Political Science

“Jonathan Cohn”:http://www.tpmcafe.com/story/2005/7/18/114013/338 asks whether there’s any good reason to believe that nice guys do indeed finish first in the business world.

bq. I’d love nothing more to believe that treating employees well is actually better business than treating them shabbily. But at the moment, anyway, count me as skeptical.

As I think I’ve mentioned before, Gary Miller has used economic theory to make exactly this argument, in a series of publications over the last fifteen years (this “piece”:http://www.isnie.org/ISNIE99/Papers/millerg.pdf co-written with Dino Falaschetti, gives a good flavour of his work). Miller uses social choice theory and game theory to argue that managers, if they are to get workers to deliver their full effort, need to be able to make credible commitments to them that their efforts will be rewarded over the longer term. It’s thus a good idea to keep a strict separation between management and owners. Efforts to make the interests of stockholders and managers coincide with each other are going to weaken management’s ability to credibly commit to workers that they will continue to be employed, as managers become more interested in chasing short term stock market gains than in ensuring the long term health of the company. Long term success, for Miller, is produced through “gift exchange” in which managers credibly commit to insulate workers from the pressure for short term profits, and workers reciprocate by giving additional effort. One of Miller’s examples of a firm that used to do this very well is rather timely. From Miller’s 1992 book, “Managerial Dilemmas”:http://www.powells.com/search/DTSearch/search?partner_id=%2029956&cgi=search/search/&searchtype=kw&searchfor=gary%20miller%20managerial%20dilemmas :

bq. Another condition for the achievement of cooperative equilibria in a repeated game is the mutual expectation that the relationship will go on long enough to justify the investment in cooperation. This was achieved at Hewlett-Packard by an early decision by the two founders not to be a “hire and fire company,” but one in which employees would have the security of employment commitment. In the 1980 recession, this policy was tested severely, but everyone in the organization took a 10 percent cut in pay and worked 10% fewer hours so that no one would be fired (Peters and Waterman 1982: 44). This confirmed everyone’s subjective belief that the relationship was long-lasting and that employee efforts were not going to be exploited for short-term gain by Hewlett-Packard.

How “things have changed”:http://www.washingtonmonthly.com/archives/individual/2005_07/006756.php.

I’ve been reading Wolfgang Streeck and Kathy Thelen’s edited volume, “Beyond Continuity”:http://www.oup.com/us/catalog/general/subject/Economics/Political/?view=usa&ci=0199280460 over the last several days – Jacob Hacker’s chapter, “Policy Drift: The Hidden Politics of US Welfare State Retrenchment” is particularly good (a draft version is available “here”:http://www.staatlichkeit.uni-bremen.de/download/de/ueber/gast_hacker.pdf ; a closely related article appeared in the _American Political Science Review_ last year). Leftwingers are sometimes entirely too sanguine about the durability of entitlement programs like Social Security; Hacker lays out reasons why this confidence is misplaced. In a political system like the US, it’s extremely difficult to get large scale changes through, such as abolishing programs, because there are so many veto points in the decision making process. It’s even more difficult when the program has an active constituency, which will be unhappy at any changes that disadvantage them. This helps explain, for example, the problems that Bush’s proposed Social Security reforms have run into. But there are still ways in which a program can be dismantled piecemeal. First is what Hacker (and the others writing in this edited volume) call “drift.” As society changes over time, programs are likely to become increasingly badly calibrated to the needs that inspired their creation. But updating these programs may be difficult, especially given that conservatives can use the many veto points to block change. Thus, one may expect to see social programs becoming increasingly unmoored from society’s needs over time – and hence less politically defensible – as attempts to reform them and make them more relevant are blocked. Second is “layering.” When faced with highly popular programs such as Social Security, conservatives have had difficulties in making head-on attacks, so that they have instead sought to create an alternative institutional framework that will attract defection and undermine these programs’ rationale over time. As Hacker concludes:

bq. in a context where social risks are changing and policy drift is ubiquitous and consequential, _conservatives have not had to enact major policy reforms to move toward many of their favored ends_ (emphasis in original). Merely by delegitimizing and blocking compensatory interventions designed to correct policy drift or ameliorate intensified risks, opponents of the welfare state in the United States have gradually transformed the orientation of social policy. The struggle over the welfare state has not simply been concerned [with] whether programs will be cut or scrapped; it has also concerned the degree to which social policies will uphold long-standing goals and adapt to the world around them. We vastly underestimate the strength of the welfare state’s opponents if we do not see the extent to which they have succeeded in this latter debate.

