MPIfG Working Paper 03/11, October Government Status and Legislative Behavior Partisan Veto Players in Australia, Denmark, Finland and Germany

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1 MPIfG Workng Paper 03/11, October 2003 Government Status and Legslatve Behavor Partsan Veto Players n Australa, Denmark, Fnland and Germany Steffen Ganghof, Max Planck Insttute for the Study of Socetes, Cologne, and Thomas Bräunnger, Unversty of Konstanz Max Planck Insttute for the Study of Socetes Paulstr Köln Germany Telephone 0221/ Fax 0221/ E-Mal nfo@mp-fg-koeln.mpg.de Webste

2 2 Abstract In parlamentary systems, partes compete for votes and offces n the electoral arena but n many systems they also cooperate n the legslatve arena. Ths paper examnes the queston of whether the government status of partes affects ther legslatve behavour and, hence, polcy outcomes. We develop a smple veto player model that ncludes partes postonal goals (vote, offce, etc.) to formalze the noton of accommodatng legslatve behavour. The model predcts that government partes are most accommodatng whle opposton partes are least accommodatng. The hypothess s then tested by comparng two pars of most smlar poltcal systems: Dansh and Fnnsh coalton governments, as well as German and Australan bcameralsm. The case studes support the man hypothess that government status systematcally affects partes level of accommodaton. We conclude that ths has mportant mplcatons for the two major approaches n comparatve nsttutonal analyss advanced by Ljphart (1999) and Tsebels (2002). Whlst Ljphart s dstncton between jont and dvded responsblty cannot provde a consstent theoretcal ratonale of hs twodmensonal map of democraces, Tsebels concepton of purely polcy-seekng actors may be nsuffcent to adequately dentfy veto players n comparatve research. Zusammenfassung In parlamentarschen Systemen konkurreren Parteen um Wählerstmmen und Ämter, aber n velen Systemen koopereren se auch n der legslatven Arena. Das Paper untersucht de Frage, ob der Regerungs- versus Oppostonsstatus von Parteen hr legslatves Verhalten und somt Poltkergebnsse beenflusst. Wr entwckeln en enfaches Vetospelermodell, das postonale, das heßt auf Wählerstmmen oder Ämter bezogene, Erwägungen n den Poltkpräferenzen von Parteen berückschtgt und damt de verbretete Vorstellung von (ncht-)akkommoderendem legslatvem Verhalten formalsert. Das Modell mplzert, dass Regerungsparteen am stärksten akkommoderend snd, Oppostonsparteen am wengsten. De Hypothese wrd mt Hlfe zweer Vergleche n enem most smlar case Desgn getestet. Der erste Verglech stellt dänsche und fnnsche Koaltonsregerungen enander gegenüber, der zwete das deutsche und das australsche Zwekammersystem. De Fallvergleche stützen de Hypothese, dass der Regerungsstatus von Parteen beenflusst, we akkommoderend se sch verhalten. Das Ergebns hat wchtge Implkatonen für zwe bedeutende Ansätze n der verglechenden Analyse poltscher Insttutonen: Ljpharts Unterschedung von Mehrhetsund Konsensdemokraten und Tsebels Vetospelertheore. Ljpharts theoretsche Gegenüberstellung von gemensamer und getrennter Verantwortung für Poltkergebnsse lefert kene konsstente theoretsche Begründung für sene zwedmensonale Messung moderner Demokraten; Tsebels Konzepton von Akteuren, de nur an Verbesserungen m Polcy-Raum nteressert snd, schent ncht hnrechend, um n verglechenden Studen Vetospeler angemessen zu dentfzeren.

3 3 Contents 1 Introducton 5 2 Government Status n a Smple Veto Player Model 6 3 Testng the Government Status Hypothess Comparson 1: Denmark and Fnland Comparson 2: Germany and Australa 16 4 Dscusson and Concluson 19

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5 5 1 Introducton In parlamentary systems, partes compete for votes and offces n the electoral arena but n many systems they also cooperate n the legslatve arena. Though ths creates tenson for all partes, the nature of ths tenson may dffer accordng to partes government status. Legslatve partes may belong to the government, to the opposton or be neutral. A neutral party s here defned as one that has no chance of wnnng government offce. 1 The queston we seek to answer n ths paper s whether partes government status affects ther legslatve behavour and, hence, polcy outputs. The lterature on comparatve poltcal nsttutons does not gve a clear answer to ths queston. On the one hand, many n-depth studes of partcular countres fnd, at least wth respect to popular polces, that opposton partes potentally supportng a government proposal are frequently reluctant to collaborate wth the government because they fnd t dffcult to clam credt for polcy change (e.g., Huber 1999). Thus, agreement may be thwarted by the pressure to compete (Scharpf 1997: 192). On the other hand, two outstandng approaches to comparatve poltcal nsttutons those by Tsebels (2002) and Ljphart (1999b) do not allow for any sgnfcant effect of government status on legslatve behavour. In Tsebels (2002) veto player theory, the status of partes does not matter because veto players are conceptualzed as pure polcy-seekers n the legslatve arena. The only relevant characterstc of a veto player s ts deal pont and/or ts nternal coheson. In the case of (one-party) mnorty governments, opposton partes are dsregarded completely, based on the argument that n general they do not have effectve veto power. Ljphart s approach (1999b) lnked to veto player theory by Brchfeld and Crepaz (1998; see also Crepaz 2004) s more ambguous. In search for a theoretcal ratonale behnd the two emprcally dentfed dmensons of democracy, Ljphart draws on Goodn (1996) and argues that polcymakng nteractons along the executve-party dmenson are characterzed by collectve agency and shared responsblty, whle those along the federal-untary dmenson are not. Based on ths perspectve, I consdered changng the labels of the two dmensons to jont-power and dvded power dmensons (Ljphart 2003: 23). To see what collectve agency and shared responsblty means, we have to consult Goodn. Tryng to make the case that U.S.-style dvded government s fundamentally dfferent from coalton government n parlamentary democraces, he states: True, parlamentary partes may face a formally analogous task n hammerng out the legslatve agenda for a coalton government. But where there s a formal coalton, collectve agency has been created, and all partes to t wll be judged at least n part by ts successes or falures. Where, as n the Unted States, there s merely coalton-lke governng, there s no collectve agency and no shared responsblty. (Goodn 1996: 331, emphass n orgnal) Ths concepton of shared responsblty s not perfectly congruent wth Ljphart s two dmensons of democracy. For example, when mnorty governments have to bargan wth opposton partes about We would lke to thank semnar partcpants at the Unversty of Konstanz as well as Andreas Brosched, Flemmng Juul Chrstansen, Rchard Eccleston, Henrk Enderlen, Mark Hallerberg, André Kaser, Herbert Ktschelt, Bernhard Kttel, Matthas L. Maer, Brgtta Rabe, Frtz Scharpf, George Tsebels, as well as our n-house referees, Jürgen Beyer and Hendrk Zorn, for ther helpful comments and dscussons. All remanng errors are ours. 1 We focus on the case where t s techncally mpossble for a party to be part of the governng coalton, because t s not represented n the lower chamber of parlament. An mportant example, dscussed n more detal below, s mnor partes n the Australan Senate.

