Thursday, October 14, 2021

"Apeirogon" and "Haifa Republic"

The novel “Apeirogon,” written by Colum McCann, is about the friendship and activism of the Palestinian Bassam Arami and the Israeli Rami Elhanan, united by the tragic loss of their daughters in acts of violence. I thank Marta Fraile for convincing me to read this fantastic book, from an article she wrote in El País.

The novel is based on real facts, and uses an absorbing narrative technique made of short 1001 chapters (counted in ascending order from 1 to 500 and then in descending order from 500 to 1, with an isolated page 1001 in-between) of very variable extension, where time goes back and forth,  and a diversity of interconnected fields (from biology to mathematics) are touched. One chapter for example just reports that the average life expectancy of Palestinians is 72.65 and the equivalent for an Israeli is almost ten years longer.

Bassam and Rami also have in common that they are treated as traitors by others in their communities. They know from experience what is attributing evil or hidden intentions and motivations to the critics. The story, as Marta Fraile explained, is a homage to empathy and the hope of peace. It is also an impressive description of life in a small land dominated by walls, check points, fear and discrimination.

Anyone who has a direct interest or just curiosity about the complexities and tragedies of national conflicts should read books like “Apeirogon” (literally, a generalized polygon with a countably infinite number of sides), and be interested, without being naïve, in exploring possible solutions. That the solutions are very difficult to come by in Palestine/Israel is illustrated by the fact that the mediator that was key in finding a (temporary at least) solution to the very complex conflict of Northern Ireland, Senator Mitchell of the US, could not find a similar broad and effective agreement in the Middle East.

That is why I am very cautiously attracted to attempts to revive a proposal by the late historian Tony Judt in favour of a one democratic state solution, given the failure of the two-state solution that is still routinely endorsed officially by many well-meaning parties. One such attempt is the book “Haifa Republic,” written by Omri Boehm, and reviewed by Peter Beinart here. Following the ideas of Judt, Boehm proposes a federal binational Republic shared by Palestinians and Israelis (it’s too small a land to have two viable states). The author argues that this would follow and old and somehow forgotten Zionist tradition that distinguishes between self-determination and sovereignty. Both Palestinians and Israelis can have self-determination for their culture, religion and language in the context of one shared state where every individual has full citizenship, everyone is educated in the past tragedies of each people, and everybody learns at least two languages: Arabic and Hebrew.

The name of the book comes from the admiration of the author for the city of Haifa, which he prefers to the divided Jerusalem or to the Jewish dominated Tel Aviv. Haifa seems to be an example of coexistence and diversity, which reminds me of my home city of Barcelona, where the constant threat of divisive nationalism has so far not prevented people from different origins and using different languages (in this case, both, Catalan and Spanish, coming from Latin) to be friends and to set up families. I just hope that Haifa does not become a new Sarajevo (with which the City Council of Barcelona has had links before and after the war), also shown as an icon of multi-culturality before suffering a horrible ethnic conflict in the 1990s.

Perhaps the examples of Haifa and Barcelona will help us promote an even more ambitious idea than the binational federation, and that is the idea of a postnational federation, where individuals are not tagged by their belonging to one side or the other, but they can just be everything and more at the same time (in the spirit of the Apeirogon concept).


Sunday, October 10, 2021

Why democracies are not stopping climate change

There are at least five reasons why democracies are finding it difficult to stop climate change (I’ll discuss this with my undergraduate and graduate students and see if they find more reasons). Two of these reasons can be labelled institutional (1 and 4), two of them behavioral (2 and 3) and one redistributive (4).

1. Absence of a key constituency. Those that will suffer more the consequences of climate change (future generations) are not here to vote or express their opinion. The current young generation is starting to strongly mobilize to address the climate emergency, but they are still a basically powerless minority.

2. Lack of urgency. Like in many intertemporal problems, our short run self disagrees with our long-run self. Although we are aware that climate change is happening and we basically know the solutions (changing our lifestyle with a mixture of taxes, regulations, subsidies, innovation…), we are unable to take the short run sacrifices that are necessary to implement them.

3. Nudges and other small interventions are crowding out support for strong intervention and relieving the burden of taking costly action. Make no mistake: nudges and small interventions are necessary –but a small part of what it takes to stop climate change.

