Thursday, April 12, 2007

Robert Fogel, nobel activist

This is an excerpt from an interview with 1993 nobel laureate Robert Fogel:

RF: There’s a large gap in your academic CV from 1948, when you finished your undergraduate degree, to the mid-1950s, when you enrolled in graduate school. What were you doing during that period?


Fogel: When I graduated from college, I had two job offers. One was from my father, to join him in the meat-packing business. That would have been quite lucrative. The other was as an activist for a left-wing youth organization. I chose the latter and worked as an activist from 1948 to 1956. At the time I was making that decision, my father told me: “If you really believe in that cause, come work with me. You will make a much higher wage and you could give your extra income to hire several people instead of just yourself.” I thought, well, that makes some sense. But I was convinced that this was a way to get me to change my views or at least lessen my commitment to an ideological cause that I found very important. Yes, the first year, I might give all of my extra money to the movement, but every year I would probably give less, and finally reach the point when I was giving nothing at all. I feared I would be co-opted. I thought this was my father’s way of indoctrinating me.


So I went to work as an activist. At first, I thought what I was doing was important. But over time, I started to become disillusioned. The Marxists had predicted a depression in 1947-1948. That didn’t happen, so they said, it will happen the next year. But it never came. So by the early 1950s, I began seriously reconsidering my position. I had been drawn to Marxism because I thought of it as a science. But it was pretty clear that its “scientific” predictions were wildly off the mark. I was ready to leave the movement, but then McCarthyism started to heat up and that led me to hesitate. I stayed a few more years to fight against McCarthyism. But by 1955 and 1956, the horrors that had occurred under Stalin, which we had all heard about but didn’t really believe, were confirmed by Khrushchev. That was the breaking point in a sense. I began to rethink my views and especially my involvement with Marxism. So I decided that I needed to receive more serious training in economics and the social sciences generally and went to Columbia.


RF: Did the failures of Marxism to accurately analyze the economic situation in the United States influence you to pursue work that was heavily data driven and empirical?


Fogel: There is no doubt about that. As I said, Marxism was sold as a science, but it became clear that it was not. It was more of an ideology than anything else. My early experiences made me very skeptical of ideologues of any persuasion. I’m willing to be surprised, to accept seemingly radical ideas, but there better be data to back up those claims, and Marxism could not provide that type of evidence.

Tuesday, April 10, 2007

Coasian bargains and structural reforms

The (im)possibility of political Coasian bargains?

The fact that second generation reforms have stalled since divided government came about in Mexico, poses the crucial question of why, if the net benefits of these reforms are so high, political key players cannot successfully bargain to implement them? A related question is how come the PRI was able to push reform in so many areas, while current government faces gridlock? The puzzles of political Coasian bargains actually permeate policy-making everywhere and deserve some clarification here.

A simplified Coasian bargain looks like this: “If the long run net efficiency gains of policy A exceed transaction costs B, policy A should be implemented”.  Under ideal situations, when property rights are well defined, and as long as transaction costs are low enough, such bargains should be made.  If they are not made, we pose two possible explanations:

1. Property rights of reform are not well defined.  Reforms imply clear political costs to key players, as well as economic costs to specific groups.  Following Olson (2000), the beneficiaries of the status quo (reform) are concentrated (diffuse) whereas its burden is diffuse (concentrated).  If the economic and political payoffs are not easily transferable between transacting parties, bargains are more difficult: how do you translate future economic payoffs into present value political compensation?

2. Lack of credible commitment devices.  A hypothetical contract, where reforms are agreed upon in exchange for some political and economical compensation, requires credible commitments, and equally important, they need to be enforceable.  In private bargains, it is easy to rely on explicit contracts and third party enforcement.  But in matters of public policy, such explicit contracts are rare, and the likely enforcer, the electorate, faces collective action problems.

In the case of Mexico, the inability of legislators to be reelected in consecutive terms, for instance, limits the time horizons of the political bargains that can credibly be made.  In the PRI era, centralized policymaking allowed for some political bargains, but they also faced limits and trade offs, which often turned into unsustainable policies.  It is possible that as political competition consolidates, some commitment devices will develop in the current PMP arenas—but such devices are not here yet.


Monday, April 09, 2007

Testing Huntington... they will be assimilated

Testing Huntington: Is Hispanic Immigration a Threat to American Identity?
Jack Citrin, Amy Lerman, Michael Murakami, and Kathryn Pearson

Samuel Huntington argues that the sheer number, concentration, linguistic homogeneity, and other characteristic of Hispanic immigrants will erode the dominance of English as a nationally unifying language, weaken the country’s dominant cultural values, and promote ethnic allegiances over a primary identification as an American. Testing these hypotheses with data from the U.S. Census and national and Los Angeles opinion surveys, we show that Hispanics acquire English and lose Spanish rapidly beginning with the second generation, and appear to be no more or less religious or committed to the work ethic than native-born whites. Moreover, a clear majority of Hispanics reject a purely ethnic identification and patriotism grows from one generation to the next. At present, a traditional pattern of political assimilation appears to prevail.

Tuesday, April 03, 2007

The Improving State of the World

• The rates at which hunger and malnutrition have been decreasing in India since 1950 and in China since 1961 are striking. By 2002 China’s food supply had gone up 80%, and India’s increased by 50%. Overall, these types of increases in the food supply have reduced chronic undernourishment in developing countries from 37% in 1970 to 17% in 2001, despite an overall 83% growth in their populations.
• Economic freedom has increased in 102 of the 113 countries for which data is available for both 1990 and 2000.
• Between 1970 and the early 2000s, the global illiteracy rated dropped from 46 to 18 percent.
• Between 1897-1902 and 2001-2003, the U.S. retail prices of flour, bacon and potatoes relative to per capita income, dropped by 92, 85, and 82 percent respectively. And, the real global price of food commodities has declined 75% since 1950.

And these tables and charts are much more telling: