Category: Political Science
In case there was any remaining doubt
The Supreme Court of Honduras ruled today that the Honduras legislation establishing charter or model cities was unconstitutional. A ruling two weeks ago from the constitutional branch of the court established by a 4-1 vote that the law was unconstitutional. Because that decision was not unanimous, the entire Supreme Court had to consider and vote on the issue.
The full court voted 13-2 that decreto 283-2010 which reformed two constitutional articles to enable the model cities legislation violated the constitution.
There is a bit more here, including some information on one of the companies involved.
Does physical strength influence male political views?
Dr Petersen and Dr Sznycer were investigating the idea that a person’s political opinions might be aligned with his physical characteristics. The opinion in question was whether resources should be redistributed from the rich to the poor. The physical characteristic was strength.
…Dr. Petersen and Dr Sznycer found that, regardless of country of origin or apparent ideology, strong men argued for their self interest: the poor for redistribution, the rich against it. No surprises there. Weaklings, however, were far less inclined to make the case that self-interest suggested they would. Among women, by contrast, strength had no correlation with opinion. Rich women wanted to stay rich; poor women to become so.
The paper is here. Here is another paper by the authors (and two others), on attitudes toward welfare. Sznycer has a useful page of research papers here.
How to improve state-level fiscal policy
Some states rely too much on income taxes for their revenue and others rely too much on sales taxes (see the paper’s map on p.26). We could have better state-level automatic stabilizers. Here is a paper from Nathan Seegert (pdf, currently on the job market from Michigan, by the way):
I find U.S. state tax revenue volatility increased by 500 percent in the 2000s relative to previous decades. State governments’ inability to smooth volatile revenue streams, due to self-imposed balanced budget restrictions, has caused this increased volatility to magnify U.S. state budget crises. The theoretical model demonstrates the cause of the increase in volatility is due to changes in tax rates, economic conditions, or tax base (e.g. what types of consumption are taxable). Despite ampli fied business cycles in the 2000s and important tax base changes such as the increase in e-commerce, I fi nd changes in tax rates explain 70 percent of the increase in tax revenue volatility in the 2000s. Motivated by this result I create a normative model of taxation and produce a condition for optimal taxation when tax-revenue volatility is considered (a volatility-adjusted Ramsey rule). I estimate the volatility-adjusted Ramsey rule and find thirty-six states in 2005 rely inefficiently on either the income or sales tax, up from twenty-six states in 1965. This increase in imbalance is due to an increased reliance on the income tax as fourteen states relied inefficiently on the income tax in 1965 compared to twenty-six states in 2005. This paper fi nds strong evidence the increase in tax-revenue volatility state governments recently experienced is due to changes in tax rates, causing states to expose their revenues to unnecessary levels of risk.
The idea of volatility-adjusted Ramsey rules is a good one. Here is Nathan Seegert’s home page.
For the pointer I thank N.
Can you raise your kid as a conservative or liberal?
Here is a new study (caveat emptor all the way):
This new study, by a team led by psychologist R. Chris Fraley of the University of Illinois at Urbana-Champaign, begins with new mothers describing their intentions and approach in 1991, and ends with a survey of their children 18 years later. In between, it features an assessment of the child’s temperament at age 4.
…“Parents who endorsed more authoritarian parenting attitudes when their children were one month old were more likely to have children who were conservative in their ideologies at age 18,” the researchers report. “Parents who endorsed more egalitarian parenting attitudes were more likely to have children who were liberal.”
Obviously genes are an alternative channel of influence. And this is a stunner:
Also, the Illinois researchers did not gauge the parents’ political beliefs.
So I don’t believe the interpretations at all. Still, it is interesting to see the extent of attitudinal persistence, and furthermore “…our results also showed that early childhood temperament predicted variation in conservative versus liberal ideologies.” I suspect, however, that politics would turn out to be less susceptible to parental shaping than, say, religion or general temperamental approach to religion.
I consider this study radically incomplete, but still it is interesting to see the question tackled with a twenty-year time window and some ex ante planning.
For the pointer I thank www.artsjournal.com.
Italy estimates of the day
• According to the IMF’s economic data, Italian corruption losses are larger than the national economy of Serbia, which it ranks 76th in the world at $78.7 billion.
• This new economy would be roughly equivalent to the GDP of Italy’s eastern neighbor, Croatia.
• In 2011, the Italian government spent $1.112 trillion and brought in $1.025 trillion, a gap it could close almost entirely by recovering estimated corruption losses for that year.
Here is more, and for the pointer I thank Jonathan Weinhagen.
Sheila Bair’s new book
I put this one in the jaw hits floor category, and for more than one reason. (Sheila ran the FDIC during the financial crisis and her book is titled Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself).
