A brief comment about "Spin Dictators," a book I recommend

In their new and very interesting book “Spin Dictators,” Daniel Treisman and Sergei Guriev argue that, if the dominant form of dictatorship in the XXth century was based on fear, open violence and human rights violations, the dominant one in the XXIst century is based on the manipulation of information, often keeping some democratic surface.

The book is based on their joint academic work, both theoretical and empirical. Their classification is plausible and, as they explain, should not be interpreted as a discrete taxonomy, but more as a continuum. The fact that “spin dictators” like Putin or Orban, keep some democratic forms, also suggests that the border between democracy and dictatorship has become fuzzy. In their defense of a liberal, rule-based democracy, they might as well be presenting their arguments to defeat, more generally, different forms of national-populism (although some spin dictatorships, like the Singaporean, do not fit with the national populist mold).

In the final part of the book, they try to answer this question: “How to respond to spin dictators?” Of course, this part is necessarily speculative, but in my view it is a very useful contribution to the necessary debate on how to improve democracies in a concerted global action.

They propose five principles:

1) Be more watchful. That is, never take for granted that a democracy is fully consolidated and be watchful for signs that democracies may be deteriorating. Perhaps this is a message to those that thought that democracy had come to stay in Russia and did business with Putin in an open way. Democracy is not only about voting, but also about respect for the rule of law and reasoned discussion.

2) Welcome modernization -even in our adversaries. Treisman and Guriev believe that if dictators hesitate to use fear and open violence, it is because of globalization and modernization. They believe that if globalization and modernization persist, spin dictators will necessarily evolve into democracies. I am not so sure of that, and I guess there is no way to be sure, but perhaps we should at least share this piece of wishful thinking.

3) Put our own house in order. That is, improve the functioning of the institutions of what we proudly call democracies, so that they can be an example that others want to follow, and introduce reforms that show to a great majority of people that democracies deliver what they promise. Here I would add a greater emphasis on reducing inequalities and fighting climate change at the same time, and in general a more critical stance about capitalism. The authors put a lot of hope on informed elites, but throughout history I am not sure that it has been these elites the ones who put their lives at risk to defend democracies.

4) Defend and reform the institutions of the liberal order, especially those at the international level, like the EU, NATO and the UN.

5) Support democracy democratically (not through the army), uniting around the idea of liberal democracy.

These are all useful ideas. They may be incomplete, but all of them are food for thought. I recommend this book.

Borders and soccer

In the last five centuries, the nation-state has become the most important form of political organization in the world, with important implications for economic and industrial organization (including the sports industries, where national teams, national federations and national tournaments play a key role). Since the end of the nineteenth century, empires and colonialism collapsed and resulted into many newly independent states, while at the same time there were attempts at political integration (the re-unified Germany, the European Union). One problem with the nation-state form of political organization is the constant and often violent questioning of borders. Today, small ethnically homogeneous countries coexist with muti-ethnic and diverse countries (as it could be seen in the final between Croatia –a former Yugoslav Republic- and France in the last World Cup). World Cups and other tournaments exhibit both national pride and global integration, sometimes with internationally mobile players on the pitch having difficulties to understand the (not always peaceful) feelings of the crowds.

Some examples of these border tensions are the US Civil War in the nineteenth century, which started with the secession attempts of Southern states, or the partition between India and Pakistan in the 1960s following the Independence of India from the British empire, which was accompanied by thousands of deaths and the forced displacement of millions of people, or the Independence of Ireland in the 1920’s, which was accompanied by the partition of the island of Ireland between the Republic of Ireland and Northern Ireland (with the latter belonging to the UK, and suffering violence between the Catholic and Protestant communities until the Good Friday Agreement of the late 1990s). A recent speech by the Kenyan ambassador to the UN warned about the risks of questioning existing borders, even acknowledging their unavoidable imperfection.