On all of this, see also “Mark Schmitt”:http://markschmitt.typepad.com/decembrist/2005/02/auh20_again.html. If Hacker is right, and I’m pretty sure that he is, the implications are clear. Turning back the right-wing assault on Social Security isn’t enough. What’s needed is a comprehensive program that seeks to update the welfare state to address the massively increased burden of risk that ordinary individuals are expected to bear today. There’s also a strong rationale for increasing the role of the state substantially in such a program – as Hacker notes, programs which seek to deliver the welfare state indirectly, through tax incentives and the like, are substantially more vulnerable to drift than directly administered programs (health insurance being the obvious test case). I presume that the chapter is a taster for Hacker’s forthcoming book on the politics of risk and insecurity; I’m looking forward to seeing how he links his analysis of the parameters of institutional change to the prospect of introducing substantial new reforms.

A piece by Noam Scheiber in The New Republic , prompted me to get to work on a piece I’ve been meaning to write for ages, not so much because I have new and original ideas, but because I’d like to clarify my thoughts, with the help of discussion. The piece is subscription only, but the relevant quote is a point that’s been made before

The problem with [criticism of Bush’s handling of the Iraq war] is that there’s a difference between expecting the administration to fight a war competently and expecting it to fight an entirely different kind of war than the one you signed onto.

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“Alex Tabarrok”:http://www.marginalrevolution.com/marginalrevolution/2005/06/krugman_beneath.html denounces Paul Krugman as an “illiberal demagogue” who has forgotten his heritage as an economist. The reason: Krugman’s claim that China is a strategic rival, and his recommendation that the Chinese bid for Unocal be blocked. Now I’m far from being an expert on Asian politics, and so won’t pronounce on the substance of whether Krugman is right or wrong on this specific issue. But I do think it’s fair to say that there’s another term than “illiberal demagogue” for someone who believes that strategic concerns trump trade interests when push comes to shove. That term is “mainstream international relations specialist.” The kind of “doux commerce” liberalism that Alex seems to favour has been out of fashion in IR theory since Norman Angell’s (somewhat unfairly) ballyhooed _The Great Illusion_ .

If I understand Alex correctly, he’s telling us that economics, which likes to portray itself as a rationalistic and impartial approach to the understanding of human behaviour, is at its core a set of normative arguments for the increase of trade and commerce, and against the pursuit of a certain kind of ‘irrational’ self-interest. I think that Alex is largely right on this – though many economists wouldn’t admit it (and one is faced with the interesting question of whether scholars like, say, Dani Rodrik, are economists under Alex’s definition of the term). But it leads to the interesting question of when economists’ prescriptions for free trade over strategic manoeuvre are in fact the right prescriptions. On the one hand, posturing and mutual distrust can lead to a downward spiral and thus to war, in circumstances where peaceful commerce might otherwise have been possible. And it may well be, as Alex believes, that you can reconstruct people’s beliefs away from war, and towards peaceful exchange by substituting the voices of liberal economists for those of “mercantilists, imperialists and ‘national greatness’ warriors.”* On the other, if one state _does_ see politics as a zero-sum game and is unlikely to be persuaded otherwise, then it may be a big mistake to concede strategic resources to that state – it may use them against you later. This is of course the reason that international trade in, say, advanced weapons systems, does not resemble a free market (whether control over oil companies is a similarly sensitive strategic asset, I’ll leave to the discussion section). Which means that if Alex wants to make a convincing case that Krugman isn’t just making a claim that runs against the usual normative biases of economists, but is actually wrong on the merits here, he needs to provide more evidence than an argument-by-assertion that China is now “moving” from war to trade. As stated above, I’m not a China expert, but from what I do know, this is very much an open debate.

