Category: Political Science

The new cabinet in Chile

E. Barandiaran notes in the comments:

You may want to know about the qualification of the new cabinet of 22 secretaries. There are 6 economists with graduate studies in the best US universities: Felipe Larraín will the secretary of the Treasury (Felipe is well known as the co-author with J. Sachs of a macro textbook and also got his Ph.D. from Harvard), two a Ph.D. from Minnesota and three a Master from Chicago. There is only one laywer but with training in law and econ in Harvard. A few others have degrees in public policy or MBA, and most of the others are engineers, all with graduate studies abroad. Most have been related as students, professors, and deans with Universidad Católica. Thus, Sebastián Edwards knows well the six economists (they studied there in the 1970s and were my students and/or assistants). Most have already long, successful careers in private enterprises and close relations with important NGOs. Quite a cabinet.

Here is one external report.

One reason why Germany can’t play tough guy with Greece

In the first year of the German occupation of Greece, austerity and "wage cuts" were imposed on the economy; at least 300,000 Greeks died of hunger.

Here is one contemporary account of that occupation.  The IMF, on the other hand, can't override EU strictures on currency policy and on fiscal policy.

Who then will play tough guy with Greece?

Beware of Greeks bearing gifts

In an interview in Ta Nea newspaper, Papaconstantinou also insisted that middle- and low-income earners would pay less tax.

The full article is here.  Is that a sign they're not so serious?  There was a recent poll:

…most Greeks back Prime Minister George Papandreou's plans to freeze civil servants' wages and cut their bonuses. But the majority of respondents also opposed a hike in the fuel tax and the introduction of new taxes.

“When Politics is Stuck in the Middle”

That's the header of my New York Times column today, here are some excerpts, starting with the health care issue:

The point here is not to belittle or praise the president, but to point out that his hands are tied. The biggest leftward move in American economic policy occurred during the Roosevelt and Truman years, when the Democrats had the upper hand for five consecutive presidential terms. Because of depression and war, people were looking for real change. Competitive forces in politics were relatively weak, and the Democrats had the chance to make their policies stick.

The Supreme Court‘s recent ruling on campaign spending also comes into clearer focus through the median voter theorem. The court ruled that the government may not ban political spending by corporations in candidate elections. Critics fear that the political influence of corporations will grow, but some academic specialists in campaign finance aren’t so sure.

For all the anecdotal evidence, it’s hard to show statistically that money has a large and systematic influence on political outcomes. That is partly because politicians cannot stray too far from public opinion. (In part, it is also because interest groups get their way on many issues by supplying an understaffed Congress with ideas and intellectual resources, not by running ads or making donations.) It is quite possible that the court’s decision won’t affect election results very much.

Here are the concluding two paragraphs:

The median voter theorem doesn’t predict that the legacy of the Obama administration will be a wash. But it does imply that we might find the most important achievements in areas that don’t always linger on the front page. For instance, the president’s ideas on education, which involve accountability and charter schools and pay for performance, may please the American public and thus make their way into policy. And because education transforms the knowledge and interests of the median voter for generations to come, such acceptance could make for a lot of other improvements.

If you’re looking for change to believe in, and change that will last, the odds are best when political competition is pushing the world in your direction.

Jacob Weisberg has a not unrelated column.  And, for another perspective, here are the comments over at Mark Thoma's blog.  A few further points:

1. "How tough Obama is" matters less than is usually portrayed.  That is the fallacy of anthromorphizing the outcome of political battles.  Obsessing over either positive or negative evaluations of key actors probably interferes with one's abilities to understand underlying structural forces.  

2. Even the Supreme Court usually tracks voter sentiment reasonably well.

3. On the health care issue, I don't think the electoral calculations of  the Democrats are over.

Economists’ petitions

Dan Klein, Carrie Milton, and David Hedengren are starting a new project, namely a study of petitions signed by economists.  Their list is here, can you add to it?  This is part of a longer-term project to understand the behavior of economists and to treat us as rational, maximizing agents, not just disinterested truth-seekers.

