Geoscience Reference
In-Depth Information
9
The Political Geography of Inequality
Summary and Implications
As democracy and decentralization spread around the world, the number of
people living in democratic political unions continues to increase. Canonical
approaches in political economy would predict, either with cheer or concern,
a new wave of higher inequalities. This topic began with a challenge and a
pledge. I challenged the conventional view that decentralized political struc-
tures inevitably lead to more inequality and less redistribution. As with other
aspects of federalism, such as the macroeconomic consequences of the design
of fiscal constitutions (Rodden and Wibbels
2002
), the case that motivates the
conventional theoretical arguments, namely the United States, is far from being
the rule. In fact, in terms of observable outcomes some political unions display
very little redistribution and large levels of inequality as a result (United States,
Mexico, Argentina, the EU) whereas others show levels of redistribution that
challenge the conventional expectation that decentralization breeds poverty
and inequality (Canada, Germany, Spain). Why, to borrow the language of
Linz and Stepan (
2000
), are some political unions inequality inducing whilst
others are inequality reducing? In addressing this question, I pledged to shed
light on a largely overlooked aspect of the politics of inequality: the territorial
distribution of conflicting interests over the nature and scope of redistribution.
I have endeavored to show that the key to this task lies in the politics
behind the origins and evolution of fiscal structures in political unions. A
choice about fiscal structures is a choice about redistribution. More precisely,
it is first a choice about the degree of decentralization of taxes and public
insurance programs, and, secondly, a choice about the amount of redistribution
of resources from wealthier to poorer members of the union. In exploring these
choices, I have encountered a few puzzling characters: representatives of poor
regions (Southern Democrats in the 1930s) fiercely opposing centralized public
insurance programs that would have implied a massive income transfer; and
leaders of rich regions (like Ontario or British Columbia in the post-Depression
years) begging for the centralization of welfare despite its implications for the
regional tax base; or happy to accept significant transfers of resources to their
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