Category: Political Science

Indian voters reject high-tech

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.

Map the Power Elite

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.

NYTimes

Secession

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.

Why isn’t Brazil a first-world country?

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.

Here is an article on Lula’s partial success in reforming Brazilian pensions, here is more detail.

The quotations are taken from William Lewis’s interesting The Power of Productivity.

To be continued…

What makes for media bias?

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!.

War Politics

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?

The stock market prices presidential candidates

…[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.

Here is the full paper. Here is the home page of the researcher, Brian Knight.

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.

Phrase of the day

“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.

Electronic voting

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.

Bootleggers and Baptists

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.

Is Russia a normal country?

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.

That’s the take of Andrei Shleifer and Daniel Treisman. Here is the full article. Here is a longer unpublished version.

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.

Senators tell their favorite jokes

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.

Punkers for capitalism

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…”

Is Congress becoming worse?

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.

Mexican democratization

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.

5. Since democratization, progress against crime, corruption, and drug trafficking has been slow at best. The Mexican public agrees.

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.