Book Project

hollowing out the state

My book studies a puzzling phenomenon: in countries as different as India and the United States, elites have deliberately weakened bureaucratic capacity at specific moments in history. I argue that bureaucratic weakening occurs as a backlash to democratization in order to limit future redistributive taxation.

The phenomenon of institutional weakening is not new to comparative politics scholars. Research like Brinks, Levitsky and Murillo’s recent volume on Latin America illuminates these dynamics in developing world contexts. But the sudden emergence of this phenomena in contexts like the US—long-standing democracies with robust governing capacity—raises interesting questions.

Research on bureaucratic capacity in the advanced industrial countries casts state-building as a slow moving and historically contingent process that occurred over centuries in response to warunderlying resource endowments, and through strategic choices made at pivotal moments.  A state’s ability to raise taxes plays a central role in this literature. This is because in order to be able to tax, states need to know where you live, how much you make, and be able to shake you down. The ability to extract creates a bureaucratic infrastructure that the state can deploy for other purposes. Importantly, in these places, the advent of strong bureaucratic capacity pre-dated mass electoral politics, and continues to be something we take for granted every day

Given the importance of state capacity to effective governing, it is then puzzling that elites might undertake steps to weaken it. Where and why might we observe a “hollowing out of the state?”

I find that strategies to weaken capacity were more successful in places where elites could build a cross-class coalition against taxation. In places with high social status inequality – due to the legacy of the caste system in India or slavery in the United States – “high-status” individuals value their rank in the social hierarchy. When high-status groups face challenges to their rank, either through an expansion of the franchise to low-status groups or through government policies aimed at equalizing social and political rights, status identity gains greater salience than class identity. The threat of social integration and not just economic redistribution makes poor voters from high-status groups more susceptible to joining anti-tax coalitions. Such coalitions lead to a ”hollowing out of the state.”

My book’s novelty lies in connecting identity politics to institutional decline, and its findings highlight the importance of studying bureaucratic capacity rather than fiscal policy during a democratic transition.

In the main theoretical chapter I describe what hollowing out the state looks like. I shift the analytical focus of the studies of state capacity from state-building to state-wakening and discuss how state-capacity can be weakened deliberately and rapidly. I distinguish hollowing out from other types of institutional decline. I offer a theory of where we are likely to observe hollowing out. I argue that an identity cleavage called social-status mediates the relationship between income and preferences for state capacity. In societies with hereditary ranked distinctions between groups — with some individuals ranked as “high-status” and others as “low-status” at birth —  the rise of lower-status group in politics not only portends a redistribution of income, but also a desegregation of public goods and spaces. Facing the specter of desegregation, wealthy upper-status elites are able to persuade poor high-status members into anti-redistribution coalitions. Such coalitions enable elites to weaken state capacity in order to prevent future redistributive taxation.

Studying institutional weakening is a challenge as places with historically weak institutions likely suffer from weak institutions in the present day. In order to demonstrate hollowing out in action, I study this phenomenon from a historical perspective. In the first empirical chapter, I demonstrate how social-status shaped cross-class coalitions by studying taxation and state capacity in colonial Indian provinces around a quasi-exogenous historical moment– India’s first franchise expansion. I used Colonial era records to develop novel micro-level measures of land tax collection, tax avoidance, and the size of the tax bureaucracy. I find that tax collections as well as tax capacity declined after franchise expansion in the districts with higher levels of inter-caste status inequality. Importantly, status-inequality between castes rather than land inequality or ethnic fragmentation explained the decline in tax institutions.

In the second empirical chapter, I test the external validity of my argument beyond the Indian case. I examine the historical legacies of slavery and Reconstruction on taxation at the county-level in the American South (using data collected for a co-authored paper with Steven White). In order to measure taxation and tax capacity, we use census data from 1860-1880 to develop county-level measures of tax collection and age-heaping. I find that the end of the Civil War was associated with an increase in taxation under an occupying North in counties where there were greater numbers of emancipated former slaves. However, after Reconstruction ended, the same counties were more likely to see a weakening of taxes as white “Redeemers” attempted to roll back institutional changes. Moreover, higher intrawhite economic inequality was associated with lower taxes and lower bureaucratic quality in the post-Reconstruction era in counties with more enslaved people and slaveholdings. These results suggest that Southern elites could successfully build cross-class coalitions against taxation in places where whites were more threatened by desegregation and sought to protect their racial status.

In the third empirical chapter, I use contemporary survey data and I show that both wealthy and poor upper castes exhibit more anti-redistributive views in places with greater historical caste-based status inequality. The chapter provides evidence for the claim that cross-class solidarities emerge in places where the status dominance of groups is threatened.

In a concluding theoretical chapter I attempt to define social-status, describe its salient features, and explain why identities such as class and ethnicity are insufficient for explaining politics in some contexts. I use examples across the world to show where it emerges, and how it comes to shape redistributive outcomes such as tax capacity, public good preferences, and vote choice.