Paper

Monday, March 27th

Justin Melnick (New York University)

Title: Why Exit from International Agreements? A Domestic Perspective

Abstract:

Across developed democracies, electoral candidates increasingly promote platforms rejecting international cooperation or are willing to withdraw from international agreements. Voters too seem increasingly willing to support such candidates. What explains this backlash, and withdrawal from international agreements in particular? I argue that high costs of policymaking, or policy incompetence, lead to a status quo bias when designing transfers, generating redistributive frictions. Rather than maintain the globalized status quo with insufficient levels of redistribution, incompetent leaders can propose exit. Exit emerges in equilibrium because incompetent candidates cannot credibly promise to offset the damages incurred by globalization losers with redistributive policy. The inequality between globalization “winners” and “losers” serves as an important moderating variable: compensation becomes politically infeasible as inequality grows because greater redistribution from winners to losers is needed. Rising inequality increases the likelihood of exit and subsequently makes redistribution from winners to losers more politically costly.