* interestingly, those in international relations theory who make this sort of claim are usually vehemently opposed to economic reasoning.

Andy Moravcsik had an article in the FT yesterday which provides an interesting counter-argument to Chris’s – claiming, in effect that the French and Dutch should never have been asked to decide upon the technicalities of EU decision making (FT version with sub required “here”:http://news.ft.com/cms/s/1a3fac54-dc39-11d9-819f-00000e2511c8.html, Word version on Moravcsik’s home page “here”:http://www.princeton.edu/~amoravcs/library/works_well.doc ). But Moravcsik goes further even than Giscard – he claims that the very idea of asking people to vote on the text was naive:

bq. The convention, the constitution and the invocation of European ideals were tactics explicitly designed to increase public legitimacy. Enthused by the prospect of re-enacting Philadelphia, Europeans were supposed to educate themselves, swell with idealism, back sensible reform and participate more actively in EU politics. In retrospect, this grand democratic experiment seems naive. Abstract constitutional debates and referendum campaigns gave anti-globalisation, anti-immigrant and anti-establishment discontents of every stripe a perfect forum. EU policies already ratified by national parliaments, such as the recent enlargement, drew fire. Add the suspicion of voters unsure why a new constitution is required at all, and the enterprise was doomed.

Still, he thinks that the voters made the right choice, despite themselves.

bq. In rejecting the resulting document, reasonable though it is, French and Dutch voters may be wiser than they know.

Why? Moravcsik believes that the recent votes demonstrated the impossibility of a ‘political’ integration process. EU leaders should return their attentions to the bread-and-butter business of the European Union, and to incremental, unflashy integration based on technocratic bargains among the big member states.

Moravcsik’s arguments stem both from his basic theoretical claims about the processes driving EU integration (he’s the best-known academic advocate of the argument that the EU is little more than a set of bargains among states) and from his belief that the debate over the EU’s ‘democratic deficit’ is a chimera (see “here”:http://www.princeton.edu/~amoravcs/library/deficit.pdf for the best short version of his arguments). He claims that the kinds of policies that are delegated to the European Union are the kinds of policies that national governments usually delegate – decisions over cross-border trade issues, interest rates, judicial decision making and the like – so that we shouldn’t be especially concerned when they’re delegated to a transnational rather than a national authority. In any event, there are checks and balances that allow for some degree of democratic control (the European Parliament, national parliaments and so on). These arguments can be challenged on both empirical and normative grounds. There’s a lot of evidence that EU decision-making processes do escape the control of nation states (something I’ve posted on frequently before). But more pertinently, the fact that many aspects of economic decision making are delegated and removed from direct democratic controls is by no means necessarily a good thing on normative grounds. Indeed, you could turn Moravcsik’s argument on its head – a fair amount of the animus that led to the “No” votes was less specifically directed at the constitutional text, or even at the EU, than at the general feeling that economic decision making is slipping away from democratic control, and that the EU is one manifestation of this. Indeed, I suspect (and hope) that the ‘No’ votes are the beginning of a wider challenge to the notion that vast areas of economic decision making should not be subject to political control. While I’m broadly in favour of an integrated Europe, I’m not especially keen on a EU like the one we have today, in which the imperative of the free market usually overrides national level social protections.

