Governance: An International Journal, Volume 25 Issue 1 January 2012

governance1.     Commentary
Does Governance Matter? CHARLES KENNY
2.     Introduction to Special Issue
A New Age of Uncertainty DAVID COEN and ALASDAIR ROBERTS
3.     Articles
Democracies and Deficits: Prospects for Fiscal Responsibility in Democratic Nations 

The financial crisis had significant implications for the fiscal positions of OECD. As nations seek to cope with the economic contraction, budget deficits and debt have risen to near record postwar levels. As the crisis in Europe and other advanced economies has deepened, fiscal consolidation will have to be coupled, and even preceded, by actions to jump-start crippled economies. Nonetheless, when fiscal consolidation becomes necessary, nations that procrastinate by waiting
for a crisis to provide cover for the politically hard choices will pay a steep price indeed both economically and politically. Many in the academic and policy community have raised questions about whether advanced democracies have the political wherewithal to respond to gathering fiscal pressures through early and timely action. Recent fiscal actions in advanced nations suggest that democracies are not doomed to wait for market shocks and crises. Rather, leaders have shown that fiscal sacrifice can be achieved in ways that promote electability. In this article, we discuss the
impetus for democratic fiscal actions and the strategies used to gain public support.
Stories and Interests in Finance: Agendas of Governance before and after the Financial Crisis   JULIE FROUD, ADRIANA NILSSON, MICHAEL MORAN and KAREL WILLIAMS

The financial crisis can be understood in many different terms. In this article, it is analyzed in terms of the unfolding of a series of elite narratives that shaped the agenda of regulation before the crisis, that were damaged by the crisis, and that were then reframed and recounted again in the wake of the crisis. The form of these stories differs in subtle ways by jurisdiction, and thus the fate of postcrisis regulatory practice likewise differs.
Ideas and Coordination in Policymaking: The Financial Crisis of 2007–2009  
Policy change occurs because coalitions of actors are able to take advantage of political conditions to translate their strong beliefs about policy into ideas, which are turned into policy. A coalition's ability to define a problem helps to keep policies in place, but it can also cause coalitions to develop blind spots. For example, policy subsystem actors will often neglect the need for coordination between governmental actors. We examine the financial crisis of 2007–2009 to show how entrenched policy ideas can cause subsystem actors to overlook the need for policy coordination. We first analyze the prevalent idea that policymakers should aim to keep inflation
low and stable while employing light touch regulation to financial markets. We then demonstrate how this philosophy led to a lack of coordination between monetary and regulatory policy in the subprime mortgage market. We conclude with thoughts about the need for coordination in future economic policy.
Into an Age of Multiple Austerities? Public Management and Public Service Bargains across OECD Countries  
This article focuses on Public Service Bargains (PSBs) in the Organisation for Economic Co- operation and Development (OECD) world in an age of austerity and makes four main claims. First, both logic and recent history suggest that states can respond to financial crises in more than one way. Second, we argue that the pressures on existing PSBs are not all the same in this group of states, given observable differences in their financial vulnerability. Third, we analyze countries'
differential exposure to two other major challenges, namely, that of population aging and environmental risk. Fourth, we show that those areas of vulnerability can counteract one another in some cases but be mutually reinforcing in others, and we argue that “triply vulnerable” states in a composite analysis are those likely to face the strongest pressure to change their existing PSBs. We conclude that while homogenizing pressures cannot be ignored, PSB diversity is likely to continue.
Developing Countries Will Follow Post-crisis OECD Reforms but Not Passively

This Time 

Will reforms emerging from the 2008 crisis have a global impact and influence developingcountries? Evidence suggests that this happened before, after meltdowns in the 1970s. This article deconstructs how reforms diffused in this period and why countries followed different reform timelines. Institutional theory and a descriptive analysis of post-1970s experience suggest that countries followed different reform paths. Developing countries copied reforms seen as legitimate in various OECD countries, supported by entities upon which developing countries were dependent. The article argues that developing countries may not follow the same path now.
Endogenous discussions about reform options are more common in developing countries now. More external reform alternatives have also emerged from new development partners such as China, and it is unclear that countries such as the USA will chart postcrisis reform paths developing countries perceive as worthy of following.
Double Bind: Governing the Economy in an ICT Era  
The recent financial debacle was preceded by a long complex evolution in the way firms created value and organized. The fragmentation of production, intense global competition, and the information and communication technology (ICT)-enabled transformation of services are all part of a story that was framed by, and in turn further framed, ideologies of deregulation and self- regulation. In the aftermath of the crisis political leaders worldwide find themselves in a heightened double bind. On one side, the demands for rules allowing experimentation and innovation are sharpened as growth and job creation are needed; on the other side, the demands are heightened for the state to act and regulate markets to prevent future crisis. The article
focuses on the development of ICT, the main general-purpose technology of our time, and how the the ways it allows value to be created interacted with the politics regulating uses and defining the winners and losers.