Cooperate or die

Here is an excellent speech about the virtues of cooperation in permanent institutions like the EU. It was meant to be about Brexit, but it is actually against any sort of nationalism in the 21st century. I found out about it from an article in The Guardian that says this: "In the weeks running up to the referendum, when Peter Mandelson was trying to galvanise remainers with an appeal to their pockets, and Yanis Varoufakis was making complicated speeches about conjuring forth ever deeper democracy, one man gave a simple, passionate speech that at the time I found bizarre. John Gummer, speaking to the Environmentalists for Europe, said – almost tearfully – that, because of the EU, nobody had had to send their son to another country to kill someone else’s son for 70 years. A eulogy to peace seemed quite tangential to the argument, but only if you had failed to see, as I had, how much bellicosity the leave side were generating, how much their nationalism and sovereignty were rooted in nostalgia, not for any old Britain of yore, but for a victorious Britain."

Gordon Tullock's dangerous "minimal federalism"

Branko Milanovic twitted some days ago about a book on sovereignties apparently in Serbo-Croat by Gordon Tullock, so bad according to Milanovic that nobody cared to translate it into English. However, I did some research and found two pieces in English by Tullock that seem to correspond to the same period of time (early 1990s). These are a participation in a roundtable with among others Kenneth Arrow (to me, the one with the best arguments, which I am not aware that he developed in his research work) and a book that is available on-line, entitled "The New Federalist". From what I have seen in Google Scholar, this book has been cited by other authors suchs as Bruno Frey. The latter has some interesting work on what he calls FOCJ: "Functional, Overalpping, Competing Jurisdictions." The link with Tullock is what I believe Tullock calls sociological federalism, by which he means non-territorial sovereignty, that is sovereign institutions based on interests, ethnicity, preferences or any other affinity. Of course one can imagine dangerous developments of this, such as people getting organized only after some sort of ethnic cleansing. But the work of Frey has been interpreted as lending support to institutions like special districts in the US, where the organization of some public services gets structured overlapping but not coinciding with traditional administrative jurisdictional borders. These special districts have advantages and disadvantages, but perhaps would be (or perhaps already are) an input towards a more flexible European Union. In general, the Public Choice school of Tullock and Buchanan has been influential in a sort of free-market minimal federalism with a key role for jurisdictional competition and constraining public intervention. I would include in this tradition Tiebout, Weingast, Frey and also Alesina and Spolaore. Some of the work of these authors is valuable, as are valuable and should be taken seriously some of the contributions of Public Choice, even if those like me who advocate strong public intervention do not share the value judgements behind it. For example, the main points of public choice that government agents are no different from market agents, or that the outcomes of democracy have no particular normative properties for the fact of resulting from majority rule (but what matters is contractual process) are serious points that deserve to be taken into account, and that progressive authors such as Amartya Sen have taken seriously and responded to. But one can see the dangers of pushing the ideas of Tullock too far in federalism. For example, seeing some of his words in the above mentioned roundtable, one can be afraid of the kind of world that awaits us if that minimal federalism is ever implemented:
-"From 1790 until 1930, the US federal government, except in war time, regularly absorbed about 2.5 percent of our GNP. Most of that was used to mainatin a rather small military force (...). We got along beatifully -in fact, rather more beatifully tan we have gotten along since we became more fully integrated, I would say." I'm not sure that African-Americans among others share this view.
-"So, what we need, theoretically, is free trade and a lack of economic integration beyond that (...). Will the European Common market become a contribution to free trade, or will it build a tariff wall of its own, or will it disintegrate? I would not be at all surprised if it disintegrates." I'm happy that his prediction has failed on this.
-He also argues that Canada has no justification for existing beyond the fact that they do not like the USA: "if I were to offer them advice, I would suggest they just disintegrate." Here I'm happy that Canadians did not follow his suggestion, and remain today one of the most civilized federations on Earth.