6 6 ther polcy agenda, no collectve agency s establshed. It s governng partes, and not the opposton partes, that have the man responsblty for polcy changes. Emprcally, however, frequent mnorty governments are assumed to make countres more consensual on the executves-partes dmenson, not the federal-untary dmenson (Ljphart 1999b, ch. 6). In ths paper we want to explore the conjecture of Goodn (and others) that government status matters for legslatve behavour and, thus, polcy outputs. In secton 2, the ssue s tackled theoretcally. We take the standard veto player framework as our startng pont because we seek to analyse the potental for polcy change. However, we follow Goodn (1996: 331) argung that n terms of the larger reelecton game t may be more n the nterests of each other [e.g., a Democratc presdent and a Republcan Congress] to eschew compromse and try to lay the blame for consequent polcy falure on the other. To model ths knd of logc, we dstngush between partes polcy deal ponts on the one hand, and ther postonal consderaton (vote, offce, etc.) on the other, and argue that the postonal consderatons of the three types of partes dffer systematcally for two reasons. Frst, snce government partes bear formal responsblty, they expect larger postonal gans than the other types of partes smply from gettng thngs done. In other words, the eagerness to acheve polcy change s greater for government partes than for neutral and opposton partes. Second, snce opposton partes have dffculty clamng credt for poltcal change, they demand sgnfcant polcy gans n order to send a clear sgnal to voters that ther partcpaton n polcymakng makes a dfference. Hence, the senstvty for polcy sacrfces s greater for opposton partes than for neutral and government partes. Vewng the eagerness to acheve polcy change and senstvty for polcy sacrfces n conjuncton, we show that the preferred-to-sets, the sets of polces that partes prefer over the status quo, are largest for government partes and smallest for opposton partes. As a consequence, the potental for polcy change, that s, the sze of the wnset of the status quo, tends to be smaller when opposton partes partcpate n polcymakng. In secton 3, we undertake an ntal qualtatve test of ths government status hypothess by performng comparsons of legslatve poltcs n two pars of most smlar poltcal systems: Denmark and Fnland, as well as Germany and Australa. In both pars, countres resemble each other n many crucal aspects but often dffer n the government status of the veto players. The case comparsons support our man hypothess: the partsan actors needed to pass government polces tend to be more accommodatng f they are not n drect opposton to the government that s, f they are ether part of the government or do not compete for government offce. The fnal secton dscusses our results, draws out mplcatons for varous lteratures, and makes suggestons for further research. 2 Government Status n a Smple Veto Player Model Let us start wth the veto player framework (Tsebels 2002) whch s based on standard spatal model assumptons. Frst, any ndvdual actor has a most preferred polcy n a one- or multdmensonal space of all polces that are on the agenda. Second, preferences are assumed to be symmetrc and sngle-peaked around ths deal pont so that for any two polces the preferred one s closer to the deal pont. Gven the assumpton that there are veto players, that s, actors that have to consent on any polcy change, a non-empty set of all polces that can beat the status quo ndcates the possblty of polcy change. As a result, the utlty functon of an actor may look as follows:

7 7 U X = x R x x (1) where X R n represents the polcy space and U the polcy utlty of actor, whch s a functon of the x polcy and depends on the actor s deal pont x. All actors are concerned about s to move the status quo as close as possble to ther own deal pont. As far as poltcal actors are actually vote-seekng, electoral gans are supposed to be monotoncally ncreasng n the dstance between deal pont and status quo replacement. Tsebels has clearly worked out three major mplcatons that follow from the polcy-seekng assumpton. Frst, leavng nternal coheson asde, the only varable that, gven some status quo polcy, determnes the legslatve behavor s the deal pont of the player n the polcy space. For ths reason there s nothng that dstngushes the U.S. presdent from, say, a small coalton party n Denmark. Second, snce a veto player cares only about polcy gans, she always accepts even very small gans as long as they exceed the decson or transacton costs and f her agenda-settng power does not allow her to extract larger gans. Ths mples that f the agenda-setter s located n the center of a multdmensonal polcy space, t wll typcally not have to make concessons at all (Tsebels 2002: 97 99). Therefore, mnorty governments, especally one-party governments, are treated as facng no veto players. Fnally, snce a veto player cares only about polcy gans, she never accepts polcy losses, that s, a polcy movng the status quo away from her deal pont. As a result, Tsebels counts all members of overszed coaltons as veto players: f the wnset of the status quo s non-empty, the coalton partes wll only accept wnset alternatves; and f t s empty, then the coalton wll not form or dssolve. In the followng paper, we wll relax the polcy-seekng assumpton n order to model partes postonal consderatons. We start by dstngushng polcy change from poltcal change. Polcy change refers to the content of poltcs: an ncrease n expendture or rasng of a tax etc. In terms of the polcy space X, polcy change means any change of the status quo polcy. In contrast, poltcal change refers to the form or nstruments of poltcs and becomes vsble as the product of legslatve or government actvty: a new governmental regulaton, the modfcaton of an exstng law, or the passng of a parlamentary resoluton. Two characterstcs are fundamental to our dstncton between polcy and poltcal change: frst, poltcal change may nvolve polcy change but t need not do so; second, from the voters pont of vew, poltcal change sgnfes that ssues on the publc agenda are beng tackled whether or not ths nvolves polcy change. Formally, we dstngush between the polcy space X and a bnary decson space D = {0, 1}, where d = 1 and d = 0 sgnfy the decson and the non-decson, respectvely. Gven these parameters, we dstngush between three types of change: Table 1: Three Types of Change x0 = x x0 x d = 0 stablty exogenous shock d = 1 symbolc poltcs substantve poltcs

