Category: Political Science
In 1995 the most prestigious journal in economics, the American Economic Review, published one of the most controversial papers in its long history, War Politics: An Economic, Rational-Voter Framework (JSTOR). Gregory Hess and Athanasios Orphanides modeled voters as caring about two presidential abilities, the ability to make war and the ability to manage the economy. To get reelected an incumbent President must convince voters that his combined abilities make him better than a challenger.
This simple model has some profound implications. If the economy is doing well, the President is up on one score and without evidence can be assumed to be as good as the challenger in war-making ability. Thus, the President gets reelected. But if the economy is doing badly then an incumbent who cannot present evidence that he is of superior war-making ability will lose for certain. Crucially, an incumbent can’t demonstrate war-making ability without a war – thus when the economy is doing poorly and the President is up for reelection the model predicts more wars.
Hess and Orphanides define a war as “an international crisis in which the United States is involved in direct military activity that results in violence.” Using data from the International Crisis Behavior Project they compare the onset of wars in first terms when there is a recession with the onset of wars in first terms with no recession and second terms. If wars are random these probabilities ought to be the same. Stunningly, however, they find that in the 1953-1988 period wars are about twice as likely in first terms with a recession than in first terms with no recession and second terms (60 percent to 30 percent). The probability of this result occurring by chance is about 5%. Various extensions and modifications produce similar results.
Need I mention that the Hess and Orphanides model has proven to have predictive power?
…[political] platforms are capitalized into equity prices: under a Bush administration, relative to a counterfactual Gore administration, Bush-favored firms are worth 3-8 percent more and Gore-favored firms are worth 6-10 percent less. The most sensitive sectors include tobacco, worth 13-25 percent more under a favorable Bush administration, Microsoft competitors, worth 15 percent less under a favorable Bush administration, and alternative energy companies, worth 16-27 percent less under an unfavorable Bush administration.
This result was generated by correlating firm-specific equity returns with the Iowa Electronic [Presidential] Market forecasts. In other words, when Bush’s electoral fortunes went up, “Bush stocks” rose as well.
The bottom lines: 1) Overall the market did regard Bush as “better for business” than Gore. 2) Equity markets moved more rapidly than did the Iowa markets. 3) If the outcome of a Presidential election truly matters to you, your position can be hedged fairly easily. 4) Presumably there are “John Kerry stocks” right now.
Thanks to Eric Crampton for the pointer.
“The non-governmental sector.” At yesterday’s UNESCO meetings, I heard it at least fifteen times.
Yes I know the term has a (supposedly) legitimate use, but you will never hear it from my lips. How about a sentence like this?:
…non-governmental organizations have made and are increasingly making important contributions to both population and development activities at all levels. In many areas of population and development activities, non-governmental groups are already rightly recognized for their comparative advantage in relation to government agencies.
It’s nice to know that we are good for something!
The bottom line: Tomorrow I fly home.
Many people fear electronic voting. What if there is an error? Don’t we need a paper trial? How can we be sure that the election won’t be stolen? My response is simple. Ever buy gas? When you buy gas do you pay cash or use a credit card? And when the terminal offers to print you a receipt do you take it, save it, and check it against your monthly Visa bill? Or do you press “no receipt” and drive away?
I have never once checked a gas receipt against my monthly credit card bill and I suspect most people don’t either. The credit card companies have big incentives to record transactions quickly and accurately. The system isn’t perfect but it’s good enough so that I don’t worry about being ripped off and, the key point, the electronic system is certainly more accurate than the primitive process of counting out paper and metallic tokens and handing them over to a minimum-wage cashier who repeats the process by counting out change. I see no reason why electronic voting should not be far superior to punch cards or other manual machine.
Obviously, we need to be careful, which brings me to a suggestion. How about open-source software for voting machines? Opening the source makes life easier for outsider hackers but harder for inside-hackers and open source is less-susceptible to bugs. Open-source would also be well, open – as in an open society.
I would say turn this project over to Linus Torvalds but he’s a Finn and we have to be careful about them but surely there are some skilled programmers who would like to lay the core for voting in the twenty-first century?
Addendum: Yup, here is an open-source voting project.
The Arizona Daily Star reports that Nogales, Arizona will be opening a new state-of-the-art truck inspection station:
The governor touted the new Motor Carrier Inspection Station as a state-of-the-art facility that will improve homeland security while not slowing down international traffic between the United States and Mexico.
It gives state and U.S. federal officials a one-stop shop to inspect drivers’ immigration papers, the safety of their semi-trucks, and the quality and safety of cargo crossing into the country.
