Category: Political Science

Solve for the equilibrium

by  Tyler Cowen in

…the Romney campaign went up with an ad just days after the Ryan pick, hitting Obama on the $716 billion figure.

“You paid into Medicare for years: every paycheck. Now, when you need it, Obama has cut $716 billion dollars from Medicare. Why? To pay for Obamacare,” the ad says. “The Romney-Ryan plan protects Medicare benefits for today’s seniors and strengthens the plan for the next generation.”

How the GOP ticket talks about Medicare is vitally important in Florida in particular, a competitive swing state with a high retirement-age population. Ryan is visiting the state for the first time today since he was named to the ticket, and will go to The Villages — billed as the largest retirement community in the world — with his mom.

But instead of wading into the policy details with which Ryan is most comfortable, Republican strategists said it would be far smarter for the Wisconsin lawmaker to focus on the Obama move to remove money from the Medicare trust fund and portray Republicans as the program’s savior.

The article is here.  You can try a second exercise, called “Solve for the Equilibrium Ten Years from Now.”

Increased aggression during human group contests when competitive ability is more similar

by  Tyler Cowen in

From Stulp G, Kordsmeyer T, Buunk AP, Verhulst S.:

Theoretical analyses and empirical studies have revealed that conflict escalation is more likely when individuals are more similar in resource-holding potential (RHP). Conflicts can also occur between groups, but it is unknown whether conflicts also escalate more when groups are more similar in RHP. We tested this hypothesis in humans, using data from two professional sports competitions: football (the Bundesliga, the German first division of football) and basketball (the NBA, the North American National Basketball Association). We defined RHP based on the league ranks of the teams involved in the competition (i.e. their competitive ability) and measured conflict escalation by the number of fouls committed. We found that in both sports the number of fouls committed increased when the difference in RHP was smaller. Thus, we provide what is to our best knowledge the first evidence that, as in conflicts between individuals, conflicts escalate more when groups are more similar in RHP.

The paper is here, hat tip goes to Neuroskeptic.  One hypothesis is behavioral.  The other hypothesis is more directly microeconomic.  Perhaps fouling has positive expected returns within the context of the game, but costs a player long-term reputation, risks long-term retaliation, and so on, and thus the aggression is deployed more in the really important situations.

All this just for them?

by  Tyler Cowen in

In spite of clichés about Nascar dads and Walmart moms, the actual share of voters nationally who are up for grabs is probably between just 3 percent and 5 percent in this election, polling experts say. The Obama and Romney campaigns are expected to spend on the order of $2 billion, in part to try to sway this tiny share of the electorate.

I’ll be glad when the whole thing is over.  There is also this:

In Virginia, for example, a large number of swing voters are concentrated in Fairfax County, just outside the District of Columbia…

The full article is here.

Now that’s what I call fiscal policy

by  Tyler Cowen in

If Changsha gets its way, the 100 day battle will just be a start. The city made headlines late last month when it unveiled plans for Rmb829bn ($130bn) in spending on projects ranging from airport expansion to road building, waste treatment and sprucing up the city.

The investment target was jaw-dropping, nearly 150 per cent the size of the city’s GDP last year.

Here is more, Simon Rabinovitch in the FT, “Changsha plan at the heart of China stimulus.”  Obviously not all of China will see a comparably large program.

*The New New Deal*

by  Tyler Cowen in

That is the new book about ARRA and fiscal stimulus, by Michael Grunwald, available here with the subtitle The Hidden Story of Change in the Obama Era.  Excerpt:

…it was an astonishingly big bill,  In constant dollars, it was more than 50 percent bigger than the entire New Deal, twice as big as the Louisiana Purchase and Marshall Plan combined.  As multibillion-dollar items were being erased and inserted with casual keystrokes, Obama aides who had served under President Bill Clinton occasionally paused to recall their futile push for a mere $19 billion stimulus that seemed impossibly huge in 1993, or their vicious internal battles over a few million bucks for beloved programs that suddenly seemed too trivial to discuss.

Critics of ARRA will not agree with everything in this book, but putting mood affiliation aside for a moment, the writing, research, and conception of the work are all excellent.

Yet again the tragedy of the commons, for Indian power generation

by  Tyler Cowen in

Surendra Rao, who was the chairman of the Central Electricity Regulatory Commission in 2001, when the nation’s last major blackout occurred, said that a fairly sophisticated system of circuit breakers should have prevented the failures on Monday and Tuesday. But, he said, the people manning the circuit breakers are bureaucrats beholden to state government officials, who are loath to have the power in their locality shut off — the usual prescription when power surges threaten the national grid.

Here is more, and for the link I thank Fred Smalkin.

The public choice approach to monetary policy

by  Tyler Cowen in

It remains neglected, even today.  Yet Martin Fackler is on the case when it comes to Japan (or try this link):

By speeding the flood of less expensive imported products into Japan, the strong yen is contributing to a broader drop in the prices of goods and services, known as deflation, that has helped retirees stretch their pensions and savings. The resulting inaction on the yen, according to a growing number of economists and politicians, reflects a new political reality, with already indecisive leaders loath to upset retirees from the postwar baby boom who make up nearly a third of the population and tend to vote in high numbers.

‘‘Japan’s tolerance of the strong yen and deflation is rooted in a clash of generations,’’ said Yutaka Harada, a professor of political science and economics at Waseda University in Tokyo. ‘‘And for now, the seniors are winning.’’