8 8 Substantve poltcs refers to government decsons or parlamentary legslaton that nvolves substantal changes n the status quo. Symbolc poltcs means that poltcal actors engage n governmental or parlamentary actvty on an ssue on the poltcal agenda wthout changng the status quo. Exogenous shock means that the status quo changes for external reasons so that poltcal actors cannot clam credt for t. Fnally, stablty exsts when the relevant actors are ether not nterested n or cannot agree on change. The dstncton between polcy and poltcal change allows us to ntroduce a specfc noton of responsblty for polcy outputs nto the standard veto player model. 2 If actors are able to clam responsblty for legslatve acts and f credt-clamng promses to reward electoral gans, poltcal actors care about poltcal change rather than mere polcy change. Followng the lterature on party motvatons n parlamentary systems (Strøm 1990), we add a postonal component to the standard polcy-dependent utlty functon of poltcal actors. Specfcally, we assume that poltcal change s assocated wth a varable postonal gan (or loss f negatve) that reflects the varyng expectaton of actors regardng the consequences of the poltcal decson to change the status quo for ther future vote share as well as ther future access to government offces, agenda-settng power, etc. 3 It s exactly here where partes n government dffer from opposton partes or neutral actors. Formally, we defne utlty functons U * on the alternatves for poltcal change rather than the polces themselves. Utltes are, therefore, defned on the product of the spaces of the formal decson D, the locaton of status quo ex ante n X, and ts replacement n X: U * D X X R = ( d, x0, x) x x + x0 x + d( σ x0 x γ x x ) G where σ 0, γ 0. (2) The varables d D denote the decson (d=1) or non-decson (d=0), whle x 0 and x X are the status quo and ts replacement. The σ and γ parameters are used to model the postonal utlty that actors are rewarded wth when makng a decson. Whlst the frst two terms n the utlty functon refer to the standard spatal model, the thrd component s the postonal utlty that actors can expect only f they make a decson and nduce poltcal change. To model the postonal utlty component we frst assume that actors may receve a nonnegatve postonal utlty σ from polcy change. One man source of ths s the expected electoral gans derved from clamng credt for polcy change. We assume that electoral gans depend on the dstance between the status quo and the actor s deal pont. Gans from credt clamng are ceters parbus lower for status quo locatons that are close to her deal pont (σ x 0 x s ncreasng n x 0 x ). The source of σ s not necessarly restrcted to electoral expectatons, but may also reflect the benefts partes receve from becomng and stayng part of governng coalton, e.g., government offces, patronage resources, or agenda-settng power. Snce the stablty of governng coaltons depends on ts ablty to agree on polcy change (Tsebels 2002), partes that value the above-mentoned benefts may 2 For a dfferent way to model partes postonal goals, see Heller (2001b). 3 In a slghtly dfferent framework one can make actors postonal expectatons dependent on ther votng behavor nstead of whether or not the status quo s changed (cf. Huber 1996).

9 9 attach postve postonal utlty to polcy change. The σ parameter thus captures partes eagerness to acheve polcy change. The second assumpton we make s that postonal utlty s hghest at the deal pont but decreases as the status quo replacement moves away from t ( γ x x s decreasng n x x ). The underlyng dea s that as the potental replacement s farther away from her deal pont, t becomes ncreasngly dffcult for the actor to sell the polcy reform as a success to her (potental) voters. Thus, the γ parameter measures actors senstvty for polcy sacrfces (cf. Huber 1996). To understand the mplcatons of the two parameters, t s useful to compare the preferred-to-sets of the status quo of any player n the conventonal and the modfed model, P (x 0 ) = { x U (x) U (x 0 ) > 0 } and P * (x 0 ) = { x U * (d,x 0,x) > 0 }. For the frst case, we know that x s preferred to the status quo f x x < x 0 x, whereas n the second case t must hold that. 1+ dσ x x < x0 x 1+ dγ If d = 0, then no decson s taken renderng no postonal gans so that actors utlty functons represent polcy preferences as n the standard model. If d = 1, the dfferences between the two models s expressed by the term 1+ σ ρ = (3) 1+ γ The ρ rato summarzes the effects of actors non-polcy goals (offce, votes, etc.) on ther behavor n the polcy arena. If actors eagerness to acheve polcy change, measured by σ, outweghs ther senstvty to polcy sacrfces, captured by γ, ρ s greater than one and the preferred set ncreases. Conversely, f the senstvty to polcy sacrfces outweghs eagerness to acheve polcy change, ρ s smaller than one and the preferred set decreases. If σ and γ balance each other, ρ equals one and actors behave lke pure polcy-seekers as n the standard model. In other words, ρ measures how accommodatng actors are n the legslatve arena. The hgher an actors ρ, the easer t s to agree wth her on a change of the status quo, everythng else beng equal. There s another, more ntutve way to thnk about the meanng of ρ. In the standard model, actors only care about ncreasng ther polcy gan by substtutng the status quo wth some replacement z. Thus, ther polcy gan s U (z) U (x 0 ). In the extended model suggested here, actors also care about how much of ther total polcy ambton, gven by U (x ) U (x 0 ), they contnue to sacrfce. Ths polcy sacrfce s gven by U (x ) U (z). Now, t s easy to see that ρ expresses a players sacrfce rato, that s, the maxmal polcy sacrfce player s wllng to make relatve to her polcy ambton: U ( x ) U ( z) x = U ( x ) U ( x0) ( x The sacrfce rato s smply one partcular noton of how postonal consderatons (most notably offce and votes ) matter n actors legslatve behavor. Here we are not concerned wth defendng ths partcular concept aganst others. Rather, we want to use the noton of the sacrfce rato to develop hypotheses about how players government status affects the sze of the wnset. Our goal s not 1+ σ + 1+ γ ( x x x 0 0 x )) = ρ. (4)

