Saturday, August 19, 2017

Come to Barcelona soon

When I was a kid, I used to live very close to the bull ring in Barcelona. From the spring to September there were bull fights which I occasionally attended. Most of the time I didn't go, but our passtime was to watch the tourists (and their funny clothes, or in some cases almost lack of them, to be honest) that parked their coaches in our street. In those years, before the Olympic Games of 1992, we only saw tourists on Sundays because they came for the day to the city to the bull fight from the Costa Brava. In Barcelona, there were not many hotels back then. Another way to see toruists was to go to Montserrat (a mountain near Barcelona) in summer, where tourists from the beaches also came for the day. Since the Olympic Games tourists now stay in Barcelona. They have many hotels and now more or less legal tourist appartments. That does not mean that Barcelona has not been a city of visitors. Most of our touristic assets were here before the Olympic Games, like the Gaudí buildings, the nice weather and... yes, the immortal Rambla where a horrible terrorist attack took place on Thursday. That is the pedestrian street, itself a monument to diversity and freedom, which had seen George Orwell, Pablo Picasso, Federico García Lorca, Gabriel García Márquez and many others walking up and down the avenue. Some of our occasional visitors come for a few days or for an academic course and then decide to stay and join us as citizens of Barcelona. And some of them become partners of those that were here before, and even come to lead our associations, political parties or even municipalities. Only a couple of decisions separate a tourist from a local. All those of us who can organize anything know the power of the subject matter "Invitation to Barcelona" in an email. Because of this power (exerted by myself personally or others, we all know the trick) I have been able to spend time with people I admire in my profession, like Paul Levine, Jon Stern, Neil Rickman, Sam Bowles, Branko Milanovic, Glenn Woroch, Maitreesh Gattak, Antonio Estache, Massimo Florio and others. And I am also happy to having spent time with other visitors with whom I don't have professional links. In the last ten to fifteen years, I have had literally hundreds of foreign students in the Autonomous University of Barcelona and its associated courses. I expect to have more this academic course. Every time I start with a new group I feel a sense of excitement for getting in touch with individuals with such varied backgrounds, a sense of excitement that I only hope it is shared by them. All of them will enjoy our street life and be part of us. This is an open city, this is everybody's city. Among the casualties of Thursday's attack the official version says that there are more than thirty nationalities. That's surely wrong. If they followed the appeal of Barcelona, surely many of them as individuals were multinational, multilingual and multicultural. Therefore, it should be thirty times the number of nationalities inside each of them. It could have been any of us, but we are not afraid. To all of the visitors that have been here before and to all those that will join us for the first time, I say: please come soon.

Tuesday, August 15, 2017

"Diversity and Complexity," by Scott E. Page

The book by Scott E. Page "Diversity and Complexity" is a useful complement of the book written before by the same autor, "The Difference," offering definitions and taxonomies of diverse and complex systems.
In that previous book, Page argued that diverse preferences, although presenting social choice challenges, also offer the opportunity for diverse perspectives that help to solve problems with uncertain solutions. Diverse communities or groups do not succeed automatically, as cycling is not something that one learns without some training. But once you learn, cycling goes much faster than running, which is much easier.
Complexity comes from systems that result from the interaction of diverse adaptive units from which patterns emerge that are difficult to predict in advance. A calculus exam is difficult, but not complex, because the parts do not interact.
The more recent book explains that the role of diversity is to provide insurance, competition, redundancy, and innovation. Although the book has mostly a positive tone, it also reflects a preference for diversity. This preference then must be implemented under the positive constraints set out in the book. There are many examples of this, and that is one of the good reasons to have institutional diversity. A preference for diversity makes many of us prefer big cities rather than small villages, although the countryside is also an example of natural diversity.  The author is very aware of the constraints: diversity is no panacea and not every kind of diversity works. If we put lots of randomly different things together they will not create a coherent system from the beginning. In nature, diverse ecosystems work precisley because they have been evolving for centuries. The book has many interesting insights beyond the relationship between complexity and diversity, like the distinctions between data, information, knowledge, and wisdom (in increasing order of structure).
In biology and non-human nature, change comes from evolution. In human societies, it comes both from evolution and from creative intelligence. However, intelligence has plusses and minuses, the latter especially coming from confirmation and other biases.

Thursday, August 10, 2017

The book about Buchanan, and what it says about Tullock

In Nancy MacLean’s “Democracy in Chains” there is an impressive account of the efforts of Nobel Prize economist James Buchanan to build over his career a theory of government and democracy to justify the reversal of all redistributive or environmental public interventions. These efforts were generously funded by billionaires and helped to create the intellectual infrastructure of what is today a very powerful network of right wing organizations. The origins of that network are traced in the book to the resistance of the Southern oligarchy in the US to the enfranchisement of African-Americans. How the school of thought promoted by Buchanan has come to be so influential not only in the US but also in Europe (this economist was one of the favorite of more than one of my undergraduate teachers) is probably a combination of the originality and audacity of his radical ideas and the financial support he received. The book is stronger in connecting Buchanan to the social context of the time than in analyzing his ideas on their merits, something for which the author delegates into basically only just another author (Amadae, which I’ll read). By this, she leaves aside an interesting history of economic ideas, which is the debate between Buchanan and his co-authors and other more progressive economic thinkers, such as Kenneth Arrow and Amartya Sen, who were also concerned about the problems of government and democracy (which are real), who took seriously the critique of Buchanan to public intervention, but who ultimately reached opposite conclusions.

Interestingly, in the book there is also more than a passing mention of Gordon Tullock, the most famous of Buchanan’s co-authors, and who was recently mentioned in this blog. In p. 99 of the book, for example, we can read: “In 1967 (…) for the third time in as many years, the senior economics faculty, led by Buchanan, again recommended that Gordon Tullock be promoted to full professor. (…) Tullock had never earned a PhD and by his own admission had never completed an economics course. Brilliant though Buchanan and his allies might have believed the law school alumnus to be, he lacked training in the field in which he taught, and his publication record –apart from the book he had coauthored with Buchanan- was undistinguished. He was also an awful teacher. It did not help that Tullock struck many as an egomaniac –or just a twit. (Once, for example, as a new colleague was unpacking his books, Tullock appeared at the door. “Oh, Mr. Johnson, I’m glad that you finally arrived,” he said. “I need the opinion of someone obviously inferior to me.”). Tullock would not be promoted. Buchanan was furious.”

