European Unilateralism and Involuntary Burden Sharing in Global Climate Policy

Powerful political actors in the international system quite frequently adopt unilateral
policies whose effects extend beyond their respective borders. Often, they do so to avoid lowest common-denominator outcomes in areas where they desire more ambitious international rules, and to motivate or coerce other countries to shoulder a part of the burden associated with problem solving. The European Union’s attempts to enlist non-EU countries in efforts to reduce greenhouse gas emissions in the international aviation sector are a typical example.

While climate policy making at the global level remains in a state of paralysis the European Union is committed to move ahead unilaterally. Public support for such unilateralism appears quite high, despite the economic crisis in Europe. However, in particular areas of climate policy, where unilateralism might result in competitive disadvantages for European industries vis-à-vis non-EU industries, debates over appropriate measures for creating a „level playing field“ have arisen. Proposals for one such measure, carbon-related border adjustments – i.e. special tariffs on imported goods, based on their embodied carbon dioxide emissions – have been met with great skepticism inside and outside the EU and have not been implemented by any country.

Attempts to enact another measure that involves a level playing field challenge have been somewhat more successful. In 2012, the EU started implementing a policy that subjects all airlines operating flights between, from and to EU member countries to its cap-and-trade Emissions Trading System (ETS), no matter whether airlines are based in the EU or not. The new rules cover emissions during the entire flight, including those occurring outside EU airspace. This means that the EU is unilaterally applying its rules for aircraft emissions not only within, but also beyond EU borders. Emissions from aircraft have grown strongly in the past decades and climate scientists agree that there is an urgent need to reverse this trend.

In late 2012, in response to strong opposition from China, India, the United States, and a few other countries, the EU suspended the application of the new rules to flights from and to destinations outside the EU (but applies and enforces the rules within the EU). It also noted, however, that the (partial) suspension was only temporary, was meant to allow for the re-opening of previously failed negotiations on a global solution through the International Civil Aviation Organization (ICAO), and would be lifted if global negotiations in the ICAO did not lead to an agreement on regulating airline emissions soon. Thus far, no progress has been made in ICAO, and it remains unclear what the EU will do if no multilateral solution can be found. Notably, it is unclear whether the EU could continue to apply the policy only to EU-based airlines and permanently exempt others, particularly if currently low carbon prices in the ETS, which make compliance rather inexpensive, picked up again.

Coming back to the potential effects of unilateralism on third countries, interesting questions arise. Will the new EU policy motivate other countries to adopt similar policies, unilaterally or via a global agreement negotiated in ICAO? Or will it result in negative responses, for instance retaliatory policies by other countries against the EU that could undermine the EU initiative?

Assuming that public opinion matters in climate policy, we should be interested in how the new EU policy regulating emissions of aircraft affects public opinion in non-EU countries that are directly affected by this policy. To find out we implemented survey embedded experiments in India and the United States, the two largest democracies (where public opinion should be particularly influential) outside the EU. We were particularly interested in the extent to which the public there evaluates the new EU policy based on economic cost and sovereignty concerns. The reason is that the new EU policy will increase air transport costs for companies and individuals, and that it could also be perceived as violating third countries’ sovereignty by regulating carbon emissions within their airspace.

The results show that both considerations matter. They imply mixed news for frontrunners in climate policy, particularly in areas where their unilateral policies affect other countries. High costs imposed on individuals in other countries reduce public support for the EU’s policy there, and they increase support for sector specific retaliation (e.g., higher landing fees for EU airlines in those countries). Framing those costs with polluter pays, climate risk reduction, or economic co-benefits arguments does not mitigate the negative effect of a high cost increase. Improved framing of the EU’s unilateral climate policy is, therefore, unlikely to reduce opposition by non-EU countries. These findings are clearly undesirable from the viewpoint of those hoping that the EU’s unilateral move could motivate – via positive effects on public opinion in third countries – other governments to follow up with similar policies at national and/or international levels, or at least to refrain from trying to undermine EU climate policy for the airlines sector (as the U.S. Congress has done with a law barring U.S. based airlines from complying with the EU’s rules).

