Christian H.C.A. Henning
Political Foundation of Economically Inefficient Public Policies: The Case of the Common European Agricultural Policy

Mannheimer Zentrum für Europäische Sozialforschung: Arbeitspapiere; 57
ISSN: 1437-8574

The paper offers a rational explanation for the notorious inefficient farm support policies within the EU with an optimization model of legislative behavior and legislative institutions. It is argued that inefficient agricultural policies can be rationally explained if it is assumed that legislative decision making is determined by informal norms derived in the shadow of formal institutional rules. First, maximization of political support implies that different institutional actors, i.e. national members of the Council, Commissioners and relevant actors of the European Parliament, do prefer different levels of subsidization for the different national farm sectors. Second, according to the applied specific decision norm legislators’ preferred policy positions are aggregated to a specific Common Agricultural Policy. In the formal model informal norms correspond to a specific organization of political exchange, where on a macro level legislators exchange political rights to control policies in specific policy domains, and on a micro level within a policy domain network political control rights are exchanged over specific policy dimensions. Beside the importance of the “principle of ministry government”, that is political control rights over agricultural policies are generally obtained by actors that are politically strongly related to the farm sector, the model emphasizes the impact (1) of external effects of political exchange and (2) of the principle of financial solidarity on the efficiency of CAP. Since the foundation of the EU norms have been changed from less efficient norms, i.e. the Luxembourg Compromise corresponding to Weingast’s norm of a universal coalition, to more efficient norms reflecting qualified majority voting within the Council. Observed changes of norms are interpreted as legislators choosing the rules of the game maximizing their expected benefits, where the enlargement of the EU is identified as a main factor forcing legislators uniquely to choose new norms.