Guido Tabellini, academic at the Bocconi University of Milan, was proclaimed yesterday, together with Timothy Besley (London School of Economics) and Torsten Persson (Stockholm University), winner of the XV edition of the BBVA Foundation Frontiers of Knowledge award in Economics, Finance and Business Management, an award that on several occasions has been the prelude to the Nobel Prize in Economics. Tabellini has studied the relationships between political systems and economic policies.
Are coalition governments less efficient?
The institutions that concentrate political power do not need to haggle and negotiate and this reduces waste and there is not so much public debt. The government limits itself to giving benefits to the citizen groups that support it. In contrast, when power is more divided among many political actors, collective decisions are more difficult, reforms are postponed, and this leads to inefficiencies. The advantage is that by having the support of a broader group of citizens, more is invested in public goods such as health and education.
And you can't be in the middle? Efficiency and common good?
There are a number of possible corrective measures, such that in a proportional system, for example, the strength of the prime minister's prerogatives or whether there is the institution of a constructive vote of no confidence is important. As is the case of Spain, compared to Italy. Another compromise is the French mixed system, in which the government is appointed by the president, but must receive the confidence of Parliament, so it is an effective middle way. In addition, its two-round electoral system tends to reduce the bargaining power of smaller parties, which tend to be more extremist parties.
But the Europe of the frugal has fiscal discipline and coalition governments...
This is the case in the Netherlands. An important role in this case is played by the Parliamentary Budget Office. It is an independent agency that has to evaluate the effectiveness of economic policy and the budget deficit. Then count the political environment. If the ruling parties are relatively homogeneous, the ineffectiveness of a coalition government is less. If they are very diverse, decision-making is more difficult.
How does economic policy change from one term to another?
Governments facing the prospect of elections in their first term are more responsive to voter demands. For better and for worse. For the better, because they are less corrupt. To bad, because to increase the probability of being re-elected they make wrong cyclical policies. They tend to cut taxes or increase spending and after the elections they have to correct these distortions in the second term.
Why are societies now more polarized?
Today the division has more to do with cultural issues than with redistribution and economic classes. If we want more or less immigrants, it is not because we are afraid of their competition, but because we do not want them in schools or in the neighborhood. It is a defense of cultural homogeneity. In the United States there is an important racial dimension, in Europe the opposition is more between nationalism and European integration. This is explained by globalization and technology, which has increased the division between the trained (who are the beneficiaries) and the untrained, who are the harmed.
Does an identity issue weigh?
Today individuals do not identify with an economic group, but with a community that has something in common with them culturally. And it is an affective polarization. When we disagree, we disagree on more things than in the past. And this also implies that we have become more intolerant. In the past this was not the case.
The presence of the State in the economy has once again increased. Do you have reverse?
History and empirical evidence show that the so-called “hook effect” occurs: we fight a war, this causes public spending to go up, it stays at a higher level. And when there have been major shocks that have raised the presence of the state, it has never been able to go back.