I spent a fair chunk of time over the last few months working as chair for one of the divisions of the annual American Political Science Association’s annual meeting, which is being held this year in Washington DC. It was an eye-opener – I’d never understood how the decision-making process worked before; i.e. how decisions are made over which paper proposals are accepted or rejected. It was also somewhat startling to see how many good papers don’t end up being accepted through no fault of their own. If I had had the slots, I would have accepted twice as many papers for my division as I was able to – there were a number of very good paper proposals that ended up not being accepted due to reasons of space or fit. But there is also a political economy to the process of decision-making; if you understand it properly (I didn’t, prior to participating in the process), you can maximize your chances of getting a good proposal accepted. Mediocre or bad papers are of course still likely to end up on the cutting room floor. Some lessons are posted below the fold. NB that these only apply to the APSA meeting – the processes of choice (and hence the best means to maximizing your likelihood of paper acceptance) will vary dramatically from conference to conference. Those with expert knowledge of other conferences and other disciplines are invited to share tips and experiences in comments.
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Welcome to the blogosphere to “Duck of Minerva”:http://duckofminerva.blogspot.com/, a new group blog featuring two international relations professors (Dan Nexon and Patrick Jackson) and a grad student (Bill Petti). The IR-academic corner of the blogosphere has been relatively underpopulated up until very recently. With this new blog, and the forthcoming contribution from John Ikenberry, Anne-Marie Slaughter (an international lawyer, but we can stretch a point) and friends, it’s experiencing a bit of a population boom. Nice to see.

Interesting times for the European Union’s constitutional project. The French are looking “decidedly wobbly”:http://www.danieldrezner.com/archives/002081.html on the new European constitution, which they vote on next Sunday. The Dutch, who will be voting soon after, appear to be strongly opposed. This all sounds dreadful for pro-Europeans. However, I’m going to make two predictions. First, the unexceptionable one – I don’t think that the constitution has much chance at all of being ratified. If it somehow gets over the French hurdle, it’s going to come a cropper at the British one. Then the risky one – I reckon that the European Union may be on the verge of acquiring real political legitimacy for the first time, exactly and precisely because of the vociferous debates which are starting to get going.
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Eric Muller “reports”:http://www.isthatlegal.org/archive/2005/05/nine_months_lat.html that Peter Irons and Aiko Herzig-Yoshinaga have “extracted a retraction and apology”:http://michellemalkin.com/archives/002489.htm from Michelle Malkin, after she smeared them in her book and on her blog last year. At least in some of its parts, the self-correcting blogosphere still needs the threat of legal action to kick it into gear.

Quickly quickly, here’s my prediction. I’m using vote shares from the IG betting market, because I think that “The Wisdom of Crowds” probably works quite well for mass estimation problems like this, but maybe not so good at projecting the results of its mass estimation onto a difficult electoral college problem. So I’m working on the assumption of 32.5% Conservative, 37% Labour and 24% LibDem and using my own Allocated Regional Swing model, documented here last week.

That gives me the following seat predictions:

Labour: 388
Conservative: 190
LibDem: 53.

Labour majority 130, and presumably Blair decides that it was a referendum on the war (and the lying about the war) after all.

Note that the LibDems get royally screwed by first-past-the-post; they get a swing of 5% and pick up three seats. I have a really ace triangle plot showing this but I don’t know how to upload images on the new WordPress site (Update: thanks Henry!)

I’ll do a proper post after the election explaining how I got it so wrong. Meanwhile, below the fold is my list of possible seat changes; it’s longer than Martin Baxter’s, but this is mainly because the list is drawn from a slightly different model; I wanted one as long as would be possible consistent with my overall predictions to be a bit more interesting.

Now I’m off to vote (LibDem, if anyone cares. Sorry Dobbo, you’re a really nice guy but you’re not standing for the Frank Dobson party. You’re standing for the Labour Party and that means Blair).
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A week late and a dollar short, I am now ready to unveil my election forecasting model. Gosh what fun it was to make; there really is no substitute for wading in and making a model if you want to learn about a dataset. I am not uploading it here, because the bloody thing is a 1MB Excel file and I suspect that the bandwidth consequences of this for CT would cost me my stripes. However, if you email me at daniel dot davies at gmail dot com, I’ll send it across to you if you like. Or alternatively, you can download the data yourself from Martin Baxter‘s site and produce your own version which may be safer from my trademark incomprehensible spreadsheet design and boneheaded calculation errors. Below the fold, the recipe for my model, the forecasts themselves, and a bit of psephological analysis which suggests why I think that the Liberal Democrats are really, really badly screwed.

