Category: Political Science
Sentences to ponder (model this)
Our main result is that an increase in per-capita Muslim expenditures generates a large and significant increase in future religious conflict. An increase in Hindu expenditures has negative or no effect.
Here is more, from Mitra and Ray. The pointer is from Andres Marroquin.
Very good sentences
This raises an interesting, tangentially related question. Liberals fulminate constantly against outrageous conservative obstruction, yet often seem nevertheless surprised by its effectiveness. Why is that? My guess is that liberals are sometimes deceived by assumptions about the scope of liberalising moral progress. Modern history is a series of conservative disappointments, and the trend of social change does have a generally liberal cast. The surprisingly rapid acceptance of legal gay marriage is a good example. Liberals are therefore accustomed to a giddy sense of riding at the vanguard of history, routed reactionaries choking in their dust. But all of us, whatever our colours, overestimate the moral and intellectual coherence of our political convictions. We’re inclined to see meaningful internal connections between our opinions—between our views on abortion and regulatory policy, say—when often there’s no connection deeper than the contingent expediencies of coalition politics. For liberals, this sometimes plays out as a tendency to see resistance to all liberal policy as an inevitably losing battle against the inexorable tide of history. This occasionally leads, in turn, to a slightly naive sense of surprise when a hard-won political victory isn’t consolidated by a decisive, validating shift in public opinion, but instead begins to be ratcheted back.
That is from Will Wilkinson.
*Borgen*, season one
He is a market-oriented professor of economics who talks about Milton Friedman to his young Danish students. She is — suddenly — Prime Minister of Denmark and leader of a moderate left party, but not actually prepared to wield power. The regime is proportional representation and maintenance of the fragile coalition is all-important. Her younger child wets his pants while watching TV and they schedule Tuesdays and Saturdays for sex, in vain. Some media outlets maximize profit, whereas others pursue personal and political agendas. People who have slept together in the past cannot escape each other’s presence in the elite circles of Copenhagen. The median voter occasionally surfaces too.
If you are looking for a new “intelligent TV show” to watch, this is my nomination. I don’t like this as much as my all-time favorite shows, but if you are only going to watch twenty good TV shows in your lifetime, this should be one of them. You don’t have to care about politics, much less Danish politics, but if you do that will make it all the more intriguing.
You can buy Season one here, and season two is coming out soon.
The lobbyists themselves state the “Tullock paradox”
According to statistics United Republic assembled, the prescription drug industry spent $116 million lobbying for legislation to prevent Medicare from bargaining down drug prices — legislation that enabled drug companies to make an additional $90 billion annually. That amounts to an extraordinary 77,500 percent return on investment. Oil companies, in turn, had a return on investment of 5,900 percent, and multinational companies, 22,000 percent….
For example, the Carmen Group, a Washington lobbying firm, boasted on its Web site that for every dollar it collected in fees, clients got $100 in benefits.
I enjoyed the ROI visual presented here. Of course the Carmen Group needs to explain why it is not raising its prices and the companies need to explain why they do not spend more. Presumably the rate of return on additional lobbying expenditure is relatively low.
One part of the Tullock puzzle of high upfront but low marginal returns to lobbying may be answered by the article:
I asked a prominent Democratic lobbyist with just over $3 million in annual billings — who requested anonymity to avoid alienating his clients — about the difference between trying to win legislation and trying to block it.
“It’s significantly easier to block and impede,” he said.
Once you have blocked, you have blocked, and “more blocked” doesn’t necessarily make you better off, so you can end up at a discontinuity point. This also may explain why the forces seeking to push new laws do not spend more. Spending more, to try to get your way, may induce more offsetting investment from the “blockers,” who have access to a cheaper technology, so to speak. Still, if they have a fixed cost for getting the blocking activity up and running at all, you may spend some small amount in the first place, enough to have influence but again with the knowledge that their blocking abilities put a discontinuity in the returns function.
The article, with much more useful information, is here, by Thomas Edsall. Here are a few earlier MR posts on the Tullock paradox.
Addendum: Karl Smith comments.
Very good sentences
There is simply no tradition of radical bank resolution in Europe. European bank supervisors are national operators by temperament, not international referees. They see their job as colluding with their national banking sectors to protect them against foreign competition. When a crisis occurs, they let the next economic recovery take care of the problem, rather than resolving it by reducing banking capacity. While I do believe that a banking union constitutes an important reform in the long run, it is very naive to think that the newly appointed bank supervisors are going to resolve the European banking sector with a determination they never displayed in their capacity as national supervisors.