10 10 to measure the sacrfce rato of actors but to derve dfferences n partes (average) sacrfce ratos from the way n whch poltcal nsttutons structure the polcy process and assgn poltcal responsblty. 4 The frst step s to form expectatons about relatve szes of σ and γ, and thus ρ, for the three types of partes. As to σ, measurng the eagerness to acheve polcy change, the mportant dfference s between government partes (g) on the one hand, and neutral (n) and opposton partes (o) on the other. Voters regard most governments as beng prmarly responsble for gettng thngs done, so that governng partes assocate polcy change wth postve postonal utlty. Hence, we can expect σ g > σ o/n. For γ, the senstvty to polcy sacrfce, the mportant dfference s between government and neutral partes on the one hand, and opposton partes on the other. Opposton partes, but not neutral partes, have a clear ncentve to deny the government polcy successes. As opposton partes fnd t more dffcult to clam responsblty for polcy change, they wll only make deals wth the government f the outcome sends a clear sgnal to voters that the party actually made a dfference. Hence, opposton partes wll generally be senstve to polcy sacrfces. They wll not smply help the government to pass ts own program, but try to extract sgnfcant concessons. As a result, we expect γ g,n < γ o. From ths we derve the followng hypothess about partes sacrfce ratos: Government partes can be assumed to be the most accommodatng, opposton partes the least accommodatng, and neutral partes somewhere n between (ρ g > ρ n > ρ o ). Note that we do not assume that neutral actors behave as n the standard model (ρ n = 1) and that the preferred sets of government or opposton partes are larger or lower than n the standard model. More precsely, t may be that all three types of partes are, n order not to dscourage ther consttuents, farly senstve to polcy sacrfces. As a result, not only opposton partes but also neutral and governng partes may have smaller preferred-to-sets than n the standard model. What we do hypothesze, however, s that there are clear and sgnfcant dfferences n the accommodatng behavor of the three types of partes. These dfferences do not, of course, translate drectly nto dfferences between the szes of the wnset n dfferent veto player constellatons. Whether or not an actor s sacrfce rato makes a dfference to the sze of the wnset s condtonal upon the other varables of the veto player model, most notably actors polcy deal ponts. However, we can state the effect of players sacrfce ratos on the sze of the wnset n the same way as veto player theory states the effect of players congruence (that s, the dstance between ther deal ponts): f one player s sacrfce rato ncreases, the wnset of the status quo s lkely to ncrease and t wll never decrease; conversely, a decreasng sacrfce rato tends to decrease the sze of the wnset but wll never ncrease t. To llustrate these ponts, consder Fgure 1, whch shows two veto players: a one-party mnorty government G and a potental oppostonal support party O. The dotted ndfference curves are those of the standard model, the others those of the extended model. In the stuaton depcted n the fgure, G s accommodatng. That s, t has a sacrfce rato of above 1; hence, t accepts mnor polcy losses f these are necessary to acheve poltcal change. In contrast, O s non-accommodatng. It has a sacrfce rato of below 1; therefore, t needs some mnmum polcy gan to accept a change of the status quo. Comparng the wnsets of the standard and the modfed model reveals two mportant ponts. Frst, the exstence of an oppostonal veto player may reduce the sze of the wnset (because O s preferred-to-set s reduced), but t does not have to. In Fgure 1, snce G s preferred-to-set s n- 4 Estmatng actors sacrfce ratos s dffcult, but not more dffcult than estmatng spatal preferences. In fact, f we had precse data on polcy preferences, sacrfce ratos could be nferred from the dfference between actors polcy deal ponts and ther votng behavor.

11 11 creased compared to the standard model, the sze of the wnset remans (almost) unchanged. If G were a pure polcy-seeker as n the standard model, the fact that O expects postonal losses from polcy change would result n a reducton n the sze of the wnset. Ths lnks up to the second pont: Whether or not G s sacrfce rato s hgher or equal to one, the wnset s shfted toward O s deal pont. In order to reach an agreement, G has to compensate O for ts postonal losses. Even wth extensve agendasettng power, G can at best realze the z polcy. In contrast to standard veto player theory, our model mples that oppostonal support partes have effectve veto power and must not be dsregarded as veto players. Fgure 1: Effect of Postonal Utlty on Polcy Wnset SQ G z O The man concluson from our analyss s that partes level of accommodaton vares systematcally wth ther government status. Ths leads to two hypotheses about polcy outcomes that can be tested emprcally: Hypothess 1: The sze of concessons to a partcular partsan veto player ncreases as ts status changes from government to neutral or opposton, or from neutral to opposton, everythng else beng equal. Hypothess 2: The sze of the wnset never ncreases (but may decrease) as we replace a government party wth a neutral or opposton party, or a neutral party wth an opposton party. In the next secton, we confront these hypotheses wth evdence from two case comparsons: between coalton governments n uncameral Denmark and Fnland, and bcameralsm n Germany and Australa.