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“Over at John Band’s site”:http://www.stalinism.com/shot-by-both-sides/full_post.asp?pid=970 they’re all doing Chris Lightfoot’s “Who Should You Vote For?”:http://www.whoshouldyouvotefor.com/ (in the coming UK general election) test. Annoyingly, I came out Lib Dem on this though I fully intend to grit my teeth and vote Labour anyway. But for the purposes of this post I’m going to go all meta and discuss what we are trying to do in voting and how that affects how we should vote. Here’s something I posted on the philos-l list just before the 1992 general election:

bq. A friend asked me to provide him with an argument against tactical voting and I came up with this – derived very loosely from some of the things Geoff Brennan says in his ‘Politics with Romance’, in Alan Hamlin and Philip Pettit eds The Good Polity (Blackwell 1989).

bq. The only situation in which an individual voter can affect the outcome is one where there is a tie among the other voters. But in a large electorate this is unlikely to be the case. I want to do two things with my vote: express a preference and secure an outcome. But since my chances of the latter are so small, I may as well concentrate my deliberations on the expressive side. If I am a positive identifier with a particular party — and this is more important to me than my negative feelings towards another party — then even if my party is third I should still vote for it (if I vote). By doing so I secure one of my objectives (the expressive one) but run only a vanishingly small risk of incurring the cost of bringing about a worse outcome than if I had voted tactically. The rational voter should therefore vote for the party she prefers unless it is more important to you expressively to declare your hostility to the party you loathe most – in which case vote for the best placed challenger to that party.

In other words: it is a waste of time and effort to try to bring about a determinate outcome. You’ll almost certainly make no difference. Tactical voting is an attempt to bring about some determinate outcome. But if what is important to you is saying “Blair hooray!” or “Howard boo!” then you can do this perfectly well (voting being only one way of doing it of course). And there’s no merit to the argument that voting for the Lib Dems, Respect, or even the Monster Raving Loony Party is a “wasted vote”. It is no more wasted than any other. So vote for whom you like best, or against whom you hate most, instead of making micro-calculations about effectiveness.

(BTW I realise that this argument deprives me of one lot of nasty things I might say about people who voted for Ralph Nader in either 2000 or 2004, but there are many other nasty things to be said about such people anyway, so I don’t care that much.)

I know that FrontPageMag (and everything Horowitz-related) is bonkers. But I wasn’t really prepared to see I face I know staring out at me. Today they have “a piece attacking Brendan O’Leary”:http://www.frontpagemag.com/Articles/ReadArticle.asp?ID=17538 , political scientist at UPenn, formerly of the LSE. I’ve know Brendan since we were undergraduates together in the late 70s. For most of the time I’ve known him he has been gently chiding me from the right for my “infantile leftism”. He’s been an advisor to top Labour politicians on Northern Ireland, always on the side of moderation. Now Brendan is a “leftist” and a “terror apologist”. Well, as I said, I knew that Horowitz was crazy, but it is helpful to have a marker against which to judge just how crazy.

Update: One small thought – Brendan’s reputation in the UK is such that he could sue FrontPageMag for libel in London. He’d stand every chance of success and some serious damages.

2nd update: the full text of the remarks that FrontPageMage characterize as “terror apology” are “online”:http://www.upenn.edu/almanac/v48/n04/OLeary.html for all to inspect.

The FT has a good article on Kyrgyzstan today, suggesting that the recent upheavals in Russia’s ‘Near Abroad’ doesn’t actually have all that much to do with George W. Bush.

There is certainly a domino effect at work. Supporters of the US’s democracy campaign have been quick to cast Kyrgyzstan as the latest state to join “the global march of freedom led by President Bush”, as the conservative Wall Street Journal said on Friday, praising Washington’s policies in Afghanistan and Iraq.

However, of more relevance to Kyrgyzstan have been the peaceful revolts against authoritarian leaders in the former Soviet Union, in Georgia and Ukraine. Television and the internet has spread the message. The common element has been a drive to get rid of self-serving corrupt cliques which have often been in power, as in Kyrgyzstan, since Soviet times. These cliques have generally been supported by Moscow, but the revolts against them have not been principally anti-Russian or pro-western. Domestic issues have mattered most.

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