Category: Political Science
Sentences to ponder
Support for redistribution, surprisingly enough, has plummeted during the recession. For years, the General Social Survey has asked individuals whether “government should reduce income differences between the rich and the poor.” Agreement with this statement dropped dramatically between 2008 and 2010, the two most recent years of data available. Other surveys have shown similar results.
…the change is not driven by wealthy white Republicans reacting against President Obama’s agenda: the drop is if anything slightly larger among minorities, and Americans who self-identify as having below average income show the same decrease in support for redistribution as wealthier Americans.
Here is more. The researchers, Ilyana Kuziemko and Michael I. Norton, attribute this to “last place aversion,” namely the desire to always have someone below you in the income pecking order:
Which group was the most opposed [to an increase in the minimum wage]? Those making just above the minimum wage, between $7.26 and $8.25.
For the pointer I thank The Browser.
The Negative Externality of Voting
Here is Jason Brennan:
How other people vote is my business. After all, they make it my business. Electoral decisions are imposed upon all through force, that is, through violence and threats of violence. When it comes to politics, we are not free to walk away from bad decisions. Voters impose externalities upon others.
We would never say to everyone, “Who cares if you know anything about surgery or medicine? The important thing is that you make your cut.” Yet for some reason, we do say, “It doesn’t matter if you know much about politics. The important thing is to vote.” In both cases, incompetent decision-making can hurt innocent people.
Commonsense morality tells us to treat the two cases differently. Commonsense morality is wrong.
…In The Ethics of Voting, I argue that…voters should vote on the basis of sound evidence. They must put in heavy work to make sure their reasons for voting as they do are morally and epistemically justified. In general, they must vote for the common good rather than for narrow self-interest. Citizens who are unwilling or unable to put in the hard work of becoming good voters should not vote at all. They should stay home on election day rather than pollute the polls with their bad votes.
Steven Pinker on violence
It is an important and thoughtful book, and I can recommend it to all readers of intelligent non-fiction, reviews are here But I’m not convinced by the main thesis.
Might we run an econometrics test on regime changes? The 17th century was much more violent than the preceding times, as was the early 19th century, albeit to a lesser extent. Perhaps the distribution is well-described by “long periods of increasing peace, punctuated by large upward leaps of violence”, as was suggested by Lewis Richardson in his 1960 book on the statistics of violent conflict? Imagine a warfare correlate to the Minsky Moment. In the meantime, there will be evidence of various “great moderations,” though each ends with a bang.
Pinker does discuss these ideas in detail in chapter five, but at the end of that section I am not sure why I should embrace his account rather than that of Richardson. I am reminded of the literature on the peso problem in finance.
Another hypothesis is to see modern violence as lower, especially in the private sphere, because the state is much more powerful. Could this book have been titled The Nationalization of Violence? But nationalization does not mean that violence goes away, especially at the most macro levels. In a variant on my point above, one way of describing the observed trend is “less frequent violent outbursts, but more deadlier outbursts when they come.” Both greater wealth (weapons are more destructive, and thus used less often, and there is a desire to preserve wealth) and the nationalization of violence point toward that pattern. That would help explain why the two World Wars, Stalin, Chairman Mao, and the Holocaust, all came not so long ago, despite a (supposed) trend toward greater peacefulness. Those are hard data points for Pinker to get around, no matter how he tries.
We now have a long period between major violent outbursts, but perhaps the next one will be a doozy.
How would this book sound if it were written in 1944? Maybe there is a regime break at 1945 or so, with nuclear weapons deserving the credit for a relative extreme of postwar peace. Pinker’s discussion of the nuclear question starts at p.268, but he underrates the power of nuclear weapons to reach the enemy leaders themselves and thus he does not convince me to dismiss the nuclear issue as central to the observed improvement, throw in Pax Americana if you like.
In one of the most original sections of the book (e.g., p.656), Pinker postulates the greater reach of reason, and the Flynn effect, working together, as moving people toward more peaceful attitudes. He postulates a kind of moral Flynn effect, whereby our increasing ability to abstract ourselves from particulars, and think scientifically, helps us increasingly identify with the point of view of others, leading to a boost in applied empathy. On p.661 there is an excellent mention of the wisdom of Garett Jones. Pinker’s thesis implies the novel conclusion that those skilled on the Ravens test have an especially easy time thinking about ethics in the properly cosmopolitan terms; I toy with such an idea in my own Create Your Own Economy.