The more positive news, from the perspective of those seeking stronger measures against climate change, is that our high cost treatments in the survey experiment are at the extreme end of current expert estimates of cost implications for airlines and passengers from non-EU countries; and only the most extreme and explicit sovereignty treatment induces significant negative reactions. In addition, we observe very little support for non-sector specific retaliation, which could impose high costs on Europe if it escalated into a trade war. This means that in what we think is a more realistic scenario, with moderate cost and sovereignty implications, publics in non-EU countries are unlikely to push their respective governments toward aggressive responses that could not only prevent a reduction of emissions from aircraft in non-EU countries, but could also undermine the EU effort as such. By implication, this also means that opposition from voters and consumers in third countries against the unilateral EU policy is likely to remain rather weak unless the airline industry and governments in those countries succeed in whipping it up via extreme (and arguably unrealistic) statements about cost implications and violations of sovereignty. Overall, and particularly in view of currently low carbon prices in the ETS, which create low compliance costs, this suggests that ambitious unilateral initiatives by frontrunners are feasible.

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More democratic legitimacy through civil society involvement in the UNFCCC negotiations?

This post is co-authored with Robert Gampfer.

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International climate negotiations have become almost unimaginable without the participation of civil society organizations (CSOs). In 2011, 1490 organizations were accredited as observers; most of which were environmental groups, research institutions, and business associations (see the UNFCCC page on civil society participation). Moreover, 70% of national delegations to the COPs (2011) included CSO representatives among their members.

One of the main advantages of civil society involvement is ostensibly that it improves the democratic legitimacy of global climate governance, as both activists working in these organizations and political scientists agree. Legitimacy is often thought to be low since negotiations occur on an intergovernmental level far away from most citizens, despite the potentially large consequences a global climate agreement has for individuals through its implementation in domestic energy policies, carbon taxes, etc.

Civil society involvement can improve legitimacy by affecting both the process and the outcome of negotiations. First, CSOs can increase transparency of the process thus providing citizens with better information to hold their governments accountable (e.g. through elections) for their international policy. Second, CSOs may create a more balanced representation of society’s various interests regarding climate change. And third, CSOs often have expert knowledge on environmental issues that can help achieve outcomes potentially more effective in addressing global warming.

However, the question remains whether individual citizens actually agree with this account and perceive climate governance as more legitimate if civil society is involved. After all, CSOs might simply advance narrowly-defined special interests instead of improving overall representation. Furthermore, having a multitude of different organizations, in addition to governments, at the table could hamper and impede agreement on an effective climate treaty. Even though the behavior and influence of CSOs in the UNFCCC negotiations has been examined by many scientific studies (Bernauer and Betzold 2012, Schroeder et al. 2012), their effect on legitimacy has not been investigated. We have conducted several survey experiments with a large international participant sample via Amazon Mechanical Turk to answer this question (Bernauer and Gampfer 2013). The main results are summarized below.

In a first experiment, we asked participants which organizations they would include in their national delegation to the next COP. They had to pick representatives from a diverse pool of government agencies and CSOs. Most participants included government and CSO representatives more or less evenly (two or three each in a five-post delegation). Interestingly, there was no difference between treatment groups primed either with information that negotiations should be transparent and representative, that they should yield an effective outcome, or with no information at all. This suggests that individuals think civil society should be involved in global climate governance, but not necessarily because of reasons of transparency, representation, or effectiveness.

Four thoughts on the future of #policydiffusion research

Last week I had the pleasure of being on a roundtable on “Transnational Diffusion: Concepts and Mechanisms” at the ISA conference in San Francisco, together with Etel Solingen, Zachary Elkins, Detlef Jahn, and Covadonga Meseguer. In fact, diffusion was the general theme of the conference, which pissed off some tasteless discerning people.

It was a great occasion to think freely about the future direction of diffusion research. Here is a summary of my contribution to the discussion. A more traditional review of the literature is here, and on Twitter I use #policydiffusion for tweets related to this topic.