Friday, August 4, 2017

The Scaramuccis of the world

The theatrical part of politics attracts individuals like Anthony Scaramucci, the financial executive that lasted ten days as communications director of the Trump administration. It is tempting to say that the chaotic current US presidency is fertile ground for this kind of characters, but the fact is that it is easy to come up with examples from other corners. In fact, the generals that had no option but to take over the sinking Trump presidency have sacked Scaramucci without much hesitation. In private I can give local examples of similar characters from my personal experience. Scaramucci and those like him are fast talking and arrogant. For them, what is important is not any particular ideas or values (they can defend different, sometimes opposite, things in a short period of time), but to express anything with apparent conviction. They have a tendency to talk about themselves and to emphasize humble origins or their contact with important people. In one of the few interviews he had time to give during his brief spell at the White House, he behaved with reporter Emily Maitlis more or less as a drunken youngster would behave in a night club at two o'clock in the morning. It is very revealing to know how this reporter obtained the interview in the gardens of the White House. It seems that she was there for a press conference and she saw Scaramucci taking selfies. She told him that she was from the BBC and asked him without preparation if he was interested in answering a few questions for the prestigious Newsnight program. Scaramucci, who probably had not much traing in international media, probably didn't know anything about the seriousness and the style of reporting at Newsnight. He felt flattered and he gave the interview without preparing anything. The resulting interview did not cause any dramatic accident for Scaramucci, but a similar contact with another journalist around the same days finished with him insulting other White House colleagues. When a new chief of staff was appointed and knew about that, Sacaramucci was fired. In a world of tweets, noise and self-promotion it is probably a matter of time before we see new examples of Scaramuccis, while honest citizens will keep looking for recognized adult behavior in politics. Expect more flamboyant individuals with expensive suits supporting opposite ideas and candidates, but always being flattering to the one they obtained power from.
Before I go to the beach for one week, let me give you two book recommendations to think about politics, economics and much more: the book about the role of James Buchanan in influencing the American right, and a book by Scott Page about complexity and diversity. More about them after the beach.

Monday, July 31, 2017

Cooperate or die

Here is an excellent speech about the virtues of cooperation in permanent institutions like the EU. It was meant to be about Brexit, but it is actually against any sort of nationalism in the 21st century. I found out about it from an article in The Guardian that says this: "In the weeks running up to the referendum, when Peter Mandelson was trying to galvanise remainers with an appeal to their pockets, and Yanis Varoufakis was making complicated speeches about conjuring forth ever deeper democracy, one man gave a simple, passionate speech that at the time I found bizarre. John Gummer, speaking to the Environmentalists for Europe, said – almost tearfully – that, because of the EU, nobody had had to send their son to another country to kill someone else’s son for 70 years. A eulogy to peace seemed quite tangential to the argument, but only if you had failed to see, as I had, how much bellicosity the leave side were generating, how much their nationalism and sovereignty were rooted in nostalgia, not for any old Britain of yore, but for a victorious Britain."

Sunday, July 30, 2017

Gordon Tullock's dangerous "minimal federalism"

Branko Milanovic twitted some days ago about a book on sovereignties apparently in Serbo-Croat by Gordon Tullock, so bad according to Milanovic that nobody cared to translate it into English. However, I did some research and found two pieces in English by Tullock that seem to correspond to the same period of time (early 1990s). These are a participation in a roundtable with among others Kenneth Arrow (to me, the one with the best arguments, which I am not aware that he developed in his research work) and a book that is available on-line, entitled "The New Federalist". From what I have seen in Google Scholar, this book has been cited by other authors suchs as Bruno Frey. The latter has some interesting work on what he calls FOCJ: "Functional, Overalpping, Competing Jurisdictions." The link with Tullock is what I believe Tullock calls sociological federalism, by which he means non-territorial sovereignty, that is sovereign institutions based on interests, ethnicity, preferences or any other affinity. Of course one can imagine dangerous developments of this, such as people getting organized only after some sort of ethnic cleansing. But the work of Frey has been interpreted as lending support to institutions like special districts in the US, where the organization of some public services gets structured overlapping but not coinciding with traditional administrative jurisdictional borders. These special districts have advantages and disadvantages, but perhaps would be (or perhaps already are) an input towards a more flexible European Union. In general, the Public Choice school of Tullock and Buchanan has been influential in a sort of free-market minimal federalism with a key role for jurisdictional competition and constraining public intervention. I would include in this tradition Tiebout, Weingast, Frey and also Alesina and Spolaore. Some of the work of these authors is valuable, as are valuable and should be taken seriously some of the contributions of Public Choice, even if those like me who advocate strong public intervention do not share the value judgements behind it. For example, the main points of public choice that government agents are no different from market agents, or that the outcomes of democracy have no particular normative properties for the fact of resulting from majority rule (but what matters is contractual process) are serious points that deserve to be taken into account, and that progressive authors such as Amartya Sen have taken seriously and responded to. But one can see the dangers of pushing the ideas of Tullock too far in federalism. For example, seeing some of his words in the above mentioned roundtable, one can be afraid of the kind of world that awaits us if that minimal federalism is ever implemented:
-"From 1790 until 1930, the US federal government, except in war time, regularly absorbed about 2.5 percent of our GNP. Most of that was used to mainatin a rather small military force (...). We got along beatifully -in fact, rather more beatifully tan we have gotten along since we became more fully integrated, I would say." I'm not sure that African-Americans among others share this view.
-"So, what we need, theoretically, is free trade and a lack of economic integration beyond that (...). Will the European Common market become a contribution to free trade, or will it build a tariff wall of its own, or will it disintegrate? I would not be at all surprised if it disintegrates." I'm happy that his prediction has failed on this.
-He also argues that Canada has no justification for existing beyond the fact that they do not like the USA: "if I were to offer them advice, I would suggest they just disintegrate." Here I'm happy that Canadians did not follow his suggestion, and remain today one of the most civilized federations on Earth.

