This chapter lays the foundation for the argument presented in Chapter 5 by accomplishing three tasks. In its first part, the chapter establishes the relevance of ethnicity in post-independence Zambia by showing that ethnic group memberships underlie people's perceptions of how patronage resources are distributed by those who enjoy access to them. I show that, in a context where all politicians promise to distribute jobs and development resources to the people whose votes they are seeking, voters use ethnicity as a cue to help them distinguish promises that are credible from promises that are not. I argue that it is the information that ethnicity is assumed to convey about likely patterns of patronage distribution – not atavism or tradition – that explains why it plays such an important role in Zambian political life.

The second part of the chapter shows how these expectations shape the strategies that politicians, parties, and individual voters employ to construct and secure membership in winning political coalitions. Specifically, I show that, because Zambians assume that having a member of their own ethnic group in a position of power will increase their access to patronage resources, they are inclined to join coalitions led by members of their own ethnic groups, to be sympathetic to electoral appeals couched in ethnic terms, and to be skeptical of promises made by leaders of groups other than their own. I show that, knowing this, politicians and parties appeal to voters' ethnic affiliations in predictable ways.

Introduction

Swiss federalism shares attributes with both United States and German federalism. As in the United States, an essential goal of the federalist project is to allow for differences in living conditions among the constituent territorial units. When the Swiss cantons formed a federal state in 1848, they did so on the basis of a constitutional structure that was designed to allow for diversity of social, economic and political organization at the cantonal level. On the other hand, Swiss federalism is hardly competitive. As in Germany, cantons co-operate with each other, and above all the federal government co-operates with the cantons because it relies on their administration for the implementation of most policies. Finally, as in both the US and Germany, the emergence of national social security systems has shifted power and resources from the local and the state to the federal level.

Unsurprisingly, this peculiar institutional context has contributed to the shaping of social policy over the years. Overall, we can identify three different forces underlying the territorial dimension of the Swiss welfare state and working in different directions: first, a unifying and centralizing force related to the rise of the national welfare state in response to the imperatives of industrialization and societal modernization in the nineteenth and twentieth centuries; second, a unifying – but not centralizing – force arising from the co-operation of cantonal and local administrations with a fiscally and politically weak central government; and, third, a force of diversity and decentralization stemming from the combination of cantonal competencies with different resources, polities, politics and policies.

Introduction

Conventional wisdom strongly suggests that federalism is inimical to high levels of social spending. Two arguments are prominent in this context: a veto point thesis and a ‘competition of jurisdictions’ thesis. The veto point thesis is quite straightforward: federal systems have more veto points than unitary systems ceteris paribus. This increases the probability that groups opposed to welfare state expansion can exert some influence in the legislative process. Veto points would then give these groups the opportunity to block or substantially water down redistributive legislation. ‘Competition of jurisdiction’ arguments hold that welfare redistribution is limited in federal systems because those who would pay more than they would gain in a given jurisdiction (high income earners, ‘capital’) can credibly threaten to exit highly redistributive jurisdictions and join those that are less égaliste. At the same time, those who gain more than they would pay (e.g. low income earners) are attracted to regions with higher levels of redistribution and these would therefore develop into ‘welfare magnets’. Thus, a redistributional policy stance is self-defeating in a federal context.

Indeed, many econometric studies of the determinants of welfare state spending have found that federalism exerts a statistically significant, stable and negative influence on social spending. Prominent country cases are Switzerland and the United States, both strongly federalist countries and historically, prominent welfare ‘laggards’ (although since 1980 Switzerland has moved rapidly from laggard to leadership status).

Introduction

Canadians developed their version of the welfare state in the context of a vibrant federal state, with strong governments at both the federal and provincial level. Their experience highlights in fascinating ways the reciprocal interplay between federalism and social policy. In comparative context, the Canadian case underscores the need for more nuanced analysis than is found in much of the comparative literature of the welfare state, which is summarized in the introduction to this book. Attention normally focusses on simple dichotomies: federal versus non-federal, centralized versus decentralized, concentrated power versus multiple veto points. It is widely argued that federal, decentralized and/or fragmented decision-making inhibited the expansion of the welfare state in the twentieth century, but has slowed the processes of restructuring in the contemporary period. Such propositions do find echoes in Canada. For example, decentralization helped to slow the pace of development in the first half of the twentieth century.

The primary lessons to be drawn from the Canadian experience, however, emerge from the modern social programmes put in place in the second half of the twentieth century. Canada did not develop a single, integrated public philosophy of federalism in this period, and federal–provincial relations in social policy incorporated three distinct models, each with its own decision rules. At any point in time, governments were shaping or reshaping different programmes according to different rules and processes. Canada therefore constitutes a natural laboratory in which to analyze the implications of different models of federalism.

The idea for this volume stems from the observation that, somewhere between the literatures of political science and social policy, there is an unexplored territory where federalism and the welfare state meet, a no man's land without even a conceptual map to guide us. Hic sunt leones! is the warning etched on the uncharted regions of ancient maps, but for us it serves as enticement, an invitation to explore the unknown.

