The Nascent Societies and Governments of Germany's Unitary Federalism

Abstract

Is German federalism a function of its society or of its institutions? Understood as co-ordinating mechanisms, federal institutions are functionally predicated on generating or sustaining equilibria. But what impact do changes in independent social effects have on institutional stability? Either these equilibria are highly elastic; or there comes a tipping point of social change beyond which equilibria become increasingly costly and difficult to sustain, let alone generate. A conflagration of population aging, immigration and urbanization as well as post-industrial economic transformation has been spawning unprecedented horizontal differentiation across federations. Yet, federal institutional structures have remained largely unchanged. This observation has important implications for theorizing about the relationship between structure and institutional change: Rather than taking societal change as a harbinger of things to come, federal institutions are actually proving themselves as agents of continuity. This article examines the Federal Republic of Germany as a crucial case study where demographic and economic differentiation across the federal territory is especially pronounced. While exposing sociological reductionism in federal studies as problematic, the premise of this article is that—institutional continuity in light of societal change notwithstanding—there are good empirical reasons why the German federal system cannot be taken for granted, at least not in its current form.

Keywords:

• Demography
• federalism
• Germany
• fiscal equalization
• public opinion

Notes

See, for example, Kincaid and Cole (2011); Fafard et al. (2010); Kincaid and Tarr (2005).

Elazar insisted repeatedly that federal systems cannot have a hegemonic centre and a subordinate periphery. Only unitary states, such as the UK, which devolved competencies to constituent units, such as Scotland, are characterized by this relationship. In select federations, such as Malaysia (until recently) and Austria, we can, however, find almost analogous relations (cf. Erk, 2004).

The adjectives ‘old’ and ‘new’ are qualified. However historically dubious, the distinction is commonplace in vernacular parlance.

Calculations by the German Institute for Economic Research (DIW Berlin) in Wochenbericht, Vol.76, No.4, p.57, table 1.

The city-states of Hamburg and Bremen may be highly indebted—but they are also disproportionately productive; so, their debt-to-GDP ratio is still lower than that found in the new Länder (Bundesministerium für Wirtschaft und Technologie, 2009).

For an overview about this discussion see Blankart (2007). Another way to look at this problem is as a soft-budget constraint where subnational federal units are prone to fiscal irresponsibility when the institutional fiscal constraints are not ‘hard’—when spendthrift subnational governments can expand expenditures without facing the full cost because the federal level ends up having to bail out lower levels (cf. Rodden, 2003).

For an overview of this debate, see Scheller and Schmid (2008).

Previous surveys—if not as systematic and comprehensive—on this topic can be found in other sources, including Noelle-Neumann and Köcher (1997; 2002; 2009), as well as in Bertelsmann Foundation/forsa (2003).

For a concise introduction to German federalism and its fiscal implications, see Feld and von Hagen (2007).

Centralization refers to a modus operandi whereby regulation is made centrally but in co-ordination with the Länder. See, for instance, Hesse (1962). By contrast, unitarization refers to horizontal co-ordination among Länder or vertical co-ordination between the federal government and the Länder (see Abromeit, 1992).