Thursday, November 20, 2014

Re-reading Beinhocker

The book by Beinhocker "The Origin of Wealth" parallels Darwin's "The Origin of Species" and presents the foundations of a complex evolutionary approach to economics. I read it some time ago and I re-read it now to talk about complexity and evolution in soccer for my class on soccer and economics in the Study Abroad programme in Barcelona. The book shows that combining the prisoner’s dilemma with thegame of lifeone can see patterns in the evolution of successful strategies (Lindgren, 1997). In the Game of life cells that develop successful strategies (the ones that obtain a higher payoff when playing with others the prisoner's dilemma) occupy the space of less successful cells after playing against them and their neighbours. Each cell in a grid is randomly endowed with one of the strategies in the prisoner’s dilemma repeated game
In addition, random mutations (small changes in the strategies) and errors are introduced. The cell grid then experiences changes in patterns of more or less cooperative strategies, depending on initial conditions and proportion of errors and mutations.
There are lessons derived from analyzing many rounds of play:
There is no stable equilibrium.
There is no single successful strategy (who is the winner? what is the best strategy? are 
non-sensical questions).
Highly successful strategies today might be real losers in a hundred years,
and the most successful strategies in a century might be ones that were only modestly  
successful today, or don’t even exist yet.
Some strategies do not even survive, and others are thecockroaches” of the game
simple  strategies like Tit for tat, which never dominated, but seemed somehow to survive 
and make a living, no matter what else was going on.
Strategies that use longer memories achieve higher payoffs.
Patterns of punctuated equilibrium: long periods of stability followed by sudden change.
 The book then goes on to apply these insights to business and organization strategy, and the 
main lesson is that what is important is not to learn to become successful, but to learn to be 
good evolvers.

Sunday, November 16, 2014

Catalonia: Let them vote on federalism

The Economist's editorial proposing a referendum to defeat independence in Catalonia gives me the opportunity to express my opinion once more on this issue.
A referendum on independence with a clear question and clear rules has advantages, like certainly the opportunity of defeating secessionism, an option I think is bad for Catalonia, Spain and Europe. And it is a democratic way of choosing. But it is not the only way to do so.
An independence referendum also has disadvantages, which at least include the following:
1) A plebiscitarian democracy with two extreme options gives easily the stage to groups that practice intolerance and attitudes close to the mob rule, at least in social networks (of which we already had some examples in Catalonia).
2) Cascade effects, both internal and external: showing the way for new referenda on the territories of Catalonia where a majority think they belong to Spain, and on other European regions where they do not want to be less than the Scots or the Catalans. This creates economic and political uncertainty and instability. It could finish with the dream of a united Europe in the long run, and trigger the final crisis of the euro in the short run.
3) Potential disenfranchisement of the minority that loses the referendum. This risk is especially serious in case of a YES victory. According to all surveys and electoral evidence, the anti-secessionist are disproportianetly Spanish speaking, working class and powerless (they are scarcely seen in the civil society groups that dominate political debate).
4) Risk of increasing the social division in Catalonia. Many of us have experienced increasing distance with some friends. Some political parties have already divided because of this issue. With a legal referendum with two extreme options this can clearly get even worse, in my view.
5) Lack of expression of the majority. Surveys and electoral evidence show that between the status quo and independence, most voters support a "third way" (to me, it is the first and only way) along the lines of a federal administrative organization. On what basis this majority should be deprived of seeing their option in the ballot paper? Of course, that would make the question less clear, which is the reason why I prefer a referendum with two options: federalism and the status quo.
6) Lack of incentives for an agreement: during the referendum campaign, all the energies would be focused on winning the referendum, instead of trying to find an agreement by all means. In Catalonia and Spain we share enough common values to be able to reach this agreement, which would benefit everybody according to most external observers. But there are no incentives to reach it.
7) An independence referendum incurs all sorts of commitment problems, as I argued elsewhere.
8) At a practical level, a criterion used by The Economist, there would be serious difficulties of a coherent No campaign in Catalonia, much more serious than in Scotland. The anti-secessionists include democratic federalists like me, extreme fascists, and many people in between. Why should I be pushed to campaign with the Popular Party, a party that has yet to condemn the Franco dictatorship in Spain?
9) A clear question does not imply a clear option: what does it mean independence in the XXI century? The victory of the yes vote would trigger negotiations: the final agrrement would be different from the initial position of the secessionists. What happens then if a majority does not like the agreement: should we have another referendum then?
10) Externalities: The Economist already made this argument, it seems they have forgotten it. 
A united Europe will not be built one independence referendum at a time. An independence referendum makes for a great story for journalists and it would certainly be a victory for the secession movement. They have celebrated with joy the editorial in The Economist, forgetting to mention that the same editorial says that independence would be disastrous and that the best option would be a federal reform.
When I say all these things I am answered with partial arguments, like "OK, but the independence referendum is necessary because it is the only option to defeat the secessionists". I would appreciate some answer that considers seriously all my arguments, or at least a fraction of them. There are phenomena that have multiple causes and phenomena that have multiple consequences. A referendum on independence, no matter how clear it is, would have multiple consequences, and not all of them are desirable.
Unlike the UK, Spain has a written Constitution, and it had a 40 year dictatorship in the middle of the XX Century. Unlike Canada, Spain belongs to the European Union and the Euro zone. This introduces binding constraints that are often forgotten by well intentioned agents in this debate.
I am not making a prediction that an independence referendum will never take place. I am not an astrologist. Perhaps there will be an independence referendum in Catalonia at some point in time against my wishes. If that is legal and it has clear rules, I will vote no to independence. But I would prefer to vote yes to federalism, and I think that The Economist would have been more coherent to propose a referendum in favour of the option that it deems better for the Catalans. British democrats like the Labour Party or the Liberal Democrats do not show any sympathy for a referendum on EU membership in the UK in 2017, as demanded by the UKIP and the conservative euro-sceptics. French democrats understandably do not show any sympathy for the referendum proposed by Marine Le Pen (I presume with a very clear question) about membership of France in the EU, a very democratic proposal. A referendum on a better federalism should be based on a previous agreement, accepted by the European Union, and make progress towards a better federal architecture for Catalonia, Spain and Europe. The current Spanish Constitution was based on a large agreement, and supported by an hegemonic majority of the Catalan and Spanish populations: a new agreement should have similar support. Otherwise, reforming the status quo would not be legitimate.

Tuesday, November 11, 2014

The federal debate becomes more and more international

The Japanese press pays attention to what insignificant Catalan academics have to say. The journalist tells me this: "I'm attaching a copy of the article as it appeared in the Saturday 8th morning edition of the Hokkaido Shimbun Press newspaper.
You'll see that we also spoke with Dr Costa-i-Font of LSE to hear his opinion on the "consultation".The large headline in the middle states "'Independence Vote' in Catalonia Tomorrow—The expert's opinion", and the large header on the left hand side summarising your viewpoint reads "What is necessary is a debate on decentralisation". The summary of Dr Costa-i-Font's section reads "The view of the people must be made known in order to find a solution".