The “Pride and Prejudice” of Economists

The dominant position of economics in the field of social science has long been recognized, but Marion Fourcade, et al. recently published a new paper investigating this phenomenon in greater detail. By presenting evidence of the hierarchy that effects job prospects, getting published, and establishing influential connections, Fourcade argued that economists’ objective supremacy is intimately linked with their subjective sense of authority and entitlement. “Economists may advise governments, but they do not convince the people.”

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Whether or not that is a problem depends on its unintended consequences. William Easterly has expressed concerns for the “tyranny” of economists in international development. The “tyranny of experts” in development posited the belief that poverty is due to a lack of technical expertise, and that autocrats are best at delivering this. The support for a benevolent authoritarian approach to development is not overt but implied, and is often altruistic rather than self-serving. Easterly sympathized with economists who, in their zeal to help the world’s poor, unwittingly favor autocracy, because he used to be one of them himself. Economists choose to advise governments on how to alleviate poverty through a top-down approach, but for Easterly the real cause of poverty is exactly the unchecked power of the state against the poor.

According to Fourcade, 57.3% of American university economics professors disagree with the statement that in general, interdisciplinary knowledge is better than knowledge obtained by a single discipline. But as Easterly noted, at least for development, other than national policies of technical solutions to poverty, such as fertilizers, antibiotics, or nutritional supplements, history, non-national factors, and spontaneous solutions also matter. Therefore development may have to give up its authoritarian mindset to avoid tragedies such as the one that happened to the farmers in Mubende District, Uganda, detailed in the beginning of Easterly’s book. Soldiers marched more than 20,000 farmers away from their land at riflepoint in 2010. Some of those farmers died and the rest never returned, because they were told the land no longer belonged to them. Four years later, the whole event has been forgotten by almost everyone except the victims.

However, it is not always wise to label people and attack economists as a homogeneous group, because criticism or compliment could be just a matter of opinion. Fourcade consented to the notion that most modern economists are talented. They simply believe in the ideal of an expert-advised democracy, in which their competence would be utilized. Unfortunately democratic societies are often deeply suspicious of expertise as described by Alexis de Tocqueville:

“When the ranks of society are unequal…there are some individuals invested with all the power of superior intelligence, learning, and enlightenment, whilst the multitude is sunk in ignorance and prejudice. Men living at these aristocratic periods are therefore naturally induced to shape their opinions by the superior standard of a person or a class of persons, whilst they are averse to recognize the infallibility of the mass of the people. The contrary takes place in ages of equality. The nearer the citizens are drawn to the common level of an equal and similar condition, the less prone does each man become to place implicit faith in a certain man or a certain class of men.” That is what Fourcade meant by saying, “democratic societies are deeply suspicious of (non-democratic) expertise, and economic advice, unlike dentistry, can never be humble.” It is our own inclination to believe in practical and results-oriented views (instrumental rationality) from objective data (quantitative research) more than value-based (value rationality) statements from our peers (qualitative research).

That being said, the perceived superiority of economists and their supposed lack of humbleness may also be a kind of resignation. In other words, are we talking about the pride and prejudice of the economists or ourselves?

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Haven “Of the People, For the People, By the People”

It sounds reasonable to assume that a high crime rate correlates with political, economical, and social turbulence. But Nicaragua, a country lying in the center of Central America, defies this apparent logic. Despite its reputation as the second poorest country in the western hemisphere, Nicaragua has made remarkable strides in public security compared to its regional neighbors, the Northern Triangle– El Salvador, Guatemala, and Honduras. In 2012, the homicide rate in Nicaragua was 11.3 per 100,000 persons, less than one-third of the rates seen for its three northern neighbors.

From CentralAmericanPolitics

Nicaragua’s public safety profile is an even bigger surprise once you consider its economic, political, and geographical reality. As mentioned, Nicaragua’s living standard is one of the lowest among its regional neighbors with almost half the population in unemployment and homelessness. The wage rate for police officers, set at $120 a month, as well as their availability, 18 per 10,000 persons, is just as bad as the country’s poverty level. Politically, it has only been forty years since the revolutionary knock-over of the Somoza family dictatorship, and the foreign-intervened guerilla war against the subsequent authoritarian Sandinista regime. Such a short history of recovery is a fair enough excuse for Nicaragua to have security irregularities as past remains. What takes people aback the most is probably that Nicaragua has eschewed violence by drug traffickers and youth gangs like the MARAS or BARRIOS that have defined Central and South America for centuries. While Nicaragua shares a border with Honduras, a country pegged as one of the most dangerous areas in the world with the largest presence of the Maras, it has little identified indigenous terrorism and organized crimes.

