Exam 1 Comp Pol Econ ADRIAN AND AUSTIN

What is CPE?

Study of how society, history, politics, and economics interact across cases.

WWII's Impact

Postwar reconstruction, welfare state expansion, embedded liberalism.

Bretton Woods/Gold Standard

Fixed exchange rates, dollar centrality; collapsed in 1970s leading to floating rates.

2007-2008 GFC Impact

Global recession, deregulation exposed, state bailouts, austerity debates.

2016 and Austerity

Cuts after financial crisis, led to the rise of populism (Brexit, Trump, etc.).

Covid-19's Impact

Return of strong state intervention; supply chains & globalization tested.

Labour and the future of the British economy

Union decline, Brexit, austerity backlash → Labour seeks stability.

Ramen shops in Japan

Inflation + weak yen→ rising costs, limited ability to pass on to consumers.

Principal-Agent Problem (Voters/Politicians)

Voters (principals) can't fully monitor politicians (agents).

Logic of Markets

Efficiency via supply, demand, prices.

Logic of Governments

Stabilize, redistribute, fix market failures.

Market Failures requiring Government Interventions

Externalities, monopolies, public goods → lead to taxes, subsidies, regulation.

Government Failures

Corruption, inefficiency, capture, rent-seeking.

State Capacity

Ability to implement effective policy.

Rent-Seeking

Using politics for private gain without value creation.

Economic Voting and Principal-Agent Problems

Voters punish/reward incumbents for economy, but info gaps distort.

4 Core Aspects of CPE

Comparative analysis, theory building, institutional focus, historical context.

Comparative Analysis

Systematic comparison of countries/cases to explain outcomes.

Theory Building

Causal explanations of political-economic dynamics.

Greenhouse Gas Tax and European Union Policy

Carbon border tax to stop leakage and protect firms, but risks trade friction.

Labor Market

Interaction of supply/demand for work, shaped by institutions.

Three Levels of Unions

National, industry, and enterprise/company level bargaining.

Skilled vs Unskilled Labor and Unions

Skilled workers benefit more from unions than unskilled.

Unions and the Social Welfare State

Unions demand welfare; welfare reinforces unions.

Role and Benefits of Unions

Raise wages, protect jobs, expand welfare.

Unequal Benefits of Unions

Skilled/full-time benefit more than unskilled/part-time.

Decline of Unions Causes

Globalization, neoliberalism, employer pushback.

Ghent system

Union-run unemployment insurance → results in higher union density (Nordics).

Varieties of Capitalism (VoC)

Framework distinguishing LMEs (markets) and CMEs (coordination).

LME (Liberal Market Economy) characteristics

Market-driven, flexible labor, weak unions (e.g., US, UK).

CME (Coordinated Market Economy) characteristics

Coordinated bargaining, training, high unionization (e.g., Germany, Scandinavia).

Wage Determination Institutions

Systems for setting wages (markets vs bargaining).

Labor Market Policies

Rules on jobs, benefits, training, and protections.

Central Banks and Independence

Independent banks set monetary policy w/o political meddling.

Business Donations to Parties

Corporate funding shapes political agendas.

Presidential Executive

Fixed/separate executive (independent of legislature).

Parliamentary Executive

Fused/executive depends on legislature.

Types of Parliamentary Governments

Single-party majority, coalition, or minority.

Economic Effects of Executive Institutions

Affects stability, accountability, and fiscal policy.

Legislative Institutions

Shape lawmaking, representation, accountability.

Plurality/Majoritarian Electoral Systems

Winner-take-all decisive but less proportional.

Proportional Representation (PR) Electoral Systems

Leads to coalitions, proportional outcomes, and more redistribution.

Why Do Institutions Matter?

They shape incentives, distribution, and economic paths.

Economic Effects of Electoral Systems

PR= more welfare/redistribution; majoritarian = less.

Historical Institutionalism

Institutions evolve historically, constraining present choices.

Path Dependency

Past institutional choices constrain current/future options.

How Institutions Change?

Critical junctures, layering, drift, reforms.

Veto Players (Institutional)

Formal actors (courts, upper chambers) who block policy.

Veto Players (Partisan)

Coalition parties who can veto/block policies.

Institutions and Convergence Argument

Question of whether global pressures make institutions converge; debate is ongoing.

European Parliament and Business Contributions

Case of lobbying/business influence at supranational level.

Traditional Electoral Cycles

Governments spend pre-election, cut after elections.

Context - Electoral Cycles

Political/economic context changes cycle dynamics.

Debt Composition and Electoral Cycles

Type/structure of debt shapes election-cycle spending choices.

Strategic Timing and Austerity

Governments front-load or delay austerity based on elections.