Category: Political Science

A “Grand Coalition” in Germany?

The electoral deadlock in Germany may mean a "Grand Coalition" with its two major parties, the Social Democrats and the Christian Democrats.  This is the likely outcome if neither of the major parties can assemble a coalition with the minor parties; some minor/major alliances simply are not possible, for either political or ideological reasons.

Looking to public choice theory, how will a Grand Coalition operate?

Models of proportional representation typically allow for multiple equilibria, but a plausible outcome involves a trade between a major party and an allied minor party.  The minor party will promise to support the major party in forming a coalition, if the major party makes one or two key policy concessions.  The distribution of gains will depend on bargaining power.  Will the major party have other possible coalition allies?  Does the minor party crave power, or would it rather stake out a purist stance on policy, and risk being left outside the coalition?  Note that once the coalition is in place the minor party often has a difficult time defecting.  Minor party officials come to enjoy the perks of power.  Their threats to bring down the coalition often are not credible.  So the resulting government often holds power snugly and governs sluggishly.

When no minor party is available for the coalition, the terms of the bargain shift.

First, a Grand Coalition usually means that the two major parties have roughly equal electoral strength.  If the coalition collapses, and a government must re-form, and either party could come out on top in the new bargain.  Therefore the (slightly) weaker coalition member does not have a very strong incentive to hold the coalition together.

Second, the two major parties often have opposing platforms.  So the initial policy compromise might stop either party from doing much of anything.  That is one reason to expect stalemate.  It also means that the (slightly) stronger party doesn’t gain much from the coalition; it cannot promote its agenda.  There is also the danger of many minor parties proliferating at the fringes, given the centrism of the joint coalition.  This lowers the returns to holding power at the center, as these minor parties will cut into your future electoral support.

The bottom line: Two parties in a Grand Coalition will reap low gains from trade.  Neither party will much mind if the Grand Coalition collapses.  Stability is "knife-edge."  But the parties therefore might be willing to take more chances.  What do they have to lose?  A Grand Coalition does not mean certain policy gridlock (in contrast to this pessimistic view). 

And let us say that both parties recognize the need for reforms, but are held back by voters.  An arrangement where accountability is low and "each party can blame the other" might be exactly what is needed.

To cite reality for just a moment, Germany had a "Grand Coalition" from 1966 to 1969, and this was no obvious disaster.  Student revolts aside, many Germans consider these years a golden age. The earlier Grand Coalition passed important economic legislation in 1967 and restricted civil liberties in a controversial manner.  Modern German politics is often slow, but in relative terms this period was not a time of gridlock.

Addendum: Here is a longish piece I once wrote on proportional representation; note Alex’s contribution on referenda as well.

The earthquake that is Germany, a continuing series

Here is one good take on today’s election.  My view of the bottom line?  Most Germans are sick of Schroeder, and ready to vote for someone else, but they run to third parties.  Wessis still have cultural inhibitions about voting for Ossis, even though they won’t admit to it in public.  We don’t yet know which coalition is most likely, but go to the excellent Medienkritik site for updates.  Here is another good source.

Combine this with the electoral results from New Zealand and you get a simple hypothesis: we don’t have better economic policies because voters don’t want them.

The New Zealand election

It is going on now, many say "too close to call," here is The New Zealand Herald (with updates on their home page), and yes comments are open, add what you know, and I will update this post in the morning.  National Party candidate Don Brash is, to the best of my knowledge, the best candidate running for a leadership position in any major country in some time.  And of course Sunday is the election in Germany…

Addendum: The vote is very close.  This is mixed member proportional representation, so the final outcome will depend on negotiating a coalition with the minor parties.  This could take weeks, with (boo-hoo) Winston Peters as the likely kingmaker.  Here is the voting; note that ACT is the libertarian party but they have only 1.5 percent.

Are autocratic successors less fierce?

Hypothesis A: Successors to tyrants will be less fierce, because tyrants themselves fear fierce wanna-bee underlings. 

Hypothesis B: Hereditary monarchy does not breed for love of power, therefore successors will become less fierce than the first usurper monarch.  Bryan Caplan attributes this view to Gordon Tullock.

Hypothesis C: Any method of orderly succession is better than recurring contests for national leadership.

Hypothesis D: Over time orderly succession becomes difficult to maintain, given the lack of fierceness of the rulers.

Hypothesis E: If you can prevent repeated coup d’etats, you are on your way toward economic growth.


Here is a Jonathan Klick paper on autocracy.  Here is a Daniel Sutter piece on the transition from autocracy.  Here is another painting by Neo Rauch.

The public choice economics of crisis management

Why don’t governments handle all crises well?  Read Brad DeLong’s catalog of charges on Katrina.  I can think of a few systematic reasons for institutional failure:

1. The event is often small-probability in nature.

2. The event has very negative consequences, and we don’t have optimal punishments for those who get it wrong.

3. Many crisis-related events and required decisions happen quickly in immediate sequence.  First, it is hard to get the decisions right, second it is even harder to look good, given some inevitable mistakes.