It is neither stellar sociopolitical stability nor geographic prerogative that undergirds Nicaragua’s peace-mongering environment. Then, what? The most sounding answer lies in “preventive, proactive, community-oriented police model.”

Four decades of civil war the in Northern Triangle occurred at the end of the twentieth century, though they all differed in intensity, nature, and longevity. These conflicts caused these nations to develop national security policies that engagee the military in reactionary and repressive fashion. In contrast to their iron-fist policies, Nicaragua’s police system, while still retaining the pattern of military engagement in public security, proactively seeks to create a safe social environment. For example, the Nicaragua National Police (PNN) has created specialist bodies for youth violence and intra-family and sexual violence, which take up 20% of the national crime rate. These bodies carry out comprehensive three stage responses – transforming local environments, cooperating with local NGOs and health centers for victim support, and vocational training and education.

Even more telling of the country’s success, is the community-oriented aspect of the police model. A 1995 Constitutional Reform has given the PNN its own General Directorate and greater independence, which allows it freedom from political games. Under the centralized leadership, its operation is enrooted in a strong police-society partnership in a decentralized manner. There are usually broad channels of communication with local residents such as community assemblies and direct linkages with the people. In each district, there is a sector police chief, responsible for paying door-to-door visits to residents, building close ties with them, and inviting them for neighborhood watch activities. Among 100,000 volunteers nationwide assisting the PNN in both crime detection and victim support are some professionals like law and psychology students, as well as some experienced former gang members and victims of violence, and NGOs. The fact that Nicaragua has social culture of parochialism and small-township, resulting in close community ties, complements the picture.

Aminta Granera Sacasa

Nicaragua is not completely spared from the threats of violence. There are still 25,000 or so youth gangs. They are small in scale and often do not have foreign connections. But it is a logical sequence that the Mara gangs, contained in the North for now, may move south and reach these youths, especially at the wake of the Central America border control agreement which allows free movement of citizens between Nicaragua, El Salvador, Guatemala, and Honduras. Threats from a Mexican Mob, the Zetas cannot be ignored, as well. The persistence of low income, high poverty level further “legitimizes” participation in cocaine smuggling and investments. Above all, fraud in 2008 municipal elections, and the Police Directorate’s neglect of the limit on a five-year term, a writ-large departure from democratic order, pose a greatest disturbance to the philosophy of the country’s legal system.

Nicaragua has done a fair job so far, fair enough for the neighboring countries to learn from, though not replicate, its police model. Whether it will continue to be exemplary depends first on the collective effort by its regional partners to contain and ultimately eradicate organized crime groups. What remains of greater importance is to strive to live by a pillar that ensures equality of all people both politically and economically.

Democracy and Development in Pakistan: Where are we headed?

On June 11th, 2014 the Center for International Private Enterprises hosted a panel discussion entitled “Strengthening Democracy through Economic Reform In Pakistan: Challenges and Opportunities.” Last May, the Pakistani Peoples Party (PPP) became the first democratic government to serve out a full term in the country’s 66-year history of independence. This historic accomplishment created a great deal of optimism and speculation about democracy and development in Pakistan. In light of this accomplishment, it may be important to question how successful democracy has been effective in Pakistan and whether or not democracy has promoted development.

The recent terrorist attack at the Karachi Airport, the arrest of Pakistani political leader Altaf Hussain in the UK, and the Karachi Riots in 2010 only highlight a share of the complicated political, economic, and social issues shaking the country’s fragile security. According to the panelists, the outlook for Pakistan is very pessimistic, unless the government recognizes these issues and takes action as soon as possible. According to Dr. Ehtisham Ahmad of the London School of Economics, the Pakistani government must address two core issues: the financing of political parties, and the management of state finances. The PPP and PLMN have both neglected these major issues, hindering institutional and political development.

The lack of a formal mechanism for funding political parties has led to politicians looking for funding from wealthy groups and individuals. As a result, purchasing votes and favors has become a regular occurrence. These factors have created an inefficient and corrupt tax system that does not generate revenue or demographic information. In order for a democratic country to run properly, tax revenue and demographic information is heavily relied upon.  According to panelist Moin Fudda of CIPE Pakistan, the government missed its tax collection target by 77% last year, which indicates a need for major reform. The graph below displays tax revenue for Pakistan and similar countries in South Asia. The data shows the decline of tax revenue in Pakistan over the last sixteen years to one of the lowest tax revenue percentages in South Asia.

Tax Revenue Pakistan

 

The population living below the poverty line has been hit the hardest. The central government has given the provinces the responsibility of providing public services for its citizens, such as healthcare and education, but the inefficient tax system has left them without enough funding. The provinces have no way of providing viable public services unless they do not pay taxes, inevitably leading to a tax war within the government. This inability to provide basic services has also hindered development.

