Archive for the ‘Political Economy’ Category

the 3.5% rule

Thursday, May 30th, 2019

In a 2013 TED talk, Harvard political scientist Erica Chenoweth (born 1980) focused on what she calls a “3.5% rule”— “the notion that no government can withstand a challenge of 3.5% of its population without either accommodating the movement or (in extreme cases) disintegrating”.

“Researchers used to say that no government could survive if five percent of its population mobilized against it. But our data reveal that the threshold is probably lower. In fact, no campaigns failed once they’d achieved the active and sustained participation of just 3.5% of the population—and lots of them succeeded with far less than that. Every single campaign that did surpass that 3.5% threshold was a nonviolent one.” (more…)

collaboration is important

Saturday, May 4th, 2019

Sixty years ago the British scientist and novelist C.P. Snow (1905-1980) delivered his famous lecture The Two Cultures and the Scientific Revolution, published later the same year in book form. FT columnist Tim Harford celebrates the occasion this week in a column that reminds me that IIASA, the Austrian research institute with which I have been associated since my retirement from the UN in 2004, provides a meeting place for mathematicians, statisticians, social scientists -from sociologists to economists- and natural scientists -from biologists to physicists- to work together. This is an important public service, as Snow’s lecture and Harford’s column clearly show. (more…)

Adam Smith and basic needs

Tuesday, April 30th, 2019

Mark Twain is reputed to have said “A classic is something everybody wants to have read, but no one wants to read.” This is certainly true for the writings of dead economists. I recently saw an example in criticism of Adam Smith, the author of Wealth of Nations, first published in 1776. The economist, whom I will not cite, correctly wrote that the now-dead Adam Smith broke with the tradition of his day by explaining that it is consumption, not production or saving, that satisfies the wants of men and women.

But the contemporary economist went on to criticize Smith for not distinguishing between needs and wants, known also as necessities and luxuries. This distinction between types of consumption, he asserted, was done more than a century later, with the 1890 publication of Cambridge University economist Alfred Marshall’s Principles of Economics. This assertion is wrong. Alfred Marshall founded neo-classical economics, so is justly famous, but he was not the first to distinguish between necessary and luxury consumption. In the Wealth of Nations, Smith devotes considerable attention to this in a section titled “Consumable commodities are either necessaries or luxuries”: (more…)

Nick Rowe, exemplary professor of economics

Tuesday, December 25th, 2018

Carleton University professor Nick Rowe received a well-deserved tribute, on his retirement from teaching, in The Economist magazine. I was fortunate to have known him as a colleague, but regret that I never had the opportunity to enroll in one of his macroeconomics courses. Sadly for me, he completed his PhD in 1985, long after I did. Current and future generations of economists will also miss the opportunity of learning from him. But all of us can continue to benefit from reading his many posts online at Worthwhile Canadian Initiative (WCI).

Professors may find themselves ill-prepared for the macro classroom. To become academics they had to answer erudite questions posed by more senior members of the discipline. To become good teachers of introductory macro, they have to give clear answers to muddled students. That requires an intuitive feel for the subject. It is not enough to crank through the equations.

Indeed, Mr Rowe attributes part of his success as a teacher to his shortcomings as a mathematician. He quotes Joan Robinson, another clear expositor of macroeconomics: “I never learned maths, so I had to think.” Because the answers did not leap out at him from the equations, he had to dwell on the economic behaviour underneath the algebra.

Anonymous, “Mangonomics“, The Economist, 9 August 2018.

universal vs targeted transfers

Sunday, November 11th, 2018

Two Boston economists, Rema Hanna from Harvard and Benjamin A. Olken from MIT, have drafted a paper on basic incomes for the Journal of Economic Perspectives, a publication of the American Economic Association. They argue that, though a universal basic income (UBI) might be appropriate for wealthy countries, it is not appropriate for developing countries.

The paper is well-written, but fails to support their thesis. In fact, drawing on a phrase from William Shakespeare’s play Hamlet, they “hoist themselves with their own petard”.  A “petard” is a small bomb. Shakespeare, writing in the singular, referred to a case in which a bomb-maker is blown up (“hoisted”) with his own bomb. The phrase came to be used more generally, to indicate ironic reversal or poetic justice.

My point is simple: the text of the paper provides abundant evidence that universal incomes should be preferred to transfers that are limited to the poor. (more…)

targeting the poor does not work

Tuesday, September 4th, 2018

Targeting the poor provides opportunity for corruption in delivery of benefits, even when the beneficiaries are older persons. Here is an example from Nueva Ecija, a province in the Central Luzon region of the Philippines. (more…)

the rise of American authoritarianism

Wednesday, July 25th, 2018

More than two years ago Amanda Taub, a journalist and former human rights lawyer, published an amazing article that I somehow missed. Drawing on the work of several political scientists, Ms Taub explains why Donald Trump was elected, and why we can expect US voters to elect authoritarian figures similar him in the future. In other words, Trump is not a passing phenomenon. (more…)

immigration policies of Republican presidents

Monday, June 25th, 2018

FT columnist Edward Luce, in an op-ed last week, highlighted the rise of anti-Americanism in the world. “US pollsters”, he wrote, “routinely find that more of the world trusts China to uphold global stability than America”. What caught my attention, though, was Luce’s point that Trump’s treatment of immigrants is so different from that of his Republican predecessors:

Both Reagan and Bush junior were keen to create new citizens. Reagan gave amnesty to 3m [3 million] illegal immigrants. Mr Bush said if Mexicans could make it across the border, “hell we want ‘em”. Mr Trump called African countries “shitholes” and uses words such as “animals”, “infest” and “criminals” when talking of Central America.

Edward Luce, “The rise of a new generation of anti-Americans“, Financial Times, 22 June 2018 (gated paywall).

Adam Smith for our troubled times

Saturday, June 23rd, 2018

An old joke is that a classical book is one that everyone cites, but no-one reads. By this measure, each of the two books that Adam Smith wrote are classics. If his followers today took time to read then, they would disagree with much of what he wrote. (more…)

Italy’s economic woes

Wednesday, June 20th, 2018

Martin Wolf’s Wednesday column provides an excellent explanation this week of why Italy is in trouble. Italy should never have joined the euro. In theory, countries can avoid devaluation by increasing productivity and lowering wages. In practice, this is politically difficult. In the case of Italy, it is impossible. If Italy had kept the lira, it could easily devalue its currency and regain competitiveness with other countries of the euro zone (primarily Germany). (more…)