The book is remarkably full of information and substantive narrative. Few books pack in so much and I mean this in a very positive way. I learned something on virtually every page, even after having read many of the other crisis books.
Yet her running claim that she had a plan to end the bailouts, or abolish “Too Big To Fail” is absurd. (Though most of these people do.) She should be presenting only the more modest argument that it would have been better to distribute more losses on creditors, which indeed she did advocate. Her narrative overreaches by a long mile.
Second, to a remarkable degree, she sees everyone else in the process as filled with fault and herself as never at fault. She has zero qualms about ceaselessly flinging mud out the rear view mirror, and does so for even the tiniest and pettiest of squabbles, including ones the readers never knew or cared about. Geithner by the way is villain number one but no one else on the scene matches her virtue and common sense and scarcely a page flies by when we are allowed to forget this.
She is beloved of sentences such as “Maybe the boys didn’t want Sheila Bair playing in their sandbox.” Who am I to say she is wrong? Reading this book now I know why!
This is arguably the most _______ book I have read, ever, and I am still looking for the right word to fill in that blank. It is in any case stunning.
From yesterday’s media, here is Sheila celebrating the departure of Vikram Pandit from Citibank. I do support full free speech rights, but still I feel queasy when former top-ranking government officials — who have been privy to lots of inside knowledge — speak out on such specific matters and in such a negative way on particular individuals and firms, as opposed to making broader policy recommendations. What are now the incentives for CEOs negotiating with the FDIC or for being honest with regulators the next time around? Former government leaders and regulators should not be settling personal scores in public to such an extent. Do you see many other accomplished statespeople doing the same?
This tract is a performance of terror, in good and bad ways. Few books will teach you more about the politics of bureaucracy and regulation, though not exactly as the author intends.
How to think about makers and takers
Here is my latest NYT column, on how we ought to be thinking about the issue of makers vs. takers. Excerpt:
EVERYONE FEELS ENTITLED People tend to think that they have justice on their side, whether it comes to making or taking.
For example, millions of homeowners have spent hundreds of thousands of dollars on the premise that the tax deduction for mortgages will be continued. If they support a continuation of that deduction they hardly feel like brigands, even though a bipartisan consensus of economists doubts the efficiency of this tax break.
As years and decades pass, recipients of this deduction and other benefits start to see them as deeply and richly deserved. Furthermore, almost all of us reap one or more of these benefits, so few individuals are consistently opposed to all government transfers.
It becomes difficult for a politician to articulate exactly what is wrong with this arrangement when the audience itself is in on the game and perhaps does not want to hear about its own takings.
Mark Thoma comments.
You also should read the new (short) book out by Nicholas Eberstadt, A Nation of Takers: America’s Entitlement Epidemic, which came to my attention quite recently.
Long profile of Glenn Hubbard
From the NYT, you can read it here. Excerpt:
“Did you know, for instance, that he has a brother who is a country music star?” asked Kevin A. Hassett, a friend and scholar at the conservative American Enterprise Institute.
Hubbard’s younger brother, Gregg — known to fans as Hobie — is a member of Sawyer Brown, a country rock band that gained fame via “Star Search,” a sort of precursor to “American Idol.”
“He’s always had a great sense of humor,” says Gregg Hubbard, speaking by telephone before a flight to a concert. He recounts celebrating his 40th birthday in New York City and sharing a gift he had just been given, a Razor scooter, with his brother. “We were with my older nephew,” he says, “and we took turns, the three of us, riding up and down Broadway on a scooter.”
Paradoxes of Internet Regulation–Korea Edition
Google’s maps of Seoul are peculiar, they offer public transit directions but not driving directions. Turns out that this is due to Korean law (the Measurement Act) which prohibits the export of Korean map data without obtaining government approval. (The distinction appears to be that driving directions are “new” maps and thus unapproved while transit directions are fixed and can be approved in advance of generation.)
Local versions of Google satellite imagery are also much lower resolution in South Korea due to military restrictions. Google has argued that by satisfying the law within a country it satistifes that country’s law, a policy rule on Google’s part that I applaud, but this policy does lead to the paradox that the images of South Korea available in South Korea are not as high resolution as those available in North Korea!
More generally, however, the bigger Google gets the more countries it has a physical presence in (servers, sales staff and support etc.) and thus the more leverage individual countries, especially large countries, will have to degrade the services that Google offers not just within-country but to the world.
What does the cost disease imply about the public sector?
Matt Yglesias has a good post on the recent Steven Pearlstein column. Here is Matt:
…people need to start paying much more attention to questions of tax efficiency. It’s overwhelmingly likely that we’re going to want the public sector to be a larger share of the economy in 10, 20, 30, 40 years than it is today and we need to find relatively growth-friendly ways to make that happen.