4. Media scrutiny is intense, and voters care about the issue.  This encourages ex post overreactions and overinvestments in symbolic fixes, especially when combined with #1.

5. A crisis is, by definition, large.  This puts federalism, whatever its other merits, at a disadvantage.  No one is sure who is responsible for what, or how a chain of command should operate.

All of these seem to have operated in New Orleans, plus they were combined with one of our worst-functioning local governments and an administration especially weak on the issue of accountability.  My colleague Roger Congleton has a paper on the public choice of crisis management.  This is an underexplored topic, so feel free to suggest other readings in the comments.

What went wrong, in general terms

Matthew Kahn asks:

1. How much did the people of the New Orleans metro area invest in their own levees? Given that property owners and public safety in this metro area are the main beneficiary of such investments, why wasn’t this sufficient incentive for the Mayor and the metro area’s other political leaders to tax citizens collect the money and invest in better, more modern levees?

Here is the full post, which includes three other to-the-point questions.  I am not into the blame game, but Randall Parker’s recent post also raises questions about the underfunding of New Orleans local government.  Of course the Feds messed up too.

Are democratic governments simply not very risk averse when it comes to very bad, low probability events?  The model behind this conclusion is simple.  Politicians would have to spend the money on protection no matter what, and lose the benefits of spending that cash elsewhere with p = 1.  The chance of reelection goes up only with a small probability, namely if the bad event happens and voters can tell their representatives were suitably cautious.  Why not instead spend the money with a higher chance of boosting reelection prospects?  The key stylized fact is that if a politician messes up very badly, there is no penalty worse than removal from office, which is a penalty (roughly) fixed in value.  And since the value of holding office may not fall in proportion to the suffering caused by the disaster, politicians’ utility maximization will not bring optimal spending either.

Addendum: David Bernstein has some good information on federal spending cuts.  And there is also a complicated story about overreaction ex post, although without necessarily doing much useful, read Daniel Drezner.

The Republican War on Science

Chris Mooney’s new tract is one of the most important books of this year.  Here is a CrookedTimber review.  If you can’t figure out the book’s contents from the title, here is Chris’s blog

My take: I agree with most of the arguments but would have called it The Political War on Science.  Democrat politicians are excessively enamored of government regulation, for instance, and many of them do not pay enough attention to incentives.  (Admittedly these issues are not as clear cut as the theory of evolution; Mooney in fact suggests a scientific approach will lead to more regulation.)  The left often treats human beings as excessively malleable.  Both Carter and Clinton committed some gross errors out of self-deception; they violated the simple principle of dominance rather than any complicated scientific hypothesis.  (What exactly should count as an error of science?)  In fairness to Mooney he does point out many Democrat or left-wing transgressions although not all of these.

Has the increase in Republican hostility to science sprung from an especially bad and craven administration on this issue?  Or has there also been a more fundamental shift in the political equilibrium, due to the greater mobilization of interest groups?  Perhaps voters will be judging science on a more frequent basis from now on, and asking their politicians to take the side of untruth.  Advances in biology will spur this tendency.  Why do Democrat errors more frequently get framed as failures of will or morality, rather than ignorance, vice versa for current Republican errors?  How much of the difference is real and how much is framing?  For how long will media take the side of the Democrats on scientific issues?  Here is today’s New York Times piece on related issues.

Elsewhere on the book front, John Coetzee’s Slow Man is due out September 22, pre-order it hereThe FT reviewer was not crazy about it but I hold greater trust in the author.

A short recent history of FEMA

Courtesy of Kevin Drum, read the whole thing.  Hindsight is easy, but what should FEMA be doing?

My view is the following.  Many levees are genuine public goods, and should receive government support, from the federal government (e.g., Army Corp; here is a brief history of their involvement) if need be although perhaps not ideally.  FEMA should not be in the business of flood insurance, nor should FEMA reimburse local governments for snow plowing.  Here is a Cato critique of FEMA.  Here is a libertarian article on why a limited governmental response to the Chicago fire was best.  Here is another libertarian critique.  Here is an AEI article that FEMA invests too much in earthquake safety.  Here is an argument that FEMA should not have been made part of the Department of Homeland Security.

Here is a recent piece on cuts to levee subsidies; the news will hurt the Republicans.  Here is a short piece on how revenue from airport privatization could have been used to shore up New Orleans levees.

Libertarian readers, do you care to argue the levee should not have been subsidized?  Do you favor real privatization, not as a Port Authority or Federal Reserve may be private, but in the true market sense?  (Here is a short history of the Louisiana levee authorities; their status has evolved over time.)  If you take that position, you have a few alternatives:

1. We rely too much on unreliable levees, and privatization/non-subsidization would reveal their true social costs and induce people to move elsewhere.