Friday, July 28, 2017

Celebrating the 25th anniversary of the Barcelona Olympics

Barcelona celebrates these days the 25th anniversary of the Olympic Games. This event was hugely popular and an organizational success. A sub-literature in economics emerged more or less after those games concluding that these events have more costs than benefits for society, which is why some cities like Hamburg, Boston and Oslo have withdrawn from bidding races. Unfortunately this literature has not reached the general public in Spain. I believe there is no contradiction between deeming Barcelona 92 a success and accepting that in general Olympic Games are bad economic propositions. This is the same view that is taken by Andrew Zimbalist in Circus Maximus. I tried to develop it in a joint paper with Eloi Serrano that was published last year. This is the abstract of the paper: "An extensive literature mostly developed after the Barcelona Olympic Games has questioned the existence of net economic benefits arising from the organization (with significant amounts of public resources) of major sporting events such as the Olympics, although some studies still defend their positive impact. Host cities tend to become hostage of the governing bodies organizing the games. The Barcelona Olympic Games were exceptionally successful but still suffered from cost overruns, white elephants and the exaggeration of social benefits as it is usual in many mega sporting events. We report about the socio-political and economic considerations that surrounded the initial project of Barcelona 1992, and we evaluate the uniqueness of these games, including the legacy of infrastructures and sports facilities. Barcelona, a relatively rich city, was emerging from a long centralist dictatorship when the games were initially planned. It had many urban deficits and the games were used as a catalyst to coordinate public and private agents in a complex society that was in a fast process of decentralization. The games had enormous social support. Although it may be argued that the public funds could have been used in alternative projects, it is hard to think that this degree of coordination and support could have been achieved for them."

Wednesday, July 26, 2017

Non-conventional rationality and social choice in a referendum

Most of the Theory of Social Choice is based on the assumption of the exogenous nature of the preferences of rational voters acting in a consistent way. However, modern behavioral economics suggests that the presentation of options ("framing") plays a crucial role in determining people's choices. In this sense, the traditional sequence in the Social Choice Theory (exogenous preference formation, election of a voting system, final vote) does not have to be fulfilled, and the choice of details of the voting system can influence the formation of preferences. This raises the neverendum issue: the campaign for a referendum or the referendum campaign, even if secessionists lose the referendum (as in Scotland), they succeed in convincing the electorate to pay attention to what they want. That is, they are part of the battle for the attention of the electorate. The more plebiscitarian campaigns there are, the better. If the battle of the referendum demos is implicitly and cognitively won as a symbolic manifestation of the nation itself, democratic standards and international recognition are secondary to those who have nationalistic preferences. In this sense, the questions and the exact words of the questions are not innocent. In Catalonia, the referendum questions in ilegal plebiscites are barely innocent. Voter opinions can fluctuate greatly depending on how exactly the questions are asked. For example, before the 1991 Gulf War, nearly two-thirds of Americans said they were willing to "use military force," but less than 30 percent wanted to "go to war."
Our preferences are more vague and incomplete than the traditional theory assumes, and co-evolve with the institutions that claim to aggregate them. Hence the importance for Amartya Sen of the reasoned discussion and of being able to make a decision with the maximum possible information, something that according to this economist and many other observers did not facilitate the dichotomous character of the campaign of the Brexit referendum, where even the more neutral and respected media organizations had to treat both opinions and facts equally to comply with an appearance of neutrality. The objective of making decisions after reasoned discussions, negotiating taking into account the multidimensionality of problems, links with a tradition somewhat forgotten in economics and political science, due to the Swedish economists Wicksell and Lindahl, pointing to the virtues in terms of social harmony and efficiency of unanimity. In addition, as Amartya Sen reminds us, the perspective view of people from other latitudes should be welcomed in any debate to avoid the excesses of "parochialism": sometimes passions and emotions prevent us from facing the pros and cons of a decision, and observers from other latitudes can help us broaden the angle of observation and decide with more perspective.Research on these issues, insofar as it departs from the assumption of absolute rationality, should prioritize the study of conditions or interventions that facilitate cooperative solutions to social dilemmas (as is done with experiments on the voluntary provision of public goods) by adapting the study to the typical situations of this type of conflicts of sovereignty. For those involved in advocating one or another option, consideration of behavioral issues may also be important. For example, Matt Qvortup has pointed out that for Brexit supporters in the UK, Brexit was a commodity with inelastic demand (the perception of a high "price" did not alter preferences) while those who might be in favor of staying in the European Union did have more elastic behavior. By focusing on economic issues (although the economic debate was objectively won),  remainers focused on the price of exit, which did not guarantee them the vote of their potential "elastic" voters and did not allow them to conquer the vote of the "inelastic" and hyper-mobilized a priori supporters of Brexit.

Monday, July 24, 2017

A fuzzy Brexit: like before, without a seat at the table

My father will like the title of this New York Times article: In favor of a fuzzy Brexit. I do not agree with everything it says and how it says it, but a couple of paragraphs I find very descriptive of what is to me the likely final outcome: the UK will have a similar special relationship to the one it had pre-referendum, but the UK government will not have a seat in the governing bodies. Not exactly what the British voters thought they were voting for last year in the referendum. These are the paragraphs I liked:
"A series of nudges and winks in the last few weeks from several of the senior British political players — above all, the Brexit secretary, David Davis — suggest that the election has left its mark and that British negotiators are edging away from a hard Brexit toward a “fuzzy” one, for when serious trade talks begin in October.
This means a much longer transitional period than originally envisaged by both sides, possibly staying inside the European Union’s customs union in some modified form, and a much greater readiness on Britain’s part to compromise on continuing payments into the European Union’s budget (as well as a large onetime leaving fee) and on some continuing jurisdiction by the European Court of Justice.
Voting to leave was always going to be a lot easier than actually leaving, especially when the referendum result gave politicians no indication as to what kind of Brexit people wanted."
And this will probably be without any more referendums, for which serious people are losing their appetite.