I wonder why institutions bother to generate petitions signed by economists.  Is it to influence the world?  To signal which economists are on their side?  To cultivate better connections with economists and create an excuse to contact them and affiliate with them?  Something else?

I've signed petitions once or twice but in general I don't like doing it, in part because I don't understand the game I am playing in doing so.

Bryan Caplan responds to criticisms of libertarianism

He makes many points, here is one of them:

E&O might be right that cynicism about government perversely increases support for government.  But if so, libertarians shouldn't attack the public's justified cynicism.  Instead, they should help people see the logical anti-government conclusion of their cynicism.  Academics who are cynical about government generally are anti-government; see for yourself at the Public Choice Society meetings.  Why not teach laymen to make the same connection?

I worry when I read this.  Most of all, it is surprisingly meliorist; I once read a book that suggested voters were doomed to irrationality (albeit to varying degrees).  If voters can be taught the correct sophisticated mix of cynicism and pro-liberty sentiment, can they not be taught to support good policies, thus making democracy a well-functioning system of government?  The E&O criticism strikes at the heart of an important tension in libertarian thought.  Outcomes which might be described as "good libertarian" also require important public goods to be produced at the level of overall public sentiment; there's no getting around that.

Admittedly, being pessimistic about public sentiment under democracy does not a priori mandate being pessimistic about the ability of public sentiment to support and maintain more libertarian settings.  (You might for instance think that the public good can be produced under some settings but that democracy per se corrupts public opinion, because of its internal workings, electoral pandering, etc.)  Nonetheless, I've yet to see good, well-fleshed out arguments to support the split claim Caplan is proposing, namely that public sentiment can be produced to support good libertarian outcomes but not good democratic outcomes.  

Addendum: Caplan responds.

*The Cleanest Race*

This is a very interesting book about the ideologies behind North Korea.  The author is B.R. Myers and the subtitle is How North Koreans See Themselves — and Why it Matters.  Excerpt:

One searches these early works in vain for a sense of fraternity with the world proletariat.  The North Koreans saw no contradiction between regarding the USSR as developmentally superior on the one hand and morally inferior on the other.  (The parallel to how South Koreans have always viewed the United States is obvious.)  Efforts to keep this contempt a secret were undermined by over-confidence in the impenetrability of the Korean language and the inability of all nationalists to put themselves in a foreigner's shoes.  The Workers' Party was taken by surprise, for example, when Red Army authorities objected to a story about a thuggish Soviet soldier who mends his ways after encountering a saintly Korean street urchin — another child character symbolizing the purity of the race.

I  liked this bit as well:

The lack of conflict makes North Korean narratives seem dull even in comparison to Soviet fiction.  Rather than try to stimulate curiosity about what will happen next, directors and writers try to make one wonder what has already happened.  Films introduce characters in a certain situation (getting a medal, say), then go back and forth in time to explain how they got there.  Nowhere in the world do writers make such heavy use of the flashback.  But we should beware of assuing that people in the DPRK find these narratives as dull as we do.  The Korean aesthetic has traditionally been very tolerant of convention and formula.  (South Korean broadcasters rework the same few soap-opera plots every year).  According to refugee testimony, however, most North Koreans prefer stories set either in the "Yankee colony" or in pre-revolutionary times, with real villains and conflict.

I also recommend the new book Nothing to Envy: Ordinary Lives in North Korea, by Barbara Demick.  Excerpt:

North Koreans have multiple words for prison in much the same way that the Inuit do for snow.

From the WSJ, here is a joint review of the two books.

How Haiti could turn things around

I'm not suggesting that the future gains will, in moral terms, outweigh the massive loss of life and destruction, but still the future Haiti might have a higher growth rate and a higher level of gdp per capita.  Here's how.