This leaves us with a bank resolution strategy – if you want to call it that – that begins with an inadequate bank recapitalisation, on the basis of dubious stress tests and asset quality reviews, and is followed by further piecemeal steps in later years as the shortcomings of the strategy become more evident. All this will be accompanied by regulatory forbearance. We are already seeing this process at work in Spain.
Leaving it to the next recovery to take care of the problem will not work this time because the credit crunch and debt deflation prevent the recovery. Resolution is a precondition for growth…
That is from Wolfgang Münchau at the FT.
Painted into a corner?
According to the BoJ [Bank of Japan], a 100 basis-point increase in interest rates across all maturities would lead to mark-to-market losses equivalent to a fifth of tier one capital for regional banks, and 10 per cent for the major banks.
At the same time, rising interest rates could undermine the government’s attempts to improve its own finances, precipitating a fiscal crisis.
Here is further FT coverage. The general point is that very often we — correctly or not — are more willing to live with the distributional consequences of lower inflation than of higher inflation. (This topic should be the subject of dozens of public choice papers, although I don’t from my vantage point see the flow.) The Japanese effort at “Abenomics” may already be faltering, but for political rather than economic reasons. And the elderly defenders of gerontocratic deflation haven’t even spoken up yet, if only because Japanese prices have not yet started to rise. Keep in mind that Japan has had a lot of political stagnation too, and that is not an accident which can easily disappear overnight.
The most provocative, fascinating, and bizarre piece I read today
The author is Ron Unz, and the topic is what the media chooses to cover or not. His thoughts run in directions very different than mine (I favor invisible hand mechanisms to a much greater degree, for one thing), but here is the essay.
It is entitled “Our American Pravda.” It is difficult to summarize. Maybe some parts of this essay are totally, completely wrong, so I urge you to read it with caution. But still I thought it was worth passing along; if nothing else you can read it as a study in how a situation can look “very guilty” even if perhaps it is not.
One excerpt is this:
These three stories—the anthrax evidence, the McCain/POW revelations, and the Sibel Edmonds charges—are the sort of major exposés that would surely be dominating the headlines of any country with a properly-functioning media. But almost no American has ever heard of them. Before the Internet broke the chokehold of our centralized flow of information, I would have remained just as ignorant myself, despite all the major newspapers and magazines I regularly read.
Am I absolutely sure that any or all of these stories are true? Certainly not, though I think they probably are, given their overwhelming weight of supporting evidence. But absent any willingness of our government or major media to properly investigate them, I cannot say more.
However, this material does conclusively establish something else, which has even greater significance. These dramatic, well-documented accounts have been ignored by our national media, rather than widely publicized. Whether this silence has been deliberate or is merely due to incompetence remains unclear, but the silence itself is proven fact.
The original pointer came from @GarethIdeas, who describes the piece as “totally fascinating.”
David Brooks on the words we use
Daniel Klein of George Mason University has conducted one of the broadest studies with the Google search engine [TC: the paper is here]…On the subject of individualization, he found that the word “preferences” was barely used until about 1930, but usage has surged since. On the general subject of demoralization, he finds a long decline of usage in terms like “faith,” “wisdom,” “ought,” “evil” and “prudence,” and a sharp rise in what you might call social science terms like “subjectivity,” “normative,” “psychology” and “information.”
Klein adds the third element to our story, which he calls “governmentalization.” Words having to do with experts have shown a steady rise. So have phrases like “run the country,” “economic justice,” “nationalism,” “priorities,” “right-wing” and “left-wing.” The implication is that politics and government have become more prevalent.
So the story I’d like to tell is this: Over the past half-century, society has become more individualistic. As it has become more individualistic, it has also become less morally aware, because social and moral fabrics are inextricably linked. The atomization and demoralization of society have led to certain forms of social breakdown, which government has tried to address, sometimes successfully and often impotently.
This story, if true, should cause discomfort on right and left. Conservatives sometimes argue that if we could just reduce government to the size it was back in, say, the 1950s, then America would be vibrant and free again. But the underlying sociology and moral culture is just not there anymore. Government could be smaller when the social fabric was more tightly knit, but small government will have different and more cataclysmic effects today when it is not.