What is the alternative hypothesis to this moral Flynn Effect? Given that the private returns to supporting violence are rare — most of the time — and violence has been nationalized, people will have incentives to invest in greater empathy and to build their self-images around such empathy. This empathy will be real rather than feigned, but it also will be fragile rather than based in a real shift in cognitive and emotive faculties; see 1990s Mostar and Sarajevo or for that matter Nagasaki or British or Belgian colonialism.
When doing the statistics, one key issue is how to measure violence. Pinker often favors “per capita” measures, but I am not so sure. I might prefer a weighted average of per capita and “absolute quantity of violence” measures. Killing six million Jews in the Holocaust is not, in my view, “half as violent” if global population is twice as high. Once you toss in the absolute measures with the per capita measures, the long-term trends are not nearly as favorable as Pinker suggests.
Here is John Gray’s (excessively hostile) review of Pinker. In my view this is very much a book worth reading and thinking about. And I very much hope Pinker is right. He has done everything possible to set my doubts to rest, but he has not (yet?) succeeded. I find it easiest to think that the changes of the last sixty years are real when I ponder nuclear weapons.
John Ralston Saul on the decline of political speech
Via www.bookforum.com, from an interesting interview:
GB Who are the best speakers in the world today, politically?
JRS Long silence. The reason for which there is a ‘long silence’ is that, with the gradual bureaucratization of politics, we have ended up with – through the 1970s, 1980s and 1990s – politicians increasingly reading speeches written for them by somebody else; that is, politicians being made to feel that they were not the real political leaders, but rather – in a sense – heads of a large bureaucracy. The result has been that politicians may think that they have a responsibility to speak in a solid and measured way – with the consequence that they not only became boring and bad speakers, but sound artificial and are not listened to. Modern speech writers started adding in ‘rhetoric,’ which sounded artificial, and led to people listening even less to political speeches. This also came with a rise in populism; that is, we saw the revival of populist speaking – with populist politicians winning power here and there – meaning that the speech writers started putting populist rhetoric in as a gloss on top of the boring managerial material that they had been producing. So what we now have are sensible, elected leaders giving speeches that, at one level, are boring, solid stuff and, at another level, cheap rhetoric.
…Many political leaders think that it is dangerous to speak well. In fact, they are looking to bore people – and we feel that. As a result, when we stand up and say real things, people are quite shocked. And that is because they are always working on this level of measurement. If we take someone like a Trudeau or an FDR, or an LBJ, or a de Gaulle – someone like that – they knew that speeches are not about who will like them and dislike them. Speeches are actually about whether people will respect you because you have spoken to them in a way that they take to be honest – as if they are treated in a way that is intelligent. Trudeau was often boring, but his secret was that, even when he was being insulting, he was talking to you as if you were as smart as he was.
A model of political corruption
Lessig takes on the model of lobbying as “legislative subsidy” developed by political scientist Richard Hall and economist Alan Deardorff as an alternative to the naive lobbying-as-bribe model. Legislators come to Washington passionate about several issues. Quickly, though, they come to depend on the economy of influence for help in advancing an agenda. They need the policy expertise, connections, public-relations machine, and all the rest that lobbyists can offer. Since this legislative subsidy is not uniformly available, the people’s representatives find themselves devoting more of their time to those aspects of their agenda that moneyed interests also support. No one is bribed, but the political process is corrupted.
That is from Matt Yglesias.
A simple theory of regulations, new and old
Q = min (#laws, #regulators)
The number of laws grows rapidly, yet the number of regulators grows relatively slowly. There are always more laws than there are regulators to enforce them, and thus the number of regulators is the binding constraint.
The regulators face pressure to enforce the most recently issued directives, if only to avoid being fired or to limit bad publicity. On any given day, it is what they are told to do. Issuing new regulations therefore displaces the enforcement of old ones.
If the best or most fundamental regulations are the ones issued first, over time the average quality of regulation will decline.
Critics from both sides will claim, at the same time, that “regulation is too high,” and “regulation is too low.” They will both be describing aspects of the same proverbial elephant.
The ability of a new regulation to pass a (partial equilibrium) cost-benefit test does not mean said regulation is a good idea, at least not without adjusting for the “crowding out” effect.
Hiring more regulators will address the dilemma only temporarily (assuming that the number of regulators cannot keep up with the number of laws). At first more regulations will be enforced, but as time passes the quality gap between the enforced regulations and the most important regulations will again open up.
