Fighting climate change, building the infrastructure for tomorrow’s economy or adapting public finances to the challenges that present an aging society all involve making sacrifices in the present to build a more prosperous future. This dissertation reveals that such choices are uncommon: policies covering large and influential constituencies and those offering benefits in the short term are prioritized when governments implement austerity packages, while long-term investments are cutback (chapter 3).
The dissertation, titled The politics of public finance in an era of permanent austerity is about budgetary choices under constraints. After showing that government’s fiscal room to maneuver is decreasing over time, as tax revenues fail to match rising expenditure demands, it asks what policies are more likely to be prioritized under such a constrained situation. Three questions deriving from the finding that long-term investments are likely to be cutback under austerity are then addressed in this dissertation 1) Does politics and institutions mediate the impact of austerity on long-term investments? 2) What is the impact of austerity on politics? 3) Are government’s choices reflecting public opinion preferences?
In summary, the dissertation reveals that government partisanship marginally affects policy choices under austerity (chapter 4). However, the overall pattern of the prioritization of visible, short-term oriented spending, is less mediated by partisanship than by institutions and electoral situations (chapter 5). Governments are more likely to prioritize long-term investments when they evolve in power-sharing institutions and when electoral competitiveness is low.
To answer the second question, the dissertation investigates the impact of austerity on government approval. It finds that fiscal consolidations based on spending cuts have a negative effect on government approval, especially during recessions, while the effect of tax increase is insignificant (chapter 6). Finally, the last chapter (7) identifies which constituencies are willing to pay higher taxes and finds that a high socio-economic status, along with a left-wing ideology, are necessary conditions to accept a higher tax burden. The chapter argues that willingness to pay taxes contribute to tensions within the typical center-left coalitions.
Section 1. Structural pressures meet immovable objects: concepts and theoretical foundations
1. Theoretical foundations and empirical puzzles
2. Investment, consumption and permanent austerity in advanced capitalism
Section 2. The impact of austerity on policy choices
3. Austerity and the path of least resistance: how fiscal consolidations crowd out long-term investments
4. Partisan priorities under fiscal constraints in Canadian provinces.
5. The politics of long-term investments.
Section 3. The impact of austerity on politics
6. Paying the price of austerity? How fiscal consolidations reduce government approval
7. Political coalitions and willingness to pay taxes
8. Conclusion: austerity and policy trade-offs in advanced capitalism