12 12 3 Testng the Government Status Hypothess Although Denmark and Fnland, as well as Germany and Australa, are smlar n many crucal aspects, they dffer n the government status of the veto players. Denmark s frequent mnorty governments establsh at least one opposton party as a potental veto player, whle n Fnland all the veto players are typcally ncluded wthn the government coalton. Smlarly, n the Australan Senate, the decsve poston s typcally held by a neutral party (most notably the Australan Democrats), whle n Germany ths poston s often held by the major opposton party n the lower chamber (see Table 2). Table 2: Government Status and Type of Legslature Government status of veto players legslature only government or neutral partes also opposton partes uncameral Fnland Denmark bcameral Australa Germany The case comparson wll focus on the perod from the early 1980s to the early 2000s. The pragmatc reason s that for ths perod we have expert survey data on partes postons on a general left-rght scale. The more theoretcal reason s that the systematc effect of government status should become more vsble as stark deologcal dvsons between socalst and bourgeos partes become less mportant, whch s what happened from the 1980s on. Such a comparatve test s certanly not decsve; t s rather a frst step to establsh the frutfulness of our theoretcal perspectve. Ultmately, one would wsh to perform a quanttatve test, wth a larger set of countres, whch would requre, however, farly precse estmates of partes polcy preferences on specfc ssues. Only then would t be possble to test whether government status affects legslatve behavor, hereby controllng for the polcy dstances between veto players. For the tme beng, we largely have to rely on the characterzaton of legslatve poltcs by country experts wth ndepth knowledge of many decson-makng processes on mportant peces of legslaton. 3.1 Comparson 1: Denmark and Fnland Denmark and Fnland are small, Nordc, parlamentary, and uncameral consensus democraces wth hghly fragmented party systems. 5 On Ljphart s (1999b: 255) two-dmensonal map of democraces, Denmark and Fnland are close neghbors. The two countres dffer, however, n the extent to whch the relevant veto players share formal responsblty for polcy outputs. Unlke n Denmark, n Fnland 5 Before the recent completon of consttutonal reform, the Fnnsh consttuton could be descrbed as sempresdental. Nevertheless, n the followng we gnore the Fnnsh presdent for three reasons: hs formal legslatve power had always been severely restrcted; even n the perod up to 1987 the actual presdental ncursons nto the domestc-polcy process were lmted and exceptonal; and after 1987 the presdent s role n domestc polcymakng dmnshed further.

13 13 the agreement of the governng partes was typcally suffcent to pass a bll nto law. Fnnsh coaltons had majorty status, whle almost all Dansh governments (except from 01/93 to 02/94) had not. 6 Fgure 2: Left-rght Placement of Dansh and Fnnsh Partes Denmark RGE SF SD RV KRF CD KF V FRP Notes: Huber-Inglehart (1995) left-rght scores. RGE = Red-Green (Unty) Lst, SF = Socalst Party, SD = Socal Democrat, RV = Socal Lberals, CD = Centre Democrats, KRF = Chrstan People s, KF = Conservatves, V = Lberal, FRP = Progress Party Fnland VAS VIHR SDP KESK LKP SMP SFP KOK SKL VAS = Left-Wng Allance, VIHR = Green League, SDP = Socal Democratc Party, LKP = Lberal People s Party, SFP = Swedsh People s Party, KESK = Centre Party, SMP = Rural Party, KOK = Natonal Coalton, SKL = Chrstan Unon Denmark Fgure 2 gves a stylzed one-dmensonal descrpton of the Dansh party system, based on Huber and Inglehart s (1995) left-rght expert scores. 7 Snce 1982 all governments have been coaltons and there have been no coaltons across the center. That s, no government has ncluded the Socal Democrats on the one hand and Lberals or Conservatves on the other. Partly as a result, the deologcal range of Dansh coaltons was moderate. It ranged from 0.5 (Lberals and Conservatves) to 2.5 (from the Lberals to the Socal Lberals). If all partes were pure polcy-seekers n the legslatve arena, even mnorty coaltons could be expected not to grant sgnfcant concessons to opposton partes because they can choose ther support party (see secton 2 above). What governments need of course s agenda-settng power. Dansh governments do possess a crucal nstrument n ths regard: the power to make the last amendment (Heller 2001a: 791; Tsebels 2002: 98-99). If opposton partes tend to be non-accommodatng, however, even mnorty governments wth agenda-settng power can be forced to make sgnfcant concessons n order to acheve polcy change. In Denmark, ths became most obvous durng the regn of the fve bourgeos governments under Prme Mnster Poul Schlüter governng between October 1982 and January 1993 (Damgaard 6 Fnnsh coaltons were n fact typcally overszed. However, one reason for ths was that untl 1992 consttutonal rules allowed one-thrd of all MPs to postpone the fnal adopton of an ordnary law by two to four years by votng t to le dormant. 7 We rely on Huber and Inglehart (1995) manly because they cover more partes n the four countres under consderaton than comparable expert surveys.