1) Concepts are clear, worry about measures

We have reached a consensus on the definition of diffusion. Diffusion is a consequence of interdependence and is not defined exclusively (or even primarily) by the fact that something has spread. This implies that, when studying diffusion, we are interested more in the process than in the outcome. Convergence, for instance, can be a useful complement to a diffusion analysis, or it can motivate the research in the first place, but is not what we are actually studying.

Moreover, there is consensus on three broad classes of diffusion mechanisms: learning, emulation, and competition (some add coercion, but I disagree). For definitions, see this chapter.

This means that, conceptually speaking, it is pretty clear what we talk about when we talk about diffusion. There is definitely room for some improvement, but not much. Most new conceptual distinctions are hairsplitting. Where we have real problems is with operationalization. In this paper (still at draft stage), Martino Maggetti and I have done a meta-analysis of 100+ diffusion studies and have found that there is a lot of confusion on what indicators are appropriate for the different mechanisms. The same indicators are used for different mechanisms, and different indicators are used for the same mechanism. A mess. This has to improve if we want to generate more cumulative knowledge.

2) Learn about diffusion, or use diffusion to learn about something else?

There are two types of research questions that are worth asking at this point.

First, we can try to make a contribution to the diffusion literature itself. It is becoming harder and harder to pull this off successfully. The n-th study showing that a unit is more likely to adopt a policy if its neighbors/competitors/etc. have done so is not going to cut it. What is required is better, more focused questions, which themselves require better, more focused theory. As the building blocks of diffusion are fairly clear, theoretical advances should aim to explain more precisely how they operate in different contexts. For instance, Susan Hyde has been working on how practices diffuse and become norms in virtue of the signals they send. For instance, refusing to invite observers to monitor elections has become an unambiguous sign that a country is not democratic, which is why even clearly non-democratic states do it. In a panel at last week’s ISA conference, Hyde suggested that many other phenomena may fit this argument, such as sovereign credit ratings. In my own work I have tried to move theory forward by, for instance, arguing that different policy makers learn from different policy outcomes (including implications for their re-election) and that socialization attenuates tax competition.

Second, we can try to use the insights of diffusion research to learn something new about other phenomena. Diffusion often gives an original angle to do this. For instance, traditional work on competition focuses on, well, competition, but diffusion research tells us that this is just one type of interdependence among others: there is more to competition than just competition. Or, the literature on women’s representation has identified many types of spillovers, but it turns out that, until women’s participation in politics becomes a well-established norm, the number of women candidates in one unit increases with the number of women elected in other units.

3) We need better research designs

Standard research designs have almost fulfilled their potential. Adoption in one country = f(adoption in other countries, controls) has been done to death. Mostly for good reasons: it is a good approach to show that something diffuses. But if we want to push things forward, at this point we need something new (and better).

First, we need better data. Often this means moving away from cross-national analysis, which is also a trend in political science in general. In many cases sub-national units offer data of higher quality, are more comparable, and are closer to the level at which the action is really going on. We should also think creatively about data sources. Automated text analysis seems an especially promising avenue in this respect.

Second, research designs should be tailored to the specific questions asked. This is a truism that applies to any area, of course, but the problem seems particularly acute in diffusion research. There is a clear template with which we can study almost anything, so there is the temptation to actually do it. Which is fine, except that we cannot expect significant new insights to follow.

Third, we should take causal inference more seriously. This is a big fad trend in political science right now, but one needs not be an identification Taleban to say that very, very few diffusion studies in political science pay any attention at all to this issue. Although in our context the problem is even thornier than usual (some say there is no hope), the status quo is not OK and we should do our best to improve on this front.

4) So what? Enter the “diffusion multiplier”

If you are into diffusion, you cannot get enough of it. But why should others care?