Here is Pearlstein:
From a political perspective, Baumol’s most important insight is that government spending must grow as a percentage of the economy. Most of the services that are provided by, or financed by government — health care, education, criminal justice, national security, diplomacy, industry regulation, scientific research — are those that suffer most acutely from Baumol’s disease. That’s not because of incompetence or self-interest on the part of public servants or even the socialist instincts of Democratic politicians — it’s in the nature of those activities.
To demand, as Republicans do, that government be held to some historical average as a percentage of the economy stubbornly ignores this reality. It would condemn the country, as John Kenneth Galbraith once put it, to a future of “private affluence and public squalor.”
Let’s for the purposes of discourse take the cost-disease argument, and this classification of sectors, for granted. I would stress that there are two different ways of measuring the relative size of government in the economy. The first is as expenditure share, say as a fraction of gdp, and that indeed may well go up because of Baumol’s argument (I’ll return to this).
The second question concerns the real value of outputs from government, as measured from the consumer side. If government outputs increasingly cost more to produce, should not a substitution effect kick in and lead us to prefer, at the margin, a higher proportion of productivity enhancement-enjoying private sector outputs? In common parlance, if flat screen TVs become much cheaper, buy more of them.
This implication often receives less stress from cost-disease advocates and you will note that it militates in favor of substituting away from government outputs.
There is a further implication. What goes up on the expenditure side is the share of any given governmental output in gdp. If we substitute out of government outputs enough, the total share of government output, as an expenditure fraction of gdp, could go up or down in an optimum. If the elasticity of demand is sufficiently high, flat screen TVs can become an increasing share of gdp and government social workers a smaller share. Right now for instance internet commerce is a growing share of gdp as measured in terms of expenditures.
In any case, moving away from expenditure shares and back toward output: if government responds optimally, we end up with government as a smaller share of real output over time, yet at higher costs. Surely that is a recipe for cynicism, justified or not.
Arvind Subramanian is pessimistic about Indian growth prospects
“The Indian state is increasingly unable to provide a range of basic services: health, education, physical security, rule of law, water and sanitation. The writ of the Indian state, for example, covers only about 80% of India, with the tribal belt essentially contested by Maoist insurgents. The private sector can substitute for some of these deficiencies but never completely. – In the long run, growth is determined by effective state capacity: that is India’s weakness compared with China.”
Here is more, in the form of a debate. Hat tip goes to Tom Murphy.
The political business cycle in Honduras
In Honduras, one of Latin America’s poorest countries and also its most dangerous, candidates dole out another kind of political swag: coffins for the destitute.
Charities organized by politicians scour poor neighborhoods in search of families of murder victims who cannot afford funeral services or even a simple casket to bury their beloved. There are plenty of takers in this Central American country, where two out of three workers earn less than the minimum wage of $300 a month, and more than 136 people are killed every week.
Here is more, courtesy of Daniel Lippman; here is Daniel’s piece on Medicaid cuts for dental services.
Fooled by satire
An Iranian news agency has reported as fact an entirely fictitious survey carried on The Onion website earlier this week which claimed that most rural white Americans would vote for President Mahmoud Ahmadinejad ahead of Barack Obama.
The English-language service of Iran’s semi-official Fars news agency republished the spoof story from the satirical website word-for-word.
It even went so far as to include a made-up quote from a fictional West Virginia resident it idendified as Dale Swidersk who claimed he would rather go to a baseball game with Mr Ahmadinejad because “he takes national defence seriously and he’d never let some gay protesters tell him how to run his country like Obama does”.
The story is here.
The bottom line on the euro right now
… it’s not that long ago that the world was optimistic that Mario Draghi and the European Central Bank had finally gotten the situation under control. But the politics of the thing essentially prevent a “once and for all” resolution from taking place. That’s because the ECB’s game is to centralize as much authority in Frankfurt as possible which means that peripheral governments must be continually put to squeeze between the demands of the central bank and the demands of the voters. The fear is that if the ECB goes “too easy” on the Spanish government, that Rajoy will give in to the political unpopularity of the ECB agenda and back off. Spain needs to be perched perennially on the brink of a crisis since its citizens can’t be trusted to Ireland/Baltic-style simply go along with austerity budgeting.
The Spanish ten-year yield is back up over six percent and climbing…
Catalonia, just to keep things interesting
Catalonia government president Artur Mas has called early elections for the powerful northeastern region, a vote that will likely be seen as something of a referendum on independence from Spain.
In a regional parliamentary debate Tuesday, Mas set the date for Nov. 25.
Mas called the elections more than two years ahead of schedule after the central government in Madrid last week rejected a demand to grant Catalonia special fiscal powers.
That is from The Montreal Gazette. Here is FT coverage. You can follow the issue on Twitter here.
I wonder where Andreu Mas-Colell (Finance Minister of Catalonia) stands on all of this?