4. Lack of institutions to enforce international agreements. Global consensus has been reached several times, but then it is not enforced, because of lack of global institutions that mandate the policies that result from the agreements. These institutions should not only be international, but truly transnational and global, with current and future citizens represented somehow. Climate games between countries have the structure of a prisoner’s dilema (“The Economy” chapter 4): the joint payoff maximizing solution is not a Nash Equilibrium, so it requires constant external enforcement.

5. And last but not least (and related to the previous point), redistributive problems make it difficult to enforce some agreements if they are reached at all. Developing countries will not stop their environmentally unsustainable development unless they are compensated, and the same happens with working and middle classes in rich countries. Lobbying can be also interpreted as a distributive problem. Corporate interests in favour of polluting activities weigh more than the interests of ordinary citizens, although they are losing the battle of public opinion.

Unless we address (at least and at the same time) these five challenges, we will face a climate catastrophe.

Sunday, October 3, 2021

Good economic models

Explaining Unit 2 of CORE’s e-book "The Economy" in the new degree on History, Politics and Economics at my university, I’m discussing with my students what is a good model in economics, and they have to do a task about it.

Models can be in text (like with Ronald Coase), in graphical or mathematical form, and usually come in a combination of these different languages. Marx worked with models and some economic concepts are models implicitly, like the use of GDP to measure the standards of living: good for some questions (inequality, growth), very imperfect for others, like welfare. There are many different models.

"The Economy" says that a good economic model has four attributes:

It is clear: It helps us better understand something important.

It predicts accurately: Its predictions are consistent with evidence.

It improves communication: It helps us to understand what we agree (and disagree) about.

It is useful: We can use it to find ways to improve how the economy works.

The economic historial Robert Allen (in a great article linked in unit 2 of "The Economy," reviewing the work of another economic historian, Gregory Clark) says that “models can help to organize and guide the collection of information, but they are no substitute for research.” I couldn’t agree more.

Sometimes it is said that an economic model is like a map. It is true that it shares with a map the fact that it is a simplification, that it focuses in what is important for some purpose and leaves aside other unimportant details. However, models are logical constructions which do not try to mirror reality ex ante (although to be relevant they must be related to real facts), but to be able to ask relevant questions and hypotheses. Everything in a map should be true (at scale), which is not a priori the case in economics. An economic model might explore a hypothetical case: what would it happen if… which is not the case in a map. But once I said this in a CORE workshop and several colleagues disagreed, so perhaps I have unjustifiably less faith in the map metaphor.

Sunday, September 26, 2021

Definitions in social sciences

The e-book “The Economy” of the CORE Project (which I’m using in my classes) has an interesting discussion about definitions in social sciences in its first unit.

For example, ‘Capitalism’ refers not to a specific economic system, but to a class of systems sharing some characteristics. How the institutions of capitalism—private property, markets, and firms—combine with each other and with families, governments, and other institutions differs greatly across countries. “Just as ice and steam are both ‘water’ (defined chemically as a compound of two hydrogen atoms bonded with one oxygen atom), China and the US are both capitalist economies. But they differ in the extent to which the government influences economic affairs, and in many other ways."

One might think that humans are too complex. But I guess that if other animals had evolved an ability to use definitions to try to explain what happens to them, they would have run into similar problems. But as far as I know (non-human animals always surprise you), they have not. They have evolved other equally intriguing and very complex abilities, such as flying or having a radar system.

“Some people might say that ‘ice is not really water’, and object that the definition is not the ‘true meaning’ of the word. But debates about the ‘true’ meaning (especially when referring to complex abstract ideas like capitalism, or democracy) forget why definitions are valuable. Think of the definition of water, or of capitalism, not as capturing some true meaning—but rather as a device that is valuable because it makes it easier to communicate.” And ask questions about the world.

"The Economy" adds that “definitions in the social sciences often cannot be as precise as they are in the natural sciences. Unlike water, we cannot identify a capitalist economic system using easy-to-measure physical characteristics.”

And later on, “We should be sceptical when anyone claims that something complex (capitalism) ‘causes’ something else (increased living standards, technological improvement, a networked world, or environmental challenges).”

