Category: Political Science
Alex Tabarrok assures me that one of my most under-rated papers is “The Idea Trap,” published in the June 2003 issue of the European Journal of Political Economy. In this paper, I set up a simple political-economic model with three variables: growth, policy, and ideas. The model is governed by three “laws of motion.” The first are near-tautologies:
1. Good policies cause good growth.
2. Good ideas cause good policies.
The third law is much less intuitive:
3. Good growth causes good ideas.
The inspiration for law #3 was my empirical finding that people with high income growth “think more like economists.”
These assumptions have an interesting implication: there exist “multiple equilibria” – one where growth, policy, and ideas are all good, and another where growth, policy, and ideas are all bad. I call the later “the idea trap,” because bad ideas sustain bad policy, bad policy sustains bad growth, and bad growth reinforces bad ideas. Implausible? Think about any of the world’s economic/political basket cases. How often do the people in those countries admit that their worldview is a failure, and humbly turn to their more successful neighbors? Not often. Or consider: When do crazy demagogues get the most serious hearings? In most cases, when a country is already going down the drain.
In any case, I was recently reading Whittaker Chambers’ Witness, and noticed that his story about communist conversions is directly relevant to my model:
[A] man does not, as a rule, become a Communist because he is attracted to Communism, but because he is driven to despair by the crisis in history through which the world is passing… In the West, all intellectuals become Communists because they are seeking the answer to one of two problems: the problem of war or the problem of economic crisis.
Think about the inter-war period. The problems of war and economic crisis loom large. So what happens in the world of ideas? People flock to a new viewpoint almost guaranteed to make both problems vastly worse! The effects of Communism on economic crisis are all too familiar: famine, chaos, slave labor camps. And of course any country that might go Communist is going to have a lot of trouble retaining domestic capital, much less attracting foreign investors.
The effect of Communism on war is less direct, but the history is pretty clear. The rise of Communism greatly increased the demand for Fascism in Italy and Nazism in Germany. By terrifying people, the Communists convinced many to hold their noses and support brutal dictatorships as an alternative. And by allying with Hitler against Poland in 1939, Stalin made Communism the junior sponsor of World War II.
My take: Bad ideas launched the bad policies of World War I, which in turn devastated Europe. The devastation in turn made people like Chambers embrace even worse ideas, leading to even worse policies, culminating in World War II. The only thing that surprises me is that the world ever recovered… but then again, in my model escapes from the idea trap are supposed to be random surprises.
At Tradesports the market prediction of a Bush victory has hit an all-time low.
Blogging is politically important in large part because it affects mainstream media, and helps set the terms of political debate (in political science jargon, it creates ‘focal points’ and ‘frames’). Note that we don’t provide an exhaustive account of blogs and politics – some aspects of blogging (fundraising for parties, effects on political values in the general public), we don’t have more than anecdotal data on.
I would phrase my view as follows. Blogging creates “common knowledge,” even if only among a few at first. Will an idea fly or not? You find out quickly by sending it out into the blogosphere and seeing the reaction. The verdict will be swift and often ruthless, but more often than not fair. And once this common knowledge leaks out to broader and more general communities, the effect is powerful. People will abandon an indefensible idea before it gets started. Or they will jump on the bandwagon right away. They already know how the fight will turn out. In short, the blogosphere is like simulating the larger debate with very swift intellectual mini-armies.
Under this account what matters about the blogosphere is the quick back and forth and the ability to construct rapid-fire dialogues through links. It also means that a better than average debator can influence the broader world by swaying the earlier mini-debate through sheer force of intellect. Of course as the blogosphere gets larger this will become harder to do. The argument will be “thicker,” and arguably less conclusive as well. After all, what if everyone wrote a blog? The debate would not be simulated any more.
What else does it mean for ideas to be evaluated more quickly? Many new ideas will have better chances than before. Throw it out there and see if it sticks; the blogosphere is relatively egalitarian with regard to traditional credentials. Debate-defensible ideas will do better, on average. I hold a number of views that I believe are true, but find difficult to defend in debate on blogs. Either the supporting data are not on the web or the ideas may sound politically incorrect. Ideas that take time to mature, and reveal their full wisdom, may suffer as well.
Print out and read the whole paper; at the very least it is likely to become a mini-classic, maybe more.
