Category: Political Science

Brexit update (POTMR)

Boris Johnson is planning to force a new Brexit deal through parliament in just 10 days — including holding late-night and weekend sittings — in a further sign of Downing Street’s determination to negotiate an orderly exit from the EU. According to Number 10 officials, Mr Johnson’s team has drawn up detailed plans under which the prime minister would secure a deal with the EU at a Brussels summit on October 17-18, before pushing the new withdrawal deal through parliament at breakneck speed.

The pound rose 1.1 per cent against the US dollar to $1.247 on Friday amid growing optimism that Mr Johnson has now decisively shifted away from the prospect of a no-deal exit and is focused on a compromise largely based on Theresa May’s withdrawal agreement.

That is new from the FT, here is part of my Brexit post from August 29:

I would sooner think that Boris Johnson wishes to see through a relabeled version of the Teresa May deal, perhaps with an extra concession from the EU tacked on.  His dramatic precommitment raises the costs to the Tories of not supporting such a deal, and it also may induce slight additional EU concessions.  The narrower time window forces the recalcitrants who would not sign the May deal to get their act together and fall into line, more or less now.

Uncertainty is high, but the smart money says the Parliamentary suspension is more of a stage play, and a move toward an actual deal, than a leap to authoritarian government.

This remains very much an open question, but if you “solve for the equilibrium,” that is indeed what you get.

My Conversation with Samantha Power

Samantha Power has a new and excellent book out, The Education of an Idealist: A Memoir, which I very much enjoyed.  And so a Conversation with Tyler was in order, here is the audio and transcript, here is one bit:

COWEN: For a final closing segment, I just have some super simple questions about foreign policy again. Over the course of the last summer, Iran apparently seized two British tankers. There’ve been other incidents in the Strait of Hormuz in some way connected with Iran. From a game-theoretic point of view, why would they do this? Why does this make sense?

POWER: Well, the one thing that they would know that would give them some point of leverage is the extreme war fatigue within the United States, and really within the Western world. So, by upping the stakes, arguably — I mean, who knows why the hell they’re doing what they’re doing?

But by upping the stakes, they arguably could be sending a signal like, “You want to get in this game? It’s not as if we’re an island and you can just break the deal, penalize us gratuitously, penalize the people who are still trying to maintain the terms of the deal, and that there won’t be collateral consequences outside the nuclear space.”

Because the nuclear consequences, as they begin to enrich and violate the terms of the deal — having legitimately argued that we had violated the terms of the deal — the effects of those are not day-to-day effects in the news world. It’s a bit abstract for the public and even for policymakers. It’s an incremental abrogation.

But acts like this show that they have leverage, that they are active militarily in parts of the world where we have a vested interest in maintaining freedom of navigation. So I think they’re showing that they can hit in domains outside the nuclear domain. I think that is probably what they’re doing.

Here is another segment:

COWEN: In which ways do you feel your thought is in some manner still Irish in orientation in a way that would distinguish you from, say, American-born individuals?

POWER: It’s hard to know because I can’t run the counterfactual, so I don’t know what’s just because my mother is a physician and very empathetic toward her patients, and do I learn from that? Or am I moved by having come from a small country, at that time a poor country, that was sending —

COWEN: With a history of oppression, right?

POWER: With a history of oppression, with a history of the dignity of its people being trampled. Is that why I care so much about individual dignity? Again, I can’t run the history a different way.

And finally:

COWEN: Very simple — are baseball games too long? Why not make it 7 innings?

POWER: Why not make it 12?

COWEN: It’s boring, right?

POWER: For you and, as it turns out, for others.

COWEN: For me. So many games are over 3 hours. Shouldn’t the game be 2 hours, 17 minutes?

We also cover her first impressions of America, being a wartime correspondent, China and Iraq, Star Wars vs. Star Trek, van Morrison vs. Bob Dylan, robot empires vs. robot umpires, her favorite novel, how personal one should get in a memoir and why, and German defense spending, among other topics.

Definitely recommended.

Special Emergent Ventures tranche to study the nature and causes of progress

I am pleased to announce the initiation of a new, special tranche of the Emergent Ventures fund, namely to study the nature and causes of progress, economic and scientific progress yes but more broadly too, including social and cultural factors.  This has been labeled at times “Progress Studies.

Simply apply at the normal Emergent Ventures site and follow the super-simple instructions.  Feel free to mention the concept of progress if appropriate to your idea and proposal.  Here is the underlying philosophy of Emergent Ventures.