Liberals sometimes argue that our main problems come from the top: a self-dealing elite, the oligarchic bankers. But the evidence suggests that individualism and demoralization are pervasive up and down society, and may be even more pervasive at the bottom. Liberals also sometimes talk as if our problems are fundamentally economic, and can be addressed politically, through redistribution. But maybe the root of the problem is also cultural. The social and moral trends swamp the proposed redistributive remedies.
Here is more, interesting throughout.
Red Lights for Profit
TAMPA BAY, Florida — A subtle, but significant tweak to Florida’s rules regarding traffic signals has allowed local cities and counties to shorten yellow light intervals, resulting in millions of dollars in additional red light camera fines.
The 10 News Investigators discovered the Florida Department of Transportation (FDOT) quietly changed the state’s policy on yellow intervals in 2011, reducing the minimum below federal recommendations. The rule change was followed by engineers, both from FDOT and local municipalities, collaborating to shorten the length of yellow lights at key intersections, specifically those with red light cameras (RLCs).
…Red light cameras generated more than $100 million in revenue last year…with 52.5 percent of the revenue going to the state. The rest is divided by cities, counties, and the camera companies….”Red light cameras are a for-profit business between cities and camera companies and the state,” said James Walker, executive director of the nonprofit National Motorists Association. “The (FDOT rule-change) was done, I believe, deliberately in order that more tickets would be given with yellows set deliberately too short.”
See Buchanan and Brennan’s The Power to Tax for an analytic approach and Benson, Rasmussen and Sollars for another example of bureaucratic revenue maximization.
Hat tip: Radley Balko.
Daniel Klein views the rise of government through Ngram
Here is the abstract:
In this very casual paper, I reproduce results from the Google Ngram Viewer. The main thrust is to show that around 1880 governmentalization of society and culture began to set in — a great transformation, as Karl Polanyi called it. But that great transformation came as a reaction to liberalism, the first great transformation. The Ngrams shown include liberty, constitutional liberty, faith, eternity, God, social gospel, college professors, psychology, economics, sociology, anthropology, political science, criminology, new liberalism, old liberalism, public school system, Pledge of Allegiance, income tax, government control, run the country, lead the country, lead the nation, national unity, priorities, social justice, equal opportunity, economic inequality, forced to work, living wage, social needs, our society, bundle of rights, property rights, capitalism, right-wing, left-wing, virtue, wisdom, prudence, benevolence, diligence, fortitude, propriety, ought, good conduct, bad conduct, good works, evil, sentiments, impartial, objective, subjective, normative, values, preferences, beliefs, and information.
The paper is here. Here is one example:
A Marxist take on “the great stagnation”
From Will Davies:
Wandering around Stratford Westfield the other day, I had a similar but more pessimistic thought: maybe capitalism is gradually morphing into the ‘actually existing’ state socialism of the old Eastern Bloc. (For international readers, Stratford Westfield is a vast shopping centre that was strategically located between the 2012 Olympic Park and the nearest train station, in the hope of rinsing unfortunate athletics fans for some cashen route to the games.) British capitalism already has many of the hallmarks of Brezhnev-era socialist decline: macroeconomic stagnation, a population as much too bored as scared to protest about very much, a state that performs tongue-in-cheek legitimacy, politicians playing with statistics to try and delay the moment of economic reckoning.
…My feeling is (and I discuss this in a book I’m just finishing) that neoliberalism has entered a post-critical, repetitive phase, in which certain things have to be spoken – delivery, efficiency, security, competitiveness – but in order to hold the edifice together, rather than to reveal anything as objectively ‘delivered’, ‘efficient’, ‘secure’ or ‘competitive. Political systems which do not create space for critique encounter this need for mandatory repetition immediately, as occurred to state socialism.
Eastern bloc socialism had to keep going through the 1970s and 80s, in spite of lagging growth and failed ideological hegemony, because nobody knew what else to do. This is the stage neoliberal policy-making has now reached. The difference is that there is still one area of our economy that is still moving and changing, namely the money economy, with corporate profits high and financial innovation ongoing. What seems to have changed, post-2008, is that the price paid for this monetary dynamism is that the rest of us all have to stand completely still. In order that ‘they’ in the banks can cling on to their modernity of liquidity and ultra-fast turnover, ‘we’ outside have to relinquish our modernity, of a future that is any different from the present. Finance is to our stagnant societies what the space race and the Cold War were to the Eastern Bloc countries of the 1970s and 80s – a huge cost that the state imposes on its public, with the result that cities and economies start to become tedious processions of the same.
The link is here (good photos), and the underlying Potlatch blog is here. The blog has plenty of interest, and this is an amusing post about advertising.