In the previous Haitian political equilibrium, the major interest groups were five or six wealthy families and also the drug trade, plus of course the government officials themselves.  None had much to gain from market-oriented, competitive economic development.  The wealthy families would have lost their quasi-monopolies and the drug runners would have been pushed out or lost some rents.  The wealthy families are not that wealthy and their economic projects are relatively small, at least by the standards of the outside world.

Enter the rebuilding of Haiti.  Contract money will be everywhere.  From the World Bank, from the U.S., from the IADB, even from the DR.  That contract money will be significant, relative to the financial influence of either the main families or the drug trade.

There exists (ha!) a new equilibrium.  The government is still corrupt, but it is ruled by the desire to take a cut on the contracts.  Ten or twenty percent on all those contracts will be more money than either the families or the drug runners can muster.  The new government will want to bring in as many of these contracts as possible and it will (maybe) bypass the old interest groups.  Alternatively, the old interest groups will capture the rents on these contracts but will be bought off to allow further growth and openness.

Arguably the new regime in Haiti will operate much like the federal states in Mexico.  Corrupt and a mess, but oriented toward a certain kind of progress, if only to increase the returns from corruption.

You will see this in how the port of Port-Au-Prince is treated.  Previously the rate of corruption was so high that the port was hardly used.  If the port becomes a true open gateway into Haiti (if only to maximize contracts and returns from corruption), that means this scenario is coming true.

The surviving Haitians, in time, might be much better off.  Virginia Postrel lays out some theory.

The “spending freeze”

There's not much to say in terms of the economic issues, the real lesson is that politics is more constrained than many people think.  Berating Obama for his lack of courage or his "failure to get tough" is simply denying or postponing this fundamental realization.

All policy recommendations need to be analyzed within this framework.  How will your preferred policy (this includes deregulation and the like, by the way; I am not aiming this barb in any particular direction) play out when, in the middle of the action, government turns out to be extremely constrained in a way you do not like.

If you are surprised by this Obama announcement, that is indirect evidence that some of your other policy preferences are incorrect.

Why Bernanke should be reconfirmed

Jim Hamilton nails it.  Excerpts:

Please permit me to suggest that intellectual stamina is the most important quality we need in the Federal Reserve Chair right now.

And:

How could there possibly be an alternative whom Barbara Boxer (D-CA) and Jim DeMint (R-SC) would both prefer to Bernanke?

Elsewhere I have to strongly differ with the Johnson-Kwak proposal that Paul Krugman be selected.  I don't intend this as a negative comment on Krugman, if anything I am suggesting he is too dedicated to reading and writing and speaking his mind.  The Fed Chair has to be an expert on building consensus and at maintaining more credibility than Congress; even when the Fed screws up you can't just dump this equilibrium in favor of Fed-bashing.  What lies on the other side of that curtain isn't pretty.  Would Krugman gladly suffer the fools in Congress?  Johnson and Kwak are overrating the technocratic aspects of the job (which largely fall upon the Fed staff anyway) and underrating the public relations and balance of power aspects.  It's unusual that an academic will be the best person for the job.

I also have to put the kibbosh on plans which postulate Bernanke as failing to receive reconfirmation but staying on the Board and letting Donald Kohn slide into the de fact #1 slot and everyone working together as before.  That's just not how things work.  Bernanke would more likely leave, plus outsiders would not know who was in charge or what the default was if the cooperation should break down.  The resulting reputational equilibrium would again prove unworkable or at least highly disadvantageous.

Overall when I read these discussions I realize that my theories of public choice are very, very different from those of some of the other commentators.

The “health care betrayal” and Waxman-Markey

If there's one lesson from the health care debacle, it is that Waxman-Markey was and is a dead end.  Many of us objected to the bill on the grounds that it supports a lot of phony offsets for twenty years, imposes lots of costs and regulation in the meantime, and then never really does much to help climate change, given the difficulties of political precommitment.  I believe that people with these objections, such as myself, were viewed as "obstructionists" by many or as people who were simply looking for an excuse not to support the bill.  But the idea that Congress was just playing around, and had no real will to address the problem, should now be much, much more credible.  For all the talk about Waxman-Markey as a "framework," I see plenty of reasons — all the more now — to think Congress never meant to follow through.