The ever-effervescent Jane Galt poses this obvious yet profound question:
…why did we agree to be the world/s policeman? The rest of the developed world essentially opted out of military development in favour of building their welfare states–why didn’t we? After all, we were perhaps the country least threatened by the Soviet Union.
I don’t think the standard imperialist answer holds. Sure, we have done some unsavoury things in order to promote our country’s economic interest, but shockingly fewer such things than any other country I can think of. The US has generally pursued its imperialistic expeditions in ways that are fairly altruistic — either ideological, or in pursuit of broadly stabilising actions such as trying to keep the Middle East fairly peaceful so that oil continues to flow, an action that benefits anpetrological countries far more than the US. Why did we take on the superpower project, and why didn’t we exploit our role as much as we could have?
My take: Even if the rest of the world hates us (debatable, in my view, but let’s say), being the world’s policeman is high status in American eyes. On top of that, most American leaders, and most ordinary Americans, think it is the proverbial “right thing to do,” and think that we do a relatively good job of it. Plus we get some economic benefits, such being able to bribe or bully people to open up their markets or buy our Treasury securities. When relative status, perceptions of right and wrong, and (some) economic self-interests all push in the same direction, the mix is potent. For the clincher, people have strong psychological tendencies to want to feel “in control.” Many people fear flying so much, precisely because they feel they have no control over the risk. Forget about the world, some people even try to control their teenagers, how is that for a laugh?
Or you might pose another, simpler question. How many Presidents run for a second term? Almost all of them. It’s not good for their income, and arguably it is not even good for their happiness. Most look like hell when they leave office. But they like being in control.
The bottom line? Whether you like it or not, America is not going to give up this policeman role anytime soon.
Virginia Postrel says yes; read more here. Paul Krugman suggests Kerry will repeal the tax cut [tax shift, more accurately] to spend more on health care, rather than trying to restore a balanced budget (my words, not his). Can these two luminaries, not always in total agreement, be wrong?
No doubt, if you look at what Kerry says, it sounds like he will spend more than Bush. But the ever-perceptive Jane Galt reminds us that, well…politicians are liars! (Just don’t let on you heard it here…)
I look less at what politicians say, and more at what kind of coalition they would have to build to rule. The high domestic spending of Bush I take as a sign of perceived political weakness (“we need to buy more allies”), rather than a reflection of Bush’s ideology. So in part it depends on what a Kerry victory would look like. But here are a few reasons to think Kerry might be more fiscally responsible:
1. The Republicans will still probably control the House and maybe the Senate too, check out the odds. The political benefits from spending are less, the less you control the content of that spending.
2. The Republicans become more fiscally conservative in opposition.
3. Kerry’s supporters hate Bush, most of all, for what is perceived to be his “Texan-evangelical-grammatically challenged-frat boy” symbolism [just for the record, I don’t buy this picture]. Kerry can appease his base on these symbols fairly easily, just by showing up for work. I doubt if many Kerry supporters are expecting or requiring that a Kerry candidacy would bring a significant movement toward the left on economic policy, above and beyond repealing some of the tax cuts. The left hates Bush so much they would become captives of the center, if Kerry held the presidency. The left would have nowhere else to go (advice to the left: be careful how much Bush hatred you show!)
4. Kerry would be under constant pressure to show that he is “tough” on foreign policy. This will limit his ability to make domestic spending commitments. And if he does well on foreign policy, and appears suitably in charge, he could get reelected without much using spending to buy domestic support. If he is weak on foreign policy, will lots of spending really help him?
5. If Bush is re-elected, it affirms that a Republican can get away with jacking up domestic spending. Such a precedent is worrying for the longer run, not just for Bush’s second term.
6. Have many Presidents moved closer toward their original ideological base in their second terms?
That’s enough raw unfounded speculation for one day. But no, it is not obvious to me that Kerry would be less fiscally responsible than Bush. It’s a judgment call, but let’s not obsess over what candidates say when campaigning. Don’t forget, it was Bush who campaigned on a platform of fiscal responsibility and no nation-building.
Italy is planning to privatize many of its historic museums and buildings:
A portmanteau law affecting all aspects of the Italian artistic, built and environmental heritage was enacted last month. It is the product of three political tendencies. The first dates back to the late 1990s, when a Socialist government wanted to allow the private sector to become involved in a part of Italian life that for 50 years had been dominated by the State, in order to bring greater efficiency and better services to it. The second is the partial devolution of power to regional and local government as result of the electoral reforms of the 1990s, and the third proceeds from a 2001 Finance Act of the current, right wing government that aimed to raise money by the sale of public assets, including historic buildings and State-owned land.
