’t the Norwegian government simply finance the looming fiscal imbalance through its oil revenue, particularly in light of the huge oil-financed “rainy day” fund that the government controls?
The Norwegian case is illustrative because it underscores the limits of natural resource driven spending. Discussions about the use of the oil fund in the media and in the political arena are often bounded by the effect of increased discretionary spending on the domestic inflation rate. This suggests that governments may not always be able to spend their way out of economic mismanagement, and that there is in fact an incentive for resource rich states to control social spending even in the face of massive windfalls. Lower growth countries, however, might have greater leeway with marginal increases in spending (especially given the relatively lower benefit levels afforded to the relatively poorer populations). Given the natural limit on spending (i.e., due to inflation), perhaps the link between natural resource endowment and bureaucratic mismanagement is weaker than the link between economic development and bureaucratic mismanagement.
Fedor Iskhakov. 2008. "Pension reform in Norway: evidence from a structural dynamic model." University of Oslo Department of Economics Memorandum 14/2008.
The Bates and Lien reading argued that those who owned factors of production that were very elastic were more likely to hold political power than those who owned factors of production that were inelastic. One thought I had about the effects of capital mobility on political institutions in the context of an increasing need for government revenue was this: the problems of tax evasion in the contexts of mobile production factors can be overcome by harmonizing tax structures and rates across jurisdictions; in effect; by centralizing the authority to levy tax. This means that those who might think about shifting their production or factor away in response to taxation might find that the tax rates were the same wherever they went. I wonder then whether this need for harmonized taxation in on the part of elites could be seen as a force that brought about the centralization of political authority. These authors consider the 18th and 19th centuries in their historical analysis; but I am here considering more the process of political centralization that occurred in Europe in the 15th can 16th centuries.
I suspect that the regressions in Morrison’s article suffer from some model specification problems: 1) the lagged dependent variable Yi,t-1 included in the equation (p. 123) might causes violation of the exogeneity assumption of OLS regression. Specifically, the disturbance term ei,t is part of the dependence variable △Yi,t that is constructed by (Yi,t - Yi,t-1). It is likely that on the right hand side of the equation Yi,t-1, the revenue or spending in country i in last time period (t-1), carries useful information for prediction of the disturbance term ei,t, the difference in revenue or spending between this (t) and earlier time periods (t-1). If this problem is true with the models, it will cause bias in estimation of the coefficients on Yi,t-1; 2) on the right-hand side of the equation (Morrison, 2009: 123), including △Xi,t, the first difference of all independent variables (Xi,t - Xi,t-1), may increase multicollinearity in the equation, because △Xi,t must be highly correlated with Xi,t-1. High multicollinearity will inflate the variances of △Xi,t and Xi,t-1, impairing the estimation precision of the models.
Although I am not sure whether the above suspicion is valid, I would supplement the quantitative models in the article with some qualitative comparative cases to better clarify the causal mechanisms between non-tax revenue, regime stability and tax/spending regimes. First, I would compare the tax/spending regimes in a given regime type between resource-scarce East Asian countries and resource-rich Latin American countries to examine: controlled for regime types, to what extent non-tax revenues determine the redistribution mechanisms. Second, in order to test the proposition that it is non-tax revenues not democracy that determines tax/spending regimes, I would look into the evolution of tax/spending regimes across regimes types (authoritarian in the 1960-70s to democracies in the 1990s) within East Asian and Latin American countries respectively.
Egorov, Guriev and Sonin (2009) offer a compelling if somewhat stylized narrative of the relationship between media freedom, dictatorship and resource wealth – suggesting that a free media can be used by dictators to incentivize the performance of lower level officials. The benefits of this freedom however must be weighed against the costs and likelihood of stimulating revolution. And the importance of this benefit varies with the amount of natural resource endowment – suggesting that higher levels of resource endowment reduces the dependence of dictators on bureaucrats, and therefore decreases the need and likelihood of a free press.