And I am pleased to announce that an initial award from this tranche has been made to the excellent Pseudoerasmus, for blog writing on historical economic development and also for high-quality Twitter engagement and for general scholarly virtue and commitment to ideas.

Pseudoerasmus has decided to donate this award to the UK Economic History Society.  Hail Pseudoerasmus!

*Jewish Emancipation: A History Across Five Centuries*

That is the new and excellent book out by David Sorkin.  I feel I have read many good books on Jewish history, and I don’t always see the marginal value of adding to that pile, but this one really delivered.  Plenty more detail without losing any conceptual overview.  Ever wonder what exactly happened to Jewish emancipation, and why, as the Napoleonic conquest of Europe was reversed?  This is the place to go.  By the way, in the middle of the eighteenth century there were more Jews in Curacao, Suriname and Jamaica than in all of the North American colonies combined.

You can order it here, worthy of my year-end “best non-fiction of the year” list.

Rebuilding the British right?

For most of the postwar era, the Conservative Party prided itself on its ability to tell an economic story. Tories traditionally explained their right to govern in terms of an overarching economic vision for the country, a vision which was instantiated in policy and which often set the political agenda.

From Macmillan to Thatcher to Cameron, they presented themselves as the party of national prosperity, and of hard-nosed economic realities, and many people voted for them on this basis. But this no longer seems to be the case.

The last few years have witnessed what elsewhere we called the Strange Death of Tory Economic Thinking. In the years following the EU Referendum, Conservatives in Britain largely dropped the economy from the heart of their political story. This is not just a criticism of Mayism, with its Home Office view of the world; many who professed to be market liberals seemed to do so performatively, without serious consideration of what they wanted to deregulate or how.

The recent change of Prime Minister provides an opportunity to put this right. We hope that the new government will turn away from the trajectory of the last three years, and start taking economics seriously again. If it chooses not to, we would urge others on the centre-right to take up the challenge.

This paper is an attempt to sketch out some principles for a centre-right economic outlook, and some specific policies to focus on.

We begin by presenting a few important stylised facts about the contemporary British economy that should frame an economic narrative; we then set out some political principles for how to turn these into economic policy.

Based on these, we set out a set of policies in four areas where we think progress can be made: tax, housing, infrastructure and devolution, and innovation and technology.

Finally, we conclude with some long-term actions that need to be taken to begin rebuilding an economic narrative for the Right.

This website was written by Sam Bowman and Stian Westlake. If you would like to discuss it, they can be contacted via Twitter (@s8mb and @stianwestlake respectively). If you would like a PDF of the whole website, you can find one here.

Here is the link.

Do mass shootings lead to liberalized gun laws?

It seems so, at least in Republican-controlled states:

There have been dozens of high-profile mass shootings in recent decades. This paper presents three main findings about the impact of mass shootings on gun policy. First, mass shootings evoke large policy responses. A single mass shooting leads to a 15% increase in the number of firearm bills introduced within a state in the year after a mass shooting. This effect increases with the extent of media coverage. Second, mass shootings account for a small portion of all gun deaths, but have an outsized influence relative to other homicides. Third, when looking at bills that were actually enacted into law, the impact of mass shootings depends on the party in power. The annual number of laws that loosen gun restrictions doubles in the year following a mass shooting in states with Republican-controlled legislatures. We find no significant effect of mass shootings on laws enacted when there is a Democrat-controlled legislature, nor do we find a significant effect of mass shootings on the enactment of laws that tighten gun restrictions.

That is the abstract of a new NBER working paper by Michael Luca, Deepak Malhotra, and Christopher Poliquin.

East Germany fact of the day

Evidence of a widening gulf has become too copious to ignore. Last month, for example, a poll by the Allensbach Institute asked eastern Germans whether they saw democracy as practised in Germany as the best form of government. Only 31 per cent agreed. Two years ago, the figure was 53 per cent.

In western Germany, meanwhile, 72 per cent described democracy as the best form of government, broadly unchanged from two decades ago.

The same divergence shows up when Germans in both parts of the country are asked about their identity: 47 per cent of eastern Germans say they identify above all as eastern Germans, compared with only 44 per cent who feel simply German. This, too, is a sharp reversal from only a few years ago.

Also striking is the sheer persistence of specifically eastern German views and stereotypes: even 30 years after the fall of the wall (and with an east German chancellor, Angela Merkel, holding office since 2005), more than a third of eastern Germans describe themselves as “second-class citizens”.

That is from Tobias Buck in the FT.