Dr. Ahmad stresses that these issues need to be tackled immediately, but Pakistan has quite shockingly done nothing to find a viable solution. If the Pakistani government won’t act, then what else can be done  to remedy the situation? Dr. Ahmad believes that foreign investors can press for a level playing field in order to incentivize reform. The Pakistani government needs to implement a strong corporate income tax and provide public services for the poor, especially education. Most importantly, these core issues must be taken seriously by the government, and the population must strongly push for reform and public services. Despite these issues, the economy has performed quite well and has seen solid growth in the past four years according to the data below.

 

GDP Growth Rate

 

 

Pakistan GNI

 

At a time when political and economic  unrest is very high, people are wondering whether this growth is due to the development of an informal economy that is quietly keeping the formal economy afloat . This question is of great relevance and will unfold in the near future as the political demographics of the country either stabilize or spin out of control.

 

April is the Cruelest Month: the Coming Austerity Measures and Elections in Ukraine

Photo Credit: REUTERS/Anatolii Stepanov
Photo Credit: REUTERS/Anatolii Stepanov

The International Monetary Fund has offered Ukraine a two-year bailout package of $18 billion in return for steep economic reforms. The long-term goal of the bailout package is to stabilize a Ukrainian economy that is running up expenses and moving toward a debt default. It is hoped that economic stability in Ukraine will lead to the political stability that can then ease Ukraine’s transition to democracy, and more importantly, away from Russia. By opening up to the IMF deal, Ukraine will signal to nations like the US and Japan that they are committed to restructuring their economy and are open to investment. For example, the United States Congress is working on a bill for $1 billion in aid to Ukraine as well as economic sanctions against Russia. The European Union has put $15 billion on the table. It total, Ukraine is in position to receive around $27 billion in aid.

The downside to these deals is that the enforced austerity measures will likely hurt the average Ukrainian citizen by increasing gas prices by 50% and inflating the currency, the hryvnia, by somewhere between 12% and 14%. Therefore, we may see the cost of living rise while the purchasing power of the hryvnia plummets. Ukraine’s interim Prime Minster Arseniy P. Yatsenyuk explained that there would be a minimum-wage freeze and an increase in taxes for Ukraine’s largest companies. All of this spells out hard times for Ukraine in the coming years. But consider the result if Ukraine were not to accept the austerity measures. As The New York Times reported, Yatsenyuk “told the Parliament on Thursday that the country was ‘on the brink of economic and financial bankruptcy’ and that gross domestic product could drop 10 percent this year unless urgent steps were taken in conjunction with the fund.” With such instability, Ukraine’s interim government would not have the time or the legitimacy to set up the proper institutions before the planned election in May.

Photo Credit: Genya Savilov/AFP/Getty Images
Photo Credit: Genya Savilov/AFP/Getty Images

The top candidates for the election include former Prime Minister Yulia V. Tymoshenko, billionaire businessman Petro Poroshenko, and Parliamentary leader as well as former professional boxer Vitali V. Klitscho. Tymoshenko, who was born in the industrial and Russian-leaning eastern Ukraine, has support from the western and central provinces. However, it is Poroshenko and Klitscho who lead in the polls. No matter the result in May, the next president of Ukraine is set to face a difficult transition in all aspects of society. Somehow, he or she must ease the pains of economic liberalization, consolidate political factions, and reign in nationalist as well as pro-Russian sentiments. International aid may help, but the real battle for Ukrainian independence must be fought from within. It is a fight to defeat the legacy of authoritarianism; a fight that Ukraine desperately needs to win.

Rocking the Vote: Challenges in Election Monitoring

Counting votes in the 2009 presidential elections in Herat, Afghanistan.
(BEHROUZ MEHRI/AFP/Getty Images)
http://blogs.sun-sentinel.com/click/2009/08/off-the-wires-afghanistans-election-day.html

Election monitoring is commonplace in the world of democracy promotion today. The men and women who observe elections – hailing from NGOs such as the National Democratic Institute (NDI) as well as international organizations like the Organization for Security and Co-operation in Europe (OSCE) – aim to prevent election manipulation, fraud, and corruption. Short-term election observers arrive in the country under observation a few days before the election is set to begin. They meet with party members, police, election officials, and members of the general population to try to get a sense of what policies are at stake in the coming election and who the front-runners appear to be. On the day of the election, observers visit polling stations to make sure that the legitimacy of the election is not jeopardized in any way by government intimidation, closed polling centers, corrupt vote counters, and suspiciously low (or high) voter turnout. The team of election observers will report any unusual findings. If all is well, the election observers will watch the tallying of the votes, concluding that the citizens freely and fairly elected the winner.