If you think you just passed some really, especially important regulations, slow down the pace of future regulations.
If you are pro-deregulation, slowing down the pace of forthcoming regulations won’t much help your cause. It will shift back attention and labor to slightly more important regulations, however. It is possible that the net regulatory impact goes up.
Sunset provisions may induce regulators to treat, enforce, and monitor the old regulations more like the new ones, and vice versa. What other institutions might contribute toward this end?
Complaints Choir of Singapore
They sing complaints about their city-state, here is one excerpt:
Stray cats get into noisy affairs
At night my neighbor makes weird animal sounds
People put on fake accents to sound posh
And queue up 3 hours for donuts
Will I ever live till eighty five to collect my CPF?
It sounds like a terrible place:
Old National Library was replaced by an ugly tunnel
Singaporean men can’t take independent women
People blow their nose into the swimming pool
And fall asleep on my shoulder in the train
Full lyrics and explanation are here. Yet it is now legally banned for foreigners to sing the complaints. Here is a video of the Choir, definitely recommended, best video I’ve seen this year and do watch it through to the end.
For the pointer I thank Chug Roberts.
Henry Farrell’s public choice theory of the EU
In the EU, the instinct is always to fudge — to come up with technocratic fudges that are incomprehensible to the outside world but get some minimum consensus among states…But the problem is not a technocratic problem. It’s a political problem. So they’re going to hesitatingly help out the Greeks, but it’s not going to provide political actors or market actors the confidence I think they need.
Here is more.
Why they call it Green Energy: The Summers/Klain/Browner Memo
The LA Times reports that Larry Summers and Timothy Geithner “raised warning flags” about the loan guarantee program for renewables long before the Solyndra bankruptcy. The article doesn’t have a lot of new information (the key players are clearly protecting themselves) but it does link to a fascinating briefing memo written for the President in October of 2010 by Summers, Ron Klain (then chief of staff to the Vice President), and energy advisor Carol Browner.
The memo says that OMB and Treasury were concerned about three problems, “double dipping” (massive government subsidies from multiple sources), lack of “skin in the game” from private investors and “non-incremental investment,” the funding of projects which would occur even without the loan guarantee.
The memo then illustrates with one such program, the Shepherds Flat Loan guarantee. Here is the relevant portion of the memo:
The Shepherds Flat loan guarantee illustrates some of the economic and public policy issues raised by OMB and Treasury. Shepherds Flat is an 845-megawatt wind farm proposed for Oregon. This $1.9 billion project would consist of 338 GE wind turbines manufactured in South Carolina and Florida and, upon completion; it would represent the largest wind farm in the country.
The sponsor’s equity is about 11% of the project costs, and would generate an estimated return on equity of 30%.
Double dipping: The total government subsidies are about $1.2 billion.
Subsidy Type Approximate
Amount
(millions)Federal 1603 grant (equal to 30% investment tax credit) $500
State tax credits $18
Accelerated depreciation on Federal and State taxes $200
Value of loan guarantee $300
Premium paid for power from state renewable electricity standard $220
Total $1,238
Skin in the game: The government would provide a significant subsidy (65+%), while the sponsor would provide little skin in the game (equity about 10%).
Non-incremental investment: This project would likely move without the loan guarantee. The economics are favorable for wind investment given tax credits and state renewable energy standards. GE signaled through Hill staff that it considered going to the private market for financing out of frustration with the review process. The return on equity is high (30%) because of tax credits, grants, and selling power at above-market rates, which suggests that the alternative of private financing would not make the project financially non-viable.
Carbon reduction benefits: If this wind power displaced power generated from sources with the average California carbon intensity, it would result in about 18 million fewer tons of CO2 emissions through 2033. Carbon reductions would have to be valued at nearly $130 per ton CO2 for the climate benefits to equal the subsidies (more than 6 times the primary estimate used by the government in evaluating rules).
In my view, the Summers/Klain/Browner analysis was a damning indictment of the Shepherds Flat project. The taxpayers were expected to fund by far the largest share of the bills and also of the risk and in return they weren’t getting many benefits in terms of reduced pollution. In contrast, Caithness Energy and GE Energy Financial Services, the corporations behind the project, weren’t taking much risk but they stood to profit handsomely. I guess that is why they call it “green” energy.
In short, the Shepherds Flat project was corporate welfare masquerading under an environmental rainbow.