2. A privatized, non-subsidized levee would engage in a successful long-term contract with city residents; see the Demsetz-Williamson debate.  The government still would have to force residents to make the relevant tax payments, for free rider reasons.

3. A levee contract could be written without use of coercive taxation; see this piece on assurance contracts.

4. A private levee authority would invest in water safety out of fear of being sued.  Furthermore these ex post legal incentives would be reliable and would not involve more government intervention than ex ante regulatory incentives.

5. A private levee authority would be forced by its insurance company to build good protection and also hold huge capital reserves.  Their cost of capital and costs of production would remain lower than the government’s.  You can hold this position in conjunction with #3, or believe that coercive taxation would remain necessary.  But in any case it probably requires reliance on #4.

I am not willing to defend any of these five positions, but what do you say readers?  The current government system, obviously, does not have a sterling record.  Comments are open.

Whither right-wing thought?

Original thinking often
flourishes under conditions of intellectual marginality. Unfortunately,
the conservative movement, having discovered a mass audience, risks
squandering the intellectual marginality that once made it so
interesting and daring. 

In future years, it may take a smaller, elite group of right-wingers to animate conservative ideas once more.

Read the whole thing, and prepare to be offended if you are conservative or libertarian. 

No Prisoner’s Dilemma on the Western Front

Robert Axelrod’s story of how cooperation developed between British and German soldiers in the trench warfare of World War I is so elegant few people have questioned it.  Yet in a single sentence, Andrew Gelman says the emperor has no clothes and looky, looky, he’s right!

The crux of Axelrod’s story is that the soldiers were trapped in a prisoner’s dilemma: individual incentives were to shoot the enemy while the socially optimal outcome was cooperation.  Axelrod then introduces his famous ideas of tit for tat etc. etc. to explain how cooperation could evolve even under these most hostile of conditions.

But Gelman asks why should we think that shooting the enemy was in a soldier’s best interest?  Indeed,

…it seems more reasonable to
suppose that, as a soldier in the trenches, you would do better to avoid firing: shooting
your weapon exposes yourself as a possible target, and the enemy soldiers might
very well shoot back at where your shot came from.

I believe that on this point Gelman is totally correct [insert dope slap here].  But, as he continues, "If you have no
short-term motivation to fire, then cooperation is completely natural and
requires no special explanation."

Axelrod’s story and the large literature following it sometimes suggest that cooperation is always the thing to be explained.  Cooperation is what happens when the natural order is overcome.  Gelman reminds us that sometimes cooperation is the norm, it’s conflict that needs to be explained.  In this case, we need to explain why the soldiers fought. 

Comments are open.

Lee Kuan Yew is usually worth reading

He is not afraid to be blunt, and for a politician he is surprisingly analytical.  Here is the interview.  Here is Lee on Singapore and China:

Mr. Lee: …So it is a very
serious challenge for us to move aside and not collide with them [the Chinese]. We have
to move to areas where they cannot move.
SPIEGEL: Such as?

Mr. Lee: Such as where the rule of law, intellectual property and
security of production systems are required, because for them to establish that, it will
take 20 to 30 years. We are concentrating on bio medicine,
pharmaceuticals and all products requiring protection of intellectual
property rights. No pharmaceutical company is going to go have its
precious patents disclosed. So that is why they are here in Singapore and
not in China.

Will New Zealand reform any further?

The core outlines of the New Zealand story are well-known: in 1980 the country was arguably the most socialized OECD country and stood on the verge of bankruptcy.  By the early 1990s New Zealand was one of the freest economies and had produced a solid if not spectacular economic performance.  The reforms included near free trade, substantial privatization, elimination of agricultural subsidies, free labor markets based on contract, free capital markets, 0-2 percent inflation as a formal regime, a relatively flat tax, and greater transparency in policymaking.  But the New Zealand economy has not seen major reforms in over a decade and in a few areas, such as labor markets, there has been backsliding.  Will reforms return?  I see a few hypotheses:

1. New Zealand reformed everything short of social welfare spending, education, and health care, which few voters wish or wished to reform.  In fact the point of previous reforms was to preserve (and perhaps extend) previous levels of social welfare spending.

2. Further reforms were thwarted by a move to proportional representation in the early 1990s, which gave minority parties undue influence and weakened threads of accountability.

3. Asset privatizations in particular were oversold — remember the Auckland blackout? — and New Zealanders lost their appetite for further changes.

4. New Zealand policymakers were well ahead of public attitudes, and managed so many reforms only because the country’s (previous) Parliamentary system had few checks and balances.  It is taking public opinion an entire generation to catch up to where policy stands.  Only then might current reforms continue.