This is a difficult policy issue, as national heritage can be a genuine public good. But the major argument being used against these privatizations is hardly convincing:
The proposal to sell State-owned buildings has been contentious, largely because the State does not know in detail what it owns [emphasis added], and the architectural protection lobbies are afraid that masterpieces may be sold to unsuitable owners.
Here is the full story.
The following table lists how many of the major agencies or departments had their budgets cut in a given Presidential term:
President and Term, Number of Budget Cuts [see the last link in this post for further explanation of the data. I’ve done minor editing and added the boldface]
Johnson, 4 out 15
Nixon, 3 out 15
Carter, 5 out 15
Reagan 1, 8 out 15
Reagan 2, 10 out 15
Bush, George H., 2 out 15
Clinton 1, 9 out 15
Clinton 2, 0 out 15
Bush, George W., 0 out 15
Obviously Reagan II made real efforts in this direction. George W. comes in tied for last with Clinton II. This is a highly imperfect proxy, but when you are 0 for 15 it is hard to blame measurement error alone.
Here is one unnoticed achievement of Ronald Reagan:
President Reagan is the only president to have cut the budget of the Department of Housing and Urban Development in one of his terms (a total of 40.1 percent during his second term).
I’ve long suspected that many political debates boil down to a relatively small number dimensions or core value judgments. And I believe these values often are rooted in basic personality.
George Lakoff tries to put some meat on these bones. In a nutshell, he sees conservatives as siding with a “Strict Father” model, and liberals as siding with a “Nurturant Mother” model.
My findings indicate that the family and morality are central to both worldviews…What we have here are two different forms of family-based morality. What links them to politics is a common understanding of the nation as a family, with the government as parent. Thus, it is natural for liberals to see it as the function of the government to help people in need and hence to support social programs, while it is equally natural for conservatives to see the function of the government as requiring citizens to be self-disciplined and self-reliant and, therefore, to help themselves.
The linked essay presents the hypothesis in more detail. For more detail, buy Lakoff’s fascinating book, Moral Politics. Note, however, that he definitely sides with the liberal point of view. I would argue, in contrast, that liberals misapply what is good family policy to larger polities, where a stricter and more impersonal approach is appropriate.
My take: I’ve never met an intelligent person who couldn’t come up at least five good objections to Lakoff’s thesis. But Lakoff’s writings make more progress on a difficult topic than anything else I have read to date. They also explain, in my view, why libertarianism, in practice usually ends up closer to the right wing than to the left. “Individual responsibility” is a core moral intuition for most libertarians, and this puts them closer to conservatives, despite the considerable differences.
That all being said, let’s say you realized that your political views followed from your core personality. Let’s say also that personality is something that, in large part, you do not choose. Either you are born with it, or your upbringing shapes you from an early age. Shouldn’t that make you less rather than more confident of your political views? After all, it would be a mere genetic accident that conservative or liberal politics should feel as right to you as they do.
Would you like to live in a Christian nation with government similar to the early United States?
No, it’s not Colonial House (much inferior to Victorian House, by the way) but Christian Exodus
ChristianExodus.org has been established to coordinate the move of 50,000 or more Christians to a single conservative state in the U.S. for the express purpose of reestablishing constitutional governance….ChristianExodus.org is orchestrating the move of 50,000 or more Christians to one of three States for the express purpose of dissolving that State’s bond with the union. The three States under consideration are Alabama, Mississippi and South Carolina. The exact destination will be chosen by vote of our membership. Our move will commence when the federal government forces sodomite marriages on our local communities or once we reach the 50,000-member mark, whichever comes first.
If this sounds kinda familiar you may recall the libertarian Free State Project “an effort to recruit 20,000 liberty-loving people to move to New Hampshire.”
Freedom of thought is the most fundamental right. Fortunately, it has been nearly impossible to invade the mind. New technologies, however, do threaten freedom of thought, raising many difficult problems. Should children diagnosed with ADHD who refuse to take Ritalin be refused an education? Should a mentally-ill person be drugged so that they can stand trial? Is hypersonic advertising an invasion of mental privacy?
India appears to take a turn for the worse:
The government in Andhra Pradesh state, headed by the coalition’s second-largest member and a leading proponent of India’s technology revolution, was routed by the Congress party, which is also the main opposition on the national stage.
