Institutional perspectives on democracy and federalism : some comments on Argentina and Australia

Abstract

Abstract: Citizens in stable democracies value democracy and take costly actions to defend its institutions. The design of optimal political institutions and a governance structure becomes important and the rule of law is a central feature of limited government. Inter temporal commitment of government is crucial and successful democracies satisfy the limit condition. There is a coordination dilemma about the appropriate limits on the state. Therefore, an alternative strategy is to initiate democracy at the local level, since federal decentralization of authority places limits on the center. This paper analyses democracy, democratic stability and the role of political parties in Argentina and Australia from 1880 to 1940s. The states’ ability to coordinate is critical to confront the central government opportunism. The experience of Australia and Argentina reveals that different institutional environments have consequences for social consensus and collective action. The paper describes the evolution of federalism in both countries, in particular focusing in the imposition of income tax.