Well, assume that you are an advocate of marriage equality. Same-sex marriage has already spread a good deal, but it is still by no means the norm. Would it not be useful to know which states or countries one should persuade in order to accelerate the process? We can call this the “diffusion multiplier” (by analogy with the “social multiplier”): if the “right” units adopts a policy, others will be more likely to do the same. Thus, by influencing one unit directly, many more are reached indirectly.

This works also the other way round: if you want to prevent the spread of a policy, it would be useful to know on which units you should concentrate the efforts. For instance, not all states are equally effective as firewalls against the spread of soda bans.

Of course, we first need to know which units are influential and why, which is where diffusion research has something to say. We are nowhere near being able to make such specific recommendations, but this is certainly one of the potential practical payoffs of this literature.

Getting Closer When It’s Close

A guest post by Oliver Strijbis, Sveinung Arnesen, Kjetil Thuen, and Lucas Rachow*

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Two weeks ago we published on this blog the predictions taken from our prediction market on the outcome of the ballots from March 3. The predictions were taken on February 22 – nine days before the official voting day. Our predictions deviated from the official results from 0.3% to 6% depending on the ballot. After one year of experience with prediction markets we come to the conclusion that this result is largely representative of our predictions over the last year.

The prediction on the Yes-vote for the “Bundesbeschluss über die Familienpolitik” was a strike. The prediction was that 54.6% of the voters would be in favor of the law while on voting day it was 54.3% (0.3% deviation). With only 3.2% deviation also our prediction on the “Raumplanungsgesetz” was rather accurate: while we expected a Yes-share of 59.7% on voting day it was 62.9%. The least precise prediction was on the share of Yes-votes for the “Abzocker-Initiative” – the most hotly debated proposal – where we expected 61.9% Yes-votes against the resulting 67.9% (6% deviation).

The predictions were rather representative of our experience with the prediction market since our first try one year ago. First, the predictions have been more precise the closer the outcome was. This is clearly reflected in our experience with the 26 ballots (15 national and 11 cantonal) for which we made predictions during the last year. Secondly, the accuracy of our predictions were within the range that we found for the predictions made previously. While the accuracy is typically within a 5% margin of error when the Yes-votes are between 40% and 60% it gets larger when the outcome is more clear (as with the “Abzocker-Initiative”).

Overall, after one year of applying our prediction markets to Swiss direct democratic decisions we can conclude that they have considerable potential. While they might not necessarily be equally precise as electoral forecasts they clearly allow to get a good feeling about the probable outcome of ballots at an early stage of the campaign and in particular when the race is close.

* Oliver Strijbis is a postdoctoral researcher at the University of Hamburg, Sveinung Arnesen is a postdoctoral researcher at the University of Bergen. Together with Kjetil Thuen and Lucas Rachow they are founders of politikprognosen.ch.

The metamorphosis of an old political institution

(with Karima Bousbah)
The Swiss political system provides a few institutional veto points, which were originally thought to protect the catholic minority, organised around the Christian Democratic Party (CVP). After a re-configuration of the political conflict lines, the ‘Ständemehr’ now seems to serve the interest of the Swiss People’s Party (SVP), at the detriment of the CVP.  

Campaign against the new constitutional article on child care

In Switzerland, all constitutional amendments need to be approved in compulsory referendums by both the majority of people (Volksmehr) and the majority of cantons (Ständemehr). This “cantonal veto” was originally introduced in order to accommodate the catholic minority, and as a veto card of their political arm, the Christian Democratic Party (CVP). Historically, the Christian Democrats (CVP) could count on very large majorities among voters in the catholic cantons of Switzerland. On average, the catholic cantons are considerably smaller than the protestant cantons, and thus, they can use the Ständemehr to bloc constitutional amendments.

In the past 165 years, there have been only nine instances in which the Ständemehr had a direct effect. Meaning that, so far, in the history of Swiss direct democracy the majority of cantons has overruled the majority of the voters on nine different referendums on constitutional articles. However, it is possible that the Ständemehr had furthermore very strong anticipatory effects on parliamentary decision-making: in the last 100 years (this is the period for which voting recommendations by the political parties are available), there has been only one constitutional amendment opposed by the CVP, which was subject to a popular vote. It reached voters’ majority approval only in three (mainly protestant) cantons.

