Abstract
The objective of this paper is to explore the relationship between speech and action in the budgetary process of provincial governments in Canada through a power approach. Using a three-dimensional approach to the concept of power, I ask the following question: Does the fiscal conservatism (liberalism) expressed by politicians in their policy speeches correspond to the fiscal discipline (indiscipline) they manifest when they improve (deteriorate) their budget balance? In other words, is there policy consonance or dissonance in the fiscal policy of the governments of Alberta, British Columbia, Ontario, and Québec, and under which conditions is dissonance useful for the general welfare? I proceed in two steps. First, I propose a conceptualization of the relationship between speech and action based on an analysis of power relationships in the policy process, which allows me to identify the conditions of a benevolent dissonance in fiscal policy. Second, I propose an empirical test of the model measuring fiscal discipline in action and fiscal conservatism in speeches and show that indeed provincial premiers often lack transparency but that this dissonance is very often beneficial for reaching the goal of properly financing public services.
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- 1.
For a comprehensive review of the history of the concept of power, see Zimmerling 2005. For a reader in which many classical contributions are gathered, see Haugaard 2002. For more recent applications of the concept of power to political economic problems, see the most interesting collection edited by Braham and Steffen (2008).
- 2.
For the remaining of this text I will concentrate on social power. Whenever I will use the term “power,” I will mean “social power,” unless otherwise mentioned.
- 3.
It is clear that, as I suggested above, positive values of a budget balance indicate growing use of coercion. But negative values (a deficit) do not necessarily indicate an absence of coercion. Since a budget balance is the difference between revenue and spending, the inferior limit of a theoretical scale comprising every possible value of a budget balance (as a percentage of total revenue) would be –100, when there is no revenue from taxation and when all spending is financed through borrowing (or through the sale of goods and services). This would be the case of a government not using any coercion in collecting its revenue, only exchange. Thus, from –100 to 0 on our theoretical scale, the use of coercion grows. What would the upper limit of this scale be? I propose 100 percent of GDP or, if total government revenue equal 25 percent of GDP as is the case of the provincial government of Quebec, 400 percent of total revenue, hence my +400%. In fact, we have two scales; one, measuring the intensity of the use of coercion, goes from –100 to +400; the other, measuring the intensity of the use of exchange, ranges from –100 (maximum) to the actual percentage of state revenue raised through the sale of goods and services (around 10% for the government of Quebec in 2000.
- 4.
- 5.
For an empirical test of this proposition, see Imbeau 2006.
- 6.
Because there is not always an inaugural speech every calendar year in every province and because some of the speeches could not be found, we could get results for only 29 out of the 31 years of the period for Alberta, 31 for British Columbia, 23 for Quebec and 17 for Ontario.
- 7.
Actually, I transformed the two measures into Z-scores and I then subtracted the measure of conservatism from the measure of discipline [ACTION – SPEECH]. This difference is reported in Fig. 10.6. Higher values, positive or negative indicate a high degree of dissonance. Values close to zero indicate consonance.
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Acknowledgments
Earlier versions of this paper were presented at the annual meeting of the Association for Budgeting and Financial Management (Washington, D.C., in November 2007) and at the annual meeting of the European Public Choice Association (Jena, Germany, March 1008). I am thankful to Albert Breton, Édouard Imbeau, Grégoire Rota Graziosi, and to the discussants and participants of the workshop for their useful comments on the previous versions of this paper. I acknowledge the financial support of the Social Sciences and Humanities Research Council of Canada. The usual caveat applies.
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Imbeau, L.M. (2009). Dissonance in Fiscal Policy: A Power Approach. In: Imbeau, L. (eds) Do They Walk Like They Talk?. Studies in Public Choice, vol 15. Springer, New York, NY. https://doi.org/10.1007/978-0-387-89672-4_10
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