Since the end of the twentieth century, border disputes and re-drawing have not stopped. The Balkan wars in the 1990’s transformed the federal nation-state of Yugoslavia into a collection of republics, after a war with more than 100.000 deaths and millions of refugees. The fall of the Berlin Wall and the collapse of communism in Eastern Europe was accompanied by the creation of new republics (such as Ukraine, the Baltic countries, Central Asian republics and others) that were previously integrated into the Soviet Union, or the partition of a previously communist country, Czechoslovakia, into the Czech Republic and Slovakia. All these movements have changed the organization of sports and soccer in particular, with the creation of new national teams and new leagues. The recent invasion of Ukraine by Putin’s Russia shows that the current status-quo is far from stable. According to American historian Timothy Snyder (in his book “The Road to Unfreedom”), many of these secession movements are not unrelated and reports about a policy (by the current regime in Russia) of advocating separatism in all countries except Russia itself (the South from the US, Scotland from Britain, Catalonia from Spain, Crimea and the Donbas region from Ukraine, any member-state from the EU…).

The European Union is the result of an integration project that started after the Second World War, to bring peace to Europe through economic integration. Although the UK was not among the founding members, it joined in the 1970s, but decided to leave (in the so-called Brexit) the club in a referendum in 2016, to become the first country to exit, with the Republic of Ireland remaining one of the current 27 member-states. The internationalization of the English soccer Premier League is difficult to understand without the free movement of workers and capital in the EU Single Market. Exiting this single market implies that now players joining a British club must do so under a “points system,” by which only top players over 18 years old can join. Some commentators have predicted that this will make the Premier League weaker. In any event, Brexit does not imply English teams leaving the Champions League (which is open to European teams out of the EU). 

The campaign for Catalonia to secede from Spain accelerated in 2012, after the main (until then) dominant moderate nationalist party joined the pro-independence forces. In 2017, an illegal secession referendum was called by the regional government on the basis of a set of decisions by the nationalist dominated regional Parliament which declared the rejection of the Spanish Constitution. After this, a dozen pro-independence leaders were arrested and judged, and six left the country. The Spanish government temporarirly suspended regional self-rule for some months, to be restored in the spring of 2018 with a newly elected regional government also led by pro-independence forces. Those that went to jail were pardoned by the Spanish government in 2021. The prospect of a Catalan national team or a Catalan league was not strong enough to culminate this now decaying campaign.

Sportswashing and what is to be done

The economist Daron Acemoglu (MIT), writes that “As in many other kleptocratic regimes, Putin’s power is based on a deal between an autocrat and oligarchs. The autocrat rules the country however he wants and enriches his allies, who make huge fortunes from the country’s natural resources or through regime-sanctioned monopolies.

But there is a catch: As the oligarchs’ coffers grow, they become more concerned about the autocrat’s power to seize their assets or harm their families. They are left with two options. The first is to develop formal and de facto institutions to constrain the autocrat, perhaps even paving the way for much-needed structural reform. The second option is to move their assets and their families abroad, so that they can avoid the fate of Mikhail Khodorkovsky, the leading Russian oligarch whom Putin expropriated and imprisoned in the early 2000s.

Gabriel Zucman of the University of California, Berkeley estimates that at least 8% of global financial wealth (more than $7.5 trillion) is now held in tax havens – a figure that does not include the other forms of dark money residing at the heart of the Western financial system. Not surprisingly, autocratic regimes account for a disproportionately large share of these dark-money activities. Zucman finds that some 52% of all household wealth in Russia – and even greater shares in the Gulf states – is held offshore.

While the world’s kleptocrats have amassed vast, illegitimate fortunes – and while Western elites have gotten in on the action – Western governments have been unable to generate tax revenues from the rich. As a result, welfare-state institutions and services have been cut back, and existing inequalities have deepened.”

You can read the full article here.

The journalist David Goldblatt (The Guardian, author of “The Ball Is Round: A Global History of Football and The Game of Our Lives”) writes

“Russia is not alone in this. In the past 20 years, football, never short of political suitors, has in much of the world been colonised by political power and projects. Why have the world’s states, politicians and political movements shown such an unprecedented interest in the game?

The UAE, Saudi Arabia and Qatar, who each own a major European football club, are spending heavily on football sponsorships and carry considerable influence at Fifa, Uefa and in Asian football too. In Qatar, the game is the single most important instrument in the state’s programme of economic and urban development and the most powerful plank in its foreign policy of visibility.

What appears so remarkable about this is that, like Abramovich’s arrival at Chelsea, it has, for the most part, been waved through, even welcomed, nowhere more obviously than the Premier League’s acceptance of Saudi state ownership at Newcastle United while the brutal war in Yemen continues to rage.

