The evolution of grain export policy and the negotiation of the U.S.–Soviet grain agreement illustrate the executive branch engaged in a form of crisis management. Examining the sequence of events and the way in which the president and his senior officials developed policy reveal much about the internal processes of an administration coping with a difficult issue. In retrospect, the events of 1975 hold lessons for public policy makers and provide insights into the formulation of policy in the federal government. Some of these include marshaling support and packaging policy, defining and articulating policy, the origins of public policies, the attraction of caution, and the limits of leverage.

MARSHALING SUPPORT

Every president is in the business of marshaling support, of selling his policies to the country, to the Congress, to foreign governments, and to affected interest groups. Thus, the president and his advisers, if they are to be successful, must not only spend time developing policies that, if carried out, will secure their objectives, but must also find ways of implementing those policies. The president must not only decide or choose; he must also execute and implement.

As discussed before, a great deal of time and attention was devoted to developing an analytical basis for decision making, to thinking about negotiating strategies, and to discussing the desirable parameters for a U.S.–Soviet grain agreement. Numerous meetings were held.

In this chapter we make a few remarks on the relationship between the existing theory and our work, and on possible generalizations of our results. First, in Section 7.1, we observe that all known restrictions on individual preferences guarantee that cores of voting games are nonempty. Thus, we may have a richer theory of representation (of committees) under the (usual) assumptions of restricted preferences. Next, we remark that restriction of preferences does not eliminate manipulability. Then we argue that there is a need to generalize the notion of exact and strong consistency to allow restricted preferences, and we notice that Dutta [1980b] contains such a generalization (see Section 7.2).

In Section 7.3 we discuss the problem of the existence of faithful and neutral representations of committees. We show how that problem can be resolved by the use of even-chance lotteries on alternatives. Section 7.4 is devoted to a systematic generalization of our results to weak orders. Finally, we discuss possible extensions of our results to infinite sets of alternatives (see Section 7.5).

This chapter is devoted to a detailed investigation of the relationship between committees (formally, simple games) and social choice correspondences and functions. We begin our investigation in Section 3.1 by associating three simple games, which are derived from three different notions of effectiveness, with every social choice correspondence. These games serve to describe the power distribution induced by a social choice correspondence among the various coalitions of voters. We proceed with a study of the properties of, and the interrelations between, the three simple games. Then we consider several examples, including the Borda rule. A social choice correspondence is tight if our three notions of effectiveness coincide for it. We conclude Section 3.1 by demonstrating that certain conditions are sufficient for tightness. In Section 3.2 we consider the converse problem, namely, that of finding representations (i.e., choice procedures or, more formally, social choice correspondences) for committees. We find sufficient conditions for tightness of representations, and we prove, by constructing suitable examples, the existence of tight and “nice” representations. We also find that the solution to the representation problem is closely related to the investigation of cores of simple games.

In this chapter we introduce three families of choice rules that play important roles in social choice theory, namely, social welfare functions, social choice correspondences, and social choice functions, and we investigate their basic properties, such as Pareto optimality, anonymity, neutrality, and monotonicity. The study of social welfare functions culminates in Section 2.2 with Arrow's Impossibility Theorem. The study of social choice correspondences and functions focuses on monotonicity properties and leads to the conclusion that every strongly monotonic social choice function whose range contains at least three alternatives is dictatorial (see Theorem 2.4.11). The Gibbard-Satterthwaite Theorem is shown, in Section 2.5, to be a corollary of the preceding theorem. Simple games and their basic properties are defined in Section 2.6. We conclude with a proof of Nakamura's theorem on cores of simple games (see Theorem 2.6.14).

The theory of voting in committees began with the basic contributions of Borda [1781] and Condorcet [1785]. Borda had been concerned about the inadequacy of choice by plurality voting, and he suggested a different method of assigning marks to alternatives, a method now known as Borda's rule (see Black [1958], pp. 156-9). It is interesting that Borda's method is still a subject of active research (see, e.g., Young [1974] and Gardner [1977]). Indeed, Borda's rule also serves as an important example in this book (see Example 3.1.18).

Condorcet developed an extensive formal theory of voting (see Black [1958], pp. 159-80). One of his profound discoveries was the “paradox of voting,” which is known also as Condorcet's paradox. His most important contribution was the formulation of the Condorcet condition (i.e., the alternative that receives a majority, against each of the other alternatives, should be chosen). This condition plays an important role in so many works in modern social choice theory that it is impossible to give a full record of its use. We, also, apply the Condorcet condition to the theory of committees (see, e.g., Theorem 3.2.5).

Nanson [1882] examined several systems of voting and suggested a modification of Borda's rule that is compatible with the Condorcet condition. (Borda's rule itself does not satisfy the Condorcet condition). Further details on Nanson's work may be found in Black [1958].

This chapter is mainly devoted to a survey of Chapters 2-6. Section 1.1 consists of an almost self-contained presentation of our theory. In particular, it contains a detailed formulation of the central problems that we try to solve in this book and the definitions of the main solution concepts. The reader will get a fairly good picture of the qualitative side of our theory by reading the survey. We conclude in Section 1.2 with brief remarks on possible uses of our results.

Survey

This section presents a summary of the most important results of our study. The main problems that we try to solve and the key solution concepts are presented independent of the following chapters. This should enable the reader to get a fairly good idea of the nature of this book. However, it should be mentioned that only the most important theorems are mentioned in this chapter. Moreover, in order to keep this section as readable as possible, we refrain from discussing proofs. Thus, in order to become familiar with our techniques, one has to look at the proofs of the main theorems. Finally, it should be remembered that we have written the survey as an almost self-contained description of our theory. Hence, for the sake of clarity and briefness, the order in which the various topics are discussed in the book has been slightly changed; however, this has not diminished the usefulness of the survey.

