Violence and Business Interest in Social Welfare: Evidence from Mexico

• Author: Bradley E. Holland,Viridiana Rios
• DOI: http://doi.org/10.1177/00104140211060272
• Published date: 01 September 2022
• Date: 01 September 2022
• Subject Matter: Articles

Article

Comparative Political Studies

2022, Vol. 55(11) 1844–1876

© The Author(s) 2022

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DOI: 10.1177/00104140211060272

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Violence and Business

Interest in Social

Welfare: Evidence from

Mexico

Bradley E. Holland

1

and Viridiana Rios

2



Abstract

Countries in the Global South are particularly vulnerable to social and

political violence. This paper suggests that such violence makes certain

recalcitrant economic interests more open to taxes and spending on social

welfare. Using results from a survey experiment of business owners and

operators in Mexico, we show that relative to more innocuous institutional

weaknesses, concerns over violence generally increase support for anti-

poverty spending and decrease support for tax cuts. To build a theory, we

explore heterogeneous effects and textual data. The findings suggest that

business interests see anti-poverty spending as a tool for shoring up costs of

violence in consumer markets, with some leaders even extending support to

welfare-enhancing taxes. However, violence can create challenges in labor

markets that increase operational costs, leading some business interests to

resist tax policies that ask them to help fund social programs.

Keywords

violence, crime, welfare, business, Mexico

1

University of Hawaii at Hilo, USA

2

Independent Scholar, Mexico City, Mexico

Corresponding Author:

Bradley E. Holland, Department of Political Science and administration of Justice, Ohio State

University, USA.

Email: holland8@hawaii.edu

Business interests have inordinate influence on public policy (Bartels, 2016).

And while the business sector frequently opposes redistribution (Esping-Andersen,

1985;Pierson, 1996), studies document systematic variation in business

support for social welfare policies (Estevez-Abe et al., 2001;Mares, 2003;

Paster, 2013;Swenson, 2002). However, such studies are conducted almost

exclusively in economically advanced democracies. As a result, we know little

about the social policy preferences of business interests in the Global South.

Like their counterparts in advanced democracies, business interests in the

developing world have significant political influence (Schneider, 2013;

Weymouth, 2012). Relative to advanced democracies, however, businesses in

the Global South often confront widespread social and political violence. How

do such conditions affect their support for social welfare policies?

Links between violence and business interests in social welfare are osten-

sibly complex. Widespread violence may lead people to believe that govern-

ments cannot deliver on their policies. We might thus expect violence to

decrease support for welfare spending and taxation. However, other dynamics

may muddleor overturn such effects. For example,endemic violence may incite

more altruistic social attitudes; likewise, welfare programs may bolster the

market activity that violence hinders. In turn, violence might actually increase

support for redistributive social policies.

To better understand these potentially conflicting effects, we analyze

original data from Mexico. We make two main contentions. First, relative to

more innocuous state weaknesses, concerns over violence generally increase

business support for anti-poverty spending and decrease support for tax cuts

that siphon funds from welfare programs. Second, we suggest that economic

considerations help drive this relationship: business interests see anti-poverty

spending as a tool for shoring up costs of violence in consumer markets, with

some leaders even extending support to welfare-enhancing taxes. At the same

time, however, violence can also create challenges in labor markets that

increase operational costs, leading some business interests to resist tax policies

that ask them to help fund social programs.

To support these contentions, the paper is organized as follows. The next

section briefly reviews academic literature on social policy attitudes, business,

and violence in the Global South. To highlight a gap in this literature, it

considers recent developments in Mexico, where violence has become in-

creasingly salient in policy discussions among business leaders.

The third section highlights a theoretically complex relationship between

violence and business interests in welfare. Namely, disparate theoretical

perspectives suggest that violence may push business attitudes in conflicting

directions. These complexities present a challenge: we cannot form a priori

theoretical predictions about how a heterogeneous set of plausible mech-

anisms shape the aggregate size or direction of a causal effect. Rather, given

the assortment of reasons to suspect some link,westartwithamoremodest

Holland and Rios 1845

hypothesis: that violence has an identifiable effect on business support for

welfare.

The fourthsection outlines an empirical approachfor testing this proposition.

The primary goalof the research design is to parse out the size and directionof a

causal effect of concerns over violence on business attitudes toward welfare.

After identifyingsuch an effect, the secondarygoal is to use supplementary data

to build more nuanced theory on the mechanisms that might underlie it.

The fifth section presents results of the primary analysis. Using data from a

survey experiment of business owners and managers in Mexico, they show

that relative to a control group, concerns over violence lead business interests

to increasingly support certain social welfare programs. Specifically, priming

concerns over the proliferation of criminal violence increased support for

public spending on anti-poverty programs and decreased support for tax cuts

that deflate welfare funding.

The sixth and seventhsections present findings fromthe secondary analysis,

in which the goal is theory building. To do so, they consider heterogeneous

effects and textual data. Broadly, the results suggest that economic consider-

ations are keymechanisms driving the resultsfrom the preliminary analysis:the

effects varydepending on the markets on whichfirms rely, and business leaders

consistently frame their concerns over violence in terms of market activity.

Specifically, the secondary results suggest that concerns over domestic

consumers help explain links between violence and business support for anti-

poverty spending: positive treatment effects evaporate when firms sell to non-

domestic consumers. Furthermore, firms that rely exclusively on domestic

markets are more likely to reference issues that affect consumer behavior—

such as fear—when discussing how violence impacts the business sector.

Given these findings, our theory posits that businesses view anti-poverty

programs as tools for mitigating costs of violence in consumption markets.

The results also suggest that labor markets structure the extent to which

welfare support extends to more direct taxation. Violence is only likely to

decrease support for tax cuts among respondents whose firms operate in

peaceful areas and rely on small workforces. In fact, when businesses operate

in violent areas or hire many employees, concerns over violence actually

increase support for tax cuts. We attribute these findings to the strains that

violence places on local production: when their firms operate in violent areas

or employ large workforces, respondents are particularly likely to frame

concerns over violence in terms of employment. In contrast, we posit that

when firms are financially insulated from violence-induced declines in labor,

they are more willing and able to bear upfront tax costs associated with

policies that bolster welfare and consumption.

Together, the results show that violence has a generally positive effect on

business support for public welfare programs, and suggest that concerns over

consumption and labor help structure this relationship. To our knowledge, and

1846 Comparative Political Studies 55(11)