Category: Political Science

Are Indian voters irrational?

India has been a functioning democracy since Independence, so why does it not have a higher standard of living? Why haven’t Indian voters opted for the kind of wealth-maximizing policies that have vaulted Singapore to a much higher standard of living? Have they in recent times, or are Indian voters especially irrational among democracies?

Here are a few hypotheses:

1. The real economic problem is local. Good policy at the national level won’t solve India’s fundamental problems, which include poorly defined property rights and corruption. Indian voters choose good leaders, but real change will require much slower piecemeal reforms at the micro-level.

2. Indian voters are just simply, plain, flat, downright irrational.

3. Indian voters seek to perpetuate the Gandhi-Nehru dynasty in some form. This leads them to choose from a narrow subsection of the elite. Indian economic policy has improved as this elite has moved away from socialism and has had greater exposure to market-based ideas.

4. Centrist Indian voters have evolved into rationality. Indians once elected socialists, but the current Indian Prime Minister, Manmohan Singh, is arguably the best man in the world for the job [TC: he wasn’t exactly directly elected…]. India does not improve more because Singh is constrained by other parties, which court irrational views at the fringes.

5. Singh is an accident, and India will likely return to leaders who reject the idea of wealth creation [but do note that Rao and Rajiv Gandhi were also pro-market reformers to some extent].

6. The real democratization story concerns the rise of “lower-caste” politicians in the 1990s, and the waning power of the Anglicized Brahmin elites. This will mean either:

a) The lower castes will choose future leaders unwisely and pursue a politics of resentment.

b) The lower castes will be forced to “own” Indian government to a greater extent. Their politicians also will be led toward pro-market reforms, given the nature of the problems they will face. India will become stronger and more unified in the long run, thereby making market reforms more wide-ranging and also more durable.

Yes many of these are contradictory but can they all be true?

Democracy: Theory and Practice

Amid all the scaremongering about a nailbitingly close election with a disputed outcome, it is worth observing that if you really believe in democracy, and if the election is close, then it doesn’t much matter who wins. The theory of democracy (stripped down to bare essentials, and omitting all sorts of caveats that I could list but won’t) is that the guy who gets more votes is the better guy. Surely, then, it follows that the guy who gets only slightly more votes is only the slightly better guy. And if one guy’s only slightly better than the other, then a miscount is no great tragedy.

You might have a strong preference for one candidate over the other, but if you have an overriding preference for democracy (“Let the majority rule, even when I’m in the minority”), then you can stop worrying about miscounts. Surely there’s not much difference between a world where Bush gets 3 more votes than Kerry and a world where Kerry gets 3 more votes than Bush. If Bush is the rightful president in one of those worlds, he’s got to be darn close to rightful in the other.

Vote libertarian?

Consider this passage:

Establishment politicians don’t have solutions that work in the real world because they aren’t asking the tough question: “Why are jobs becoming scarce? Why do we have so much downsizing and so many corporate mergers?”

The answer is too much regulation and too much government spending. In the 1980s, the number of federal regulators fell from about 122,000 to barely 100,000. The private sector added 3,500,000 jobs as a consequence. The loss of each federal regulator resulted in the creation of more than 150 new jobs, enough to hire the ex-regulator, most of the unemployed, and some of the able-bodied poor. The nation prospered!

From 1987 to 1992, the number of regulators swelled once more to pre-1980 levels. The 3.5 million newly-created jobs were destroyed as a result. The number of regulators has continued to increase, costing additional jobs as well. Was your job among them? Will you be unemployed when the next wave of government regulation hits?

Where does one start? Shall I note that corporate mergers are not per se undesirable, nor is downsizing a source of job loss? Or should I note that the growth of the 1980s was not driven by the (supposed) loss of 22,000 jobs of regulators (N.B.: I cannot verify the numbers)? Or shall we move to the next paragraph? Throughout most of the 1990s employment rose and the degree of regulation rose as well. More generally, the extent of government regulation is not a major variable driving employment fluctuations, although it does influence long-run real wages.

Matt is right to think that the world will read an LP vote as sympathy for smaller government, no matter how off-base or crazy an LP candidate might be. Nonetheless I must offer p = 0 when I ponder the chance that I vote for Badnarik. If I don’t like a picture, I’m not going to hang it on my wall. I gladly supported Ed Clark in 1980, let’s hope that the LP once again puts up a serious candidate.