So what is to be done? We could start with a shift to the social ownership of all football clubs. We could insist on the strictest financial and legal regulations of football institutions. We could demand real transparency and accountability from national and international football federations, the empowerment of players and supporters and their deeper democratisation. Politics is not leaving football in the near future. The question is: what kind of politics do we want?

You can read the full article here.

The proposals of Goldblatt are not very realistic: transparency and regularion of a global market are difficult in the absence of a global federal government. They may not be sufficient: the social ownership of clubs, at least in Barcelona, has done little to promote financial accountability. They are also contradictory: the empowerment of players can be to the detriment of the empowerment of fans. And they may not be desirable, at least in the absence of further details: deeper democratisation without global rules, may lead to a Berlusconi at global scale. But without forgetting to fight for elements of a global legitimitate federal government (at least in sports) something should be done, perhaps enhancing the cooperation between the EU, the US and other democratic jurisdictions to stop and reverse the oligarchic takeover of some sports industries.

Neutrality and complexity in a war

In a teacher's meeting last friday, we discussed whether teachers should stay neutral in the current war in Ukraine. Someone said that things were so complex that we shouldn't even raise the issue in class. The context is of teachers in an international program for foreign students in Barcelona.

I defended that neutrality should not be an option when the fight is between agression by an autocrat and a democracy. I argued that neutrality of foreign governments is what killed democracy in Spain in 1939. I know things are complex. I also know that the war in Ukraine is very different from the Spanish Civil War, but then as now the agressor was well identified, as were the victims. And then as now there are things in the "good side" that make us (or at least me) feel uncomfortable. I wouldn't have liked the weight of stalinism among the Spanish Republicans, and I don't like to defend Ukraine's democracy in the name of a Ukrainian nationalism that signs the national anthem at any occasion. Defending democracy in the name of nationalism only plants the seeds for the next war, in my modest view.

But the truth is the truth, and those who are suffering in millions now are the citizens of Ukraine, and they deserve all the solidarity of people who could be like them in other European cities, and beyond. It should also be a reminder that making Molotov cocktails is an act of defense in Kiev as it is in Gaza. And that if Abramovich is an oligarch (he is), Egon Musk and other Western tax-dodging billionaires belong to the same category.

Teachers (especially in international programs) should get ready to discuss the war with students. That does not mean that we "explain" the war to them, but that we give them tools to use it as what it is, a tragic learning opportunity.

In war and peace, truth does exist. Teachers must be neutral between sports clubs, or even between different democratic ideologies. But we must teach the difference between fascism and freedom, as much as we must teach that evolution is science and creationism is not. At the same time, we must encourage critical thinking, and care in the reading of news (and the use of social media), especially in a war. This is not incompatible with solidarity with the victims (including in this case the Russian citizens who suffer an increasingly paranoid dictator at home).

Wars as a tragic learning opportunity in Economics (and beyond)

Wars (the World Wars, the Spanish Civil War, the Balcan Wars...) are a tragic learning opportunity about history, politics, economics and their interaction (there is free coverage in the Financial Times of the War in Ukraine). These notes are based on what I tried to share with my students on Introductory Economics in my last class session.

Peace is the ultimate public good: it is non-rival and non-excludable (the provision of public goods requires external intervention or cooperation). Well-functionning markets for private goods rely on this and other public goods.

Wars are a reminder that markets are not the only mechanisms of resource allocation (there is also central and military planning, among others).

Multidisciplinary studies can contribute to better understanding (and preventing) wars:

•Wars are treated as exogenous if one studies the economy as isolated: an external shock that triggers economic crises through lower growth or de-growth and higher inflation with corresponding pressure to increase interest rates (and many other changes).

•As endogenous if one (correctly) studies the economy as part of society and history. The best economists know this (Keynes wrote “The Economic Consequences of Peace,” about the factors that could lead to a second world war)

Wars (through market disruption: destruction, supply chain bottlenecks, sanctions –should oligarchs be better targeted as suggested by Zucman and Piketty? Russia is one of the countries in the world where the richest 0.01% concentrates a higher proportion of wealth, and most of it is off-shore) have an impact on 

•Energy and Commodity Markets: oil, gas...