So are you surprised to learn that shortly after the memo was written the Shepherd Flats loan guarantee of $1.3 billion was approved? Of course not; no doubt you also saw that the memo authors were careful to inform the President that the “338 GE wind turbines” were to be “manufactured in South Carolina and Florida.” Corporate welfare meet politicized investment.
In the Solyndra case just about everything went wrong, including bankruptcy and possible malfeasance. Caithness Energy and GE Energy Financial Services are unlikely to go bankrupt and malfeasance is not at issue. As a result, this loan guarantee and the hundreds of millions of dollars in other subsidies that made this project possible are unlikely to create an uproar. Nevertheless, the real scandal is not what happens when everything goes wrong but how these programs work when everything goes right.
The perspective of the statesman and the perspective of the blogger (or scholar)
Some of you have asked me what I think of the concerted central bank effort to flood European banks with dollars. Ed Harrison noted the Fed is playing it down (no press release, perhaps a fear of treason charges), I believe Roubini viewed it as a hidden forex move.
I find it a striking dilemma and here is why. The blogger in me thinks: “This just postpones all the major decisions. Once the loans are up the banks still will be strapped, and the longer you wait to resolve financial crises, the more they will cost. There is no eurobond and no rapid economic growth at the end of that tunnel.”
If I were Trichet, or some other involved statesman, I would have done what was done, albeit sooner. The statesman in me would think: “This just postpones all the major decisions. But I can’t send everyone to their doom just yet. Maybe there is some way I am wrong and a month or two from now things will look different and we can make another decision then.”
I am never sure how to reconcile these two perspectives. Of course, in real life I am a blogger and not a statesman, for good reasons I might add.
In the meantime, the banks are lobbying the BRICS.
Cities as hotels
Earlier this year I posted about India’s private city, Gurgaon. Gurgaon has grown from nothing to a city of 1.5 million people in just 30 years and it has done so based almost entirely on the private provision of public goods, including transportation, utilities, and security. Gurgaon is a desirable place to live in India but it has grown haphazardly as a city of private oases, rather than as an integrated city. As a result, Gurgaon has not enjoyed all the benefits of economies of scale in infrastructure provision or the benefits that come from internalizing externalities–the types of benefits that are possible with a single owner or integrated political system. As Matt Yglesias explained at the time:
Imagine if someone owned all of San Francisco and leased the land and structures out. Well obviously he’d want to have some kind of fire department and building standards to protect his investment. And he’d want to have a security force, since crime would reduce the value of the rent. And he’d want there to be some parks, because people like parks and their presence will increase the rent he can charge. (Indeed, my building includes a small private park). And obviously he’d need schools and really all the rest. …But in order to internalize the benefits of privately provided infrastructure, parks, public safety, etc. the scale of the enterprise would have to be really big. Like the size of a whole city.
Gurgaon, however, is not unique. Private cities are growing throughout the developing world and some of them are quite large.
Renaissance Partners, the investment unit of Moscow-based Renaissance Group, plans to build a 6,400- acre city in the Democratic Republic of Congo as it seeks to benefit from Africa’s urbanization.
The Russian firm is working on a master plan for the new urban center after securing the land outside Lubumbashi, the country’s second-largest city… Renaissance is considering similar projects in Ghana, Nigeria, Senegal and Rwanda, he said.
“The West has peaked in terms of economic growth and the new markets are in Africa,” Meyer, 39, said. “And the main drivers of this growth in Africa are going to be cities.”
Renaissance’s Lubumbashi project will be more than double the size of Tatu City, the $5 billion center that the Russian firm is building from scratch outside the Kenyan capital of Nairobi. The Moscow firm, headed by Stephen Jennings, plans to take advantage of Africa’s economic growth and emergence of a growing urban middle class demanding better infrastructure.
6,400 acres is a small city, about the size of Apple’s home of Cupertino CA (pop: 58,000), but it is big enough that Renaissance partners will have an incentive to build public goods such as city-wide sewage, parks, roads (congestion pricing!), an electric plant and grid and so forth, exactly as Matt argued (see also The Voluntary City).
Private cities are happening now for a reason. Africa, India, and China are urbanizing more rapidly than has ever occurred in human history. In Africa, the number of urban dwellers is projected to increase by nearly 400 million, in India at least 250 million will move to cities and in China more than 400 million will move to cities in just the next 20 years. Not all of these people will move to older cities, which are not always in the right places and which rarely possess anything like the right material let alone the right political infrastructure. The rising middle-class want to live in first-world cities and in many of these countries only the private sector can deliver those cities.