Besides signalling that high-tech prowess had not impressed the millions of rural poor, the result suggested the national election could end in a hung parliament and likely political turmoil as parties searched for new allies.
Votes from the marathon national election will be counted on Thursday but financial markets have already tumbled on fears that India’s crucial economic reforms could be delayed if a weak government comes to power.
Here is the full story.
Let us not forget that India remains a badly messed-up economy. I found the following passage, from William Lewis’s The Power of Productivity, illuminating:
…India has a special problem. It is not clear who owns land in India. Over 90 percent of land titles are unclear…Unclear land titles most affect industries which use a lot of land. These industries are housing construction and retailing. The result is that there is huge demand for the very little land with clear titles. Not surprisingly, the ratio of land costs to per capita income in New Delhi and Bombay is ten times that ratio in the other major cities of Asia…Also not surprisingly, India has very few supermarkets and large-scale single-family housing developments.
But it gets worse: Stamp taxes on land sales run at least ten percent. Furthermore you are often expected to pay real estate taxes, even if you will never be granted title to the actual land. It is said that the money is accepted “without prejudice.” Here is a short article on how to make things better.
They Rule is a very cool website that uses flash player as a front-end to a database on corporate boards. Find out who is on the board of any of the largest publicly held corporations, choose two firms and find the connections between their boards (ala six degrees of separation), map the power-elites. The map below (click to expand) gives an idea of what the site is all about.
The author, Josh On, is an odd-mix of old-style lefty and cutting edge technologist. When he’s not putting together websites like this what does he do?
Twice a week I stand outside on a street corner and try to engage strangers in conversations about politics. This would be much harder without a copy of Socialist Worker in my hand.
Hat tip to Boing Boing Blog.
Recently Killington voted to secede from Vermont and join New Hampshire. Some people find this desire quixotic since Killington is smack dab in the middle of Vermont. The classic Tiebout argument says that voting with one’s feet helps to discipline government and provide a better match between government and citizen preferences. But why should the dissidents have to pack their bags? It’s the Vermont taxes that the residents of Killington want to escape not the skiing. Wouldn’t it be less costly to switch governance rather than citizens?
Does such a system sound crazy? Perhaps, but it is essentially the same supra-competitive federalism that has worked well for corporate law, so maybe we ought to give it a try.
And remember, if at first you don’t secede, try, try again.
I love Brazil, and there are few places where I feel more at home. That being said, the place can be a mess. Here is one reason why:
Unlike the United States, Brazil has chosen to collect most of its taxes through corporations. Thus today, taxes paid by corporations in Brazil are almost twice as high as in the United States. However, that’s not the right comparison. We should be making a comparison with the United States in 1913. That’s when the United States had the same GDP per capita as Brazil today. In 1913 the U.S. government spent only 8 percent of GDP. Thus, as a percentage of GDP, the corporate tax burden in Brazil today is seven times that of U.S. Corporations when the United States was at Brazil’s current GDP per capita.
Here are formal details on Brazilian corporate taxation. But the document does not stress the reality that half the firms shirk their burden and the more efficient firms must pay far more than they ought to.
It gets worse:
Brazil’s government spends about 11 percent of GDP on the government-run pension system compared with 5 percent in the United States today and close to zero in 1913. The government contribution to the pensions of Brazil’s government employees is 4.7 percent of GDP compared with 1.8 in the United States today….Brazil clearly has government employment it can’t afford.
The quotations are taken from William Lewis’s interesting The Power of Productivity.
To be continued…
Economists are taking a greater interest in the media. Here is an interesting new paper by Andrei Shleifer and Sendhil Mullainathan, The Market for News .
Abstract: We investigate the market for news under two assumptions: that readers hold beliefs that they like to see confirmed, and that newspapers can slant stories toward these beliefs. We show that, on the topics where readers share common beliefs, one should not expect accuracy even from competitive media: competition results in lower prices, but common slanting toward reader biases. However, on topics where reader beliefs diverge (such as politically divisive issues), newspapers segment the market and slant toward the biases of their own audiences, yet in the aggregate a conscientious reader could get an unbiased perspective. Generally speaking, reader heterogeneity is more important for accuracy in media than competition per se.
Also read Alex’s earlier post, Surprise! Fox News is Fair and Balanced!.