5. New Zealanders can once again sit content, since they are no longer in danger of being blown out of the water by Australia.  If they start falling behind again, reforms will resume.

6. Donald Brash will be elected Prime Minister in September, and reforms will resume then.

I’ll give the greatest weight to #1 and #4, and say no to #6, comments are open, Kiwi commentators are especially welcome.

Cutting government spending in Colorado?

The stricter Colorado [spending] cap does three things: it imposes firm spending caps (which grow only to reflect population and inflation), returns any excess revenues to taxpayers and allows only voters, not legislators, to override the caps.

Both sides agree that the measure reined in the budget. The growth in per capita spending fell to 31 percent in the decade after the cap from 72 percent in the decade before..

But even as the Colorado measure galvanizes antispending groups elsewhere, it is dividing them at home, prompting a right-on-right fight that is luring outside combatants and drawing blood.

On one side is Gov. Bill Owens, the two-term Republican once promoted by National Review as a conservative of presidential timber. Arguing that the strict provision has forced a fiscal crisis, Mr. Owens is championing a ballot measure that would suspend the limit for five years, allowing the state to spend an additional $3.7 billion. Otherwise, he warns, the cap may be repealed.

On the other side are former allies who call the governor a tax-raising apostate discrediting the law he claims to protect. In addition to Mr. Norquist, they include the editorial page of The Wall Street Journal and the former House majority leader, Dick Armey, a leader of an antitax group called FreedomWorks.

Stay tuned…I would be surprised if this kind of initiative proved to be a long-run political equilibrium in many states.  Voters could simply cut spending by voting for anti-spending politiicians, if they were truly convinced of the merits of that position.  In part this is voters wanting to feel they want to cut spending, without actually having the desire to do so, a kind of expressive politics of the right.  Here is the full story.  Here is one account of failures at the federal level, courtesy of Cato and Reason.

Remembering Who Was Right

We spend endless hours arguing who is right in current controversies, but minutes or less remembering who was right before.  Oh we sometimes brag about selected cases, but we rarely collect systematic statistics.  (Rare exceptions include weathermen, business analysts, and sports punters.)

Yet such track records are just what we need to figure out who is right today.  You might think it enough to know which side is smarter or better informed.  But a janitor can consistently beat his arrogant CEO, if the janitor is careful to only disagree on topics where he clearly knows more.  When disputants are aware of each others’ opinions, it is those who better know when to defer and when to stand their ground that should be right more often.

Yes it would be hard to track and score everything everyone says, but we could do a lot more than we now do.  Widespread idea futures or David Brin’s prediction registries could help us estimate which individuals tend to be right more often.  And it should be even easier to evaluate standard demographic categories.

When a husband and wife disagree, who tends to be right?  How about a parent and child, a student and teacher, a boss and employee, a liberal and conservative?  For a few thousand dollars, we could bring dozens of such pairs into the lab, ask them various questions together, and see who is right when they disagree.  Perhaps lab disputes differ from field disputes in unknown systematic ways, but it would be a great first step.

Perhaps even more useful, we could take a sample of real media disputes and see both who tends to take which side, and which side seemed more right in the end.  I have just finished one such analysis, on the dispute over the policy analysis market (PAM), a.k.a. terrorism futures.  Four readers rated 555 media articles on which gave favorable or unfavorable impressions of PAM, and these ratings were regressed on sixteen features of articles, publications, and authors.

The result?  Since five strong indicators of more informed articles agreed on a more favorable rating, the favorable position looks like the “right” one here.  In the case of PAM, these groups were right more often: men, conservatives, web or broadcast media over print and books, and those who talked to people with firsthand knowledge, wrote longer articles, wrote news as opposed to editorials, and wrote for specialty publications with larger circulations and more awards.

Of course we need to look at more disputes to see which of these indicators holds more generally.  But a few tens of thousands of dollars should pay for that.  And with good indicators in hand, we could in real time predict which sides are probably right in current disputes.  Wouldn’t that be something?

Tantrums as Status Symbols

Once upon a time one’s social status was clearly signaled by so many things: fragile expensive clothes, skin not worn from work, accent, vocabulary, and so on.  As many of these signal have weakened, one remains strong: tantrums.

CEOs throw more tantrums than mailboys.  Similarly movie stars, sports stars, and politicians throw more tantrums than ordinary people  in those industries.  Also famous for their tantrums: spoiled young wives, bigshot patriarchs, elite travelers, and toddlers.

These patterns make sense: after all, beautiful young women and successful older men are at their peak of desirability to the opposite sex.  If you are surprised that toddlers make the list, perhaps you should pay closer attention to the toddler-parent relation.  Parents mostly serve toddlers, not the other way around.

Of course, like a swagger, the signal is not so much the tantum itself as the fact that someone can get away with it.

Addendum: Todd Kendall has a data paper on this for NBA players.