Whilst the authors presented a well reasoned argument supported by panel data analysis, I believe their argument is too simplistic, that empirical examples are too selective, and that the theory does not adequately account for the numerous country anomalies. Perhaps the most obvious simplification is their equation of ‘oil reserves and production’ with natural resource endowment – ignoring the many other forms of natural resource wealth that can exist. The empirical examples provided are also selective and not entirely convincing. The authors present China and the SARs outbreak as evidence of the failure of bureaucracies to perform where the media are constrained. They omit to mention however the awesome efficiency that has characterized the Chinese bureaucracy in the implementation of many other programs during this same era. They also do not consider the numerous exceptions to their rules – for oil in particular, Venezuala represents an important anomaly for much of its history. For other forms of natural resource wealth further anomalies can be identified (e.g. diamond-rich Botswana). I think the paper’s theory could be improved by expanding the definition of natural resource wealth – this might be achieved by adopting a measure that reflects the percentage contribution made by domestic natural resources (irrespective of type) towards GDP. Those with high relative contributions could then be tested for their propensity to dictatorship and constrained press – using the same measures and methods adopted in the paper with the new expanded dataset of countries.
What are the effects of non-tax revenues on regimes? Egorov et al. (2009) argue that in oil-rich countries, the stakes of staying in power are high and it is not as important to monitor the bureaucracy’s performance, so there is less media freedom. According to Dunning (2008), resource wealth can actually creates both democratic (lower the threat of redistribution) and authoritarian effects (raising the elites’ benefits of staging a coup), depending on the extent of private inequality and the degree of resource dependence in the country. Morrison (2009) argues that regardless of the modalities, nontax revenues will stabilize the current regime. Those theories are plausible and methodologically sound, but I wish they provide more empirical evidence (Dunning does in other chapters). For example, Morrison claims that nontax revenues have similar effects on regime stability. Given this argument survives the statistic test, I still have a hard time believing that foreign aid has stabilizing effect on authoritarian regimes, since most grants from international organizations are conditioned on the human rights performance of the receiving regimes. The failure to enforce conditionalities does not mean the aid has no democratizing effect. The policy implication of the regression is not to suspend the aid but to establish the enforcement mechanism of the conditions.
In "A Note About Taxation" Bates and Lien examine the role of mobile assets in shaping political regimes. Governments need to tax its population in order to raise revenue to fight wars. In line with Tilly, the state evolves in reaction to international conflict. The population, however, would prefer fewer taxes or more of a say in policy decisions. Governments and their population thus need to strike a bargain. Where Bates and Lien make a contribution (or at least distill insights from others) is to argue the nature of the tax base will determine what bargain is struck. Where assets are mobile, capital can flee taxation and the government will be limited in how much it can tax or will be required to grant the population a greater say over policy decisions as compensation. Conversely, in less mobile sectors of the economy, the government will be able to impose higher levels of taxes.
Bates and Lien provide an elegant and succinct argument for the emergence and strength of democracy. However, their argument raises a number of questions. First, it is not clear why democracy should emerge for all when assets tend to be mobile for few. Bates and Lien's theory should predict the emergence of oligarchy more than democracy. Second, Bates and Lien assumes not only the mobility of assets but also to a certain degree the individual mobility. It cannot be considered beneficial to ship assets overseas if one cannot access or join them. Third, Bates and Lien assume that there exist better alternatives to the state. Indeed, the government may not need to make policy or institutional concessions if its citizens do no better overseas, and sufficiently well to account for the transaction costs.
My response paper is on courseworks. I had a quick question though. On page 117 of Morrison's article, for the ethnolinguistic fractionalization index, he only has measures from 1961-85, so for years prior to 61, he uses the 61 index, and for years after 85, he uses the 85 index. Is this a common technique? I assumed that ethnolinguistic fractionalization doesn't change that much, so there's no problem in carrying the 1961 or 1985 measures throughout time, but it still seems a bit off...