In a newspaper article, which appears on Tuesday, I am suggesting that the Ständemehr might, over time, have evolved into a veto card working in favour of the Swiss People’s Party (SVP). Since the 1990s, the constitutional amendments on which small and rural cantons have differed most strongly from the will of the voting population, dealt with questions of a conservative-liberal nature, or were related to the issue of political opening (European Union, United Nations, etc). Nowadays, on all these issues, the CVP is usually (and increasingly) aligned with both the parliament’s and the government’s , whereas the SVP stands in clear opposition. The SVP, however, increasingly finds support in the small, rural cantons, and while the CVP still predominates in electoral terms, the SVP has increased its influence in referendum votes in these cantons. This implies that the Ständemehr could turn into a veto card in the hands of the Swiss People’s Party (SVP).

Among the nine constitutional referendum instances, in which there has indeed been a difference between the majority of the people and the majority of the cantons, two occurred in 1994, and one occurred this last Sunday (3rd of March 2013). In 1994, the constitutional referendum addressed the promotion of arts; it was opposed only by the SVP and the small Liberal Party (representing 3% of the electorate). The constitutional amendment was blocked by the majority of the cantons.

This Sunday, the Ständemehr struck back again. The referendum was on the issue of a constitutional article on families (the controversy was mainly about child care). Also in this case it was the SVP (supported by parts of the Free Democratic Party), which politicised the issue along a conservative-liberal dimension. In the end, the SVP managed to defeat the article with the help of the Ständemehr. Given that the Swiss People’s Party (SVP) is nowadays quite strong, especially in the small cantons, and is often in opposition with parliament on conservative-liberal issues, we could actually expect an increase of referendums, where the Ständemehr is decisive, i.e. overruling the population’s majority. One thing, however, is particularly ironic about the failed referendum of Sunday: the veto card – originally thought to function as a the veto of the catholic minority (i.e. CVP) – was now used by the SVP to defeat a bill initiated by the CVP.

Predictions for the Ballots on March 3

This is a guest post by Oliver Strijbis, Sveinung Arnesen, Kjetil Thuen, and Lucas Rachow*

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About one year ago we published on this blog for the first time predictions for direct democratic votes taken from our “prediction market”. Prediction markets are designed to aggregate information and produce predictions about future events. Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as an election or a referendum. A considerable bulk of literature has shown that prediction markets can easily compete with surveys in forecasting election outcomes. This has also been shown for the Swiss parliamentary elections in 2011 where the forecasts of the prediction markets were more accurate than those of the surveys (Tagesanzeiger online, 27th October 2011).

Predicting election results, however, is clearly easier than results from direct democratic votes. And indeed, the accuracy of our forecasts published one year ago were rather mixed. We identified several reasons why this might have been the case. One reason is that predictions are easier if there is abundant information, which is clearly more so for national elections than for initiatives and referenda. There is little to do about that and predictions on direct democratic votes might always be somewhat less precise than election forecasts.

However, as another major reason for the rather large variance in the accuracy of our predictions we hypothesized that the participants need to learn. As a consequence, we decided to further develop our prediction market and applied it to the ballots of May, September, and November 2012. This allowed us to maintain a rather small though faithful community of traders. In order to test our hypothesis that for the prediction of direct democratic votes the ability of the traders is particularly important, we also made use of the knowledge about their behavior in previous rounds. In order to give the best traders more influence, they could now keep playing with the raised overall amount of money from the previous prediction cycle (all participants would win between 20 and 150 Swiss francs). Hence, the ballots from March 3 will allow us to test how important the ability of the traders in the market actually is for the accuracy of our predictions.

What, then, does our market foresee for the ballot of March 3? Here are our predictions from February 22: 61.9% yes for the “Abzocker-Initiative”, 54.6% yes for the “Bundesbeschluss über die Familienpolitik”, and 59.7% yes for the “Änderung des Bundesgesetzes über die Raumplanung”. Hence, for all three proposals we anticipate a rather clear victory.

