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and patterns of mobility. But it is not sufficient. In addition, the alteration in
the patterns of economic geography and mobility must occur for reasons other
than the distributive consequences of pre-existing fiscal arrangements. Finally,
the identification of the effects of economic geography (and mobility) on fiscal
structures requires that in the event of an exogenous modification of the for-
mer, the latter can be considered as given. Similarly, given a fixed economic
geography, the empirical identification of the impact of a change in the system
of representation is only feasible if such a change is, at least to some extent,
independent from the preexisting fiscal structure. The remainder of this chapter
elaborates in detail the extent to which the unions analyzed in the empirical
chapters of the topic meet these conditions.
EXOGENOUS CHANGES IN ECONOMIC GEOGRAPHY AND MOBILITY
The second condition above concerns the process through which the geography
of economic inequality and patterns of mobility become politically salient.
Causal identification requires that the change in the geography of inequality
and labor market risk be exogenous. This is not always the case. The geography
of economic inequality may become salient due to external, exogenous factors
such as an external economic shock, or it may become politicized endogenously,
that is to say, as a result of the distributive consequences emerging from existing
fiscal structures themselves. Fiscal arrangements in political unions tend to be
contested by net contributing members as expropriatory. This distinction is
important for the purposes of hypothesis testing as it applies to the empirical
cases in this study.
Consider first the exposure of the two North American federations to the
Great Depression. In the very rich debate about its causes, it is hard to find the
nature of the existing fiscal structures during the 1920s as a prominent factor.
Whether one endorses the monetarist interpretation put forward by Fried-
man (Friedman and Schwartz
1963
), or any other alternative (Temin
1976
),
it seems fair to argue that neither the extreme decentralization of interper-
sonal redistribution nor the lack of any major system that characterized the
welfare systems of both Canada and the United States were major causes of
the Depression that provoked a massive, and territorially uneven, economic
contraction in both unions. Obviously, the lack of an effective system of
taxes and transfers exacerbated the social consequences of the Depression.
But that does not make it a cause of the Depression in the first place. The
collapse of the financial system transcended national borders. It fell upon
domestic fiscal systems as an unexpected burden. Hoover's initial reaction
exacerbated the social consequences of the crash but it was hardly its cause
(Bernacke
2004
; Krugman
2008
). The Depression was a major source of
change in America's economic geography, one that also directly affected pat-
terns of mobility within the union before changes in public insurance programs
took place (Rosenbloom and Sundstrom
2004
). In this sense, the patterns of