Morrison’s approach toward the political economy of government revenue makes an innovative contribution to the debate. In contrast to past conceptions of different types of state revenue, Morrison’s analysis is based on the aggregation of nontax revenue and the disaggregation of tax revenue, i.e. it consolidates nontax revenues, such as oil revenues, foreign aid, borrowing, etc, and disaggregates tax revenue into taxation of different classes and goods and services. Morrison similarly disaggregates government spending into social versus military and infrastructure spending in order to demonstrate the causal mechanisms by which nontax revenues stabilize both authoritarian and democratic regimes. In particular Morrison argues that nontax revenue stabilizes authoritarian regimes, which face their greatest threat from the larger population, by providing funds for greater social spending. In contrast, democratic regimes are able to use nontax revenues to compensate for a reduction of taxation on the rich elites, which pose the greatest threat to democracies. However, the causal mechanisms linking nontax revenue and regime stability might become more apparent by considering the effects of resource rents independently from those of foreign aid and other revenue sources. Foreign aid that is increasingly linked to democratization suggests that it should have an effect specific to transitioning democracies. As Dunning argues, resource rents can promote both authoritarian and democratic regimes, but different mechanisms link resource rents to the promotion of one regime type or the other. As Moore points out, especially in states that possess highly strategic resources we might expect a greater degree of external support to maintain or bring about a stable regime in order to secure access to the resource, i.e. high levels of strategic resources might result in regime stability or change depending on the external powers. A more nuanced analysis of the contextual effects of resource rents on regime stability, especially considering the level of strategic resources and prior regime type, might have afforded clearer insights into the causal mechanisms at work.
Bates and Lien, like many before them, describe the emergence of democracy (in places such as Britain) as a result of a bargain by which elites ceded to government demands for funding in the form of taxes in exchange for greater say in policy. In their story the degree of asset mobility plays an important role in the strategy of each actor. The sovereign, knowing that highly mobile assets can easily move elsewhere should taxation become too burdensome, agrees to tie its own hands. While this account is highly plausible, one is left to wonder why it is that political power was extended also to holders of presumably immobile assets such as landowners. The authors claim that bargaining over taxes was costly for the monarch who thus preferred to homogenized tax collection. This seems hardly sufficient to account for why a monarch would willingly give up the possibility of extracting greater taxes from a 'captured' source. Also, while reading this week's articles I was drawn to thinking about the case of some U.S. states. While most american states collect state income taxes, others do not (for example, Alaska, Texas, Wyoming...). Many of these coincide with states that have significant natural resource income. While the Morrison's argument is made about national level regimes (he argues that the availability of non-tax funding such as natural resources, foreign aid, borrowing leads to regime stability for democracies as well as autocracies) does the presence of such resources have any political impact at the subnational level perhaps affecting incumbency as officeholders may have greater discretion in directing such resources to strategic segments of the population?
My response paper can be found on Courseworks.
ReplyDeleteScholars should further study how each of the scholars we read for this week could learn from the other. For instance, Morrison presents an analysis where he tests his hypotheses concerning what he would expect to find to explain the impact of nontax resources in democratic and authoritarian regimes. He finds support for his hypotheses that an increase in nontax resources should be associated with 1) less taxation of elites in democracies and 2) more social spending in dictatorships. However, what are some other ways he can test for the effect of nontax resources? Bates et al. argue that in representative systems, governments strike a bargain with citizens that they want to tax; in return for the tax, the government defers to the citizens’ policy preferences. Bates et al. differentiate between sectors based on the level of mobility of assets. Instead of or in addition to examining whether the elites in a democracy have less taxation, one could also empirically test Bates’ argument by examining the impact that the elite’s preferences (particularly the preferences of more mobile elites) have in policy outcomes of the polity. What then determines whether elites will agree to democracy? Is it because they believe they will receive lower taxes (as Morrison argues) or is it because they are willing to pay more taxes if they have more control over policy? Does the outcome differ from place to place and what explains this divergence? Do sectors with more mobile factors have both greater control over policy and less taxation than sectors with less mobile factors? Morrison could also have considered Dunning’s argument about how elite preferences are shaped. Dunning argues that political outcomes depend on the extent of resource dependence and the level of inequality in the private sector. How could Morrison have incorporated Dunning’s theory into his analysis to offer a more nuanced account as to when elites are willing to give into the poor redistributive demands? Further, Morrison does not believe that distinctions among non-tax resources is important; for most of his analysis, he lumps together foreign aid, state-owned resources and a residual indicator of other nontax revenue. Dunning, however, believes that it is important to consider the specific resource in order to ascertain whether it contributes to the emergence of a “rent” state. How would Morrison’s analysis have changed if he used the value of specific resources, such as oil or diamonds, instead of just considering all non-tax revenue?