A new report discussed at the Seventh Annual New York University Center for Experimental Social Sciences Conference on Experimental Political Science brings to light some interesting findings on the effectiveness of election monitoring. The authors set out to investigate whether or not election observation actually reduces various types of electoral manipulation. Their case study is the 2012 presidential election in Ghana. Specifically the authors examine “overvoting,” a phenomenon that occurs when more votes are cast in an election than there are registered voters. Secondly, the authors assessed “unnaturally high levels of turnout.” It is well known that even in nations under compulsory voting laws, such as Australia, voting rates rarely venture into the 90 per cent range.

Actors seeking to influence election results impose many complicated strategies for doing so. The authors list a number of methods by which voters can be turned away from the polls. Manipulators can do this by voter intimidation via government forces like the police or military. Political parties can have their own, separate, security forces that scare civilians away from the polls. Even worse, these strongmen can coerce civilians to vote for a candidate they do not support. A vote for the opposition candidate would put the lives and property of the voter’s family in danger. Fearing retribution, the average voter will not risk the lives of his loved ones for the sake of democracy.

The Kenyan presidential elections in December 2007 triggered a wave of violence.
The Kenyan presidential elections in December 2007 triggered a wave of violence.

In the opposite scenario, electoral manipulators seek to add “ghost voters” to the election, running up the vote count for a selected candidate. Ballot stuffing is a common tactic. Sometimes the final results are simply changed to suit a politician’s demands. High voter turnouts increase the victor’s claim to legitimate power, although most citizens recognize it as a sham. Thus, with this two-sided approach, the manipulation of elections can do a great deal of damage to democracy and liberty within a nation.

The results of the case study, the authors write, were positive, though they exposed some new problems that the election monitoring community must address. In sum, while election monitors did reduce electoral manipulation at the polling place at which they were stationed, those seeking to manipulate the election simply moved to unobserved polling places: displaced but not disrupted. The authors explain:

We find that observers reduce fraud at the stations where they are deployed by about 60 percent. We also find evidence that observers displace fraud to nearby but unobserved polling stations. This displacement is concentrated in the historical strongholds of Ghana’s two major political parties. This suggests that parties are better able to relocate fraud in single-party dominant areas where the dominant party enjoys social penetration and where political competition is low. (Asunka et al., pg.3)

Moving forward, placing election monitors at polling stations at which fraud is more likely to occur (rather than randomly selected polling stations) would be a more effective way to prevent fraud. Working from strategic districts around a nation, election monitors can better combat the intimidation and ballot-stuffing that is all too common in today’s emerging democracies.

Small Initiatives = Big Change: Civil Society Building Democracy in Swaziland.

Fully landlocked between South Africa and Mozambique lies the Kingdom of Swaziland. Swaziland received its independence from Great Britain in 1968 but by 1973 the King had positioned himself for power, abolished the constitution and dissolved the parliament. Ever since then it has been an absolute monarchy and is now one of the last of its kind.

Swaziland is characterized as a middle-income country by OECD. However, if you take a closer look at the social economic statistics there is nothing middle-class about it. Swaziland ranks number one in percentage of population with HIV-infection, ranks in the bottom five in life expectancy at birth, and 69% of its population lives below the poverty line. Continue reading

Uncivil Society

The promise of the “Arab Spring” seems to fade day by day.  Most recently, in a series of concerns regarding the fate of the 2011 revolutions, are the civil society crackdowns underway in both Egypt and Libya.

Leaders of the Egyptian transitional government revived Mubarak’s strict stance on civil society, taking extreme measures against NGOs and civil society organizations.  On December 29th, Egyptian security forces raided seven different NGOs based in Cairo, detaining numerous employees.  The organizations targeted in the crackdown focused specifically on issues of democracy and were supposed to monitor Egypt’s upcoming parliamentary elections.  Among the Americans detained by the Egyptian government, was Sam LaHood, son of Ray LaHood, Secretary of Transportation.

Sam (left) and Ray (right) LaHood

The conflict quickly escalated as Egypt proceeded to investigate over 400 unregistered NGOs, accusing them of accepting illegal donations.  In light of these developments, Senator Leahy proposed that U.S. pull its funding from Egypt, an amount totaling to $1.3 billion of military aid.  Egyptian authorities responded, criticizing the U.S. for funding unregistered NGOs, an action that, as a Washington Post article points out, is illegal in all nations. Egyptian authorities also argued that pulling U.S. aid would constitute a breach of the terms of Egypt’s 1979 peace treaty with Israel, rendering the long-standing agreement invalid. Continue reading