*10% Less Democracy*

The author is Garett Jones and the subtitle is Why You Should Trust Elites a Little More and the Masses A Little Less, coming soon to a theater near you, early 2020.

If you believe in judicial independence, you do not believe in complete democracy.

If you do not think we should elect judges, sheriffs, and dog catchers, you do not believe in complete democracy.

If you believe in those European proportional representation systems, with post-election bargaining, you do not believe in complete democracy.

If you are a fan of the EU…etc.

Here is an excerpt from Garett’s excellent book:

Some cities in California appoint their treasurers and others elect their treasurers.  Cities can have elections to decide whether the city treasurer should be appointed by the city government; the default is that they’re elected.  Whalley checks to see which kinds of cities have lower borrowing costs: ones with appointed treasurers or elected ones.  The interest rate paid on a city’s debt is a useful index of how well the city is running its finances…So Whalley’s overall question is this: Do cities with appointed treasurers pay lower interest rates on their debt?

…Over the period Whalley examined, 1992 to 2008, forty-three cities held referenda to ask whether they should switch to appointed treasurers.  He’s therefore able to look at the before-and-after differences of these elections…

[there is] an even bigger benefit of appointed treasurers: seven-tenths of a percent lower interest rates every year.  The average city has $30 million in debt, so that comes out to a savings of $210,000 per year.

Do I hear eleven percent anybody?  Though twenty percent I do not wish to hazard, not at all.

You can pre-order the book here.

*The Enchantments of Mammon*

The author is Eugene McCarraher, and the subtitle of this Belknap Press book is How Capitalism Became the Religion of Modernity.  Here is one excerpt:

The world does not need to be re-enchanted, because it was never disenchanted in the first place.  Attending primarily to the history of the United States, I hope to demonstrate that capitalism has been, as Benjamin perceived, a religion of modernity, one that addresses the same hopes and anxieties formerly entrusted to traditional religion.  But this does not mean only that capitalism has been and continues to be “beguiling” or “fetishized,” and that rigorous analysis will expose the phantoms as the projections they really are.  These enchantments draw their power, not simply from our capacity for delusion., but from our deepest and truest desires — desires that are consonant and tragically out of touch with the dearest freshness of the universe.  The world can never be disenchanted, not because our emotional or political or cultural needs compel us to find enchantments — though they do — but because the world itself, as Hopkins realized, is charged with the grandeur of God…

However significant theology is for this book, I have relied on a sizable body of historical literature on the symbolic universe of capitalism.  Much of this work suggests that capitalist cultural authority cannot be fully understood without regard to the psychic, moral, and spiritual longings inscribed in the imagery of business culture.

I remain wedded to the traditional Weberian view that capitalism represents a discrete break away from such modes of thought, and I believe this perspective supported by the work of Joe Henrich and co-authors on WEIRD.  Nonetheless, this is a book of note, and it has a clearly stated thesis on matters of direct relevance to what is explored on Marginal Revolution.  Due out in November, pre-order at the link above.

How deregulatory is the Trump administration?

Here is an email from a loyal, anonymous MR reader:

Critics of the administration’s much-ballyhooed deregulatory efforts argue that there’s not really that much there; they contend the White House and agencies have been tinkering around the margins (and helping out special interest groups), but not really addressing regulation’s economic cost. They argue there’s been virtually nothing done to address the bloated corpus of 100 years of accumulated federal regulation, and there’s been no legislative action to change regulatory processes.

The administration’s defenders and their fiercest critics alike argue that Trump has taken a machete to the regulatory state. But aside from naming a few rule changes here or there, they don’t offer much concrete support for their claim.

What’s the steel man case that Trump has broken the back of the administrative state? Some hypothes

1. They haven’t made things worse. After eight years of an administration that was seen (fairly or not) as hostile to business, just taking the boot off the throat of entrepreneurs is a major step forward. Small-business optimism is at pre-crisis levels. The last two years have seen the fewest economically significant final rules promulgated since 1990. Beyond formal rules, the administration has ended the abuse of “dear colleague” letters, guidance documents, and sue-and-settle.

2. Related to #1, there’s been no new legislation along the lines of Sarbanes-Oxley or Dodd-Frank that will take as long as a decade to get regulations worked out. That takes a lot of the uncertainty out of the system.

3. Enforcement has been curtailed. The administrative state is a threat because its enforcement is so capricious and subject to questionable extralegal adjudication. The Trump administration has responded by simply not enforcing many regulations. EPA inspections are down by half; CFPB is asleep at the switch. Enforcement heads are basically emulating Ron Swanson, for the better.