But a legal challenge hangs over the new facility:
Attorneys about to argue a federal lawsuit against the NAFTA plan allowing Mexican trucks into the United States aren’t satisfied. They will plead their case before the the U.S. Supreme Court on April 21.
The problem with the new station: It isn’t required to check emissions on incoming trucks.
That means they aren’t being held to the same standards as U.S. trucks and will only worsen air quality standards, said John Weissglass, the San Francisco-based attorney representing the International Brotherhood of Teamsters in the lawsuit. In 2002, the Teamsters, watchdog group Public Citizen, and environmental groups sued the U.S. Department of Transportation to stop the NAFTA plan, citing environmental concerns, which eventually forced the government to conduct a $1.8 million study looking at the plan’s environmental impact.
They say politics makes strange bedfellows, but the Teamsters and Public Citizen? Bruce Yandle of Clemson explains it with a theory he calls Bootleggers and Baptists. The bootleggers like prohibition because it gets rid of competitors. But a politican who wants to listen to the bootleggers needs a more high-minded cause to sell to the public. The Baptists give the politicians cover with the argument that drink is from the devil–it leads to social unrest, unemployment, higher social costs and so on. Same with Mexican trucks. Who can justify keeping out lower cost Mexican trucks just to keep the wages of Teamsters high. Enter Public Citizen. This isn’t about greed. It’s about keeping American air clean.
The appeal of self-righteousness partnering with self-interest also explains why companies often support regulation of their industry. They’ll claim a concern for safety or the environment but often such regulations fall more heavily on smaller competitors and will drive them out of business.
There’s nothing wrong with politicians having both high-minded and low-minded motives. The real problem is that the bootleggers always push the form of the regulation to create higher profits.
NAFTA was supposed to allow Mexican truck companies to compete in the US. We’re still waiting. Before the environmental issue, the alleged worry of the Teamsters was safety. My take on that claim is here.
Conventional wisdom in the West says that post-Cold War Russia has been a disastrous failure. The facts say otherwise. Aspects of Russia’s performance over the last decade may have been disappointing, but the notion that the country has gone through an economic cataclysm and political relapse is wrong–more a comment on overblown expectations than on Russia’s actual experience. Compared to other countries at a similar level of economic and political development, Russia looks more the norm than the exception.
Here is their view on economic performance:
The best estimate is that Russia’s genuine output decline between 1990 and 2001 was small and that it was completely reversed by 2003, following two additional years of rapid growth. Considering the distorted demand, inflated accounting, and uselessness of much of the pre-reform output, it is likely that Russians today are on average better off than they were in 1990.
My take: Mostly I agree. Remember how The New York Times speculated about mass famine, civil war in the streets, or attempted reconquests of the Soviet empire? None of those dire events have come to pass. Parts of the Shleifer piece might be interpreted as Putin apologetics, but put that question aside. For the most part the former Soviet Union has made unexpected progress. If you don’t believe me, read my post from yesterday.
Imagine writing all the senators and asking them to relate their favorite jokes.
Here is one of the least funny responses, though the competition is stiff for this honor.
Here is the worst pun, don’t miss the accompanying photo.
Here is John Kerry’s joke.
Olympia Snowe won the vote for funniest joke.
I found Rick Santorum to have the funniest response, this is a PG-13 blog but for extra perspective read Dan Savage on the Senator, and no I won’t give you the link.
Thanks to Geekpress.com for the pointer.
With his mohawk, ratty fatigues, assorted chains and his menagerie of tattoos – swallows on each shoulder, a nautical star on his back and the logo of the Bouncing Souls, a New York City punk band, on his right leg – 22-year-old Nick Rizzuto is the very picture of counterculture alienation. But it’s when he talks politics that Mr. Rizzuto sounds like a real radical, for a punk anyway. Mr. Rizzuto is adamantly in favor of lowering taxes and for school vouchers, and against campaign finance laws; his favorite Supreme Court justice is Clarence Thomas; he plans to vote for President Bush in November; and he’s hard-core into capitalism.
“Punks will tell me, `Punk and capitalism don’t go together,’ ” Mr. Rizzuto said. “I don’t understand where they’re coming from. The biggest punk scenes are in capitalist countries like the U.S., Canada and Japan. I haven’t heard of any new North Korean punk bands coming out. There’s no scene in Iran.”