ReplyDeleteMoore (2004) argues that one effect of a rentier state apparatus is that “[t]here is little incentive to establish an effective public bureaucracy” since the collection of revenue from natural resource rents is easier than the management of a complex tax system (p. 307). Furthermore, Egorov et al. (2009) provide a compelling argument that, in the presence of significant natural-resource endowments, non-democratic regimes have less of an incentive to allow partial freedom of media in order to incentivize bureaucrats to act competently. An implication of both of these papers is that the presence of nontax revenues is detrimental to the development of well functioning of bureaucracies, many of which result from the revenue need of non-rentier states to enforce taxation.
ReplyDeleteAn interesting extension of this work would be an examination of the effect of oil revenues on the effective management of welfare state bureaucracies, and pension programs in particular. If revenues from nontax sources are associated with ineffective bureaucratic management, why would countries such as Norway be so concerned with the fiscal health of pension programs and make genuine attempts to undertake structural reform (see Iskhakov 2008)? Couldn’t the Norwegian government simply finance the looming fiscal imbalance through its oil revenue, particularly in light of the huge oil-financed “rainy day” fund that the government controls?
The Norwegian case is illustrative because it underscores the limits of natural resource driven spending. Discussions about the use of the oil fund in the media and in the political arena are often bounded by the effect of increased discretionary spending on the domestic inflation rate. This suggests that governments may not always be able to spend their way out of economic mismanagement, and that there is in fact an incentive for resource rich states to control social spending even in the face of massive windfalls. Lower growth countries, however, might have greater leeway with marginal increases in spending (especially given the relatively lower benefit levels afforded to the relatively poorer populations). Given the natural limit on spending (i.e., due to inflation), perhaps the link between natural resource endowment and bureaucratic mismanagement is weaker than the link between economic development and bureaucratic mismanagement.
Fedor Iskhakov. 2008. "Pension reform in Norway: evidence from a structural dynamic model." University of Oslo Department of Economics Memorandum 14/2008.
The Bates and Lien reading argued that those who owned factors of production that were very elastic were more likely to hold political power than those who owned factors of production that were inelastic. One thought I had about the effects of capital mobility on political institutions in the context of an increasing need for government revenue was this: the problems of tax evasion in the contexts of mobile production factors can be overcome by harmonizing tax structures and rates across jurisdictions; in effect; by centralizing the authority to levy tax. This means that those who might think about shifting their production or factor away in response to taxation might find that the tax rates were the same wherever they went. I wonder then whether this need for harmonized taxation in on the part of elites could be seen as a force that brought about the centralization of political authority. These authors consider the 18th and 19th centuries in their historical analysis; but I am here considering more the process of political centralization that occurred in Europe in the 15th can 16th centuries.
ReplyDeleteI suspect that the regressions in Morrison’s article suffer from some model specification problems: 1) the lagged dependent variable Yi,t-1 included in the equation (p. 123) might causes violation of the exogeneity assumption of OLS regression. Specifically, the disturbance term ei,t is part of the dependence variable △Yi,t that is constructed by (Yi,t - Yi,t-1). It is likely that on the right hand side of the equation Yi,t-1, the revenue or spending in country i in last time period (t-1), carries useful information for prediction of the disturbance term ei,t, the difference in revenue or spending between this (t) and earlier time periods (t-1). If this problem is true with the models, it will cause bias in estimation of the coefficients on Yi,t-1; 2) on the right-hand side of the equation (Morrison, 2009: 123), including △Xi,t, the first difference of all independent variables (Xi,t - Xi,t-1), may increase multicollinearity in the equation, because △Xi,t must be highly correlated with Xi,t-1. High multicollinearity will inflate the variances of △Xi,t and Xi,t-1, impairing the estimation precision of the models.