In some OECD federal nations almost one-third of the GDP is tied up in the welfare state, but scholars of the state and federalism typically ignore the welfare constituent of this spending and focus their attention almost entirely on non-welfare public agendas. For these political scientists, the state is always spelled with a capital S, and welfare, if mentioned at all, with lower-case w. As the majority shareholder of public expenditures at the federal level, the welfare state is not just a passive recipient of federalism's multi-tiered policy-making, but a key player in shaping those policies and, indeed, in shaping the functioning of the federal structure itself. Its size, its indispensability, and the large segment of the voting population it affects make the welfare state a force to be reckoned with. In many instances, it also provides a mechanism for coping with problems the normal federal process has no means of dealing with, as was so clearly demonstrated in the process of German reunification.

We began by questioning the widely held premise of econometric research that federalism is generally inimical to the growth of the welfare state in all countries and in all eras. Employing a qualitative comparative approach that Peter Hall calls ‘systematic process analysis’, we derived our hypotheses concerning federalism's effects on welfare state development from theories of fiscal federalism and political institutionalism. According to theories of actor-centred institutionalism, institutions create opportunity structures for political action by shaping actor constellations, actor preferences and the modes of their interaction. Exploiting these institutionally pre-configured opportunities for public policy-making, then, depends on a number of contextual variables. We have used middle-range theories of the determinants of welfare state development to predict the power of these contextual factors to impede or enhance our eight hypothesized effects (table 1.8).

We have also argued that the time dependence of institutional effects should be taken into account. The reasons were several. First, as shown in the path dependency literature, iterative political decision-making involves a sequential process in which earlier decisions strongly influence the trajectory of subsequent policy development. Second, the impact of federalism on social policy is contingent upon the stage of welfare state development, that is, whether social policy is in the process of initiation and expansion, or whether it is undergoing retrenchment.

Evaluating the effects of federalism

The development of American social policy appears peculiar when compared with a stylized, Eurocentric model of the welfare state. As many scholars have noted, the United States lagged behind other industrialized states in the development of social policy. The US safety net remains incomplete, most notably in the absence of universal health coverage. Benefits provided publicly elsewhere are provided privately, through employers, albeit with public regulation and subsidies. Even the language of social policy is distinctive in the US, where ‘welfare’ and ‘social security’ are used to refer to specific programmes rather than to invoke broader concepts and values.

The United States is a federal system, and it has been one longer than any of the other nations discussed in this volume. Is it federalism, then, that has prevented the development of a more extensive welfare state? For Nathan Glazer, the answer is yes: ‘Federalism’, he says, inevitably meant ‘that there were going to be far fewer national policies in the sphere of social protection in the USA’. Yet many scholars have invoked other factors to explain the limits of American social policy. These include the weakness of the labour movement; the absence of a socialist party; winner-take-all plurality elections, which inhibited the rise of new parties that might have proposed more extensive social policies than the Democrats or Republicans; the occupational and geographic mobility of the working class; the resistance of the South to policies that might disturb its paternalistic labour system; and ethnic and racial divisions among the potential beneficiaries of an American welfare state.

Introduction

Considerations of systematic coverage apart, there are a number of reasons why a comparative study of the impact of federalism on the development of the welfare state might wish to dwell on the Australian case. Perhaps the most important is that the Australian case seems to exemplify all of the key hypotheses identified in the theoretical literature linking these phenomena. If the basic hypothesis linking federalism to the ‘old politics’ of the welfare state is that federal institutions hinder welfare state expansion, Australia appears to fit the bill rather well. With the exception of a decade or so of radical experimentation immediately after federation, the story of the Australian welfare state in the first half of the twentieth century is one of the late adoption of schemes increasingly common elsewhere and, after World War Two, of levels of expenditure that are consistently towards the bottom of international league tables.

Since the early 1980s, however, things appear to have changed. In the ‘silver age’ of welfare state development, Australia has been hailed as one of the few OECD countries to combine measurable success in economic performance with a significant improvement in welfare provision. On the surface, this seems to fit with the ‘new politics’ notion of federal institutions exercising a ‘ratchet effect’ on expenditure development, making it difficult for political forces opposed to statist intervention to obtain the leverage required to reverse existing policies.

The ideal that all citizens share responsibility for the welfare of their fellows, and the impulse to unite in federations have, on occasions, been historically conjoined. The founding myth of Swiss federalism, as recounted in Schiller's Wilhelm Tell, literally makes solidarity ‘in danger or distress’ a proviso for membership in a budding thirteenth-century federation.

Federalism and social policy

Recent comparative welfare state research has acknowledged the importance of state structures in explaining cross-national variation in both the level and the dynamics of social policy formation.

Introduction

In the course of the twentieth century few western nations have experienced political upheaval on the scale of that in Austria. The country's political transformation – involving phases of democratic (1918–33/34), pre-fascist (1934–38) and national-socialist rule (1938–45) – from an economically backward, multi-ethnic superpower to a small democracy at the centre of Europe has corresponded in economic terms with its rise to a position as one of the world's richest nations. While the fate of federalism lay at these political crossroads, the welfare state established under the Habsburg monarchy survived these periods of political upheaval relatively unscathed.

The example of Austria is of particular interest for a comparative analysis of the relationship between federalism and the welfare state because, alongside Germany, it is recognized as being a pioneer of state social policy. This, along with its high government spending and public social expenditure as a percentage of GDP, seems at first glance to flout the hypothesis advanced by Brennan and Buchanan that the Leviathan is bridled by a federal state structure. However, this is only an apparent contradiction, since Austria only adopted a federal political structure in 1920, when social insurance programmes launched in the context of an authoritarian but decentralized unitary state had already been in existence for some time.