Sunday, August 30, 2015

"The Righteous Mind," by Jonathan Haidn

This book about the psychology of morality analyzes the roots of our moral behaviour in society. The first part argues that intuitions come first and strategic reasoning comes after. The author, a professor at NYU's Stern School of Business, makes this point using a variety of convincing theoretical and empirical sources. The second part argues that morality is not only about caring and solidarity, the usual moral feelings of the left, but also about authority, sanctity and other values usually associated with the right. The main point here is that the left should show more respect for these other values, because they are as ingrained as cooperation and solidarity in the evolutionary roots of human behaviour. The third point is that humans need groups, that part of our institutional environment, which has become hardwired in our brains, has to do with belonging, and that this explains many aspects of political and religious behaviour. These are mainly "positive" points, explanations about why reality is the way it is. These are the most convincing aspects of the book. There are also here and there, however, many "normative" claims, that are in my view not necessarily derived from the more positive aspects. For example, the book ends with a chapter on the desirability of creating bridges between left and right that seem to me more a convenient value judgement than something that necessarily follows from the scientific parts of the book. Looking superficially to some of the book's reviews in the net, it seems that some reviewers criticized the author for this. I kept looking for references in the book about why some people change their moral beliefs during their lives, and although the book is not essentially about this, I found some useful ideas about the issue. People change their mind (for example, the auhtor became more open to the acceptability of conservative values during his life) because their intuitions (not necessarily their arguments) may be affected by other people's intuitions or arguments, and because of the influence of particular biographical turning points that alter our personal narrative and that make us fall into the basin of attraction of socially appealing stories. I'm trying to apply these ideas to some friends of mine who seem to have changed their mind in the recent past, from being left wing internationalists to becoming Catalan nationalists (at least one of them says that he hasn't changed his mind: OK...). Finally, I also found the book useful to explain the behaviour of sports fans (the importance of tribalism), something I will need soon because in one week I start two new groups of my course on the economics of soccer.

Sunday, August 23, 2015

A book I almost bought (and its review)

I’m lucky enough to be spending a few days in New York City. In a book store yesterday some books were competing for my attention. One of them was “The Two-State Delusion,” by Padraig O’Malley, about the impossibility of implementing the so-called two state solution to Israel and Palestine. I didn’t finally buy it because it was long and expensive, and I thought I would never read it. But spending some time going through its pages I thought I would agree with most of it. It is impossible to keep agreed borders in such a small, disputed and mixed land. I kept looking at the last chapter for an alternative proposal, such as an obvious one state solution, or some federal arrangement, but there wasn’t anything in terms of a constructive plan. That is the criticism that is raised today by Peter Beinart in the New York Times Book Review. But this critic does attack the idea of a binational state. He says: “Binationalism, the most commonly suggested alternative to the two-state solution, barely works in Belgium. The Czechs and Slovaks opted for divorce (...) “Irastine” would be civil war under a common flag.” But the choice of examples is very poor. Certainly many Israelis and Palestinians would accept living in something similar to Belgium. And many not bi-national but multi-national federations work decently enough: would’t India be much worse if instead of being a multi-lingual multi-religious federation it had fallen apart in a collection of ethnocracies? If Muslims and Jews can live decently and peacefully enough in places like New York or London without building walls, why can’t they do the same in the Middle East?

Wednesday, August 19, 2015

"The Sovereign State and Its Competitors," more than twenty years later

Hendrik Spruyt published "The Sovereign State and its Competitors" in 1994. It started by saying: "We often take the present system of sovereign states for granted and believe that its development was inevitable. But it was not. The sovereign, territorial state had its own peculiar rivals that very well might have held the day. Now that dramatic changes within and between states are taking place, it is appropriate to rethink our explanations of the origins of the states system, analyze the forces that shaped it, and reflect on the possibility of its demise." This great book reveals a lot about the logic of institutional evolution (emergence, bargaining and selection) and applies it to the replacement of feudalism by city-leagues, city states and territorial states, and how the latter finally succeeded around 500 years ago. Of course, the book has little more than speculation about what process may replace the sovereign, territorial state: "Factors such as economic interdependence, ecological disasters, and globalization of financial markets have led to a search for new ways to organize domestic and international politics. Consequently, social scientists have started to re-examine the origins of the state system and have begun to discuss the possibility of its transformation." Twenty years later, we know more about the consequences of the end of the cold war and the spread of globalization, and the symptoms of the crisis of the sovereign territorial state are all around us, especially in Europe. But we still do not know what may replace it. If the logic of Spruyt applies, we may see for some time the emergence of candidates to replace it (micro-states? non-territorial religious radicalism? federalism?), before one of the alternatives gets selected. As opposed to 500 years ago, now the citizens and not only the elites have the possibility of trying to push for the alternative that is better for peace and social progress.

