The Impact of Distributional Coalitions and State Power on Economic Performance

Abstract

My starting point is a standard assumption in public choice theorizing. Democratic politicians are neither better nor worse than ordinary citizens; like them they are self-seeking utility-maximizers. Parties are associations of political entrepreneurs (and their supporters) who want to get enough votes in order to control political and administrative offices and decision making. Ideologies and party programs are instruments in the struggle for power. If all voters were fully informed about politics, then politicians would be equally responsive to the preferences of all voters. If some voters are ignorant of the policies that affect them, however, then there are no incentives for politicians to take the policy-preferences of these voters into account. Thus, the existence of information deficits, uncertainty and even rational ignorance² severely qualifies the responsiveness of democratic politicians to the electorate (see Brunner 1978, Demsetz 1982, Downs 1957, and Schumpeter 1942 for similar views).

This is a revised and expanded version of a paper given at the Conference “Economy and Power” organized by the FWS Institute for Socio-Economic Research, Zug/Switzerland, and held at Interlaken/Switzerland from July 12 to 15, 1988. An abbreviated version of the original paper has been published by Quality and Quantity (Weede 1991). This expanded version of the paper relies on an extended period of growth observation (1960–1988 instead of 1960–85) and it analyzes the distribution of income in addition to growth rates. I appreciate the computational assistance of Hildegard Graven for the new data analyses.