• In various ways, democratic institutions reflect the interests of voters. The majoritarian and consensus views of democracy are two fundamentally different perspectives on how democracy should work. Accountability, government mandates, and representation are all impacted by these two perspectives on democracy.

• Political institutions have a variety of effects on economic policy and outcomes. According to research, a country's election institutions have a significant impact on who gets to govern and what kinds of economic policies they are likely to adopt if given the chance.

• It should come as no surprise that the world has such a wide range of democratic institutions. As we saw in our examination of Arrow's theorem in Chapter 11, there is no perfect decision-making process; the institutional choice is ultimately a matter of selecting "second bests" and is likely to be influenced by the country's specific circumstances. This isn't to say that constitutional drafters are free to mix and match institutions at will. Particular sets of institutions, for example, recur over the world, as seen in the next section of this chapter. In general, constitutional planners select specific institutions to achieve their desired political, social, and economic goals. Of course, this assumes that people have a strong understanding of how different democratic systems influence these outcomes. Now we'll look at the effects of specific democratic institutions.

Combining Institutions: Majoritarian or Consensus Democracy?

• Although constitutional designers might potentially make various trade-offs for each specific institution they build, evidence suggests that they typically make the same trade-off for the entire system of government. In practice, institutional designers have responded to Arrow's "trilemma" by either establishing institutions that disperse power or creating institutions that concentrate it. Majoritarian democracies are defined as those in which power is concentrated, whereas consensus democracies are defined as those in which power is distributed. Even though there are theoretically many other combinations of democratic institutions that could exist around the world, political scientists frequently conceptualize in terms of two main types of democracy: majoritarian and consensus. We will now discuss the two types of democracy, compare their goals in terms of citizen representation, and assess how well each succeeds in light of these goals.

• Proportional electoral systems, on the other hand, tend to distribute power among candidates or parties in proportion to the amount of electoral support they receive. As a result, even candidates with a small majority of votes gain policymaking authority. The more proportional the voting system is, the more power is distributed and the closer it comes to the common image of democracy. In a reasonably basic fashion, the size of the party system can be conceptualized along a majoritarian-consensus dimension. In two-party systems, for example, power is concentrated since there are only two dominant political parties in the legislature, and only these two parties have a realistic possibility of retaining power.

• The election system, the political party system, and the form of governance are all causally related. Majoritarian electoral systems are connected with small party systems, as we saw in our examination of Duverger's thesis in Chapter 14, but proportional voting systems are associated with huge party systems. As we saw in Chapter 12 when we looked at the process of forming a government, the size of the party system has an impact on the type of administration that emerges. Because concentrated party systems improve the possibility of a single party winning a legislative majority, single-party majority regimes are considerably more likely to develop when there are few political parties.

• If you believe that accountability is a critical feature of a democratic government, the evidence presented here suggests that you should favor majoritarian systems over consensus institutions. But does this imply that consensus-style democracies are failing because voters find it difficult to hold their governments accountable? No, we don't believe so. Accountability is crucial in the majoritarian concept of democracy, and it would be a major flaw if majoritarian democracies were unable to provide it. However, as previously said, accountability is not a priority in the consensus vision of democracy. As a result, it's unclear whether consensus-style democracies are failing if their populace is unable to hold their politicians accountable. This logic implies that we should evaluate majoritarian and consensus democracies using distinct criteria, because

16.2

• Identification of the government is a necessary but not sufficient requirement for mandates. Most people believe that for a government to claim that it has a mandate for its programs, it must also win a majority of the votes cast. How can a government claim to have a mandate if the policies it pursues are opposed by a majority of the electorate? The problem is that, while government identifiability is strong in majoritarian democracies, a single party winning more than 50% of the vote is extremely rare. Even though single-party majority regimes are common in majoritarian democracies, these governments usually have "manufactured majorities." A manufactured majority refers to a situation in which a party wins a majority of the votes but does not receive a majority of the ballot cast.

• Another factor to evaluate is whether a government, even if it can legally claim to have gained a mandate, has the ability to carry it out. It will be impossible for the government to achieve its mandate if power is distributed, as it is in consensus democracies. Veto institutions, such as bicameralism or federalism, for example, may prevent governments from implementing their policy platforms. As a result, even if a government with a high level of identifiability were to win power in a consensus democracy, it is unclear whether it would be able to carry out its campaign promises because other actors have the potential to influence or obstruct legislation. Such issues with implementing the government's desired agenda are lessened in a majoritarian democracy.