* Oliver Strijbis is a postdoctoral researcher at the University of Hamburg, Sveinung Arnesen is a postdoctoral researcher at the University of Bergen. Together with Kjetil Thuen and Lucas Rachow they are founders of politikprognosen.ch.

Principles of Political Science: A New Introductory Textbook

(This post is co-authored by Patrick Kuhn and Stefanie Walter)

The second edition of our introductory textbook to political science was just published.

In view of the already saturated market for introductory textbooks to political science, several colleagues asked us: “Why another textbook?” and “Why in German?” Here are some answers that also convey the main conceptual and pedagogical ideas underlying our textbook, and that may also be useful for political scientists teaching in other languages.

After consulting and/or using various alternative textbooks in our introductory classes to political science, we ended up being rather unhappy with existing options. First, most textbooks are considerably narrower in scope than their titles suggest. They focus predominantly on one subfield of political science, such as Comparative Politics, International Relations, or the national politics of the country they are mainly marketed in. Second, most of them introduce the main theoretical concepts in an overly abstract fashion, divorced from their use in current research. Finally and most importantly, most textbooks are overly descriptive and do not systematically and extensively connect theory development and empirical analysis, which is in fact the core of modern political science research. Our goal was, therefore, to write a textbook for the German-speaking market that addresses the mentioned shortcomings of existing textbooks, covers the fundamental concepts, approaches, and research areas of political science, and remains accessible to entry-level students.

The book’s coverage is very broad. We deal with all main aspects of: domestic politics in the three German-speaking countries (i.e., Austria, Germany, and Switzerland); Comparative Politics by comparing those three countries with each other and with many other countries as well; International Relations and globalization; and European integration. Since entry-level students are usually most familiar with the political system of their own country, we believe that it makes sense to take newcomers to political science to the right “cruising altitude” by confronting their existing local knowledge with a scientific approach to the analysis of politics. Systematic comparison of the three German-speaking countries helps in introducing and illustrating fundamental concepts in a “hands-on manner”; and doing so in the students’ mother tongue is likely to make their first encounter with political science easier, perhaps even more pleasant – though it is obvious that students will have to read lots of scientific literature in English and perhaps also other languages later on.

To systematically connect theoretical reasoning with empirical research throughout each of the substantive chapters, we have structured the book as follows. The first three chapters familiarize students with the research process. This begins with developing interesting research questions and constructing (causal) theoretical arguments that address research questions, and leads to empirically testable hypotheses and to research designs that enable researchers to assess hypotheses empirically. These chapters provide students with the vocabulary and tools to evaluate and discuss the theoretical arguments and empirical results presented in the subsequent twelve chapters. Each of these chapters focuses on a particular political institution, issue, or research area of political science; that is, political regimes, democratic forms of government, elections, referenda and initiatives (direct democracy), parties and party systems, mass media, interest groups and social movements, legislatures, government and public administration, constitutional courts, international relations, and globalization. After a brief introduction of relevant concepts, each chapter discusses the respective political institution or issue in Austria, Germany, Switzerland, and the EU, pointing out similarities and differences. It then focuses on important research questions, theoretical approaches and discusses empirical findings, with an emphasis on how existing research is linking theory and empirics. At the end of each chapter we provide a list of books and articles for further reading. The book is accompanied by a website that offers questions for exams or self-assessment, a glossary, and other materials that may be of interest to students and professors.

In brief, our answer to the questions above is: Because it is important to have a textbook for German-speaking newcomers to political science that: builds on pre-existing local political knowledge and confronts this knowledge with a scientific approach to the analysis of politics; is broad in its coverage; and systematically connects theory with empirical analysis.

Can cooperation limit tax competition? Three lessons from Switzerland

This post is co-authored with Fabio Wasserfallen and is cross-posted (with a different title) at the LSE European Politics and Policy Blog.

