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magnitude of the external shocks was enhanced by interterritorial mobility,
overcoming inter-provincial disparities in terms of labor market structures. By
contrast, in the United States the huge gap between the rural and racial South
and the industrialized states, together with the absence of a phenomenon like
the transients, rendered the pooling effect of the Depression insufficient to
foster a national solution to the problem of unemployment. 2
From Preferences to Choices: The Role of Political Representation
(Hypothesis 2)
The joint effect of income, risk, and mobility determines the map of preferences
on the centralization of interpersonal redistribution. Through the systematic
analysis of household income surveys I have shown that distributive tensions
associated with economic geography are at work in all political unions. Why
then the variation in the actual organization of fiscal structures? What makes
Germany or Spain more centralized than the United States or the EU?
The findings in this topic confirm political representation as the key medi-
ating factor. I have shown the role of political representation to be important
in two ways. First, representation shapes the outcome of political conflicts in
the event of a sudden exogenous change in economic geography. The contrast
between Germany's response to Reunification and America's response to the
Depression is particularly informative in this regard, as in both cases represen-
tation is given before the exogenous changes in economic geography unfold.
Germany is much more centripetal when it comes to the articulation of political
will.
Hence, contending preferences fare differently. Whereas those opposed to
more comprehensive public insurance efforts in the EU and the United States
had the institutional ability to condition the final outcome, the few in Germany
in favor of institutionalizing the increase in regional inequalities were overrun
by the political incentives of national parties to incorporate the East as quickly
and generously as possible. Indeed, Eastern l ander were fully incorporated into
the system of interpersonal redistribution almost immediately, and Western
l ander barely managed to postpone the full integration of interregional redis-
tribution into the system for five years. Centripetal representation turned the
decentralizing effects of a massive increase in geographic economic disparities
into a redistributive effort whose scale lacked precedent in the economic history
of advanced industrial societies. Whereas Southern senators and other defend-
ers of specific territorial interests managed to prevent centralization during the
process leading up to the Social Security Act, Stoiber failed in his attempts to
decentralize unemployment insurance even during the late 1990s.
2 An interesting implication of this finding for the future of the EU is that those programs more
likely to see partial integration are those dealing with the more mobile subsector of the union's
population (Ferrera 2005 : 154-159).
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