14 ; Ftzmaurce 2001). The frst three of these coaltons ncluded Lberals (V), Conservatves (KF), Chrstan People s Party (KRF), and Center Democrats (CD), the fourth replaced the two smaller partes (KRF and CD) wth the Socal Lberals (RV), and the ffth dd not nclude any of the smaller nonsocalst partes. The man problem of these governments was that the only potental support party on the rght was the farly extreme ant-tax Progress Party (FRP). The problem was not (anymore) that governments wanted to ostracze the FRP (Green-Pedersen 2001: 59), but that ths potental support party had both a large polcy ambton (that s, an deal pont far away from the status quo) and was non-accommodatng. Hence, although many government proposals were clearly better for the FRP than the hgh-tax status quo, the potental polcy gan was not enough to justfy makng deals wth the government and thereby takng responsblty for only mnor polcy mprovements. Ths led to the fall of the frst Schlüter cabnet after only 16 months: toward the end of 1983, the government ntally seemed to have the support on ts budget bll of both Socal Lberals and the Progress Party; however, once the government presented the bll before parlament, the Progress Party pulled out of the agreement and called for more tax cuts. The government lost the vote and had to call new electons. Not only the non-accommodatng behavor of the Progress Party s noteworthy but also that of the Socal Democrats (SD). The latter party was the man contender for the government and, therefore, non-accommodatng. Before the 1980s, an nformal norm of Dansh parlamentarsm had been establshed n order to mtgate such non-accommodatng behavor: responsble partes, at least on budget blls, were expected to eventually support the proposal, whether they lked t or not (Damgaard 1992: 36). In the 1980s, however, the Socal Democrats started to undermne ths norm and used the budget n order to challenge and potentally embarrass the government partly wth success as shown above. The early electons strengthened the bourgeos partes so that the second Schlüter government could rely exclusvely on the Socal Lberals. Whle ths constellaton made for more stable and predctable polcymakng, the non-accommodatng behavor of the Progress Party stll dened the government the knd of flexblty needed to avod the grantng of sgnfcant polcy concessons. Ths lack of flexblty also contrbuted to the fact that the Schlüter governments were often defeated by an alternatve majorty n parlament. The reason was that whle the centrst Socal Lberals were more accommodatng than ether the Progress Party or the Socal Democrats, they were of course unwllng to accept large polcy sacrfces or even absolute polcy losses. Hence, they voted wth the socalst opposton on ssues such as foregn polcy, socal and housng polcy, legal reforms, local government taxaton, and the envronment. From 1982 to 1988, e.g., the Schlüter governments lost 8 percent of the fnal votes n parlament (Damgaard 1992). After the electon n 1987 and untl the end of the bourgeos regn n 1993, the government agan needed ether the Socal Democrats or the Progress Party to pass a bll nto law. Snce both partes were non-accommodatng, the government had to make sgnfcant concessons. In the negotatons for the 1988 budget, e.g., the government was unable to get support from the Progress Party and ended up makng excessve concessons to the Socal Democrats (Green-Pedersen 2001: 60). After 1988 the government could get the support of the Progress Party (ncludng budget blls), but ths support was nether completely nexpensve n polcy terms nor relable. Gettng the Socal Democrats was not much easer, however, so that on many major reform projects the results were meager ndeed (Green-Pedersen 2001: 61). Important areas of economc polcy were characterzed by stablty rather than change. Socal Democratc-led mnorty coaltons governng from 1994 to 2001 were both more stable and more successful n mplementng ther legslatve agenda. Ths s a remnder that the dfferences

15 15 between the sacrfce ratos of government and opposton partes are only one mportant varable nfluencng polcy change. A noteworthy dfference between the two perods of Dansh poltcs, for example, s that the economc polcy preferences of the Socal Democrats (and of the left-wng socalst partes) shfted sgnfcantly towards the rght durng the 1990s, whch ncreased the potental for polcy change (Green-Pedersen 2001). Fnland The lower part of Fgure 2 shows the postonng of major Fnnsh partes n the perod under consderaton. In contrast to Denmark, Fnland has a farly long tradton of cross-block coaltons, manly bult around Socal Democrats (SDP) and the Center Party (KESK). Partly as a result, the deologcal range of coaltons n the 1980s and 1990s tended to be somewhat larger than n Denmark: the range was between 2.5 and 4; only n 1994, a government wth a range of below 1 was n place for less than one year. After 1987 all coaltons ncluded both KOK and the Swedsh People s Party (SFP). From 1987 to 1991, these two partes formed a coalton wth the SDP and ntally also wth the Rural Party (SMP). From 1991 to 1995, they formed a coalton wth KESK and ntally also wth the Chrstan Unon (SKL). Between 1995 and 2003, Fnland was governed by the very heterogeneous fve-party Ranbow Coalton, comprsng VAS (Left-Wng Allance), VIHR (Greens), SDP, SFP and KOK. Based on the standard veto player model, one could expect the more heterogeneous Fnnsh coaltons to be characterzed by a somewhat greater lkelhood of polcy grdlock and, as a result, greater government nstablty. Ths, however, was not the case. After 1977, governments formally resgned only after presdental or parlamentary electons; and only occasonally dd they loose a (surplus) coalton party (Nousanen 2000). We contend that one reason for these fndngs s that coalton partes, due to ther postonal consderatons, tend to be relatvely accommodatng. Frst, partly as a result of deologcal convergence and strong exogenous pressures, vrtually all partes can cooperate wth each other as part of the governng coalton and are keen on dong so. The electoral consequences of beng a coalton party are ether consdered unpredctable or renforce the attractveness of government partcpaton. [T]here s a real crush to the government: party leaders want to get nvolved n effectve decson makng rather than stayng n an unproftable opposton for four years (Nousanen 2000: 293). Second, after supermajortaran rules n parlament had been abolshed n the early 1990s, small flank partes n overszed coaltons became real surplus partes that were not necessary to ensure legslaton and could be tossed overboard wthout much fuss. Because such a party knows that ts veto potental s qute lmted, t wll probably only partcpate n a government f t expects sgnfcant postonal gans. In combnaton, these two characterstcs of recent Fnnsh poltcs go a long way toward explanng why deologcally heterogeneous coaltons do not lead to frequent deadlock or hgh government nstablty. In Nousanen s terms, party leaders area of tolerance n the barganng process s broad and coalton barganng s characterzed by hgh polcy elastcty (Nousanen 2000: 288, 293). The extended veto player model presented n secton 2 helps to make sense of ths characterzaton. Whle the polcy postons of Fnnsh partes converged somewhat durng the 1980s and 1990s, ths convergence s nsuffcent to explan a large potental for polcy change. After all, Fgure 2 suggests that polcy dfferences contnue to be sgnfcant. What seems to have happened, therefore, s that partes postonal ncentves changed n a way that, compared to prevous perods, ther preferred-to-sets ncreased.

