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4161. Resilience or Relocation? Expectations and Reality in the City of London since the Brexit Referendum

Author:
Manolis Kalaitzake
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The fate of British finance following the Brexit referendum revolves around the “resilience or relocation” debate: will the City of London continue to thrive as the world’s leading financial centre, or will the bulk of its activity move to rival hubs after departure from EU trading arrangements? Despite extensive commentary, there remains no systematic analysis of this question since the Leave vote. This paper addresses that lacuna by evaluating the empirical evidence concerning jobs, investments, and share of key trading markets (between June 2016 and May 2020). Contrary to widely held expectations, the evidence suggests that the City has been remarkably resilient. Brexit has had no significant impact on jobs and London has consolidated its position as the chief location for financial FDI, FinTech funding, and attracting new firms. Most unexpectedly, the City has increased its dominance in major infrastructure markets such as (euro-denominated) clearing, derivatives, and foreign exchange – although it has lost out in the handling of European repurchase agreements. Based upon this evidence, the paper argues that the UK’s negotiating position is stronger than typically recognised, and outlines the competitive ramifications for both the UK and EU financial sector.
Topic:
European Union, Brexit, Resilience, Financial Services, and Relocation
Political Geography:
United Kingdom, Europe, and London

4162. The Political Economy of Industrial Policy in the European Union

Author:
Fabio Bulfone
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The Great Recession renewed calls for a return of state activism in support of the European economy. The widespread nationalization of ailing companies and the growing activism of national development banks led many to celebrate the reappearance of industrial policy. By reviewing the evolution of the goals, protagonists, and policy instruments of industrial policy since the postwar period, this paper shows how state intervention never ceased to be a crucial engine of growth across the EU. It argues that the decline of the Fordist wage-led production regime marked a turning point in the political economy of industrial policy with the transition from inward-looking to open-market forms of state intervention. The main features of open-market industrial policy are then discussed referring to the cases of the internationalization of national champions in public service sectors and the proliferation across the EU of industrial clusters. Finally, the paper reviews postcrisis instances of state intervention and highlights how, rather than breaking with past tendencies, the Great Recession further accelerated the shift towards open-market industrial policy.
Topic:
Development, Industrial Policy, European Union, Capitalism, Regional Integration, and Banks
Political Geography:
Europe and Germany

4163. Is the Euro up for Grabs? Evidence from a Survey Experiment

Author:
Lucio Baccaro, Bjorn Bremer, and Erik Neimanns
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
The COVID-19 pandemic may lead to a resurgence of the euro crisis. In this context, Italy seems particularly vulnerable: support for the euro is lower than in most other eurozone countries, and a possible exit could have serious consequences for the common currency. Based on a novel survey experiment, this paper shows that the pro-euro coalition is fragile in Italy and preferences are malleable. They are heavily dependent on the perceived costs of continued membership, as a majority of Italians would opt for Italexit rather than accepting a bailout plan requiring the implementation of austerity policies. Individuals who feel they have not benefited from the euro are most likely to support exit when faced with the prospect of austerity. This suggests that, differently from Greece, where voters were determined to remain in the euro at all costs, the pro-euro coalition may crumble if Italy is exposed to harsh conditionality.
Topic:
Public Opinion, Crisis Management, Voting, Survey, COVID-19, and Euro
Political Geography:
Europe and Italy

4164. Causal Mechanism and Explanation in Social Science

Author:
Renate Mayntz
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
In the social sciences, the development of a specific social event or structure is often explained by a statistical correlation between an independent variable and a variable assumed to be dependent upon it. This mode of explanation is contested by a methodology of causal reconstruction that operates with the concept of mechanisms. A mechanism is a process in which a set of linked steps leads from initial conditions to an outcome or effect. Mechanisms are general concepts, subjecting individual cases to a general category. Except for the literature dealing specifically with the concept, the term “mechanism” is often used without definition of its substantive content; there is no agreement with respect to the unique or plural character of the initial conditions, nor to the structure of the causal path leading to a specific outcome. Nevertheless, mechanisms have played a crucial role in detailed causal analysis of complex historical events, such as the financial crisis of 2008 and German unification of 1989.
Topic:
Financial Crisis, Reconstruction, Unification, Social Science, and Mechanism
Political Geography:
Europe, Germany, and United States of America

4165. Housing and Voting in Germany: Multi-Level Evidence for the Association between House Prices and Housing Tenure and Party Outcomes, 1980–2017

Author:
Paul Beckmann, Barbara Fulda, and Sebastian Kohl
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
Traditional predictors of election outcomes in Germany are increasingly losing their explanatory power. Rather than new cultural divides, this paper introduces the idea of housing cleavages, i.e., homeownership versus tenancy and high-price versus low-price areas, drawing on macro data for electoral districts and urban neighborhoods from the last three elections (2009–2017) in combination with Immoscout24 ad price data and microdata from the ALLBUS survey (1980–2016). Although, due to its low homeownership rate and conservative house price development, Germany represents a least-likely case for housing to be of importance, we find housing effects beyond traditional predictors. Generally, we find that high house prices, house price increases, and homeownership are positively associated with voting for center-right parties and voter turnout, while social tenancy is associated with votes for the left, but these effects weaken over time due to embourgeoisement effects. Beyond this expected left-right distinction between tenants and wealthier homeowners, we also find outliers along two other dimensions. First, there are center-periphery effects that housing can better capture than simple geographical divisions; second, house prices contain a populist dimension, for example when skyrocketing rents increase votes for the urban left or regions where house prices lag behind benefit the AfD. The paper argues against the more causal self-interest and socialization theories of the influence of housing on voting and instead suggests considering housing as an important socioeconomic proxy to explain political outcomes.
Topic:
Politics, Elections, Voting, and Homeownership
Political Geography:
Europe and Germany