4. The 14 uses of the Congressional Review Act in early 2017 should in fact count as highly deregulatory; it was of course more than had ever been done with this tool in the past. Okay, so the regs in question weren’t yet final or hadn’t been in effect for very long. That’s just playing a baselines game; the bottom line is tens of billions of dollars of costs were cut over what would have been.

5. The record-breaking number of appellate judges appointed by the president and confirmed by the Senate will shift the judiciary to be more skeptical of regulators’ self-aggrandized power. Justice Gorsuch is champing at the bit to eliminate Auer and Chevron deference; overruling these precedents would be game-changing.

6. There’s been more taking place than you think. No, there hasn’t been a huge shakeup of federal departments, but those kinds of things are mostly for show anyway; federal power remains more or less constant, responsibilities just get shifted around. Benefit-cost analyses and regulatory impact analyses done by most agencies are sloppy at best and mostly just a Soviet-style effort to justify what’s already been decided, so they don’t capture the magnitude of what’s happening.

What has happened? The president has appointed people who take regulatory analysis seriously and understand opportunity cost. Some of the deregulation has been in areas most sensitive to the costs of regulation, like labor and energy. ACA individual mandate? Gone. HUD is taking steps to push housing deregulation at the local level; this has gotten almost no attention.

7. There’s more that would have been done but for the “deep state.” It’s a matter of public choice economics, not AM radio conspiracies, that regulators may not be enthusiastic about deregulating. For instance, Trump’s much-trumpeted two-out-one-in executive order for federal regulations was largely kneecapped by OMB so that over 90% of new regulations are deemed exempt from the order. Given inherent resistance to change (again, for perfectly understandable reasons, this is not a conspiracy), it’s amazing that anything has been done at all!

Has monetary policy lost its power?

No, says my latest Bloomberg column.  Here is one of the opening bits:

The most striking fact about the current situation is that not one of the world’s major central banks has announced that it would like to see a higher rate of price inflation. Have you heard support for a 3% inflation rate lately from the heads of the European Central Bank, the Bank of Japan or the U.S. Federal Reserve? It is therefore no surprise that central banks don’t seem to matter much.

In essence, central banks would like to make marginal contributions to stimulating the economy, without incurring the political wrath from a higher rate of price increase. The powers they have lost are political, not economic.

On these and related questions, I am grateful to the writings of Scott Sumner over the years.  And in sum:

In fact, when it comes to macroeconomics, the current malaise is not just political but also cultural: It is a paralysis of the spirit to achieve and excel. Conventional economic theory has not been proved wrong, at least not yet. There is just a fading willingness to apply it.

Boris Johnson’s suspension of Parliament

The betting markets have stayed in the 48-55 range for Brexit by year’s end, even after the suspension announcement.  That to me does not sound like “hard Brexit hell or high water.”

I would sooner think that Boris Johnson wishes to see through a relabeled version of the Teresa May deal, perhaps with an extra concession from the EU tacked on.  His dramatic precommitment raises the costs to the Tories of not supporting such a deal, and it also may induce slight additional EU concessions.  The narrower time window forces the recalcitrants who would not sign the May deal to get their act together and fall into line, more or less now.

Uncertainty is high, but the smart money says the Parliamentary suspension is more of a stage play, and a move toward an actual deal, than a leap to authoritarian government.

That said, I still do not like either Brexit or the suspension.

Latitude

Are there systematic trends around the world in levels of creativity, aggressiveness, life satisfaction, individualism, trust, and suicidality? This article suggests a new field, latitudinal psychology, that delineates differences in such culturally shared features along northern and southern rather than eastern and western locations. In addition to geographical, ecological, and other explanations, we offer three metric foundations of latitudinal variations: replicability (latitudinal gradient repeatability across hemispheres), reversibility (north-south gradient reversal near the equator), and gradient strength (degree of replicability and reversibility). We show that aggressiveness decreases whereas creativity, life satisfaction, and individualism increase as one moves closer to either the North or South Pole. We also discuss the replicability, reversibility, and gradient strength of (a) temperatures and rainfall as remote predictors and (b) pathogen prevalence, national wealth, population density, and income inequality as more proximate predictors of latitudinal gradients in human functioning. Preliminary analyses suggest that cultural and psychological diversity often need to be partially understood in terms of latitudinal variations in integrated exposure to climate-induced demands and wealth-based resources. We conclude with broader implications, emphasizing the importance of north-south replications in samples that are not from Western, educated, industrialized, rich, and democratic (WEIRD) societies.

Here is the article, via several MR readers.