Friday, July 21, 2017

Corruption in Spanish soccer

As I write this post, the former president of FC Barcelona Sandro Rosell and the still current president of the Spanish soccer federation and influential official in the governing bodies of global soccer Angel M. Villar, are in jail. They will be there awaiting trial because judges believe there is significant risk that they will destroy evidence or try to evade justice. It seems therefore that high level corruption is not limited to FIFA, although both Mr Rosell and Mr Villar were very active in the links and transactions of global sports corruption. The last episode has been the arrest of the president of the Spanish federation, who has been in that job for 30 years. He was the "Spanish Blatter" and his method of operation was the same, showing like in the case of Rosell that success and growth are not incompatible with corruption. In fact, unless proper accountability is in place, they may be highly correlated:
"Authorities also believe Ángel María Villar may have used federation funds to pay off regional soccer chiefs in a bid to maintain control at the top of the powerful federation. Villar was returned to office for a new four-year term in May, the eighth such occasion on which he has seen his contract renewed.
The courts are now investigating the soccer chief and other detainees for crimes including corruption, embezzlement, improper management and possible asset stripping in relation to a range of possible fraudulent activities. The amount of money involved is not known. (...) But those prosecutors were not just looking at possible fraud related to €1.2 million subsidies for soccer in poor countries. In fact, they were also investigating a range of more serious crimes on behalf of Spain’s High Court, and it was on the orders of this higher court that Villar’s phone calls were being bugged."

Tuesday, July 18, 2017

A limbo instead of a second referendum?

I agree with Polly Toynbee that a second referendum would be as bad an idea as the first one in the UK. She raises the possibility of a permanent limbo that could result from revoking article 50. But there does not seem to be any certainty that article 50 can be revoked. Total confusion and uncertainty remains. For this sorry state, not only brexiters should be blamed, but all those in favour of deciding these matters through a referendum. These are the arguments of Toynbee: "One solution is a long, perhaps never-ending compromise. Andrew Adonis, whose House of Lords speech fired up the anti-Brexit peers, says lawyers are taking a case to the ECJ to declare that article 50 can be revoked. That’s the view of Lord Kerr, article 50’s author. The UK could revoke it just before the March 2019 deadline, as a temporary measure to delay exit, in transition time. Even David Davis agrees the need for transition time, as the fiendish complexity of everything finally dawns. There we will sit in the transit lounge, inside the European Free Trade Association alongside Norway, which has lived frozen in a state of perpetual transition ever since Norwegians voted against joining the EU in 1994. (...)
Indefinite limbo is no visionary battle cry, and will satisfy no one: Brexiteers will always be implacable. But it could turn out to be the least worst option, and so long as we are no better off outside the club, the EU might accept a messy compromise, saving us from calamity. We will obey rules over which we have no power, but all alternatives look worse. Elections will come and go, but at some future date Britain may vote for a government that advocates returning, humbled, to an EU that may itself look changed. Not inspiring, but avoiding Armageddon.
But never try another referendum. Haven’t we learned that lesson the hard way? A crude question divides a nation, driven by emotions not on the ballot paper, paralysing politics for years to come. If your confirmation bias draws your eyes only to stories that tell you the tide is turning, cast your eyes occasionally at how Murdoch, the Mail and the Telegraph still ply their venom. They would still be there, poisoning the air, in a second referendum."

Friday, July 14, 2017

Almost full agreement with The Economist

The Economist has just published an article where it develops almost the same arguments that I developed in my contribution to an on-line debate at the blog of the London School of Economics on June 26th. I don't make any claim of plagiarism, I just express my happiness that we have reached the same conclusions, because as I said in that contribution, "The Economist supported this idea (of a self-determination referendum) until they saw it implemented in Britain. Since then, they have backpedaled." Here is a brief comparison between the words of The Economist just yesterday and my words two weeks ago:
-The Economist (July 13th): "In a regional election in 2015, parties campaigning for independence won, but only just: the ruling coalition got 48% of the vote but 53% of the seats in the parliament."
-Real Progress Author (June 26th): "That is precisely what the leaders of the Catalan pro-independence government want to do using their control of the autonomous executive and their majority in the Catalan Parliament, which was produced via a non-proportional electoral law that gives their coalition more than half of the seats with less than half of the votes."
-The Economist (July 13th):"Mr Puigdemont invokes “the legitimate right to self-determination of a thousand-year-old nation”. National and international law is against him. (...) And the Council of Europe, which Mr Puigdemont consulted, said in June that any referendum must be carried out “in full compliance with the constitution”.
-Real Progress Author (June 26th): "a yes/no self-determination referendum could be the cause of great division among Catalan citizens or in other similarly diverse societies. That is why the Commission of the Council of Europe for Democracy through Law (the Venice Commission) recommends to hold them only under very strict conditions, including a strong legal framework and a neutral democratic authority. Illegal self-determination referendums in otherwise democratic societies are not at the frontier of best practices."
-The Economist (July 13th): "Opinion polls show that around 40-44% of Catalans support independence, depending on how the question is framed. That is not enough to make a revolution. The march to illegality is prompting strains in Barcelona."
-Real Progress Author (June 26th): "One year later, the UK seems to know what 52% of voters did not want on the day of the referendum (EU membership), but they still do not know what the public or their leaders want for their future. It seems that yes or no answers in entirely legal self-determination referendums are decidedly inefficient tools for determining the real will of the people. Now imagine something similar, but without a legal framework, without a census, and without a neutral electoral authority."
-The Economist (July 13th):  Mr Rajoy’s approach may be unimaginative, but it is effective. It is politically profitable for him in the rest of Spain, where many are fed up with what they see as Catalan whining. But it ignores Catalonia’s unhappiness with Spain’s current constitutional arrangements. Keeping the country together may require revisiting them.
-Real Progress Author (June 26th): "Spain needs a broad agreement for a federal reform that can be supported by people who strongly believe in it and by people that may find a common ground around it. Such a detailed agreement could then be voted on in a referendum."
My only disagreement with The Economist is in the title of their article. This title ("Playing Chicken...") suggests that there is a game of Chicken between the Spanish government and the Catalan government. I don't think so, given the lack of cohesion of the pro-independence movement and the lack of international support (also acknowledged by The Economist). It is too unbalanced. The game of Chicken is being played inside the secessionist movement, between a more pragmatic wing that sees that this is going nowhere and a fanatic wing that has been living in the fringes of reality for some time.