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The creation of the single market is widely believed to have strengthened tax competition among European countries; with few remaining barriers to the movement of capital and people, some member states reduce levels of tax to attract more investment at the expense of others. Despite several efforts, policy makers have not been able to agree on effective political actions constraining this dynamic, which many consider to be harmful. Evidence from tax competition in Switzerland suggests that institutional cooperation in fiscal affairs between selected countries in the EU might help to limit the negative externalities of tax competition.

Tax competition is a key characteristic of Swiss federalism. Switzerland’s twenty-six cantons enjoy almost unlimited freedom to set taxes and the general consensus is that they compete with one another to attract tax payers. There is disagreement on whether tax competition is a good or a bad thing, but all agree that it is an important phenomenon. In our study of tax competition between Swiss cantons, we started from this premise but then looked at the factors constraining competition. In particular, we analysed how institutionalised forms of cooperation between cantons limit the extent of competition between those cantons that participate in them.

In the Swiss context, an important role is played by the so-called regional conferences of cantonal ministers. These institutions have been in place for several decades and serve as a forum for discussing policy problems and elaborating common positions for negotiations with the federal government. An important goal of these conferences is the defense of cantonal autonomy. Therefore, they do not pursue stronger cooperation in tax policy. However, constraints on tax competition emerge as a byproduct of cooperation on other issues. The fact that finance ministers work together on a regular basis and develop personal relations makes them more sensitive to how their tax policies affect their colleagues. By no means does this form of socialization erase tax competition. However, it sets limit to it.

Our statistical analysis shows that, controlling for many other factors, tax competition is stronger between cantons that do not work together in the same regional conference. Specifically, we measured the extent to which two cantons are in competition with one another by looking at the commuting patterns between them (that is, how many people live in one canton but work in another). Most studies assume that competition occurs between neighbours. Our approach is similar but, we argue, more precise. In effect, in some cases using neighbourhood as a measure does not accurately show the connections between two cantons; moreover, the binary nature of neighbourhood (either two cantons are neighbours, or they are not) gives no information on the scale of connectedness. By contrast, commuting patterns give a fine-grained picture of the extent to which cantons compete with one another for taxpayers. An intuitive way to read the results of the statistical analysis is that, if a canton has two comparable competitors, it will react more strongly to the tax policies of the one with which it does not work together in the regional conference. Our interpretation of this pattern in terms of socialisation is consistent with the information we obtained in interviews with policy makers. For instance, they explained to us that, while the regional conferences strive to project a public image of consensus, in fact policy makers can be quite outspoken about their dissatisfaction with the policies of their colleagues.

Our research suggests that, in the Swiss case, cooperation can limit tax competition. What can the EU learn from the Swiss example? While there are enormous differences between these two political systems, we think that three conclusions may be helpful:

1) Most importantly, cooperation should take place between the relevant subgroup of countries. One reason why the Swiss regional conferences help to limit tax competition is that they bring together precisely those cantons that are most likely to compete with one another. In the EU, a more clustered and specialised structure of intergovernmental relations might increase the effectiveness of cooperation also in other policy areas.

2) Less intense tax competition does not have to be the goal of cooperation. It can emerge as a byproduct of cooperation on other issues because working together fosters social influence.

3) The unintended benefits of cooperation likely emerge only in the long term. Cantons have a prolonged history of cooperation and know exactly with whom they will have to work in the future. Newly established institutions cannot be expected to lead immediately to similar outcomes.

All in all, these lessons do not suggest that tax competition within the EU can be reshaped simply by enhancing a few cooperative arrangements. Nor would such a claim be credible. What our research implies, however, is that, over time, effective constraints on tax competition can emerge, provided that the structure of cooperation matches that of competition. Whether policy makers want to foster competition or rein it in, this conclusion can inform their choices.

Are Albanians smarter than Germans?

Campaign for vote-splitting in GermanyIf there was a catwalk for political institutions, mixed electoral systems would be the newest fashion trend. They are incredibly popular among politicians, pressure groups, and academics all around the world. Mixed electoral systems combine proportional representation with local representation in single-seat districts. Now, just a few weeks before the Constitutional Court of Germany is debating (again) about loopholes in mixed electoral systems, my article about strategic manipulation under these systems has been published online in the International Political Science Review.