Monday, August 17, 2015

Lessons from Atkinson's "Inequality: What can be done?"

I already read many parts of the book by Anthony Atkinson on inequality. This is the last in a collection of fundamental contributions to this debate, which also include the books by Piketty, Milanovic, Bowles, Deaton and Bourguignon. The book by Atkinson has a first part of diagnosis, a second of concrete proposals, and a last one about the contraints to the implementation of these proposals. A very useful discussion about the book can be found in this debate between Paul Krugman and Robert Solow. I would stress three insights from the book:
-A very concrete one, close to my research interests, about the need to make competition policy also redistributive, freeing it from a sole concern on average consumer welfare. There is not much debate about this, and most industrial economists would reject the idea, but I believe that in an imperfect second best world, it is worth debating it (as many other proposals that reject or qualify the notion of an efficiency-equity trade-off).
-The radical proposals about the job market, in particular about making government the employer of last resort, with a careful program of public employment to complement the private market, in a context where the notion of employment is completely different from 50 years ago.
-Finally, there is an interesting tension in the book betwen what can be done at the national level and what should be done internationally or at least in the European Union. Although most of the proposals are national in scope, there is a positive attitude towards the contribution from the EU and other international institutions.
Atkinson is a great British economist. I would not vote for Jeremy Corbyn in the Labour Party, but those who endorse Atkinson's proposals would not like many policies of Tony Blair either, and not only because of the Irak war. Any intermediate candidate would do well to read this book.

Sunday, August 16, 2015

Is there a place in the world with more freedom than Catalonia?

One of the unbearable habits of nationalists is to express their cause in terms of freedom. I have no doubt that some nationalist or even secessionist struggles through history did have to do with freedom, for example the struggle for the decolonization of India. But to say that Scotland or Catalonia will have more freedom if they become a new nation-state is an abuse of language. Scotland is part of one of the most democratic countries in the world, and any visitor to Scotland will have difficulties to find any abuse of human rights or basic or not so basic freedoms. As for Catalonia, we are blessed today with the visit of many tourists. I challenge any of them to tell us which kind of freedom is missing in our land. We have two official languages (Catalan is dominant in the school system, something I endorse but controversial), gay marriage is recognized, gay and lesbian communities are strong, there is total freedom of speech, we are part of the European Union, there is total freedom of movement and assembly, very high levels of safety, actually many of our visitors come here to celebrate personal events or whatever precisely because they experience more freedom here than in their countries. People can dress or not dress in any way they wish. The only limits to freedom are of those that are socially vulnerable and do not have enough resources to be free, a problem that we share with the rest of Spain and much of the rest of Europe, and to the extent that it is a shared problem, we can only fix it together. Another limit to our freedom is the abusive control that the secessionists exert over the public media, which is an abuse of their constitutional powers as current holders of the Catalan government. Luckily, they do not control everything, and bloggers like this one can denounce it with no consequences. I cannot think of any land with more freedom than Catalonia.

Saturday, August 15, 2015

Good bye to a scholar I admired

I am told by Miguel A. García Cestona, one of his disciples, that Japanese economist Masahiko Aoki of Stanford University has died at age 77. I ignore the circumstances of his death at this stage, but I can imagine him active until the very end. He had worked extensively on expanding the frontier of economics and social science. Although his field of expertise was initially on the institutions of economic organization and corporate governance, he expanded his interests to economic history and other fields, always combining advanced game theory with an incredibly precise knowledge of context and institutions. I always have papers and books of him around. The last one I was reading it just a couple of days ago, giving a game theoretic interpretation to the work of Douglas North. His main contribution was perhaps to stress the importance of the links between different domain games, for example the link between economic and social life to achieve cooperation, as explained in his book "Toward a Comparative Institutional Analysis." In his work on the long run development of Asian economies, he linked politics, economics and sociology in insightful ways. He will be an example of deep interdisciplinary work for generations to come. In his most recent articles and books, I preceived an attempt to explain the importance of cognitive and linguistic aspects in the development of institutions. I also found very useful a paper he wrote on the institutional architecture of the regulation of nuclear energy in Japan, in a piece proposed in the aftermath of the Fukushima accident. I am of course not the most qualified person to write on his work, and I am sure that in the immediate future we'll read much better and extensive comments about the work and life of this amazing scholar.