Here is a New York Times article, don’t forget to check out the pictures (password required). Here is a website for GOP punkers, they seem to approve of Reagan’s famous threat to bomb the Soviet Union. Or perhaps it is just irony. They stress that they are not libertarians because America is “at war” with the left, and the libertarian philosophy is not well-suited to fighting a war. Here is their cited critique of the Canadian health care model. Good economics, but these punkers, oppositional by nature, feel a kneejerk need to defend every action of the Bush administration. Here is the ConservativePunk.com website, which offers an interview with right-wing punker Johnny Ramone. Here is yet another site, which cites right-thinking punk bloggers. And will National Review be pleased that MyEvilMinion.com links to them approvingly?
My take: Punk music needs an idea of evil and an oppositional stance. So punkers will adopt every position of defiance they can find, including in-your-face right-wing politics. But in the long run? Remember what The Clash sung: “You grow up, you calm down, working for the clampdown…”
In fundamental ways that have gone largely unrecognized, Congress has become less vigilant, less proud and protective of its own prerogatives, and less important to the conduct of American government than at any time in decades. “Congress has abdicated much of its responsibility,” Nebraska Sen. Chuck Hagel said in a recent conversation. “It could become an adjunct to the executive branch.”
Hagel is no disaffected Democrat frustrated by the imperious GOP leadership. He is a conservative Republican admired by colleagues in both parties for his thoughtfulness and independence. He admits that he is atypical in his concern for Congress’s constitutional role as a check on, and a balance to, the presidency and the judiciary. “Congress is the only thing that stands in the way between essentially a modern-day democratic dictator and a president who is accountable to the people,” he says.
Throughout American history, the status and influence of the three branches of government, and particularly of the executive branch and Congress, have risen and fallen like great historical tides. For long periods, most dramatically in the last third of the 19th century, Congress was dominant. Arguably this was also true in the last quarter of the 20th century, after Congress brought an end to the Vietnam War and forced Richard M. Nixon from office. Even in the ’90s, Congress played a key role in replacing Reagan-era budget deficits with the large surpluses George W. Bush inherited when he became president in 2001.
But Congress’s influence has waned in the past few years, perhaps since the unpopular and unsuccessful effort to remove Bill Clinton from office in 1998-99. Though it occasionally resists an executive-branch proposal, Congress today rarely initiates its own policies. Few members speak up for the institutional interests of Congress. “The idea that they have an independent institutional responsibility, that the institution itself is bigger than the individuals or the parties, doesn’t occur to the bulk of [members] for a nanosecond,” said an exasperated Norman Ornstein of the American Enterprise Institute, a longtime student of Congress.
It occurs to Rep. David Obey of Wisconsin, the ranking Democrat on the House Appropriations Committee. He said that the House has given up the meaningful exercise of its powers by largely forfeiting its oversight role and abandoning all discipline on the federal budget. “Which means that this administration is essentially walking around with a free hand . . . . If the Congress is turned into a jellyfish, there are no checks and there are no balances.” Jellyfish isn’t a bad image for the backbone Congress has shown in recent times.
Read the whole story, which is instructive and stimulating throughout.
My take: The blogosphere reflects an obsession with “the Bush administration,” but the failings of Congress are essential to understanding the last few years.
1. “The making of Mexico’s democracy was distinctive in many ways. There was no Nelson Mandela, no single leader to personify and guide the struggle. Nor was there a single democratic movement, but rather a multitude of initiatives from individuals and groups across the society and the country, which gradually converged as more and more Mexicans became convinced of the need to end the PRI’s despotic rule.”
2. “We contend that Mexico’s opening to democracy is one of the few major developments in the country’s modern history that was not shaped by invasion or intervention by the United States.”
3. The Salinas cabinet had an amazing preponderance of economics Ph.ds. His Finance Secretary had a Ph.d. in economics from MIT. The Trade Secretary and Budget Secretaries had Ph.ds. in economics from Yale. Salinas’s Chief of Staff studied Political Economy at Stanford. The head of the PRI at the time had a masters in economics from University of Pennsylvania. His government favored economic liberalization but did much less for democracy.
4. “It can be argued that Raul Salinas de Gortari [brother of the president, Carlos] did more than any other living Mexican to contribute to his country’s transition to democracy. His, however, was not a hero’s role; his impact stemmed from the compelling force of his negative example. He did more to discredit the PRI system in the eyes of the Mexican people than anyone else in seven decades, and in so doing, he significantly hastened the demise of authoritarian rule.” Follow this link to the famous photo of Raul with his mistress.
6. Some communities in southern Mexico still reckon time with the Mayan calendar.
7. By 2002, “some were saying that [Vincente] Fox’s only truly major achievement had been to get himself elected.”
The facts and quotations are from Opening Mexico: The Making of a Democracy, by Julia Preston and Samuel Dillon, an excellent book on how an autocratic society can find its way to democracy.