This year’s corruption index

Transparency International just published its new corruption index:

Countries with a score of higher than 9, with very low levels of perceived corruption, are predominantly rich countries, namely Finland, New Zealand, Denmark, Iceland, Singapore, Sweden and Switzerland. “But the poorest countries, most of which are in the bottom half of the index, are in greatest need of support in fighting corruption,” said Eigen.

On the basis of data from sources that were used for both the 2003 and 2004 index, since last year an increase in perceived corruption can be observed for Bahrain, Belize, Cyprus, Dominican Republic, Jamaica, Kuwait, Luxembourg, Mauritius, Oman, Poland, Saudi Arabia, Senegal, and Trinidad and Tobago.

On the same basis, a fall in corruption was perceived in Austria, Botswana, Czech Republic, El Salvador, France, Gambia, Germany, Jordan, Switzerland, Tanzania, Thailand, Uganda, United Arab Emirates and Uruguay.

In absolute terms, the biggest losers are Bangladesh, Haiti, Nigeria, Chad, Myanmar, Azerbaijan and Paraguay.

Here is the press release, which links to the original study and some charts.

The index appears to have had an impact:

Governments as diverse as Papua New Guinea, Cameroon and Bosnia-Herzegovina have started or stepped up anti-corruption programmes as a result of publicity generated by the index, Berlin- based Transparency International (TI) says. South Korea has even pledged to reach position 10 or above by 2007 – a tall order, as Seoul was ranked 50th last year.

On the negative side, the Financial Times asks whether such indices simply scare off investment in the poorer countries, but of course this is the reason why the index works at all.

What are Presidents blamed for?

In United States presidential elections, the incumbent party’s fortunes depend significantly on recent economic conditions, as numerous studies have shown. Many details of how economic voting takes place, however, are still not well understood. Here we present evidence on four issues. 1) Which is more important for determining people’s votes, national or local economic conditions? 2) What time frame do people consider in economic voting? 3) Which demographic groups are most sensitive to the economy in their voting behavior? 4) How does economic voting depend on the political context–in particular, whether a candidate is running for re-election, and whether the incumbent party also controls Congress? Our study includes the first county-level analysis of economic voting in presidential elections. We find the answers to our four questions are: 1) national conditions, by far; 2) the most recent year; 3) blacks, females, and the non-elderly; and 4) no.

Here is the full article.

Guess Who is Getting Flu Shots?

“Flu Vaccines Abundant and Free on Capitol Hill,” is the headline in today’s on-line Washington Post.

While many Americans search in vain for flu shots, members and employees of Congress are able to obtain them quickly and at no charge from the Capitol’s attending physician, who has urged all 535 lawmakers to get the vaccines even if they are young and healthy.

I can (sometimes) see the efficiency rationale for this, but it is funny to see our Representatives try to defend their special treatment:

Sen. Joseph I. Lieberman (D-Conn.), 62, said in an interview yesterday: “I haven’t done it yet, but I want to. We’re not in the priority category” set by the CDC. “But I think the [Capitol’s] doctor makes a good case. We can pick it up and spread it” through interactions with constituents.

Here is the article.

What Gets Out the Vote?

Alan Krueger writes:

Door-to-door canvassing, though expensive, yields the most votes. As a rule of thumb, one additional vote is cast from each 14 people contacted. That works out to somewhere between $7 and $19 a vote, depending on the pay of canvassers – not much different from the cost of that three-pack of underwear. Canvassers who matched the ethnic profile of their assigned neighborhoods were more successful.

The effect of leaflets on turnout has not been evaluated as thoroughly as canvassing, but results from two partisan campaigns indicate that one vote was generated for every 66 leaflets hung on doors. In another experiment, just one vote was added for every 200 nonpartisan leaflets. Over all, leafletting costs $14 to $42 a vote. (A salutary aspect of the book is that one, two or three stars are placed next to the central findings to signify the degree of confidence the authors have in the results. This is only a one-star result.)

Direct mail is less cost-effective than leaflets. Mailing costs totaled around $60 for each additional vote cast. Telephone calling is also not highly effective, with the cost per vote ranging from $200 for heavily scripted calls to $45 for more personalized calls. Even worse, recorded messages and e-mail had no detectable impact on turnout.

Some candidates mail negative messages to their opponent’s supporters to discourage voting. Mailing a negative message depresses votes, but at a very low rate. The cost per vote diminished was about $300. (This is another one-star finding.)