Thursday, July 13, 2017

The link between globalization and populisms: Rodrik and Boeri

Dani Rodrik has published a working paper where he presents a summary of research about the link between globalization and the diversity of populist movements that have surged in different parts of the globe in the recent past. This economist argues that we should not be surprised by the backlash against hyper-globalization, because economics predicts that global economic integration has very significant distributive effects, that are naturally channelled through the political process, as it has happened in the past. Although these distributive effects could be mitigated by compensatory mechanisms, many times these are not put in place because of a political commitment problem: although politicians may promise that they would compensate the losers to have their acquiescence to liberalize, once they approve liberalization, they don't have ex post the incentives to carry through the promise. I agree about the distributive effects of globalization and I agree that compensation does not always happen (although some societies have gone quite far in that), but I am not sure that the political commitment problem is a very good explanation: why would voters do not learn from history? Then the article has a second part where he explains that populism can be right wing or left wing, and that although demand for redistribution is strong, the supply can be nativist or truly redistributive depending on the supply of narratives, and this in turn depends on objective characteristics of each community. For example, in Spain we don't have right-wing racist populism presumably because our immigrants are mostly Latin American, therefore more or less culturally like us. However, most populism in central and northern Europe (UK, France, ...) is right wing according to Rodrik. Here I think the correlations and causal links are more complex. France and the UK also have a strong populist left wing, and part of the populism in Spain is expressed through nationalist movements in Catalonia and the Basque Country that have significant right-wing components. Tito Boeri in a book in Italian where he collects previous research work of his and others provides a more complex perspective on populism, but I am afraid that some conclusions are still exaggerated. For example, he shows a negative correlation between support for populist parties and belonging to associations. First, in a lot of this empirical work support for populism is measured only as voting for parties that are pre-tagged as populist (in Spain, only Podemos!), and second, it is not clear which type of associations are considered. There is work by historians suggesting that those regions with more associations and civic movements supported nazism more than others, not less. OK, nazism and populism are not the same, but it doesn't look like associations are a guarantee of a better deliberative democracy, as Boeri seems to suggest. In Catalonia, civic movements (whose leadership is not a random selection of cultural traits and income distribution) are being used by leaders of national-populism to promote their populist cause: direct democracy, hispano-phobia, etc. There is much work to be done before we know better about the links between globalization and politics.

Tuesday, July 11, 2017

Cohesion, clarity, stability

In addition to  criteria such as transitivity, independence of irrelevant alternatives and neutrality that are desirable for voting rules according to Kenneth Arrow, one could think of other criteria that are especially applicable to sovereignty referendums such as the Brexit one. These criteria could be those of cohesion, clarity and stability.
Cohesion. A yes/no self-determination referendum can be a cause of great division in internally diverse societies. Taking the Quebec referendum of 1995, the Scottish referendum of 2014 and the Brexit of 2016 as examples, all produced a very close result: it seems that these referendums with two options tend to divide the electorate into two halves and produce very crisp and emotional campaigns. The winning option defines a model of society for which almost half of the population has explicitly voted against. In what situation this immense minority remains in terms of risk of discrimination and discomfort, should be a cause for concern.
Stability. Several observers have pointed out the risk of contagion or domino effect, both internal and external. Some might argue that this should not be a problem, since holding more referendums can only be even more democratic. However, it is difficult to find advocates of the secession of a territory that admit the right to become independent of important parts of this territory. The existence of waves of independence and referendum processes suggests that there are imitation effects, which can alert leaders of powerful powers on the international scene, even when some referendum might be desirable to address a serious problem of coexistence or human rights. Partitions and reunifications are not like playing with lego blocks, and have consequences for long term investments made by ordinary individuals and families (personal bonds, labour contracts, social security, homes, professional degrees…).
Clarity. Following the last referendum in Quebec in 1995, the Supreme Court of Canada asserted that it was necessary to take into account the principle that the options presented to the electorate should be clear and avoid confusion, and that the consequences of whatever is decided must be clear and what is decided must also be approved by a clear majority. The Clarity Act subsequently approved by Parliament applied these principles to the specific case of Canada. Note that there is some conflict between posing a clear question and presenting clearly the consequences of what is approved. Making a referendum with two or even three or more discrete options on something that is actually a continuum (the degree of sovereignty) and that does not depend only on the electoral body can induce a sense of "false clarity." There is a risk of "approving" something that is actually pending negotiation.
The solution is not simply to increase a number of seemingly simple options to three or more, because then the question still gives the false impression of simplicity (it would have been difficult to know exactly what devolution max  in Scotland meant without a detailed prior agreement).
By expanding the number of "reasonable criteria" we also increase the number of trade-offs that are typical of social choice. For example, it is difficult to achieve clarity without undermining cohesion. After all, a brief and dichotomous question is very clear, but it facilitates polarization in two opposing blocks, and if we look at the British case, it does not seem to have led to stability.

Saturday, July 8, 2017

Alaska First

The Alaskan Independence Party is proud to be "the only Alaskan political party that is entirely composed of Alaskans, staffed by Alaskans and financed by Alaskans. We are not affiliated with any political party on a National level. We believe and hold a firm footing in the Declaration of Independence, the Bill of Rights and following the Constitution of the United States and Alaska. We are a States' Rights party, as is reflected in the AIP Platform. We stand on a firm Constitutional foundation. The continual growth of membership of the Alaskan Independence Party has created one of the largest third parties in the United States. Join us as we lead Alaska to the Prosperity, Freedom and Liberty that Alaskans expect, deserve and should enjoy. We look forward to your membership!
There is a commonly held belief across Alaska, that the US Constitution has been set aside, and other than ourselves, there are no protections to the liberty and freedoms we are to have as our continued inheritance since the formation of the Union of the "several States". Our main "goal" is a legal vote and ballot." The party is in favor of minimal government and privatization and also in favor of gun rights and home schooling. Of course they want to hold a referendum: "It is the AIP's wish to get a true plebiscite according to international law, where only legal Alaskan citizens vote. The question on the ballot is in the language of the people. (Federal military and their dependents are not legal citizens and will not be allowed to vote in this plebiscite.)" This party is the main challenge to the US tradition against internal secession that has been preserved since the Civil War. Will the New York Times write an editorial supporting this referendum?

