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How do ideas shape national preferences? The Financial Transaction Tax in Ireland

Author

Listed:
  • Niamh Hardiman

    (UCD School of Politics and International Relations, and UCD Geary Institute for Public Policy)

  • Saliha Metinsoy

    (UCD School of Politics and International Relations, and UCD Geary Institute for Public Policy)

Abstract

European countries have been required to formulate a national preference in relation to the EU Financial Transaction Tax. The two leading approaches to explaining how the financial sector makes its views felt in the political process – the structural power of the financial services sector based on potential disinvestment, and its instrumental power arising from direct political lobbying – fall short of providing a comprehensive account. The missing link is how and why policy-makers might be willing to adopt the priorities of key sectors of the financial services industry. We outline how two levels of ideational power might be at work in shaping outcomes, using Ireland as a case study. We argue firstly that background systems of shared knowledge that are institutionalized in policy networks generated broad ideational convergence between the financial sector and policymakers over the priorities of industrial policy in general. Secondly, and against that backdrop, debate over specific policy choices can leave room for a wider range of disagreement and indeed political and ideational contestation. Irish policymakers proved responsive to industry interests in the case of the FTT, but not for the reasons normally given. This work seeks to link literatures in two fields of inquiry. It poses questions for liberal intergovernmentalism in suggesting that the translation of structurally grounded material interests into national policy preferences is far from automatic, and argues that this is mediated by ideational considerations that are often under-estimated. It also contributes to our understanding of how constructivist explanations of policy outcomes work in practice, through a detailed case study of how material and ideational interests interact.

Suggested Citation

  • Niamh Hardiman & Saliha Metinsoy, 2017. "How do ideas shape national preferences? The Financial Transaction Tax in Ireland," Working Papers 201710, Geary Institute, University College Dublin.
  • Handle: RePEc:ucd:wpaper:201710
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    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201710.pdf
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    References listed on IDEAS

    as
    1. Eleni Tsingou, 2015. "Club governance and the making of global financial rules," Review of International Political Economy, Taylor & Francis Journals, vol. 22(2), pages 225-256, April.
    2. Cornelia Woll, 2014. "Bank Rescue Schemes in Continental Europe: The Power of Collective Inaction," Post-Print hal-01045238, HAL.
    3. Culpepper, Pepper D., 2008. "The Politics of Common Knowledge: Ideas and Institutional Change in Wage Bargaining," International Organization, Cambridge University Press, vol. 62(01), pages 1-33, January.
    4. Culpepper Pepper D., 2015. "Structural power and political science in the post-crisis era," Business and Politics, De Gruyter, vol. 17(3), pages 391-409, October.
    5. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(03), pages 427-460, June.
    6. Pepper D. Culpepper & Raphael Reinke, 2014. "Structural Power and Bank Bailouts in the United Kingdom and the United States," Politics & Society, , vol. 42(4), pages 427-454, December.
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    9. Culpepper, Pepper D., 2015. "Structural power and political science in the post-crisis era," Business and Politics, Cambridge University Press, vol. 17(03), pages 391-409, October.
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    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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