Sensible thoughts on the grand coalition

Thanks to one of the commenters at Chris Lawrence’s post to which I have now linked three (!) times already (sorry, Chris, you don’t get a fourth just yet), I found some very sensible comments on the grand coalition possibility in Germany, and more generally on proportional representation.

Regarding PR, Tyler Cowen at Marginal Revolution offers a public-choice perspective on relations between a major and a minor party in a typical coalition government:

The minor party will promise to support the major party in forming a coalition, if the major party makes one or two key policy concessions. The distribution of gains will depend on bargaining power. Will the major party have other possible coalition allies? Does the minor party crave power, or would it rather stake out a purist stance on policy, and risk being left outside the coalition? Note that once the coalition is in place the minor party often has a difficult time defecting. Minor party officials come to enjoy the perks of power. Their threats to bring down the coalition often are not credible.

This is closely related to the point I was trying to make earlier this morning: that those who view PR as creating a series of parties that respond only to their true believers really miss the point of how multi-party competition works in practice.

Now, on the grand coalition possibility in Germany, Tyler has the following sensible bottom line:

Two parties in a Grand Coalition will reap low gains from trade. Neither party will much mind if the Grand Coalition collapses. Stability is “knife-edge.” But the parties therefore might be willing to take more chances. What do they have to lose? A Grand Coalition does not mean certain policy gridlock. [my emphasis]

Indeed, a grand coalition would not be so bad at all, and the alarmists in the media and elsewhere should take a nice deep breath and engage in some rational analysis.

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