The advantage of a carbon tax is that it forces Congress (and others) to demonstrate a certain amount of seriousness up front.  A good rule of thumb for a climate change bill is whether a representative voting for it can and will say: "This will raise the price of gasoline in the next six months and that's the whole point."

Megan McArdle predicted all along, even after Ben Nelson folded, that the health care bill will fail because Congress isn't very interested in enacting unpopular policies.  That's very good prophecy.  It's no accident that she also is skeptical of Waxman-Markey, for reasons related to those expressed above.

I believe the health care debacle should cause all of us to rethink our positions on preferred paths, sequences, and strategies.  No matter what your opinion of the health care bill, it's not a pretty picture.

“Why is there so little money in U.S. politics?”

That's the title of a famous paper by Stephen Ansolabehere, John de Figueireido, and James Snyder.  The abstract of the non-gated version (other versions here) reads as follows:

Thirty years ago, Gordon Tullock posed a provocative puzzle: considering the value of public policies at stake and the reputed influence of campaign contributions in policy-making, why is there so little money in U.S. politics? In this paper, we argue that campaign contributions are not a form of policy-buying, but are rather a form of political participation and consumption. We summarize the data on campaign spending, and show through our descriptive statistics and our econometric analysis that individuals, not special interests, are the main source of campaign contributions. Moreover, we demonstrate that campaign giving is a normal good, dependent upon income, and campaign contributions as a percent of GDP have not risen appreciably in over 100 years – if anything, they have probably fallen. We then show that only one in four studies from the previous literature support the popular notion that contributions buy legislators' votes. Finally, we illustrate that when one controls for unobserved constituent and legislator effects, there is little relationship between money and legislator votes. Thus, the question is not why there is so little money politics, but rather why organized interests give at all. We conclude by offering potential answers to this question.

The bottom line is that today's Supreme Court decision probably matters less than you think.  You should see my Twitter feed.

A simple theory of political jobs, with respect to the health care debate

Political jobs would be torture for most people.  You have no freedom.  You are underpaid and over-bugged.  You lose a lot of your privacy.  You have to stop writing emails or saying what you think.  You don't get to read many good books or go for many quiet walks.  It's hard to be a non-conformist.  And so on.

Yet it's really hard to get top political jobs.  So who gets them?  People who truly, deeply love the power.

Plus "doing what the voters want" very often feels like, or can be described as, "doing the right thing."

So what happens when those people perceive their power as threatened?  You see it.

One implication is that paying politicians more, and giving them more privacy, would lead to less craven behavior.  (Although I personally don't like the current bill, the D. refusal to pass it is sheer cowardice.)  There would then be less selection for the "power addiction" and perhaps more principled behavior.

Paul Romer doesn’t think a charter city in Haiti can work (now)

The post is here, excerpt:

Contrary to what some have suggested, a charter city in Haiti is simply not an option at this time. A charter city can only be created through voluntary agreement. Under the current conditions, the government and people of Haiti do not have the freedom of choice required for any agreement reached now to be voluntary.

He has another idea:

There are clear limits on the number of Haitian immigrants that nearby jurisdictions are currently prepared to accept. But if nations in the region created just two charter cities, they could accept the entire population of Haiti as residents. There are many locations close to Haiti where these new cities could be built, but for now, Haiti itself is the one place we should not consider.

Here is an offer for repatriation to Senegal:

Presidential spokesman Mamadou Bemba Ndiaye told reporters that Mr Wade had shared his plans with senior aides, and they involved offering voluntary repatriation and plots of land to any Haitian who wanted “to return to their origin”.

“Senegal is ready to offer them parcels of land – even an entire region. It all depends on how many Haitians come. If it’s just a few individuals, then we will likely offer them housing or small pieces of land. If they come en masse we are ready to give them a region,” he said.