16 16 The mportance of postonal consderatons of partes can best be exemplfed wth respect to the left flank partes of the Ranbow coalton, VAS and VIHR (Jungar, 2002). Socal Democrats ncluded these partes explctly to reduce the veto power of each of them and to ensure that no party would be able to requre more than t was enttled to wth respect to ts electoral strength. The left preferred government partcpaton because they were keen on gettng government offces and consdered the prospects of wnnng votes n opposton dm. Due to these expected postonal gans, they were wllng both at the tme of coalton barganng and afterwards to make large polcy sacrfces. As one Green poltcan put t: The [government] programme s n many respects a catastrophe, but power s not often offered when t s, one has to grab t (cted n Jungar 2002: 74). As n the Dansh case, of course, postonal consderatons are only one of varous mportant varables. If polcy gans are too small or polcy losses too large, the wnset of the status quo becomes empty. Ths happened when n 2002 the Ranbow coalton decded aganst the votes of VIHR to buld a ffth nuclear power plant. Even wth a polcy loss of ths sze and mportance, the leader of the Fnnsh Greens, Socal Mnster Sonnvaara, was n favor of stayng n the coalton. Eventually, however, ths loss proved to be too large for the party as a whole, so that t left the government. 3.2 Comparson 2: Germany and Australa Germany and Australa are both federal countres wth parlamentary systems and strong second chambers. The German Bundesrat s a potental veto player on all mandatory legslaton, that s, legslaton that affects the nterests and admnstraton of the consttuent states (Bräunnger/Köng 1999). The Australan Senate s a potental veto player on all blls. For our purposes, the man dfference between the two countres s that the pvotal actors n the second chambers are typcally neutral n Australa but often oppostonal n Germany. Fgure 3: Left-rght placement of German and Australan partes Germany PDS G SPD FDP CDU CSU Notes: Huber-Inglehart (1995) left-rght scores. PDS = Democratc Socalst, G = Green, SPD = Socal Democrat, FDP = Free Democrat, CDU = Chrstan Unon, CSU = Chrstan Socal Unon Australa AD ALP LPA NPA AD = Australan Democrats, ALP = Australan Labour Party, LPA = Lberal Party, NPA = Natonal Party of Australa

17 17 Germany As Fgure 3 shows, more partes are represented n the Bundestag than n the Australan Senate. As n Australa, however, the party system of Germany was characterzed by a two-block logc. Ths logc was frst establshed by the FDP, whch was part of a coalton wth the SPD ( ) and the CDU/CSU ( ). Later the consoldaton of the Greens as an establshed party and the rghtward movement of the FDP created a real two-bloc system, wth the PDS beng ostracsed by the other partes. In 1998, an SPD-Green government took offce. The Bundesrat became a real veto player n 1969, when the SPD-FDP coalton faced a second chamber n whch state governments led by the federal opposton partes had a majorty. As a result, the Bundesrat became hghly poltczed (Sturm 2001: 176). Whle n the 1950s and 1960s, the Bundesrat had tended to block legslaton f t was not fulfllng the crtera for effcent mplementaton, the CDU/CSU now used the Bundesrat aggressvely n order to thwart the agenda of the Socal-Lberal government (Slva 1999: ). Even though the ncreased level of conflct durng tmes of dvded government was partly the result of a hgher ncongruence of polcy preferences, ths was not the whole story. Instead, most experts consdered the vote-seekng ncentves of opposton partes to reduce the potental for polcy change (Lehmbruch 2000). Ths vew s apparent n a proposal made by Wlhelm Henns, a promnent German poltcal scentst, statng that grand coaltons should be nstalled n all the Länder. Ths was to remove party poltcs from the Bundesrat and force the major compettors n the poltcal system to co-operate (Sturm 2001: 177). The formaton of the CDU/CSU-FDP coalton n 1982 brought the two chambers back nto poltcal algnment for several years. Ths algnment ncreased the potental for polcy change by augmentng veto player congruence and by makng the majorty of state governments n the Bundesrat accommodatng. Snce the polcy preferences of the CDU-led state governments were often derved from ther own economc and budgetary stuaton, they were not necessarly n lne wth that of the federal coalton (Köng 2001). In such stuatons polcy change was facltated by state governments postonal nterests n helpng the federal government to pursue ts polcy agenda and to strengthen the party label. The perod of poltcal algnment between the two chambers ended n 1991, when congruent state governments (CDU/CSU-FDP) lost ther majorty n the Bundesrat. After October 1994 oppostonal governments alone had a blockng majorty. 8 Especally n the latter perod, [t]he SPD proved no less hestant than the Chrstan Democrats were n the 1970s and early 1980s to explot the new majortes n the Bundesrat and the medaton commttee to ther full extent (Slva 1999: 178). It used the medaton commttee to sgnfcantly modfy government legslaton and klled a number of mportant blls altogether. The one that receved most attenton and trggered a broad debate about consttutonal reform was the government s tax reform bll, arguably ts major economc polcy project. Wth respect to ths bll, t seemed most obvous that ts rejecton could not only have been due to the polcy preferences of the Bundesrat majorty, but also to ts vote-seekng ncentves (Zohlnhöfer 1999). After an SPD-Green government took offce at the end of 1998, there was a short perod of unfed government. Already n Aprl 1999, however, the government lost ts majorty n the Bundesrat. The result was once more cases of reform projects on whch no agreement could be found between 8 As a general rule, mxed governments of federal government and opposton partes abstan when they cannot agree on a Bundesrat vote. However, the support of mxed governments seems somewhat more lkely to be bought by the federal government.