Tuesday, August 11, 2015

Clientelism, machine politics and corruption

Clientelism is the exchange of goods and services for political support, often involving an implicit or explicit quid-pro-quo. It is a political system at the heart of which is an asymmetric relationship between groups of political actors described as patrons and clients and political parties. The key issue is that instead of focusing on providing collective goods, politicians focus on providing well targeted private goods. Since these private goods can be targeted to subgroups of poor or underprivileged voters, clientelism can often be confused with progressive politics. However, in the long run, they weaken democracy to the extent that political actors (politicians and actors) tend to focus in a private exchange relationship, forgetting about genuine participation and construcion of collective projects. A plausible conjecture then is that societies where clientelism is pervasive tend to see more volatile political parties and policies, because actors do not care about ideologies, they care about the goods being exchanged. Clinetelism is legal, and for some period of time may even be functional or cohesive. However, there is a thin line between clientelism and corruption, the use of office for private gain at the other side of the law. Quite often, a connection between clientelism and coruption is "machine politics," where what is being exchanged is jobs for votes in a hyerarchical way. Political bosses provide jobs for allies in exchange for their support and the support of those appointed or given goods by these lower bosses. At some point in the pyramid, jobs need not even be provided, but just the promise of jobs. Jobs and private goods must be scarce in these societies, otherwise bosses would have no power. Beware: I'm working on this (actually, I've been working on this for the last 30 years, since the times I was a boss of the Catalan Young Socialists myself... but now more than working on it, I'm thinking about it, which is probably more dangerous).

Friday, August 7, 2015

UK and US regulatory agencies

I am writing and thinking about the present and future of independent regulatory agencies. One interesting thing is the comparison between the US and the UK. The reformers in the UK in the late 1980s did not expect to create a permanent system of regulation (as Jon Stern explained), as they were influenced by the Austrian School view that markets, and not regulation, were the best mechanism to promote efficiency. Independent regulatory agencies to control market power had also existed for decades in the USA since the creation of the Interstate Commerce Commission in 1887. Today there are two federal American anti-trust agencies, one that is part of the executive and therefore not independent, the Antitrust Division of the Justice Department, and the other that is formally independent, the Federal Trade Commission. In addition, there are federal regulatory agencies (such as FERC in energy and the FCC in telecommunications), and state antitrust and regulatory specific instruments, as well as an important role of private litigation. But international institutions such as the World Bank or the European Commission promoted regulatory agencies mirroring the UK model instead of the US model perhaps fearing the political appointments and complexity that characterized the latter. However, the reality is that many countries find it difficult to separate market power objectives from other objectives of regulation: macroeconomic objectives (stabilization and growth), equity, environmental concerns, and others. It is in this sense that perhaps institutional architectures that do not run away from complexity, but at the same time do not exclude the input from independent entitites for specific aspects, would be advisable.

Monday, August 3, 2015

In praise of institutional diversity

The book "The Microsoft Antitrust Cases. Competition Policy for the Twenty-First Century," written by Andrew I. Gavil and Harry First, is an excellent account of the cases that several jurisdictions and institutions brought against Microsoft since the end of the twentieth century for abuse of its dominant position. The book contains a chapter that praises the role of institutional diversity in these cases. The conclusion of this chapter (which has lessons for Spain, a jurisdiction that in the recent past has reduced institutional diversity by merging regulatory and anti-trust agencies) is this:
"The arguments for a diverse and decentralized system of antitrust enforcement go beyond history and the steps that agencies have taken to manage the system in which they operate. There are good theoretical arguments for why decentralization produces benefits for antitrust enforcement: it can encourage policy diversity and experimentation, it can expand resources devoted to investigation and enforcement, and it can shadow the decentralized federal government structure into which it fits. The system is further supported by the process of institutional competition that multiple enforcement creates -processes that can help check enforcement abuses and give agencies positive incentives to produce good results.
The benefits predicted by theory are borne out to a large degree in the Microsoft litigation. Looking at the litigation from its earliest genesis at the Federal Trade Commission to its more recent conclusion in Europe, it is hard to imagine a better result had one agency been in charge. Multiple agencies, with different strengths, different legal instruments, and different policy views, were necessary to produce the benefits to competition law that the Microsoft litigation produced. There were many aspects of the litigation and remedy to criticize, as our earlier chapters indicate. But our diverse system of antitrust enforcement isn't one of them."