Here is The New York Times link. The results are drawn from this Brookings book.

The Economics of the Intifada

The number of Palestinians who worked daily in Israel before the intifada was more than 150,000; the figure now is fewer than 35,000.

Of the 2.2 million Palestinians on the West Bank, 50 percent now live below the poverty line, compared with 22 percent in 2001; the figure is now 68 percent in teeming Gaza, with its 1.3 million people.

The percentage of Palestinians with savings declined from 70 percent to 13 percent.

Before the second intifada, some $500 million a year was provided in aid; the average annual figure for the last four years is more than $1 billion, about $310 a person, the highest per capita rate in the world.

Some 500,000 of the 3.5 million Palestinians are in dire economic straits, said David Shearer, the head of the United Nations agency’s office here. Some 40 percent now feel insecure about feeding their families; 29 percent feel severely insecure, and half of them are heavily dependent on foreign aid. Some 30 percent are watching their savings dwindle. “They are the new poor, and they are slipping down,” Mr. Shearer said.

Here is the full story.

Yet many Palestinians support the intifada, and obviously some are willing to die for it. I conclude that economists need a better theory of human irrationality. Analogies from expressive voting theory suggest that (many) Palestinians support the intifada because their voices are not decisive. The support is seen as a kind of “cheap talk,” leading to a collective insanity which perhaps no single person intended. But do individual Palestinians who support the intifada really mind that so many other people go along with them? Doubtful, the contrary is sooner true, namely that people prefer that their peers follow their position.

In my (admittedly unorthodox) view the degree of decisiveness is not the key to determining the degree of human rationality. I would sooner believe that the amount of pride at stake is what turns on the irrational part of our brains, whether we are decisive or not. Remember, Stalin was convinced that Hitler was not going to invade anytime soon.

Should we prefer a monopolistic or competitive Jihad?

Matt Yglesias asks MR to address whether we would prefer, all other things equal, terrorists organized into a single group, or organized into competing groups. The answer to this question will not be a priori, but here are a few relevant considerations:

1. If terrorists perform their acts for fundraising purposes, or for criminal status, you would probably rather face a monopoly opponent. They are more likely to rest on their laurels.

2. If you think that terrorists are deterrable, at least in principle, you would prefer an easily identifiable monopoly opponent.

3. If you think that terrorists are likely to engage in internecine warfare with each other, you would prefer the more competitive set-up. (I’ll predict that if anyone kills, or has killed, bin Laden, it is one of his own people.) This is especially true when the terrorists are far away from you; they can fight without major spillover effects on your citizenry.

4. Perhaps the production of terrorist attacks involves significant economies of scale. In that case you would prefer the smaller competing groups. Nuclear weapons probably involve such economies, but suicide bombings can be organized on quite a small scale.

My guess: In Iraq you would prefer a smaller number of groups, since there is some chance of striking a deal with them. And there we are more worried about the suicide bombers than a loose nuclear device, so economies of scale do not overturn this conclusion. We are less likely to ever “trade” with al Qaeda and its offshoots, so in that case I would prefer splintering. Furthermore al Qaeda has a greater long-run nuclear potential, so it is more important to deny them potential economies of scale. I suspect we do not much mind if western Pakistan becomes a scene for terrorist infighting, whereas such conflicts could scuttle reconstruction in Iraq.

Our Presidential candidates

…conservatism as we have known it is now over. People like me who became conservatives because of the appeal of smaller government and more domestic freedom are now marginalized in a big-government party, bent on using the power of the state to direct people’s lives, give them meaning and protect them from all dangers. Just remember all that Bush promised last night: an astonishingly expensive bid to spend much more money to help people in ways that conservatives once abjured. He pledged to provide record levels of education funding, colleges and healthcare centers in poor towns, more Pell grants, seven million more affordable homes, expensive new HSAs, and a phenomenally expensive bid to reform the social security system. I look forward to someone adding it all up, but it’s easily in the trillions. And Bush’s astonishing achievement is to make the case for all this new spending, at a time of chronic debt (created in large part by his profligate party), while pegging his opponent as the “tax-and-spend” candidate. The chutzpah is amazing. At this point, however, it isn’t just chutzpah. It’s deception. To propose all this knowing full well that we cannot even begin to afford it is irresponsible in the deepest degree. I’ve said it before and I’ll say it again: the only difference between Republicans and Democrats now is that the Bush Republicans believe in Big Insolvent Government and the Kerry Democrats believe in Big Solvent Government. By any measure, that makes Kerry – especially as he has endorsed the critical pay-as-you-go rule on domestic spending – easily the choice for fiscal conservatives. It was also jaw-dropping to hear this president speak about tax reform. Bush? He has done more to lard up the tax code with special breaks and new loopholes than any recent president. On this issue – on which I couldn’t agree more – I have to say I don’t believe him. Tax reform goes against the grain of everything this president has done so far. Why would he change now?