The rapid urbanization of the developing world is an opportunity to remake cities anew. Private cities as hotels on a grand scale.
Sentences to ponder
“China is a poor country with only $4,000 per capita income,” Yu Yongding, a Chinese top economist and former member of the central bank’s monetary policy committee said in an interview in China. “To talk and think about China to rescue countries with $40,000 per capita incomes is ridiculous.”
The article (mostly on Europe) is here. I can imagine a minimum of three theories of geopolitical influence:
1. You get it by having a nice country and it is then more or less automatic, possibly proportional to size as well.
2. It is hard to get in any case, as most countries do what they want anyway and are not much susceptible to outside influence.
3. Geopolitical influence is proportional to how much a government invests in it.
To the extent #3 is true, it does not bode well for the future of the welfare state.
The economics of bombs
As the bombs get more difficult to construct or operate, the costs rise. Bombs activated with a remote detonator like a cellphone cost a mere $345 and accounted for a surprisingly small — 12.6 percent — of attacks, perhaps owing to the U.S.’ hard-won ability to jam the detonator signal. (One would imagine the major cost component is the cellphone.) For insurgents to turn a car into a bomb or convince someone to kill himself during a detonation — or both — the cost shoots up into the thousands: $10,032 for a suicide bomber; $15,320 for a car bomb; nearly 19 grand to drive a car bomb. All together, those relatively expensive attack methods accounted for fewer than six percent of bomb attacks in 2009.
Most of those bombs have gotten cheaper to produce. In 2006, victim-operated IEDs cost an average of $1,125. Command-wire bombs were $1,266. Remote detonation bombs? The same. And as the costs dropped, victim-operated and command-wire detonated bombs skyrocketed. Back in 2006, they accounted for merely 21.3 percent and a piddling 1.9 percent of all bomb attacks, respectively.
But the sophisticated bombs have gotten more expensive. Car bombs cost $1,675 on average in 2006 — which seems absurdly low, given the cost of one involves acquiring and then tricking out a car. And the going rate on suicide bombers appears to have risen, from $5,966 in 2006 to nearly double that in 2009. Accordingly, both accounted for over 16 percent of IED attacks in ‘06. And JIEDDO says it has preliminary reporting indicating that suicide bombers cost $30,000 as of January.
Here is more and for the pointer I thank David Curran.
*Deng Xiaoping and the Transformation of China*
That is the new book by Ezra F. Vogel, excerpt:
Deng in 1978 had an equally dramatic effect on the Japanese people. In the 2,200 years of contact between China and its island neighbor, Deng was the first Chinese leader to set foot in Japan. He was also the first to meet the Emperor of Japan.
So far the main lesson I am drawing from this book is how provincial the Chinese leaders were circa 1978, but also how willing they were to absorb evidence and change their minds, especially following visits to Western Europe and Singapore, both of which had significant impacts on them. I am also learning that the 1979 war with Vietnam was a more significant event than I had thought.
The publication date of the book is listed as 26 September, but Amazon shipped my copy earlier this week.
Should our government spend (and borrow) more at negative real interest rates?
I have read so many posts saying yes. But is it so obvious? Let’s put aside the stimulus argument, I’d like to focus on the rate of return argument alone.
Let’s say I could borrow money at negative two percent real, but my seven cousins, three of whom are crazy, would get together and decide how to spend it. I would get a vote too and they would agree to spend it on me. I would have to pay it back.
I say no.
Many of the infra-marginal federal dollars are allocated by formula, such as with Social Security, and the cousins don’t have such a big say in the matter. I am grateful for that. But is it possible that the hypothetical new federal spending might be controlled by the cousins? And what if four of them are crazy?
How should I feel about the exorbitant cost overruns on California high speed rail? You know, the line connecting Fresno and Bakersfield? That wasn’t even the crazy cousins at work. (Or was it?)
I absolutely do not see this one as a no-brainer. By using the “should” language in your thought experiment you can take away the crazy cousins, at least hypothetically. But in the real world they are still there, and the non-crazy cousins screw up pretty often too.
How close in your family would the spending decisions have to get before you would accept a deal like that outlined above? How many people would turn it down, even with their spouse in charge of spending the money?