Presidential Systems Of Government Mean Less Public Spending Than Parliamentary.

Pathbreaking research by two leading economists shows that countries with presidential political regimes have smaller governments than parliamentary ones. In a paper relating the size of government to comparative political systems, Torsten Persson (Stockholm University) and Guido Tabellini (Bocconi University in Milan) argue that presidential systems produce stiffer competition among politicians, which in turn induces them to spend less on every budget item and results in a smaller size of government. The authors say that the share of government spending over national income is on average ten percentage points lower under presidential systems. That is a large difference: the average share of public spending in the sample is less than 29%.

In presidential regimes effective decision-making power is split among different politicians, who are separately and directly accountable to voters. The maintenance of such powers does not depend on confidence votes and political manoeuvring or even need majority support in congress or assembly. That makes it hard to sustain stable coalitions among lawmakers, without prejudice however to the stability and effectiveness of the executive.

The two central features of parliamentary government are that powers to propose legislation rest with the government and the government needs the support of the elected assembly to survive. But within the system there are substantial differences between those known as majoritarian, such as Britain, and the proportional variety that one sees in most of continental Europe, and in an extreme form in the Netherlands. Majoritarian politicians concentrate their efforts on mobile groups of swing voters “who can be more easily swayed by electoral promises.” The authors find evidence that this leads to a lower supply of public goods, such a transport and health, than in proportional systems where electoral bribes cannot be so precisely targeted. One benefit of the majoritarian system is that its highly competitive nature reduces the opportunities for corruption, both personal and on behalf of the party. In the proportional system there are greater opportunities for collusion among politicians to increase the benefits that accrue to them.

So the authors argue that political competition can be both good and bad. It can reduce corruption but also misdirect public spending. This contrasts with the widely accepted “Chicago view” of political choice which holds that competition leads politicians to pursue efficient policies. “But this view of the political process is too optimistic,” say Persson and Tabellini. This is because politicians neglect the interests of some voters as they need only a majority to win elections. And politicians grab benefits for themselves once elected

Their pessimistic view of the political process is partly based on what the authors admit is a high degree of cynicism: this, however, gives them a new and distinct methodological approach which actually means one can measure both the kinds of competition that take place within different political systems and the choices made by politicians.

The distribution of countries used in the empirical research is comprehensive: there are 64 in the sample. Presidential systems dominate in the Americas, parliamentary in Europe. But definitions are important. France, for example, has a system that seems to fit into the presidential category but it is the cabinet, which has the power to propose economic legislation: for this reason France is classed as a parliamentary country.

The Size and Scope of Government: Comparative Politics with Rational Expectations. Torsten Persson and Guido Tabellini. Discussion Paper 2051, Centre for Economic Policy Research 90-98 Goswell Road, London, EC1V 7DB. Tel: + 44 (0)171 878-2900. Fax: 878-2999. E-mail: cepr@cepr.org