4166. Ownership in the Electricity Market: Property, the Firm, and the Climate Crisis

Author:
Gregory Ferguson-Cradler
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
Electricity is a key area in climate mitigation. The sector needs to significantly expand while transitioning to renewable production, all in an extremely short timeframe. This paper focuses on ownership and control in the electricity sector in an era of climate change. Borrowing substantially from classical American Institutionalism, heterodox theories and histories of the firm, and legal institutionalism, this paper discusses the historically constituted nature of the categories of property, capital, and the firm and how these literatures provide helpful frameworks for analyzing the recent history and possible futures of electricity sectors. A short discussion of the recent history of the German electricity sector, particularly the large utility RWE, will briefly illustrate the approach. Climate change mitigation will require revised notions of ownership and an updated theory of the firm, property, and corporate governance for the Anthropocene.
Topic:
Climate Change, Electricity, Property, Anthropocene, and Energy Transition
Political Geography:
Europe, Germany, and Global Focus

4167. Who Are These Bond Vigilantes Anyway? The Political Economy of Sovereign Debt Ownership in the Eurozone

Author:
Tobias Arbogast
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
This paper examines the ownership structure of eurozone public debt and the distributional consequences thereof. Through both a comparative perspective and an explorative case study of Italy, this paper asks two research questions. Firstly, it asks who holds government debt in Spain, France, Germany, and Italy. I focus in on Italy to provide, to the author’s knowledge, the first highly disaggregated view of the holding structure of public debt. Secondly, for Italy I study distributional effects by examining who benefits from the interest received on government debt. This is accomplished through an investigation of the various stakeholders associated with public debt. Results indicate that most of the public debt is held by private and public financial institutions but rarely directly by households. Both direct and indirect beneficiaries of the interest received on government bonds in Italy turn out to be largely wealthy households, reflecting the unequal ownership of wealth more generally. However, prominent public financial institutions are also significant beneficiaries, which likely ameliorates a possible regressive distributional effect of the public debt holding structure. The paper discusses the results with an eye on inequality and contributes to further study of the political economy of public debt.
Topic:
European Union, Inequality, Public Debt, Bonds, Public Finance, and Ownership
Political Geography:
Europe

4168. Normative Social Influence on Meat Consumption

Author:
Laura Einhorn
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
Studies from various disciplines show that including more meat-free dishes in our diets benefits our environment and our health while also promoting animal welfare. However, little is known about what encourages the adoption of more meat-free meal choices into our everyday diets. This paper focuses on the role of normative social influence on food choice as a potential answer to this question. In a real-world setting and based on the combination of a field and a survey experiment in seven German university dining halls, I analyze the impact of social norms on meat consumption in a single meal choice situation. I distinguish between descriptive and injunctive norms as well as between remote and direct norms. In a first step, descriptive and injunctive remote norm message interventions promoting a vegetarian diet were implemented. In a second step, the influence of direct social norms, i.e., the influence of vegetarian peers on non-vegetarians’ meal choice, was assessed. I find that neither type of remote eating norm influences food choice, while direct normative influence leads to convergence towards vegetarian meal choices in a university setting. I summarize the implications of these findings, discuss their limitations, and point to directions for future research.
Topic:
Food, Norms, Meat Industry, Vegetarianism, and Social Influence
Political Geography:
Europe and Germany

4169. Factsheet: Freedom and Direct Democracy (Svoboda a přímá demokracie, SPD)

Author:
Bridge Initiative Team
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
The Bridge Initiative, Georgetown University
Abstract:
Freedom and Direct Democracy (Svoboda a přímá demokracie, or SPD) is a far-right political party in the Czech Republic that was established in 2015. Founded as an anti-elitist and anti-Muslim populist party, SPD cooperates with other far-right and anti-Muslim European political parties and is a member of the Identity and Democracy (I&D) group in the European Parliament.
Topic:
Populism, Far Right, Political Parties, European Parliament, Muslims, and Svoboda a Přímá Demokracie (SPD)
Political Geography:
Europe and Czech Republic

4170. Factsheet: The League (Lega, Lega Nord, The Northern League)

Author:
Bridge Initiative Team
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
The Bridge Initiative, Georgetown University
Abstract:
Northern League (Lega Nord) is a far-right political party in Italy that rebranded itself as the League (Lega) in the run-up to the 2018 general election. Umberto Bossi established the party in 1991 as a federation of six regional parties in north and north-central Italy and it was led by Roberto Maroni until 2013. Under the leadership of Matteo Salvini, the League amplified anti-immigrant and anti-Muslim sentiments. In southern Italy, the League recently established a sister party named Us with Salvini and ran for election under the title “Salvini Premier.” In the 2018 general election, the League was the third-largest party and formed a coalition with the Five Star Movement (M5S) and the Democratic Party (PD). After the 2019 European Parliament election, it became the largest party and co-founded the the anti-Muslim and far-right parliamentary group Identity and Democracy.
Topic:
Islamophobia, Far Right, Political Parties, and Northern League (Lega Nord)
Political Geography:
Europe and Italy