In fact, the German electoral system is the best-known example of mixed electoral system, with voters voting simultaneously for a local candidate and for a national party list. Overall (surplus mandates apart), the allocated seats are exactly proportional to the parties’ vote share.

Almost the same electoral system has ended up in chaos in Albania, Italy, Lesotho and Venezuela. As my article shows, political parties can easily organise in a special pattern of strategic voting, which puts the electoral system completely out of order. More precisely, large parties can achieve over-representation by encouraging their voters to split their votes. They vote with the candidate vote (Germany: “Erststimme”) for their favourite party, but cast their list vote (“Zweitstimme”) for a different party, which is allied to their favourite party. If many voters follow this recommendation, then they outsmart the electoral system mechanism which is designed to lead to proportional results. Instead, the parties applying such a strategy will be massively over-represented.

I have simulated the consequences of such electoral strategies, and showed that there is no solution that would prevent them. Interesting enough, however, in 60 years of application of this electoral system in Germany, there is no known instance where such a strategy would have been used at large-scale. My tests (not published) for several recent elections show no sign that vote-splitting between CDU and FDP or between SPD and Greens has anything to do with such a strategy. In contrast, in young democracies, voters and parties have quickly learned how to abuse the electoral system.

De Borda: a wise manThis opens the question whether German-style mixed electoral systems with a compensatory mechanism are of any use at all. Note that there are many seemingly genius electoral systems discussed in the theoretical literature, which nobody would ever use in a real-world democracy, because they have very nice outcomes if everybody votes sincerely, but have devastating results, once actors start playing them strategically. This is why, for instance, the father of the Borda Count, Jean-Charles de Borda, told that his system was “intended only for honest men”.

I do not think that politicians and voters will ever be honest (except for Germans). Therefore, I am wondering whether German-style mixed electoral systems should be on the catwalk, or rather in the trash bin.

PS: At the NCCR Democracy, we have just started a new research project on mixed electoral systems, jointly with Christian Rubba who has joined us this month. New results coming soon.

“Sell your islands, you bankrupt Greeks!” – Exploring Public Opinion Towards International Financial Bailouts

Priding itself on openly saying what “the man on the street” thinks, the German tabloid Bild suggested a seemingly simple strategy to deal with Greece’s debt problems: rather than relying on other countries’ financial assistance, Greece should instead sell some of its islands and, if necessary, the Acropolis as well. Perhaps unsurprisingly, European finance ministers ignored this recommendation and instead set up an EU bailout fund of €800 billion. Although the IMF, the European Commission, and others demanded an increase of the fund upward of €1 trillion, German finance minister Wolfgang Schäuble opposed further expansion, deeming it unacceptable to the German public. Indeed, several snap polls reported that about two thirds of the German citizens oppose such bailouts for over-indebted Euro countries.

Although public opinion is widely regarded as a major constraint on governments’ actions in the ongoing debate over the bailouts, scholars know very little about the factors that underlie voters’ attitudes towards such international transfers. In particular, it is unclear whether voters’ opinions reflect their assessments of how the bailouts would affect their own well-being, that of their country, or perhaps that of their fellow Europeans. In a new paper, Jens Hainmueller, Yotam Margalit, and I begin addressing this question. We conducted two large-scale surveys in Germany, the country shouldering the largest share of the EU’s financial rescue fund. Our results show that while the economic features of the bailout package itself strongly affect voters’ willingness to support the bailouts, individuals’ own economic standing has limited explanatory power in accounting for their position on the issue. In contrast, social dispositions such as altruism and cosmopolitanism are robustly associated with support for the bailouts. This suggests that the current divide in public opinion towards the bailouts is generally not along distributive lines between domestic winners and losers. Instead, the divide is better understood as a foreign policy issue that pits economic nationalist sentiments versus greater cosmopolitan affinity and other-regarding preferences.