ReplyDeleteAlthough I am not sure whether the above suspicion is valid, I would supplement the quantitative models in the article with some qualitative comparative cases to better clarify the causal mechanisms between non-tax revenue, regime stability and tax/spending regimes. First, I would compare the tax/spending regimes in a given regime type between resource-scarce East Asian countries and resource-rich Latin American countries to examine: controlled for regime types, to what extent non-tax revenues determine the redistribution mechanisms. Second, in order to test the proposition that it is non-tax revenues not democracy that determines tax/spending regimes, I would look into the evolution of tax/spending regimes across regimes types (authoritarian in the 1960-70s to democracies in the 1990s) within East Asian and Latin American countries respectively.
Egorov, Guriev and Sonin (2009) offer a compelling if somewhat stylized narrative of the relationship between media freedom, dictatorship and resource wealth – suggesting that a free media can be used by dictators to incentivize the performance of lower level officials. The benefits of this freedom however must be weighed against the costs and likelihood of stimulating revolution. And the importance of this benefit varies with the amount of natural resource endowment – suggesting that higher levels of resource endowment reduces the dependence of dictators on bureaucrats, and therefore decreases the need and likelihood of a free press.
ReplyDeleteWhilst the authors presented a well reasoned argument supported by panel data analysis, I believe their argument is too simplistic, that empirical examples are too selective, and that the theory does not adequately account for the numerous country anomalies. Perhaps the most obvious simplification is their equation of ‘oil reserves and production’ with natural resource endowment – ignoring the many other forms of natural resource wealth that can exist. The empirical examples provided are also selective and not entirely convincing. The authors present China and the SARs outbreak as evidence of the failure of bureaucracies to perform where the media are constrained. They omit to mention however the awesome efficiency that has characterized the Chinese bureaucracy in the implementation of many other programs during this same era. They also do not consider the numerous exceptions to their rules – for oil in particular, Venezuala represents an important anomaly for much of its history. For other forms of natural resource wealth further anomalies can be identified (e.g. diamond-rich Botswana). I think the paper’s theory could be improved by expanding the definition of natural resource wealth – this might be achieved by adopting a measure that reflects the percentage contribution made by domestic natural resources (irrespective of type) towards GDP. Those with high relative contributions could then be tested for their propensity to dictatorship and constrained press – using the same measures and methods adopted in the paper with the new expanded dataset of countries.
I posted my response paper on Courseworks.
ReplyDeleteI've posted a paper on courseworks
ReplyDeleteI have posted by paper on courseworks.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteWhat are the effects of non-tax revenues on regimes? Egorov et al. (2009) argue that in oil-rich countries, the stakes of staying in power are high and it is not as important to monitor the bureaucracy’s performance, so there is less media freedom. According to Dunning (2008), resource wealth can actually creates both democratic (lower the threat of redistribution) and authoritarian effects (raising the elites’ benefits of staging a coup), depending on the extent of private inequality and the degree of resource dependence in the country. Morrison (2009) argues that regardless of the modalities, nontax revenues will stabilize the current regime. Those theories are plausible and methodologically sound, but I wish they provide more empirical evidence (Dunning does in other chapters).
ReplyDeleteFor example, Morrison claims that nontax revenues have similar effects on regime stability. Given this argument survives the statistic test, I still have a hard time believing that foreign aid has stabilizing effect on authoritarian regimes, since most grants from international organizations are conditioned on the human rights performance of the receiving regimes. The failure to enforce conditionalities does not mean the aid has no democratizing effect. The policy implication of the regression is not to suspend the aid but to establish the enforcement mechanism of the conditions.
In "A Note About Taxation" Bates and Lien examine the role of mobile assets in shaping political regimes. Governments need to tax its population in order to raise revenue to fight wars. In line with Tilly, the state evolves in reaction to international conflict. The population, however, would prefer fewer taxes or more of a say in policy decisions. Governments and their population thus need to strike a bargain. Where Bates and Lien make a contribution (or at least distill insights from others) is to argue the nature of the tax base will determine what bargain is struck. Where assets are mobile, capital can flee taxation and the government will be limited in how much it can tax or will be required to grant the population a greater say over policy decisions as compensation. Conversely, in less mobile sectors of the economy, the government will be able to impose higher levels of taxes.