There is an interesting piece in the April issue of The Atlantic (article not online, subscribe here) on how the Bush team is using social competition and peer-incentives to increase their campaign finances.
Politicians have celebrated large fundraisers for years, but discreetly. Names were not publicized, and some campaigns had difficulty calculating the precise number of dollars brought in by a given fundraiser. Bush changed that. Before the 2000 election his campaign instituted a simple system of tracking numbers: any fundraiser who wanted dollars credited to himself could ask donors to write his designated number on their checks. The system ensured exact accounting and signaled that the campaign was closely monitoring how much individual bundlers were bringing in. Meanwhile the campaign set aggressive goals for bundlers and publicly disclosed which people hit what specific goals….all this has instilled a fervent spirit of competition in Bush’s network that has led it to raise more and more money.
In addition to approbation, being a succesful fundraiser pays off in other ways:
Of the 241 individuals who raised at least $100,000 “eight seven were named to posts in the administration. Nineteen became ambassadors, two were named Cabinet officials, one became a federal judge, and at least six (including the Enron executive Ken Lay) were members of the Energy Department transition team.
The Atlantic notes that while the former techniques are new the latter are old hat. See the article for more of interest, including data and maps.
Why is Haiti such a mess? How might a public choice economist think about the Haitian system of government?
Before Papa Doc Duvalier, Haitian leaders were lucky to last a few years. Look at this list of constitutions. Hegel suggested that voodoo religion would not lead to political liberty; so far Haiti has not disproved this thesis. Here is a comprehensive page on Haitian history, replete with useful links.
Haitian government appears to have no “core,” to use the economist’s term for instability. Most of the population is illiterate but extremely smart and distrusting of their governments. The distrust is so strong as to become a self-fulfilling prophecy. No leader can command lasting popular support or form a stable political coalition. One alternative is to rule with complete tyranny; alternatively, you can be more moderate and govern with a shorter-term perspective. In other words, you loot the country, while telling yourself, correctly, that the people who will follow your reign will be even worse.
The Haitian voodoo gods are intransitive in their power relations, and so has been the Haitian government, at least in the absence of massive oppression or outside interference.
The Duvalier years represented a watershed in the ongoing 150-year collapse that we call Haitian politics. At first it seemed like an acceptable bargain for the elites. Accept a charismatic dictator in return for public order and protection of investments. But it turned out that Papa Doc was crazy and he waged an ongoing campaign to destroy Haitian intermediary institutions. Soon there were more Haitian nurses in Montreal than in Haiti. By the time the reign of his son Baby Doc ended in the mid-1980s, the country was in tatters.
According to one account, Haitian politics is run by about ten families, many of them of Lebanese descent. In this view no leader can challenge their commercial interests. The only question is how oppressive that leader must be to rule the country and constrain a potential coup d’etat. But I view this account as too simplistic. Haiti is not a story of “the poor get poorer, the rich get richer.” The rich get poorer too. Perhaps Haitian “social capital” is a wasting asset, and we are in an equilibrium where everyone is willing to erode it further, knowing that a downward spiral cannot be prevented. The collective result of this behavior is to hasten the corrosion of order.
Drug money has been the big story for the last fifteen to twenty years. The poverty, corruption, and coastline of Haiti make it easy prey for drug smugglers. And of course it is close to the United States. As the older wealthy families lose ground, drug money has become the dominant political force. It can be argued how directly Aristide has been linked to the drug trade. But ultimately a Haitian politician must at least acquiesce in massive drug smuggling. A leading Haitian politician with no links to the drug trade would be like a Saudi prince with no connection to oil money — in other words, don’t believe it.
The other key player, of course, is the United States government. Aristide returned because Clinton reinstalled him. Aristide left when Bush told him to get lost. The U.S. can use force, withhold foreign aid, or use proclamations to make a leader focal or not. You might recall that Aristide did not allow legitimate elections to occur, which led to a crippling freeze on foreign aid. Aristide also proved no friend of democracy. In his “defense,” probably no Haitian incumbent could have survived fair elections, which brings us back to either tyranny or ever-circulating regime, short-time horizons, and political looting. Aristide chose a mix of these options.