Friday, July 7, 2017

The language of the tribe

After Branko Milanovic linked to my blog post about his blog post criticizing Alesina and Spolaore, there was a comment on Twitter presumably about my post, saying "The Catalan bourgeoisie in my opinion is unionist and the independence movement is not lead by the bourgeoisie but by cross class alliance." As a matter of fact, I didn't say whether the bourgeoisie was pro-independence or not, I only made a claim about a group of neo-liberal pro-secession economists who I believe are very proud of being bourgeois. There is little doubt that the pro-secession movement is a cross class alliance. That is the whole point of nationalist movements especially in rich regions, to try to distract the working and popular classes from the class struggle. I'm not a marxist, but I still find some marxist concepts useful simplifications (like economic models). But the current drive, which started in 2012 with the Catalan center-right president Artur Mas changing from pro-autonomy to pro-independence, has been led by an important part of the Catalan bourgeoisie (namely, the party of Mr. Mas). In many ways, they have created a monster that now they don't know how to tame. According to Catalan government surveys, those supporting independence come disproportionately from mid and upper income groups. The reason is simple: the best predictor of pro-independence feelings is linguistic identity, and most people having Spanish as first language, although a majority of the population, are among the poorest. But there is complexity and exceptions. For example, I'm among an exceptional 10-20% of people who have Catalan as first language but do not support independence. What I mostly object about that comment is the use of the word "unionist." I don't know about the bourgeoisie, but I will never accept that those like me opposing independence are called "unionist." This was a term that was absent in Catalonia before 2012. It has been coined by the secessionist groups to insult those that oppose them to compare them with the very unpopular Northern Irish fundamentalists of Reverend Paisley. I am certainly not a unionist, I'm a federalist, which in many ways is the opposite of being a unionist. They claim that they want to expand their social base (understandably, since they don't have a majority), but I don't know how they are going to do that if they keep insulting the other (very diverse and heterogeneous) at least half of the voting population.

Tuesday, July 4, 2017

The thin line between patriotism and tyranny

I hope that at some point Tymothy Snyder's book "On Tyranny" becomes required reading material in all the schools of the world, including my daughter's. I went yesterday to buy it to my favourite book store in Barcelona, the one that has a greater variety of books in Catalan, Spanish and English (La Central, in C/ Mallorca). I was happy to find the English edition, although it surprised me that the Catalan edition came with a label with the endorsement of a nationalist journalist, Jordi Barbeta. This journalist became famous for supporting the change of gear of the moderate Catalan nationalists toward secessionism in 2012 as chief political editor of center-right newspaper La Vanguardia. When the paper decided to stop supporting secessionism some time later, they sent him to Washington as US correspondent, where he interviewed Timothy Snyder recently, with a questionnaire that avoided any parallelism between the strong criticism of nationalist populism in the book and what is happening in Catalonia, although some of the questions transpired some skepticism that warnings about fascism could apply to Donald Trump (the main example used in the book). But at least in my modest opinion, many of the sentences in the book (please buy it yourself and read it to check that I am not quoting out of context) resonate also in Western Europe's regions with secessionist movements:
"Be alive to the fatal notions of emergency and exception. Be angry about the treacherous use of patriotic vocabulary"
"You might one day be offered the opportunity to display symbols of loyalty. Make sure that such symbols include your fellow citizens rather than exclude them"
"In the politics of eternity, the seduction of a mythicized past prevents us from thinking about possible futures."
"A nationalist encourages us to be our worst, and then tells us that we are the best."
"A nationalist will say it can't happen here, which is the first step toward disaster. A patriot says that it could happen here, but that we will stop it."
Perhaps Albert Einstein would disagree about the distinction between patriotism and nationalism, but the main point of the book, I believe, is the thin line between the manipulation of feelings toward your mother land (whichever you believe that is) and tyranny.
The New York Times (NYT) recently ran an editorial where it accepted one of the post-truths of Catalan secessionism: that we contribute 19% of Spanish public revenues to receive only 10% in expenditures. In fact, we receive 15% which is only 1% less than our population percentage. The Spanish ambassador and reputable economists have already replied to the newspaper. The NYT was right that the current situation in Catalonia has been aggravated by a right wing Spanish nationalist government that has also been exploiting nationalist feelings. But as Snyder says, post-truth is pre-fascism. Not only in the USA. Catalan, Spanish and other European citizens should ask themselves:  For whom the bells toll? They toll for you.

Working on the complexity of sovereign conflicts

Branko Milanovic has a very interesting post criticizing the excessive simplicity of views in what he calls civil conflicts, by which what he means are basically secessionist movements. In particular, he mentions the much quoted article by Alesina and Spolaore "On the number and size of nations." This article and related work were widely publicized and translated into Catalan some years ago by nationalist leaders in Catalonia. Their idea that the benefits of small independent nations increase and their costs decrease in a globalized economy is one of the cornerstones of the Wilson Group of neo-liberal pro-secession economists. My conjecture is that Alesina and Spolaore came up with their ideas in the heyday of the Northern League, when it was becoming mainstream in economic circles around Milan that sharing a state with Southern Italy was a drag on the potential of the "really productive Italians." That was before the Northern League lost its initial reputation by tainting its programs with racism and blatant populism. The ideas of Spolaore and Alesina, as well as those of Sala-i-Martín and other neo-liberal Catalan secessionists amount to a coherent way of solving Rodrik's trilemma, by choosing (among democracy, globalization and the nation-state) a world with an internationally integrated economy where small nation-states compete by lowering taxes and regulatory standards, of course making impossible to fulfill the will of the majority of expanding the welfare state and protecting the weak. It is the world that the Chancellor of the Exchequer in the UK candidly described as a B Plan in case the negotiations for a reasonable Brexit failed. Milanovic points to a basic weakness in the analysis of Alesina and Spolaore, namely that similar societies do not have necessarily similar preferences, as the endless conflicts between very similar communities illustrate. There are other weaknesses in the analysis of the Italian authors, for example the fact that they do not consider other ways of organizing jurisdictions beyond the nation state, an error that Milanovic himself avoided in an old paper that he links in his post. And for example the fact that they asume that humans are organized in sets of lots of homogeneous communities that are heterogeneous among themselves but uniform inside. Anyone who is familar with the current social division in Catalonia (despite mixed marriages, etc.) would take issue with that. The old paper by Milanovic shows a much richer way of analyzing the complexity of these issues, explaining why there may be a trade-off between sovereignty (something that is not a discrete variable, but a continuous one) and income, which may explain why jurisdictions that want to secede, after a short while also want to become integrated in an even larger jurisdiction. It is the same paradox as secessionist Catalans willing to secede from the rest of Spain but willing to join a more integrated Europe (with a common currency and increasingly a common fiscal policy) where Spain is a key member. Perhaps it would be more productive for Catalan elites (including economists in the bourgeoisie) to work for a European Union where member states gradually lose their sovereignty and regions that are efficient, defeat corruption and contribute to solving collective problems (local and global ones) acquire more power.