On the merits of Hayek’s *Road to Serfdom*
I’ve seen this work bashed a number of times in the blogosphere over the last few years. It didn’t get everything right, but it remains an important and seminal work and at the time of its publication it was a revelatory work. Let’s turn the microphone over to Albert Hirschman, hardly a right-wing ideologue. This is from Jeremy Adelman’s very useful biography of Hirschman:
…when he [Hirschman] found a copy of Friedrich von Hayek’s recently published…The Road to Serfdom in a Rome bookstore, a nerve was struck: “Reading this book is very useful for someone like me who grew up in a ‘collectivist’ climate — it makes you rethink many things and has shown me in how many important points I have moved away from the beliefs I had when I was 18 years old. The experience of the army has also confirmed or rather demonstrated forcefully the advantages of a monetary society, anonymous, and where one preserves at least a sector of private initiative.”
…Even more than a reminder of his skepticism of statist planners, Hayek got at something Hirschman felt strongly: the need to acknowledge the basic limits to the “intelligibility” of our complex world. Leaders were wont to claim complete knowledge when they did not have it and thus to squash the individual’s ability to make adjustments “to changes who cause and nature he cannot understand.”
Hirschman was never convinced by Hayek’s desire to rely so heavily on the market, but in this appreciation of the book you will find more wisdom than in the recent attempted take downs. In essence, the critics are not grasping how backward was the intellectual climate when Hayek’s book came out and what a useful corrective it was.
By the way, here is a new and good Cass Sunstein review of the Adelman bio of Hirschman.
Addendum: From the comments, Ricardo points us to Sen’s nice words about the book.
Does less income mean less representation?
It is a common argument that American government is run in the interests of rich people. But Eric Brunner, Stephen L. Ross and Ebonya Washington are in this month’s AEA Economic Policy journal with a different perspective:
We assemble a novel dataset of matched legislative and constituent votes and demonstrate that less income does not mean less representation. We show: (i) The opinions of high- and low-income voters are highly correlated; the legislator’s vote often reflects the desire of both. (ii) What differences in representation by income exist vary by legislator party. Republicans more often vote the will of their higher income over their lower income constituents; Democratic legislators do the reverse. (iii) Differences in representation by income are largely explained by the correlation between constituent income and party affiliation.
Here is one version of the paper (pdf).
Why so little demand for protectionism?
Paul Krugman asks a very good question, namely why the political pressures for protectionism in the midst of recessions and depressions have been so weak. While I do not disagree with his points (which cite institutions such as the WTO and EU), I am surprised by what he leaves out. Here is a summary of Spence and Hlatshwayo on U.S. labor markets:
Looking back on the period from 1990 to 2008, the co-authors found that 97 percent of the 27.3 million U.S. jobs created were in the non-tradable sector. (The five largest non-tradable sectors, mentioned above, contributed 65 percent of the 1990-2008 jobs growth.) “The employment creation occurred mostly in non-tradable sectors — where we don’t have international competition,” Spence said.
In other words, with more jobs in the service sector, we are practicing increased “protectionism by any other name,” often with the law and with regulation but in many cases cultural barriers and lack of trade networks will suffice. Trade costs for many services are in any case high and thus the constituency for protectionism or further protectionism is not quite there. The workers who might have supported tariff-based or quota-based protectionism thirty-five years ago already have lost their jobs to foreign trade and they or their descendents have moved to more heavily protected service sectors. As we should recall from the literature on the gravity equation, explicit tariffs are only a small part of the actual barriers to trade.
A second issue is the where the actual burden of foreign competition is falling, given a much higher degree of globalization. The Mexicans are worried about Chinese competition, but they are not mainly worried about Chinese competition pulling Mexican consumers away from Mexican products (chili peppers are one exception here). Mostly they are worried that Chinese competition has taken away many of Mexico’s export markets elsewhere, and putting tariffs on Chinese goods coming into Mexico won’t stop that.
The politics of infrastructure in India
Tapan Kumar Chowdhury, 62, a retiree now working as an activist in the colony, said legalized status would be likely to improve sanitation and local health standards through installation of a true sewage system. But he remained skeptical about whether the election-year promises would be carried out, noting that politicians preferred to keep colonies vulnerable so that residents remained more beholden to them for even incremental improvements. “They have a vested interest in keeping us illegal and unauthorized,” he said, “so they can use us as a vote bank.”
Here is more.