Celebrating the 25th anniversary of the Barcelona Olympics

Barcelona celebrates these days the 25th anniversary of the Olympic Games. This event was hugely popular and an organizational success. A sub-literature in economics emerged more or less after those games concluding that these events have more costs than benefits for society, which is why some cities like Hamburg, Boston and Oslo have withdrawn from bidding races. Unfortunately this literature has not reached the general public in Spain. I believe there is no contradiction between deeming Barcelona 92 a success and accepting that in general Olympic Games are bad economic propositions. This is the same view that is taken by Andrew Zimbalist in Circus Maximus. I tried to develop it in a joint paper with Eloi Serrano that was published last year. This is the abstract of the paper: "An extensive literature mostly developed after the Barcelona Olympic Games has questioned the existence of net economic benefits arising from the organization (with significant amounts of public resources) of major sporting events such as the Olympics, although some studies still defend their positive impact. Host cities tend to become hostage of the governing bodies organizing the games. The Barcelona Olympic Games were exceptionally successful but still suffered from cost overruns, white elephants and the exaggeration of social benefits as it is usual in many mega sporting events. We report about the socio-political and economic considerations that surrounded the initial project of Barcelona 1992, and we evaluate the uniqueness of these games, including the legacy of infrastructures and sports facilities. Barcelona, a relatively rich city, was emerging from a long centralist dictatorship when the games were initially planned. It had many urban deficits and the games were used as a catalyst to coordinate public and private agents in a complex society that was in a fast process of decentralization. The games had enormous social support. Although it may be argued that the public funds could have been used in alternative projects, it is hard to think that this degree of coordination and support could have been achieved for them."

Non-conventional rationality and social choice in a referendum

Most of the Theory of Social Choice is based on the assumption of the exogenous nature of the preferences of rational voters acting in a consistent way. However, modern behavioral economics suggests that the presentation of options ("framing") plays a crucial role in determining people's choices. In this sense, the traditional sequence in the Social Choice Theory (exogenous preference formation, election of a voting system, final vote) does not have to be fulfilled, and the choice of details of the voting system can influence the formation of preferences. This raises the neverendum issue: the campaign for a referendum or the referendum campaign, even if secessionists lose the referendum (as in Scotland), they succeed in convincing the electorate to pay attention to what they want. That is, they are part of the battle for the attention of the electorate. The more plebiscitarian campaigns there are, the better. If the battle of the referendum demos is implicitly and cognitively won as a symbolic manifestation of the nation itself, democratic standards and international recognition are secondary to those who have nationalistic preferences. In this sense, the questions and the exact words of the questions are not innocent. In Catalonia, the referendum questions in ilegal plebiscites are barely innocent. Voter opinions can fluctuate greatly depending on how exactly the questions are asked. For example, before the 1991 Gulf War, nearly two-thirds of Americans said they were willing to "use military force," but less than 30 percent wanted to "go to war."
Our preferences are more vague and incomplete than the traditional theory assumes, and co-evolve with the institutions that claim to aggregate them. Hence the importance for Amartya Sen of the reasoned discussion and of being able to make a decision with the maximum possible information, something that according to this economist and many other observers did not facilitate the dichotomous character of the campaign of the Brexit referendum, where even the more neutral and respected media organizations had to treat both opinions and facts equally to comply with an appearance of neutrality. The objective of making decisions after reasoned discussions, negotiating taking into account the multidimensionality of problems, links with a tradition somewhat forgotten in economics and political science, due to the Swedish economists Wicksell and Lindahl, pointing to the virtues in terms of social harmony and efficiency of unanimity. In addition, as Amartya Sen reminds us, the perspective view of people from other latitudes should be welcomed in any debate to avoid the excesses of "parochialism": sometimes passions and emotions prevent us from facing the pros and cons of a decision, and observers from other latitudes can help us broaden the angle of observation and decide with more perspective.Research on these issues, insofar as it departs from the assumption of absolute rationality, should prioritize the study of conditions or interventions that facilitate cooperative solutions to social dilemmas (as is done with experiments on the voluntary provision of public goods) by adapting the study to the typical situations of this type of conflicts of sovereignty. For those involved in advocating one or another option, consideration of behavioral issues may also be important. For example, Matt Qvortup has pointed out that for Brexit supporters in the UK, Brexit was a commodity with inelastic demand (the perception of a high "price" did not alter preferences) while those who might be in favor of staying in the European Union did have more elastic behavior. By focusing on economic issues (although the economic debate was objectively won),  remainers focused on the price of exit, which did not guarantee them the vote of their potential "elastic" voters and did not allow them to conquer the vote of the "inelastic" and hyper-mobilized a priori supporters of Brexit.