Since 1974 local authorities in England and Wales have been under increasing fiscal pressure for two reasons. Firstly, reliance upon a property tax, rates, for raising tax revenue makes local authorities especially vulnerable to the effects of inflation. The property tax is not buoyant, since the assessed value of property is not raised annually in keeping with inflation. Thus, rates produce the same revenue yield each year unless the level of taxation, i.e. the rate per pound of assessed value, is altered. During a period of high inflation, such as Britain has experienced since 1974, local authorities inevitably face acute fiscal pressure, because inflation pushes up costs without increasing revenue (Sharpe 1981).

The second cause of fiscal pressure, of greater concern here, arises from the interconnection of central and local government fiscal measures. At Westminster successive governments have pursued policies of limiting public expenditure in order to combat inflation. Part of that macro-economic strategy has involved setting local government annual expenditure targets intended to reduce the growth of local spending, or even lower the volume of local services. The targets, although advisory and without the force of law, have been reinforced by reductions in grant support by central governments. A consequence of central government's policy has been to increase the financial difficulties already facing local authorities because of inflation by reducing the effective value of central government grants, which provide local authorities with almost half of their income.

The threat to local autonomy has been the subject of vigorous political debate in both the United Kingdom and the United States. Given the differences between the two countries, the terms in which the debate has been conducted have been surprisingly similar. In both countries the threat to local autonomy is seen to emanate primarily from intergovernmental fiscal relations, which are perceived as constraining local fiscal behaviour and rendering local government increasingly dependent on and controlled by national government.(1) This similarity in the terms of discussion and in the nature of the debate is striking in view of the substantial differences in the intergovernmental finance systems of the two countries and the widely held assumption that local autonomy – and local democracy in general – is much stronger and more vigorously valued and protected in the United States than in the United Kingdom.(2)

Unfortunately the political debate about the value of local autonomy and the extent to which it is threatened by changes over time in intergovernmental fiscal relations has suffered from substantial intellectual confusion in both countries. Frequently terms are not well defined, the logic of relationships is not specified, and empirical evidence about relationships is not brought to bear on the arguments. However, the similarity in the terms in which the debate is conducted in the two countries suggests that an analysis of local autonomy in a comparative context can serve to clarify our understanding of both.

Education now constitutes the most costly single service of local government, accounting for 36 per cent of its expenditure in England and Wales, claiming 41 per cent of current expenditure, and also 10 per cent of gross capital expenditure. Hence any developments affecting education will have considerable cost implications for overall local government expenditure.

The postwar period has seen educational expenditures rise as a result of both demographic push and increased spending per pupil. The total school population rose steadily until the late 1970s, reflecting the early post-war increase in the birth rate. Numbers in primary schools in England and Wales increased from 3.8 million in 1946 to a peak of 4.9 million in 1973, and secondary numbers from 1.2 million in 1946 to a peak of 4.1 million in 1979, including the effects of the raising of the school-leaving age in 1973. This growth entailed substantial and increasing levels of capital spending to meet basic need (i.e. the provision of more school places to cater for increases in the school population), and some attention was also given to the improvement of deteriorating facilities, such as old school buildings. Spending per pupil was increased, most notably by employing more teachers to reduce the pupil-teacher ratios (PTRs). By the early 1970s, current public expenditure on primary and secondary education amounted to 2.9 per cent of the Gross Domestic Product of the United Kingdom (OECD 1976).

In the last decade no spending authority has been insulated from pressure to cut expenditure. However, experience of that pressure and the reaction to it has varied between levels of government and between organisations within levels. Pressures on local government have been heavier and more continuous than those experienced by central government or other parts of the public sector. As a result, the level of local authority expenditure has declined both in real terms and as a proportion of total public expenditure. In 1975–6, local authority current and capital spending accounted for nearly one-third of total public expenditure; by 1980–1 that share was down to one-quarter. Moreover, in this period, total local authority expenditure declined by more than 16 per cent in real terms, with a further sharp fall in 1981–2.

Some of the pressures on local authorities to cut their spending result from change in the political control of local councils; other pressures arise from the inadequacy of local taxation in a period of high inflation. There are also pressures from central spending departments, like the Department of the Environment (DoE), the Department of Transport, and the Department of Education and Science, who themselves are subject to pressure from the Treasury and the former Civil Service Department (CSD). The pressures from Whitehall are particularly potent since Treasury grants form a large proportion of total local government income. In addition, the centre has enacted laws to strengthen its hand in central-local fiscal relations (see chapter 3).

The labour force is important in local government, most obviously because wages represent by far the largest cost which local authorities have to bear. Moreover, it is very difficult to reduce the labour force substantially by substituting capital, since in most local government services, such as education, social work and police, the activity of the labour force is the service to the public. Furthermore, local government is obligated to act as a good employer (Beaumont 1981); thus the 1946 charter for the local government service states that while local authorities should not take the lead in determining pay standards, they should be in the first flight of good employers. Finally, local government employees are usually significant within a city's total labour force, because they are highly unionised, a potentially cohesive bloc, and have a vested interest in local politics. Indeed, it is sometimes argued that in pursuing their own self-interest, local authority employees are potentially a distorting force in local democracy (Wellington and Winter 1971).

The legacy of the 1980s is far different from the relatively quiescent and peaceful relationships of the earlier post-war period. Labour problems in local government in the 1970s – the streams of ‘stop-go’ pay policies, the new militancy of local government employees and the foundering of the pay bargaining machinery – have largely remained unsolved. The Conservative government of Mrs Thatcher adopted policies that have exacerbated these problems.