Sunday, July 2, 2017

The role of the status quo in a referendum

I wrote a contribution for an interesting debate in the blog of the London School of Economics about whether a Catalan unilateral self-determination referendum should go ahead. I argued that such unilateral illegal referendum would not fulfill the conditions of the specialized Commission of the Council of Europe in charge of these issues and I developed a comparison with the Brexit legal referendum and other referendums in history (some good, some bad). In the comments section, one participant took issue with my argument that a yes/no self-determination referendum would be divisive, saying that the status quo is also divisive. Unless division should be taken as irreversible, I don't understand the validity of this counter-argument. I believe we should try to find ways to recover unity and cooperation instead of celebrating division with more division. Under much harder circumstances, Northern Ireland came about with a method for resolving their conflict that broke the division. And in my view when the status quo takes place in a democratic society, it should be taken as a starting point. At least when we talk about the status quo we know what we are talking about. Those that voted to leave the EU in the UK one year ago now it seems that they did not know what they where talking about. Voters where comparing something certain and known, although not perfect (the status quo), with something uncertain and unknown (although many were made to believe that is was certain). In these cases, the neutrality between options should be revised, as argued by economists Dasgupta and Maskin in an academic paper. This is what they say in footnote 4 of page 950 of their article in the Journal of the European Economic Association: "Neutrality is hard to quarrel with in the setting of political elections. But if instead the "candidates" are, say, various amendments to a nation's constitution, then one might want to give special treatment to the status-quo -namely, to no change- and so ensure the constitutional change ocuurs only with overwhelming support," as it happened by the way with the Irish Good Friday Agreement, where the overwhelming support took place at the referendum (North and South of Ireland) and prior to it, with the involvement and the consensus of the Republic of Ireland, the UK, the EU and the USA. Some nationalist leaders and commentators elsewhere should learn from that.

Sunday, June 25, 2017

Justice and democracy or a self-determination referendum

In the book “The Morning After” Canadian journalist Chantal Hébert explains what would have happened if the secessionists had won the Quebec referendum of 1995 by a small margin (in fact, they lost). The political chaos and uncertainty that she describes has actually taken place more than twenty years later with the Brexit referendum of 2016. One year later, the UK seems to know what 52% of the electorate did not want on the day of the referendum, but they do not know what they or their leaders want for their future. It seems that a yes or no totally legal self-determination referendum has not been a good tool to find the real will of the people. Now imagine something similar but without a legal framework, without a census, and without a neutral electoral authority. That is precisely what the leaders of the Catalan pro-independence government want to do using their control of the autonomous executive and their majority of the Catalan Parliament, favoured by a non-proportional electoral law that gives their coalition more than half of the seats with less than half of the votes. Amartya Sen, a scholar that has devoted his life to think about justice and democratic choice, in an interview with The Guardian reflecting on the Brexit referendum, spoke of the disadvantages of this kind of plebiscites. The idea of a yes/no self-determination referendum is superficially appealing. The Economist supported this idea until they saw it implemented in Britain. Since then, they have backpedaled. It is very easy to suggest it for others. The last self-determination referendums of states in the USA took place just before the American Civil War. Referendums have been promoted recently by leaders such as Erdogan, Orban, Wilders, Putin, the leaders of the Serbian part of Bosnia-Herzegovina including the mayor of Srevrenica (as we could see in a recent scaring BBC documentary in Newsnight) and by dictators in the past. The first thing Marine Le Pen wanted to do had she been elected President of France was to have a referendum on the EU. Referendums can also be used for a good cause, like in the approval of the Spanish Constitution in 1978, or the Irish Good Friday agreement of 1997. These two cases have in common a democratic consensus (the unity of democratic forces) and international support. A yes/no self-determination referendum can be a cause of great division among Catalan citizens or in other similarly diverse societies. That is why the Commission of the Council of Europe for Democracy through Law (the Venice Commission) recommends to hold them only under very strict conditions, including a strong legal framework and a neutral democratic authority. Illegal self-determination referendums in otherwise democratic societies are not in the frontier of best practices. Spain needs a broad agreement for a federal reform that can be supported by people who strongly believe in it and by people that may find a common ground around it. Such a detailed agreement could then be voted in a referendum. That could be as legitimate as other legal referendums, and in addition it would be less divisive, and it would fit much better with a European Union that makes progress towards more unity and integration, and that wants to build more bridges than walls between its citizens and communities.