•Asset prices (the expectation about the profitability of firms changes, for example Gazprom).

Sadly, we’ll have to talk much more about this in the immediate future.

Cheques and unbalances in institutions: the example of sports

All organizations and institutions should have checks and balances, to avoid concentrations of power and risk in a few -or even in a pair of-  hands. Sports organizations and institutions are no exception.

Simon Kuper in his book “Barça,” wrote about the rise and fall of FC Barcelona, the soccer club. The book ends with the departure of Leo Messi, with the institution unable to keep paying his high salary. The management debacle that led to that financial disaster is not clear that has been rectified by the current club officials. Head coaches (of first and youth teams) and CEOs have shorter and shorter tenures, and the elected president shows no sign of resisting populist pressures and of running the club in a professional way.

The agents of the most promising young players, Gavi and Araujo, do not undestand the high expenses of the January transfer window before negotiating the new contracts with them, the talented young stars who are sustaining the team in this transition period. The club will suffer to retain them. Too much looking to the past glory days makes it difficult to commit to renovating the roster and tell the old stars that their time has come.

Continuous managerial changes mean that nobody takes responsibility for the time until the last change. Meanwhile, the club has taken an enormous loan to rebuild the stadium, something that is long due, but which will require a degree of financial and managerial discipline that is nowhere to be seen.

The same need for discipline and commitment is required for Olympic Games and other big sports events. As the special issue of the journal “Nature Sustainability” argued last year, the proposition that Olympic Games can be environmentally and financially sustainable is not totally an illusion, but it is very difficult to verify. It requires very serious reforms that can only take place under strong discipline and cooperation. The importance of alliances, inside the public or the private sectors, and among the two sectors, goes hand in hand with the need for strong governance.

In British English, a cheque is a printed form on which you write an amount of money and say who it is to be paid to. In American English, this word is spelled check. Too many cheques and too few checks and balances in Sports institutions.

Training Foxes

Isaiah Berlin distinguished between hedgehogs (those who know one big thing in depth) and foxes (those who know a little bit of everything). In the new degree on Contemporary History, Politics and Economics at my university, we train foxes (I am a fox myself)... trying to improve the terms of the trade-off between scope and depth.

Our very motivated and endogenously self-selected students have a predisposition to look at the multidimensionality of social phenomena, and have the opportunity to be exposed to the basics of the three disciplines in four years. To improve the terms of the trade-off, more than teaching them a bit of everything, we try to focus on some key issues. I teach them introductory economics with the CORE materials, which have themselves a multidisciplinary approach.

In the first term, we covered in sequence the eight first chapters of the (excellent, and free) e-book "The Economy," which finish with the standard graph of market supply and demand (the starting point of tradititonal textbooks), after discussing the importance of inequality, history, social interactions, institutions or the environment. In the second term that will be starting this week, more on macro issues (but emphasizing the connection to micro), I will do more than mechanically follow the structure of the e-book. I will cover together units 10, 11 and 12, to emphasize financial markets and financial market imperfections, so that they have an introduction to money and monetary institutions in the context of financial markets and other assets. Then we'll do units 9, 13 and 14, to explain in a sequence labor markets, unemployment, business cycles and fiscal policy. Next we'll go back to monetary policy and inflation with units 15 and the capstone unit 17 (on the great depression and the global financial crisis, and I will ask them to do work on the macroeconomics of the coronavirus crisis). After this, we'll do technological change, growth and the global economy (unit 16 and capstone unit 18, where I will ask them to do work on the European Union and the eurozone as a particular response to Rodrik's trilemma; perhaps we'll make some reference to the capstone unit on the digital economy), to finish on the last days discussing political economy (the interaction between politics and economics) with capstone unit 22. The capstone units on climate change and inequality have to some extent been covered in the first term but we may go back to parts of them.

I will also ask them to choose to do one of the empirical projects from the e-book "Doing Economics" units 4, 8-10 and 12, which are more related to the contents of this second term. I know it sounds ambitious, but as I said, we are foxes, and we are not embarrassed by it.  Reality does not have academic departments. There must be both foxes and hedgehogs, but it's more fun to be a fox. Hopefully, we'll have a good time learning together.