Abstract
We study the opportunistic political budget cycle in the London Metropolitan Boroughs between 1902 and 1937 under two different suffrage regimes: taxpayer suffrage (1902–1914) and universal suffrage (1921–1937). We argue and find supporting evidence that the political budget cycle operates differently under the two types of suffrage. Taxpayer suffrage, where the right to vote and the obligation to pay local taxes are linked, encourages demands for retrenchment and the political budget cycle manifests itself in election year tax cuts and savings on administration costs. Universal suffrage, where all adult residents can vote irrespective of their taxpayer status, creates demands for productive public services and the political budget cycle manifests itself in election year hikes in capital spending and a reduction in current spending.
Highlights
Suffrage rules regulate who can vote and this, in turn, influences the interests served by elected politicians
Before we turn to the formal statistical analysis, we present some descriptive evidence on the nature of the opportunistic political budget cycle in London between 1902 and 1937
We find strong evidence of an opportunistic political budget cycle in both samples but the nature of the cycle is conditional on the suffrage rules
Summary
Suffrage rules regulate who can vote and this, in turn, influences the interests served by elected politicians. While today we associate democracy with equal and universal suffrage, historically the power to elect or appoint representatives was the privilege of narrow elites. Suffrage rules focussed on specific characteristics of the individual such as ownership of property, payment of taxes, residency and gender. The logic behind linking the right to vote to property holdings or tax payments can be traced back to mediaeval Britain and reflected the belief that it restricted the franchise to individuals with a longer-term interest in the welfare of the community, akin to the shareholders of corporations. Economic models in the tradition of Meltzer and Richard (1981) predict a straightforward positive link between demands for public goods and redistribution and extension of the franchise.
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