Tuesday, June 20, 2017

Availability bias in politics

Six months ago, nobody expected Macron to be French president and Corbyn to be the new star of British politics. Now everybody seems to believe that they should be imitated, anywhere. Some even think that a synthesis between both of them is possible, like Will Hutton in The Guardian. It is a good example of the availability bias combined with hindsight bias. Is it possible to replicate Macron in another country? Is it possible to replicate Corbyn? I doubt that I had voted for any of them, at least in a first round or in a primary election. I can't think of any politician that resembles either of them in Spanish politics. Macron is a uniquely French figure that can be explained by a combination of luck, skill, trial and error, and evolution, similarly to Corbyn in England. Both of them have good things, which could be seen even when their success was deemed unlikely. Macron is a bold pro-European leader full of energy. Corbyn is an honest egalitarian politician. But their bad things are as equally visible today as they were six months ago. Macron is an elitist individual whose professional experience was among the olygarchic banks. Corbyn is an old-fashioned trotskist, who has been lucky to receive some lessons from Bernie Sanders, who looks centrist compared to the British labour leader. I will be happy if both of them do well, hopefully eliminating their bad sides. I would be especially happy if the combination of both of them reinvigorate the space between the center and the left in Europe. But I do not count on it. Most likely, politics in Europe will keep evolving, and if there is any jump it will be in some unexpected direction.

Sunday, June 18, 2017

Social choice and secessionist referendums

Reading about social choice (the theory about voting rules and in general how to go from individual preferences to collective choices) teaches several lessons about the dangers of many secessionist referendums, like the Brexit referendum or the aspiration of Catalan and other nationalists in rich European regions to secede from their states. Social choice does not present many problems when there are only two options. There is not much scope for strategic voting, there is little risk of indeterminacy and irrelevant alternatives do not have any influence (there are none at that stage), and there is no difference between plurality and majority. But the manipulation comes in the reduction of complex phenomena to only two options. Once there are only two options, the battle for framing is over. The solution is not simply to increase a number of apparently simple options to three or more, because then the question keeps giving the false impression of simplicity (it would have been hard to know precisely what devolution max meant in Scotland). And then the usual procedure of plurality voting may deliver a winner that is hated by a majority (as opposed to the Borda count, which however is vulnerable to comparisons being dependent of irrelevant alternatives), and to strategic voting. The best option for sovereignty issues in advanced democracies is to reach a broad agreement for a yes/no question on a detailed proposal (like the Irish referendum on the Good Friday agreement). That is the appropriate framing in a democracy that wants to preserve tolerance and reasoned debate, leveraging the best practices in representative and deliberative democracy. A second lesson is precisely about the need for reasoned and informed discussion, something that was dramatically absent in divisive plebiscites such as the Quebec referenda of 1985 and 1990, or the Scottish referendum of 2014 or the Brexit one last year. Finally, as Amartya Sen reminds us in the final pages of the expanded edition of his book on Social Choice, the view of outsiders should be welcomed in any debate to avoid the excesses of parochialism. It is very difficult to know about social choice and agree with secessionist referendums or at least not to have some serious doubts. For the main conclusions of social choice are i) that the will of the people is ill defined and ii) that there are many possible voting rules in democracy, none of them being perfect.

Thursday, June 15, 2017

Pragmatic but hard behavioral policies

Raj Chetty has an Ely Lecture at the American Economic Association where he defends a pragmatic contribution of behavioral economics to public policy. The video of the lecture can be watched here. Chetty sees behavioral economics as contributing to design new policy tools, such as nudges or frames. But also as contributing to making new predictions about the impact of traditional policy tools, or as contributing to analyzing welfare effects when there is a difference between experienced utility (real individual welfare) and decision utility (the objective function used to make decisions). In the lecture he gives useful examples with retirement savings, cash transfer programs and moving decisions. A good complement of Chetty's lecture, in my view, is a recent article by Loewenstein and Chater, in the new journal Behavioural Public Policy, entitled "Putting Nudges in Perspective." These authors regret that behavioral economics has been reduced to many to be seen as a synonym of nudges. They claim that behavioral insights can be used to help in the deployment of hard policies that have their origins in traditional economics but that would crucially benefit from the help of emotions, narratives and the management of perceptions. They argue that humanity has three key challenges: climate change, inequalities and automation. In the three of them, behavioral insights can be of help, but not as a soft excuse to avoid hard interventions. Instead, behavioral insights should be a key aid to develop deep interventions that make change possible.

Friday, June 9, 2017

Orwell on nationalism and Einstein on patriotism

After Theresa May's own goal and anticipating chaos among Brexiteers (with the UKIP replaced in influence by the heirs of Rev. Paisley) in the UK and similar movements in other places, I thought it could be of interest to remind the reader about what two of the brightest minds of the past century had to say about patriotism and nationalism:
-Albert Einstein said that "He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would fully suffice. This disgrace to civilization should be done away with at once. Heroism at command, senseless brutality, deplorable love-of-country stance, how violently I hate all this, how despicable and ignoble war is; I would rather be torn to shreds than be a part of so base an action!"
 -George Orwell, in a long article said among other things that "By ‘nationalism’ I mean first of all the habit of assuming that human beings can be classified like insects and that whole blocks of millions or tens of millions of people can be confidently labelled ‘good’ or ‘bad.’
And, "Indifference to Reality. All nationalists have the power of not seeing resemblances between similar sets of facts. A British Tory will defend self-determination in Europe and oppose it in India with no feeling of inconsistency. Actions are held to be good or bad, not on their own merits, but according to who does them, and there is almost no kind of outrage — torture, the use of hostages, forced labour, mass deportations, imprisonment without trial, forgery, assassination, the bombing of civilians — which does not change its moral colour when it is committed by ‘our’ side. The Liberal News Chronicle published, as an example of shocking barbarity, photographs of Russians hanged by the Germans, and then a year or two later published with warm approval almost exactly similar photographs of Germans hanged by the Russians. It is the same with historical events. History is thought of largely in nationalist terms, and such things as the Inquisition, the tortures of the Star Chamber, the exploits of the English buccaneers (Sir Francis Drake, for instance, who was given to sinking Spanish prisoners alive), the Reign of Terror, the heroes of the Mutiny blowing hundreds of Indians from the guns, or Cromwell's soldiers slashing Irishwomen's faces with razors, become morally neutral or even meritorious when it is felt that they were done in the ‘right’ cause. If one looks back over the past quarter of a century, one finds that there was hardly a single year when atrocity stories were not being reported from some part of the world; and yet in not one single case were these atrocities — in Spain, Russia, China, Hungary, Mexico, Amritsar, Smyrna — believed in and disapproved of by the English intelligentsia as a whole. Whether such deeds were reprehensible, or even whether they happened, was always decided according to political predilection."