Is here. An excerpt:
The authors posit a contrast between what they call liberal democracy and populist democracy. Liberal institutions are designed to limit the power of what James Madison called factions, in part by making the government relatively unresponsive to public clamor. Populist institutions are designed to increase the power of those who can command electoral majorities.
A central claim of the authors is that banking crises are more likely in heavily populist countries than in countries that are less populist. They cite Canada as an example of the latter. For instance, in Canada, Senators still obtain office by appointment, rather than by direct election.
But Senators don’t have any real power in Canada, and the sitting Prime Minister can temporarily appoint enough Senators to get a majority if necessary on big issues, and the sitting Prime Minister was elected through popular vote.
By all rights, the US system limits factions more by dividing the power among more bodies, many of which end up having different factional control.
(Not a national popular vote, of course, but no less populist.)
Our banks were hobbled by strategic default but the were also the ones who got Bailed out. I’m not sure whether that is populist or not. Did Canada have a housing bubble and the same degree of securitization? Maybe they were just slower to join the bandwagon of housing hysteria.
Housing prices in Canada (especially in certain places like Vancouver) increased about as rapidly as in the US. They just haven’t fallen. Thus the difficulty of defining a bubble.
andrew’:
They’re not just talking about the 2008 crisis. Canada has *never* had a banking crisis, despite not having a central bank until 1935. The Econtalk podcast on the book is very good:
http://www.econtalk.org/archives/2014/02/calomiris_and_h.html