Public Finance and the Extent of the Voting Franchise: A Survey of Historical Cases and New Evidence from Early U.S. States
Horpedahl, Jeremy, Public Finance and Management
How does the extent of the voting franchise impact public finance in a democracy? In this paper I discuss that question from theoretical and historical perspectives. There is no simple relationship between the extent of the voting franchise and public finance, either in the total size of government spending or the allocation of that spending among different functions. In-stead, franchise extensions are the product of the interaction of various groups in the polity, and the process by which the franchise extension occurs is a crucial factor in determining the government budget. Evidence from several historical periods is discussed, as well as new evi-dence from the U.S. states in the early Nineteenth Century.
Does the extent of the voting franchise impact public finance? In an era of universal adult suffrage, the question seems relatively unimportant. However, throughout most of human history, the reins of government were confined to a small number of individuals. Even as democratic institutions began to slowly emerge in the West and then the rest of the world, universal suffrage did not become a dominant ideology or a reality until the twentieth century. As a mat-ter of historical inquiry, the question of the voting franchise and public finance is thus very important. It also presents a fascinating theoretical puzzle, and may give us some information about the differences in spending across nations today.
The first section of the paper reviews several existing theories on the con-nection between the extent of the voting franchise and public finance. These theories are critically examined through an emergent lens, examining the whether they consider the process of franchise extension or treat the govern-ment budget as an automatic consequence the extent of the franchise. Another section surveys several previous studies of different voting franchise configu-rations in U.S., European, and Latin American history. In addition to these ex-isting studies, I present original research on a neglected period of time in this literature: the period prior to the Civil War in the United States. This evidence includes quantitative data on state government spending, however the data is not systematic enough to perform econometric analysis. Finally, I offer a brief discussion of the relevance of this topic for modern public finance. In a time when universal suffrage is both the stated ideal and current practice, what val-ue is added by looking at past configurations?
2. THEORETICAL MODELS
Meltzer and Richard (1981, 1983) use the median voter theorem to provide a simple model explaining the growth of government and its relationship to the voting franchise. When the income of the median voter is less than average income, the state will be used to redistribute income for high to low income earners. An expansion of the franchise alters the decisive voter, and often the new voter will have income below the mean income. The distribution of in-come, as expressed in the ratio of mean to median income, is a key variable in their results, and changes in income redistribution follow almost mechanically from changes in this ratio. Many of the historical studies discussed in the next section are following in the tradition or testing the conclusions of the Meltzer-Richard model.
Lizzeri and Persico (2004) provide an alternative theoretical model, where franchise expansions can increase spending on public goods, rather than dis-tribution. Their different conclusion is a result of analyzing the process by which the franchise extension takes place. If a majority of the currently en-franchised voters want to move away from special interest politics and to-wards public goods provision, they will vote to expand the voting franchise. The expansion changes incentives for politicians, who must now appeal to a broader set of voters and provide goods that have benefits for the public at large, rather than to particular interests. …