18 18 government and Bundesrat majorty, despte farly smlar polcy preferences. One example of ths s the government s penson reform, whch lke ts major tax reform could only be passed because some of the mxed state governments could be won over wth sde-payments. The latter result s not untypcal. In fact, for observers lke Scharpf (1997: 194, n. 17) the fact that the federal government s sometmes able to buy off party-poltcal opposton by offerng concessons to some state nterests s one man reason why German-style dvded government does not lead to complete deadlock on major polcy ssues. Australa Fgure 3 shows the left-rght placement of the four most mportant Australan partes n the perod under consderaton. In the House of Representatves, two blocks face each other: wth ALP on the one hand, and LPA and NPA, two very close alles referred to as the Coalton, on the other. From 1983 to 1996, Australa was governed by the ALP, afterwards by the Coalton. In the Senate, the three major partes also controlled most seats, but none of the two blocks had a majorty of ts own because a number of mnor partes (and ndependents) also ganed representaton. The most mportant of these mnor partes, the Australan Democrats, s ncluded n Huber and Inglehart s expert study shown n Fgure 3. There s of course a well-known (n-)famous nstance n whch clearly non-accommodatng behavor of the Senate majorty led to complete deadlock n Australa: the consttutonal crss of 1975, n whch the Senate delberately provoked the dsmssal of the ALP Prme Mnster by refusng to pass the government s appropratons blls. Ths example provdes excellent support for our hypothess, however, because n 1975 the opposton partes proper, that s, the Lberal and the Natonal party, had a blockng majorty n the Senate. If ths were typcally so, the Senate would tend to be a very nonaccommodatng veto player (cf. Sharman 1999: 354). The crucal players n the Senate are usually the mnor partes, especally the Australan Democrats. Note that ths s not obvous n Fgure 3. When ALP governments adopted neo-lberal polces n the 1980s and early 1990s, the deologcally closest support party n the Senate mght often have been the Lberals. However, both opposton partes proper frequently behaved n a non-accommodatng fashon, whch often establshed the Democrats as the crucal support party. Yet ths party, as well as the other truly neutral mnor partes and ndependents, had no reason to block the government s agenda. It had vrtually no chance of ganng representaton n the House of Representatves (whch s elected under the Alternatve Vote System); t dd not compete for government offce; therefore, t could not hope to mplement ts own deal polces after the next electon. Its man purpose as a Senate party was to revew and modfy the polces of the ncumbent government. Mnor partes also have hardly any vote-seekng ncentve to block government ntatves. In fact, the Westmnster norms underlyng the Australan consttuton tend to turn mnor partes nto partcularly accommodatng actors. Whle many voters welcome mnor partes as a moderatng force n Australan poltcs (Bean/Wattenberg 1998; Goot 1999), they also want them to accept the norm that t s manly the government that has the mandate to govern. Because mnor partes are well aware of ths, they have no ncentve to block government legslaton for electoral reasons (Young 1999: 17). The actual behavor of mnor partes reflects ths ncentve structure. Ths was clearly evdent n the 1980s, when mnor partes man goal was to keep the bastards [of the government] honest (Warhurst 1997). Rather than pursung ther own polcy agenda, mnor partes manly acted as agents of accountablty and revew. Ths led to a strengthenng of parlament and a rejuvenaton of the legslatve

19 19 process. It dd not, however, lead mnor partes to aggressvely pursue ther own polcy preferences not to speak of electorally motvated vetoes (Goot 1999; Sharman 1999). Snce the early 1990s mnor partes have become more actve n the sense that they started to clam partcular mandates of ther own (based on ther electon pledges). Ths was an effort to at least loosen the Westmnster straghtjacket n whch these partes found themselves. In stark contrast to the status of oppostonal state governments n the German Bundesrat, Australan partes actually had to argue that sgnfcantly modfyng or vetong government polces s legtmate, even though ther actual legslatve behavor remaned very accommodatng. The 1993 budget bll, for nstance, s consdered the prme example for ncreased mnor party actvsm vs-à-vs the Labor government. Young (1999) shows, however, that mnor partes manly challenged the budget on procedural ssues related to the chamber s revew functon. Wth respect to the actual polcy ssues concerned, they restrcted themselves to margnal mprovements of the government s proposal rather than pursung ther own polcy agenda. Although they crtczed the government s twn goals of defct reducton and ncome tax cuts, they nevertheless accepted these goals as mmovable parameters wthn whch any polcy alternatves the mnor partes mght suggest would have to ft (p. 22). In the perod after 1996, n partcular, the standard veto player model would predct a greater than ever polcy deadlock n Australa because the dstance between the government and mnor partes ncreased. Polcy deadlock should also be more frequent than n Germany because mnor partes are much more cohesve than party blocks n the German Bundesrat. None of these expectatons s borne out by the Australan experence, however. An excellent example for how accommodatng mnor partes actually behave s the ntroducton of a Goods and Servces Tax (GST), one of the core economc polcy projects of the government. In 1998, when the government called early electons n order to ask the voters for an explct electoral mandate for ntroducng a GST, the Democrats clearly expressed ther opposton to the government s reform agenda. Once the government had won the electon and pursued GST reform, however, the Democrat s leadershp adopted an accommodatng stance and once more barganed for mprovements at the margns, most notably the exempton of basc food, a somewhat more generous compensaton package for the dsadvantaged, and lower ncome tax cuts for the well-off (Eccleston 2002, ch. 7). In fact, the concessons to the Democrats were so moderate that the party s leader, Meg Lees, lost her leadershp as a result. 4 Dscusson and Concluson In ths paper we have explored the conjecture that formal responsblty for poltcal change makes a dfference for partes legslatve behavor and, hence, polcy output. We have formalzed ths conjecture wthn a veto player framework and derved the hypothess that there should be sgnfcant dfferences between the preferred-to-sets of three types of partes, everythng else beng equal. We contend that government partes are most accommodatng, that s, they have the largest preferred-to-sets, because they tend to assocate legslatve change wth postonal gans. They beleve that gettng thngs done ncreases ther chances of re-electon and helps to mantan ther offce status. Opposton partes, by contrast, are much less accommodatng (that s, have lower preferred-to-sets) because they face greater dffculty n clamng credt for polcy change. In order to enter nto an agreement wth government partes, they have to acheve sgnfcant polcy gans n order to send a clear sgnal to ther

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