A fuzzy Brexit: like before, without a seat at the table

My father will like the title of this New York Times article: In favor of a fuzzy Brexit. I do not agree with everything it says and how it says it, but a couple of paragraphs I find very descriptive of what is to me the likely final outcome: the UK will have a similar special relationship to the one it had pre-referendum, but the UK government will not have a seat in the governing bodies. Not exactly what the British voters thought they were voting for last year in the referendum. These are the paragraphs I liked:

"A series of nudges and winks in the last few weeks from several of the senior British political players — above all, the Brexit secretary, David Davis — suggest that the election has left its mark and that British negotiators are edging away from a hard Brexit toward a “fuzzy” one, for when serious trade talks begin in October.

This means a much longer transitional period than originally envisaged by both sides, possibly staying inside the European Union’s customs union in some modified form, and a much greater readiness on Britain’s part to compromise on continuing payments into the European Union’s budget (as well as a large onetime leaving fee) and on some continuing jurisdiction by the European Court of Justice.

Voting to leave was always going to be a lot easier than actually leaving, especially when the referendum result gave politicians no indication as to what kind of Brexit people wanted."

And this will probably be without any more referendums, for which serious people are losing their appetite.

Corruption in Spanish soccer

As I write this post, the former president of FC Barcelona Sandro Rosell and the still current president of the Spanish soccer federation and influential official in the governing bodies of global soccer Angel M. Villar, are in jail. They will be there awaiting trial because judges believe there is significant risk that they will destroy evidence or try to evade justice. It seems therefore that high level corruption is not limited to FIFA, although both Mr Rosell and Mr Villar were very active in the links and transactions of global sports corruption. The last episode has been the arrest of the president of the Spanish federation, who has been in that job for 30 years. He was the "Spanish Blatter" and his method of operation was the same, showing like in the case of Rosell that success and growth are not incompatible with corruption. In fact, unless proper accountability is in place, they may be highly correlated:
"Authorities also believe Ángel María Villar may have used federation funds to pay off regional soccer chiefs in a bid to maintain control at the top of the powerful federation. Villar was returned to office for a new four-year term in May, the eighth such occasion on which he has seen his contract renewed.
The courts are now investigating the soccer chief and other detainees for crimes including corruption, embezzlement, improper management and possible asset stripping in relation to a range of possible fraudulent activities. The amount of money involved is not known. (...) But those prosecutors were not just looking at possible fraud related to €1.2 million subsidies for soccer in poor countries. In fact, they were also investigating a range of more serious crimes on behalf of Spain’s High Court, and it was on the orders of this higher court that Villar’s phone calls were being bugged."

A limbo instead of a second referendum?

I agree with Polly Toynbee that a second referendum would be as bad an idea as the first one in the UK. She raises the possibility of a permanent limbo that could result from revoking article 50. But there does not seem to be any certainty that article 50 can be revoked. Total confusion and uncertainty remains. For this sorry state, not only brexiters should be blamed, but all those in favour of deciding these matters through a referendum. These are the arguments of Toynbee: "One solution is a long, perhaps never-ending compromise. Andrew Adonis, whose House of Lords speech fired up the anti-Brexit peers, says lawyers are taking a case to the ECJ to declare that article 50 can be revoked. That’s the view of Lord Kerr, article 50’s author. The UK could revoke it just before the March 2019 deadline, as a temporary measure to delay exit, in transition time. Even David Davis agrees the need for transition time, as the fiendish complexity of everything finally dawns. There we will sit in the transit lounge, inside the European Free Trade Association alongside Norway, which has lived frozen in a state of perpetual transition ever since Norwegians voted against joining the EU in 1994. (...)
Indefinite limbo is no visionary battle cry, and will satisfy no one: Brexiteers will always be implacable. But it could turn out to be the least worst option, and so long as we are no better off outside the club, the EU might accept a messy compromise, saving us from calamity. We will obey rules over which we have no power, but all alternatives look worse. Elections will come and go, but at some future date Britain may vote for a government that advocates returning, humbled, to an EU that may itself look changed. Not inspiring, but avoiding Armageddon.
But never try another referendum. Haven’t we learned that lesson the hard way? A crude question divides a nation, driven by emotions not on the ballot paper, paralysing politics for years to come. If your confirmation bias draws your eyes only to stories that tell you the tide is turning, cast your eyes occasionally at how Murdoch, the Mail and the Telegraph still ply their venom. They would still be there, poisoning the air, in a second referendum."