• Let's start with receptivity. Both the majoritarian and consensual conceptions of democracy place a premium on responsiveness. The way responsiveness is conceptualized, on the other hand, differs significantly between the two democratic views. Remember that power is supposed to be concentrated in the hands of the majority in the majoritarian worldview. This means that a party should not be able to control policymaking until it has received 50% of the vote. In effect, a party that receives less than 50% of the vote should have no policymaking power, but a party that receives more than 50% of the vote should have all policymaking power.

• What percentage of the time do majoritarian and proportional democracies come close to their respective standards of democratic responsiveness? Most administrations in majoritarian democracies are single-party majority governments that dominate the policymaking process, in keeping with the majoritarian ideal of democratic responsiveness. The issue is that, as we saw previously, many of these single-party majority regimes do not truly win a majority of votes. As a result, all we can really say is that in majoritarian democracies, the party with the most votes nearly invariably forms the government and controls the levers of power.

16.3

• In some ways, consensus democracies come near to their ideals on responsiveness, but not in others. On the one hand, the fact that consensus democracies use proportional electoral systems means that the number of votes a party receives at election time tends to be closely related to the percentage of legislative seats it receives. The convoluted nature of the government formation process, on the other hand, means that there is only a shaky link between a party's proportion of seats (and votes) won and its share of government power.

• Congruence is a static measure of representation, whereas responsiveness is a dynamic measure of representation. Congruence is an important feature to cultivate for democratic theorists of all stripes—democratic governments and legislatures are meant to reflect the desires of their citizens. 16 Consider a single citizen and a single representative as the simplest example of congruence. In this case, congruence refers to the proximity or absolute distance between the citizen's and representatives' ideological positions. The higher the amount of congruence, the closer the representative is to the citizen's ideological standpoint. Most comparative studies, on the other hand, focus on how well governments align with citizens' preferences.

• Shifting the attention from the government to the legislature and asking how closely the legislature as a collectivity represents the ideological positions of the citizens is a slightly different method to approach the subject of congruence. Is there, for example, a Communist Party that controls 10% of parliamentary seats if 10% of the people favor Communist policies, and so on? Consensus democracies, but not majoritarian democracies, strive for a legislative that is a small representation of society as a whole, as we saw before. The resemblance between the distributions of citizen and representative preferences is one simple way to comprehend this form of ideological congruence—the larger the similarity between the two distributions of preferences, the higher the amount of congruence.

• We have just discussed the ideal varieties of majoritarian and consensus democracies in this part. A few countries, on the other hand, use a blend of majoritarian and consensus-based institutions. The option between parliamentarians and presidential is the most common institutional deviation from pure majoritarian and consensus models of democracy. Some democracies with essentially majoritarian institutions, for example, are presidential. The contrary is also true, as evidenced by the Belgian case mentioned previously. Even while parliamentarianism is the more majoritarian of the two regime types, it is not uncommon for countries with large consensus institutions to be parliamentary rather than presidential.

16.4

• Wagner's law is frequently taken to suggest that as a country's wealth grows, so does its government size. Wagner's law appears to be compatible with the facts in the broadest sense—as European countries became wealthier and more industrialized, the government's role in the economy grew as predicted. For example, we show in Figure 16.5 that there was an upward trend in overall public fiscal activity among OECD nations during the postwar period, which is widely regarded as a period of economic expansion and increased industrialization.

• What could be the cause of this disparity in fiscal action between countries? One improvement over Wagner's law that has been proposed stresses the disagreements that emerge between citizens over budgetary policy. Remember from our examination of the Meltzer-Richard model in Chapter 9 that there are excellent grounds to expect that citizens' views on fiscal policy will differ systematically (Meltzer and Richard 1981). Consider what would happen in a hypothetical world where the government taxed every person at the same rate (0 t 1) and then delivered all tax funds to every citizen in the form of an equal subsidy (s).

• If we assume, for the sake of illustration, that the government budget must balance over the medium term (that is, that total subsidy paid to citizens must equal total taxes collected from citizens), then some citizens will be net recipients and others will be net contributors to the government's tax and transfer system. For a given tax rate and subsidy size, we depict the tax bill paid and the subsidy received by citizens at various income levels in Figure 16.6. The citizen earning slightly more than $20,000, which is the average income in our hypothetical economy, is unconcerned about the tax and transfer regime because her tax payment is exactly equal to the government subsidy she receives. As you can see, the Meltzer-Richard model aids us in gaining a better understanding of the cross-national variation in total fiscal policy activity—total fiscal policy activity rises as income inequality rises in a country. However, the Meltzer-Richard model, like Wagner's rule, provides an inadequate explanation. Although there is a growing consensus that voter preferences for fiscal policy are likely to be linked to income levels, it is critical to remember that these preferences only influence policy after they have been filtered via political institutions.