So let’s say I was the president of Haiti. I have to keep the leading families happy or at least on board. I have to stop the drug smugglers from killing me or mobilizing opposition. I have to acquiesce in the drug trade, recognizing that most of those around me are on the take. I have to deal with the warlords who rule the local neighborhoods. I have to keep the U.S. President happy or at least neutralize him. I have to keep the population from starving. I have no resources and no tax base. Most of my public servants live from corruption. My country has virtually no foreign investment or infrastructure. I don’t even rule or physically control most of the country. In case of a revolt, I have only a few thousand policeman to draw upon.
Get the picture?
The bottom line: Don’t expect things to get better.
The theory of comparative advantage, and the theory of increasing returns, both predict that free trade brings specialization. Michigan and Tennessee produce automobiles, but Delaware does not. I have heard free trade critics suggest that regions end up especially vulnerable and overspecialized.
Yes in economics virtually everything is possible, once you recognize that Giffen goods and upward-sloping demand curves cannot be ruled out. But I am not so worried about free trade leading to excess specialization.
First, individuals can buy equities from multiple regions or countries. There does appear to be an inefficient “home bias” when it comes to investing, but surely free trade is not at fault here. If anything, free trade should encourage investors to think more globally and to diversify more.
Second, individuals specialize, in response to trade, because specializing brings higher returns. When investors expand a firm or line of business they internalize risk-return trade-offs.
Third, we must consider global risk. Let us say that protectionism helps a country avoid a declining industry. The world as a whole does not gain. Those economic problems are simply shouldered by another country, and in a less efficient way, relative to free trade.
Fourth, risk is borne by individuals, not by countries per se. Having many different industries in a country does not by itself create safety for individual investors or workers. Who cares if France has its own movie industry, if you are losing your job in computer software? Contrary to what Dana Rodrik suggests, it is not necessarily economically safer to live in a large country.
I can see a potential political version of the argument. Free trade, by inducing specialization, might make tax revenue more volatile in a country. Still, tax revenue should be higher in absolute terms. And if revenue volatility is a problem, I would prefer fiscal responsibility over protectionism as the proper medicine.
I am indebted to Randall Parker and Arnold Kling for sharing some of their email correspondence on this topic with me.
Here is a consequence of egalitarianism. According to the Statistical Abstract of the United States, men’s life expectancy is on the average about 7 years less than women’s. There is thus an inequality between men and women….Egalitarians, thus must see it as a requirement of justice to equalize the life expectancy of men and women. This can be done, for instance, by men having more and better health care than women; by employing fewer men and more women in stressful or hazardous jobs; and by men having shorter work days and longer vacations than women…There remains the question of how to compensate the present generation of men for the injustice of having shorter lives than women. No compensation can undo the damage, but it may make it easier to bear. The obvious policy is to set up preferential treatment programs designed to provide for men at least some of the benefits they would have enjoyed had their life expectancy been equal to women’s. There is a lot of pleasure that could be had in those 7 years that men are not going to have. And since those years would have come at the end of their lives, when they are more likely to know their minds, their loss affects not only the quantity but also the quality of their not-to-be-had pleasures. One efficient way of compensating them for their loss is to set up government sponsored pleasure centers in which men may spend the hours and days gained from having shorter working days and longer vacations.
Read the whole post, taken from John Kekes’s new book The Illusions of Egalitarianism. I have long felt that egalitarianism makes no sense. I can understand assigning a priority to the interests of the poor. Donate a dollar to an orphan, not to Bill Gates. But the plight of the orphan is not worse because Gates exists (in practical terms quite the contrary). Nor do we worry about the “inequality” between the millionaires and the billionaires in Beverly Hills. Let’s not confuse egalitarianism with benevolence toward the needy.
Dean did poorly because not enough people voted for him, and the usual explanations — potential voters changed their minds because of his character or whatever — seem inadequate to explain the Iowa results. What I wonder is whether Dean has accidentally created a movement (where what counts is believing) instead of a campaign (where what counts is voting.)…
…participation in online communities often provides a sense of satisfaction that actually dampens a willingness to interact with the real world. When you’re communing with like-minded souls, you feel like you’re accomplishing something by arguing out the smallest details of your perfect future world, while the imperfect and actual world takes no notice, as is its custom.
There are many reasons for this, but the main one seems to be that the pleasures of life online are precisely the way they provide a respite from the vagaries of the real world. Both the way the online environment flattens interaction and the way everything gets arranged for the convenience of the user makes the threshold between talking about changing the world and changing the world even steeper than usual.
The bottom line:
“Would you vote for Howard Dean?” and “Will you vote for Howard Dean?” are two different questions…
Not to mention “Did you vote for Howard Dean?”
The quotations are from Clay Shirky, here is the permalink. Shirky concludes: “Voting, the heart of the matter, is both dull and depressing.”