ReplyDeleteBates and Lien provide an elegant and succinct argument for the emergence and strength of democracy. However, their argument raises a number of questions. First, it is not clear why democracy should emerge for all when assets tend to be mobile for few. Bates and Lien's theory should predict the emergence of oligarchy more than democracy. Second, Bates and Lien assumes not only the mobility of assets but also to a certain degree the individual mobility. It cannot be considered beneficial to ship assets overseas if one cannot access or join them. Third, Bates and Lien assume that there exist better alternatives to the state. Indeed, the government may not need to make policy or institutional concessions if its citizens do no better overseas, and sufficiently well to account for the transaction costs.
My response paper is on courseworks. I had a quick question though. On page 117 of Morrison's article, for the ethnolinguistic fractionalization index, he only has measures from 1961-85, so for years prior to 61, he uses the 61 index, and for years after 85, he uses the 85 index. Is this a common technique? I assumed that ethnolinguistic fractionalization doesn't change that much, so there's no problem in carrying the 1961 or 1985 measures throughout time, but it still seems a bit off...
ReplyDeleteMorrison’s approach toward the political economy of government revenue makes an innovative contribution to the debate. In contrast to past conceptions of different types of state revenue, Morrison’s analysis is based on the aggregation of nontax revenue and the disaggregation of tax revenue, i.e. it consolidates nontax revenues, such as oil revenues, foreign aid, borrowing, etc, and disaggregates tax revenue into taxation of different classes and goods and services. Morrison similarly disaggregates government spending into social versus military and infrastructure spending in order to demonstrate the causal mechanisms by which nontax revenues stabilize both authoritarian and democratic regimes. In particular Morrison argues that nontax revenue stabilizes authoritarian regimes, which face their greatest threat from the larger population, by providing funds for greater social spending. In contrast, democratic regimes are able to use nontax revenues to compensate for a reduction of taxation on the rich elites, which pose the greatest threat to democracies.
ReplyDeleteHowever, the causal mechanisms linking nontax revenue and regime stability might become more apparent by considering the effects of resource rents independently from those of foreign aid and other revenue sources. Foreign aid that is increasingly linked to democratization suggests that it should have an effect specific to transitioning democracies. As Dunning argues, resource rents can promote both authoritarian and democratic regimes, but different mechanisms link resource rents to the promotion of one regime type or the other. As Moore points out, especially in states that possess highly strategic resources we might expect a greater degree of external support to maintain or bring about a stable regime in order to secure access to the resource, i.e. high levels of strategic resources might result in regime stability or change depending on the external powers. A more nuanced analysis of the contextual effects of resource rents on regime stability, especially considering the level of strategic resources and prior regime type, might have afforded clearer insights into the causal mechanisms at work.
Bates and Lien, like many before them, describe the emergence of democracy (in places such as Britain) as a result of a bargain by which elites ceded to government demands for funding in the form of taxes in exchange for greater say in policy. In their story the degree of asset mobility plays an important role in the strategy of each actor. The sovereign, knowing that highly mobile assets can easily move elsewhere should taxation become too burdensome, agrees to tie its own hands. While this account is highly plausible, one is left to wonder why it is that political power was extended also to holders of presumably immobile assets such as landowners. The authors claim that bargaining over taxes was costly for the monarch who thus preferred to homogenized tax collection. This seems hardly sufficient to account for why a monarch would willingly give up the possibility of extracting greater taxes from a 'captured' source.
ReplyDeleteAlso, while reading this week's articles I was drawn to thinking about the case of some U.S. states. While most american states collect state income taxes, others do not (for example, Alaska, Texas, Wyoming...). Many of these coincide with states that have significant natural resource income. While the Morrison's argument is made about national level regimes (he argues that the availability of non-tax funding such as natural resources, foreign aid, borrowing leads to regime stability for democracies as well as autocracies) does the presence of such resources have any political impact at the subnational level perhaps affecting incumbency as officeholders may have greater discretion in directing such resources to strategic segments of the population?