That’s Andrew Sullivan, and I think I am headed out to The Crying Bar.

Does the European Parliament favor free trade?

Of 384 studied members of the European Parliament, only 12 appear to favor free trade for Europe on a consistent basis. The Swedish representatives appear to be the most free market, the French appear to be the most protectionist. There is one Spanish woman who has voted for free trade every time.

Here is the study.

Thanks to Mit dem Kopf voran (an excellent German-language blog) for the pointer.

Back to the Future of Iraq

In the weeks after the Iraq war “concluded” there was lots of discussion about reforming the economy. But the opening of the second front pushed those plans into remission. I hope that it is not yet too late to leave Iraq with better economic institutions. Yet as we seek a way out, our influence diminishes and the chance that the war was fought for nought increases. I was pleased, therefore, to see Nancy Birdsall of the Center for Global Development and Arvind Subramanian, a division chief at the International Monetary Fund try to push reform back onto the agenda.

As the United States, the United Nations, and the Iraqi Governing Council struggle to determine what form Iraq’s next government should take, there is one question that, more than any other, may prove critical to the country’s future: how to handle its vast oil wealth. Oil riches are far from the blessing they are often assumed to be. In fact, countries often end up poor precisely because they are oil rich. Oil and mineral wealth can be bad for growth and bad for democracy, since they tend to impede the development of institutions and values critical to open, market-based economies and political freedom: civil liberties, the rule of law, protection of property rights, and political participation.

Can Iraq avoid the pitfalls that other oil-rich countries have fallen into? The answer is yes, but only if it is willing to implement a novel arrangement for managing its oil wealth with the help of the international community…. the Iraqi people should embed in their new constitution an arrangement for the direct distribution of oil revenues to all Iraqi households — an arrangement that would be supervised by the international community.

The article is in the latest edition of Foreign Affairs, it is well worth reading but if you don’t have a subscription you can find a more succint version of the argument here.

Thanks to Dave Meleney for the pointer.

Will John Kerry bring fiscal discipline?

No, but a Republican Congress might:

My AEI colleague Eric Engen and I [Kevin Hassett] just completed a detailed analysis of the Kerry spending proposals. To perform the analysis, we combed through Kerry’s web site and public statements to assemble a list of every spending promise he has made, and then dug through the public record to find third-party cost estimates for each of his proposals. When necessary, we adjusted the period for the existing score to the 10-year budget window using standard techniques. When we could not find such cost estimates, we relied on numbers that were supplied by the Kerry campaign. When the Kerry campaign did not provide cost estimates, we set the score for that promise to zero.

Even with that generous accounting, the Kerry spending promises add up to an extraordinary amount of money. Our best estimate is that Kerry’s proposals will add up to between $2 trillion and $2.1 trillion over the next ten years. Since the revenue from his tax proposals relative to the current baseline is actually negative, this implies that the Kerry proposal would increase the deficit by perhaps as much as $2.5 trillion over the next ten years.

On August 3, 2004, the Kerry campaign responded to criticisms such as this with a revised budget plan. The main difference between the first and second plans is that the campaign now claims to be able to save about $300 billion from eliminating corporate welfare. Even if we include this rather implausible savings in our estimate, the net increase in the deficit associated with Kerry’s proposals is on the order of $2.2 trillion.

What would he spend the money on? According to our analysis, roughly half of this additional spending is attributable to Senator Kerry’s health care proposals that would add more than $900 billion in federal outlays. Education expenditure accounts for nearly one quarter of Kerry’s new spending, with almost $500 billion added over ten years. A $400 billion expansion of military personnel and benefits for veterans comprises most of the remainder of Kerry’s spending plans, with the balance distributed among numerous social programs and increases in international aid.

I have not been through these numbers, but Kerry has not exactly been running on a platform of spending cuts. Most of all, I’d like to see a further analysis, weighting each number by the probability it will pass into law.

Thanks to TCS for the link.