An economy is made up of the interactions of millions of people. We cannot measure and understand them all, and it is rarely possible to gather evidence by conducting experiments. But the things we observe in the world can help us investigate causes and effects (and just describe!) through a variety of techniques -always with great caution.

The same that happens with “capitalism,” happens with democracy, socialism, freedom, federalism…

Sunday, September 12, 2021

"It's the politics, stupid"

 It is well-known that political strategist James Carville said in 1992 in the context of a political campaign that “it’s the economics, stupid.” The idea was that if you keep the attention of the voters focused on the economy, that may win an election, at least then. The political solution was to focus on the economy.

However, for many contemporary problems, it’s the opposite; the economic solution is better politics. For example, the solutions to address climate change are well-known, but there are incredible political obstacles to get to them, most notably international coordination, but also others.

The economist Jan Eeckhout has written an excellent book on the macroeconomic and distributive implications of market power, which I recommend (“The Profit Paradox”). The book has been deservedly praised in many places.  I will focus my comments here on chapter 12 of the book, which proposes policies and changes to alleviate market power. One of the proposals is to create a centralized independent Federal Competition Authority in the US, with a much larger budget that the current agencies have. The emphasis of the author is on the importance that it should be an independent institution, like the Federal Reserve or other Central Banks.

Independent regulatory agencies have advantages and disadvantages when they face simple tasks for which there are no major distributive problems, but only a problem of expertise or commitment. Independent Central Banks are now accepted in most democracies, but they are not uncontroversial, for example as a result of their passivity and blindness before the 2008 global financial crisis.

I am not sure that you can or should totally separate politics from policy (as suggested by the author) in democracies, but there is a great sentence in "The Profit Paradox" about which I totally agree: "If markets were totally free, everything would be stolen." It’s true, markets must be regulated and must be complemented and sometimes replaced by public policies to deliver public goods, correct externalities and market power and redistribute resources. Of course, this can be done in many different ways.

For a book that has as its strongest point that market power has important distributive implications, the idea of a strong independent federal competition authority  has the problem that delegating into independent agencies is not the best idea precisely when problems are distributive, because there will be no consensus on which is the appropriate policy.

Some of the best central bankers themselves are also politicians. Some become politicians after being central bankers like Janet Yellen or Mario Draghi. Some are politicians before being central bankers, like Christine Lagarde. I believe that they are aware that some problems must be fixed by politics. 

The main argument of Eeckhout is that a strong independent agency is needed to confront lobbying by large corporations, because the latter use their extraordinary profits to buy the political process. Which is true. But there also examples of captured independent regulators, and there are many other policy areas for which there is massive lobbying, like in those policies where externalities should be corrected, or in taxation. If we had to expand the institution of independent agencies to all those areas where there is lobbying, almost all government agencies would be independent, and democracies would lose all meaning.

As the author acknowledges, “this is all very idealistic, and it would take a lot of political will to implement.” The need for international coordination makes political leadership even more necessary, ”a project as big as putting a man on the moon or as urgent as the Manhattan Project.”

Do we need to keep money out of politics? Yes, and there are many proposals around to go into this direction.  Do we need to keep politics out of the economy? Certainly not in a democracy. Some of the countries with the best economic indicators in all fronts, Scandinavian countries, have achieved their status by the political action of trade unions and political parties. Then the solution is to reform politics, not to eliminate it.

Distributive problems and multidimensionality make Independence more problematic than for consensual unidimensional issues. With more that one dimension, the control of the agent (the regulator) by society becomes more difficult, like in any principal-agent problem. This is also putting pressure into the Independence of central bankers after the global financial crisis, where the dimensionality of the central banker's task has increased.

The birth of the antitrust movement in the US was political. As mentioned in the book, it was the decision of President Theodore Rosevelt to create the first strong federal antitrust policy, and it was because of the mobilization of several groups in the so-called Progressive Era. More recently, it has been Biden and the Democratic Party, and especially Senator Elizabeth Warren, to put the issue back into the political agenda.

The successful antitrust policy of the European Union is led by a political commissioner with a strong institutional framework that is the result of a political equilibrium.