The problem, many economists warn, is that the victory comes at a high price, mortgaging the future by hastening the hollowing out of the economy as companies move abroad, and contributing to the deflation that has already exacerbated a nearly two-decade decline in Japan. It may also, ultimately, be self-defeating, threatening the very industries that created the huge trade surpluses sustaining Japan’s still comfortable living standards.

How many major political battles do the elderly actually lose?  I get a little worried about the conflation between nominal and real, and the blurring of short- vs. long-run time horizons, but still this is a point worth making:

‘‘The strong yen robs from youth, but there is not much awareness here yet of generational inequalities,’’ said another lawmaker, Keiichiro Asao, with the opposition Your Party.

Honduras may appeal to London courts

by  Tyler Cowen in

Tricky legal dispute in Central America? Sort it out in the London courts. Honduras, the state with the highest homicide rate in the world, is preparing to send appeal cases to the judicial committee of the privy council (JCPC) in Westminster.

The extraordinary expansion of UK legal jurisdiction is being negotiated in an effort to support the development of a pioneering enterprise zone in the crime-scarred republic.

The Honduran government is establishing what amounts to semi-independent city states, hoping that improved governance backed by international partners will attract business investment and create employment.

The complex constitutional agreement under discussion involves Mauritius – an island 10,000 miles away in the Indian Ocean – guaranteeing the legal framework of the courts in the development zones, known locally as La Región Especial de Desarrollo (RED).

Here is more, and for the pointer I thank P.

*Affluence and Influence*

by  Tyler Cowen in

The author is Martin Gilens and the subtitle is Economic Inequality and Political Power in America.  A few points:

1. It is an interesting book.

2. It is poorly written and the first fifty pages should have been abolished.

3. It argues, using a comprehensive data set, that the preferences of poor and even middle income people are neglected or underrepresented in the policy process.  The preferences of the wealthiest ten percent seem to have more sway.

4. It should take greater care to distinguish the preferences of the (often ill-informed) poor across means and ends.  Say a poor or middle class person feels “I want tariffs” and also “I want prosperity.”  The elites then push through free trade to produce prosperity and for that matter to get reelected and perhaps also to serve commercial interests and donors.  Have they met or frustrated the preferences of the poor?  By the metrics of Gilens the poor did not get their way but that is not obviously the correct conclusion.  Matt makes a related point.

5. Many lower- or middle-income voters decide to vote retrospectively over outcomes (mostly), rather than over policy inputs.  That suggests we should judge the responsiveness of the system in terms of how well it aims toward those outputs, not whether it gives lower-income voters their preferred policy inputs.

6. What is wrong with this simple alternative hypothesis?:  Politicians seek some measure of redistribution-weighted prosperity to get reelected.  Wealthier voters are better educated and smarter, so they have a better sense of which policies will bring that about.  It seems the wealthier voters are getting their way on policy inputs, but a deeper look shows the pressures on politicians are quite general.

7. I would be falling prey to the fallacy of mood affiliation if I simply assumed the author wanted policy to be more responsive to the wishes of the poor and middle class.  Still I can ask whether this would be a desirable end.  Aren’t they less educated and less well-informed on average?  Don’t they also care about politics less and derive less of their status from political processes and outcomes?  Do I want them to have a greater say over social issues, including gay marriage?  No.

Here is a Boston Review symposium on the book, including many responses from the notables on the sidebar, along with a response from the author.

Price inflation in Syria

by  Tyler Cowen in

…as the conversation deepened and tea flowed, he spoke of prices. Mr. Hamed leads a battalion near Aleppo. The demand for weapons on his turf is so high, and supplies are so short, he said, that he has had to pay more than $4 for a single rifle or machine-gun cartridge. A Kalashnikov assault rifle, he said, costs $2,000 or more.

In the history of conflict, these are high prices…

What will the supply elasticity be?

…full RPG-7 systems (a reusable launcher with two or three high-explosive antitank rounds) cost more than $2,000, and each replacement grenade costs $500. PK machine guns, another common firearm, cost $6,000 to $7,000. No modern infantry rifle is available for less than $900. Some cost several times that. Thus, arming three riflemen, a machine gunner and a man with a rocket-propelled grenade could easily cost a commander more than $10,000 — not counting ammunition.

Because of lack of ammunition, they are using M-16s as sticks, not guns.  Here is much more, interesting throughout.  For the pointer I thank Peter Somerville on Twitter.

How hot did you say it was?

by  Tyler Cowen in

In fact, the actual trends in temperatures had nothing to do with how people perceived them. If you graphed the predictive power of people’s perceptions against the actual temperatures, the resulting line was flat—it showed no trend at all. In the statistical model, the actual weather had little impact on people’s perception of recent temperatures. Education continued to have a positive impact on whether they got it right, but its magnitude was dwarfed by the influences of political affiliation and cultural beliefs.

And those cultural affiliations had about the effect you’d expect. Individualists, who often object to environmental regulations as an infringement on their freedoms, tended to think the temperatures hadn’t gone up in their area, regardless of whether they had. Strong egalitarians, in contrast, tended to believe the temperatures had gone up.

The same does not hold for perceptions of droughts and floods.  The full story is here, the underlying paper is here, and for the pointers I thank Michael Rosenwald and Scott Duke Kominers.