Historians like Snyder or Applebaum have recently warned about the challenges that democracies face in many societies, including Europe and the USA. Applebaum recently said in an interview in a Spanish newspaper that “for democracy to work, much more participation is required. We should join political parties or pressure groups.” The pressure from the powerful do not come only from lobbying, but also from disrupting the political process through populism or social media strategies.

There is room for independent agencies but there should be a debate about their scope and role. The World Health Organization is important, but more so is the G-20 to reach an agreement to distribute vaccines all over the world.

There are no shortcuts to a better politics. Resistances to policies that benefit the majority are defeated by democratic mobilization and political participation.

Sunday, August 29, 2021

Plutocratic populism, sadopopulism and democracy

Populism is not a homogeneous movement against the elites (as it is sometimes defined), but a toolbox used by one sector of the elite to go against other sectors, using the citizenry as hostages.

In a previous post I mentioned the concept of “plutocratic populism,” which reflects much better the idea that some olygarchies resort to political disruption (emphasizing grievances and identities) to make noise and convince majorities to vote against their interest.

An extreme version of plutocratic populism I sadopopulism, as explained by historian Timothy Snyder in this video. When quite blatantly the populists convince citizens to hurt themselves, we enter the region of sadism combined with populism, that is, sadopopulism. Trumpism, convincing people to make America great again by voting him, but then lowering taxes on the rich and undermining democracy, is a clear example. But there are many other movements around the world that follow a similar logic.

Trump was defeated, but he will try to come back, and take advantage of the now lower popularity of Biden to counter attack in the midterm elections of 2022.

Sadopopulism being sadistic, its horizon is to undermine democracy, because ultimately it is not possible to rule against the majority in the long run. Therefore the answer is to strengthen democracy, through better public policies, better political parties and a strong civil society.

It is interesting that a more farsighted sector of the elites (typically technocrats in international institutions) is proposing a new social contract that addresses climate change and inequalities. Representative of this line of thought is the book by the Director of the London School of Economics (and former executive at the World Bank and the International Monetary Fund), Minouche Shafik, “What We Owe Each Other.” This idea is welcome, although this global elite of policy makers tends to over-emphasize policy by contract and consent at the national level, tending to forget that undermining the existing privileges requires democratic conflict and empowering not the elites, but the majority of the population, and not only at the national level.

Saturday, August 28, 2021

The tragedy of Afghanistan, vaccines and global passports

 The CNN correspondent in Kabul during the recent Taliban entry into the city, Clarissa Ward, explained in an interview that she found difficult to justify why she could leave the country based on her US passport (that “little blue thing”), but others would be left there because they are non-eligible to take a rescue flight.

The BBC Newsnight program also reported about the arbitrariness of the selection of people who could board a plane in the Kabul airport. The British government’s position (similar to other Western governments) is that they prioritize British nationals and “eligible Afghans.”

The allocation of basic human rights thus depends on which national passport you have. As a criterion to allocate such a precious good, it could not be less fair. The same happens with Covid vaccines. For developed countries, all their nationals have access to a free vaccine (now even a third dose is discussed). The allocation of some goods is decided by markets; the allocation of other goods is decided by governments, or by lotteries. But whether you have a free life or a free vaccine is decided by your passport. This would not be a problem if all passports gave access to the same basic rights. But reality could not be farther away from this.

The fall of Kabul and other Afghan cities also illustrates what happens when the state disappears, at least for a while: scarcity of food and money and abundance of crime, terror and arbitrariness. We need more state, that is, more and better government, but less nation-state. There are alternatives to this obsolete institution, as explained by political scientist Hendrik Spruyt in a book. The European Union is one of them, but the Afghan crisis shows that for global problems, it is not enough. At least for some life or death problems, we need global public goods such as a global Passport that gives everybody access to basic human rights and basic health services.

Philippe Sands explained it in an article in The Guardian some time ago: “Bedazzled by the power of statehood – that most artificial and fake of constructs – are we not also citizens of our home, our street, our borough, our city, our Europe and our world? The reform is clear: to recognise that our essential rights flow not from the happenstance of nationality – and certainly not just from our national passport – but from our essence as individual human beings. That’s what the 1945 moment said, that we are citizens of the world.

We should have, beyond our national passports, a global passport. Over time, the withering of the monopoly power of the nation state, and the oppressive, absurd, monopoly power of the national passport – that would be my reformation.”