Year: 2013

Critical Junctures and Path Dependency in “Why Nations Fail”: Implications for U.S. Foreign Aid Policy

Michael Adamson Books, History , ,

Greeted with wide acclaim, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, should put to bed all debate on using foreign aid to promote economic development on a national level.

Authors Daron Acemoglu and James A. Robinson effectively deploy path dependency to explain the trajectories of the political institutions that form the core of their argument: Nations with “inclusive” political institutions succeed economically whereas those saddled with extractive” political institutions fail. Citing cases from myriad times and places, the authors demonstrate the relationship between political institutions and economic development. The authors tether their argument to Schumpeter’s idea of creative destruction in the marketplace: No creative destruction, no long-term development. Nations encumbered by extractive political institutions typically privilege monopoly. And so, over time, their economies atrophy.

So far, so good. In deploying path dependency to explain why institutions, once in place, tend to persist, authors add a solid piece of research to a literature that includes persuasive and important studies from Paul Krugman and Robert Higgs (and show that path dependency is an ideologically independent analytical tool). Notwithstanding their clear, concise, and compelling prose, however, the authors do less well in explaining the origins of divergent dependent paths. This is disappointing, because knowing and understanding the point of origin is crucial to understanding the dependent path. Because points of origin are often associated with cataclysmic events, however, one thing is clear: Development economics has no chance of establishing a new point of origin for nations encumbered by extractive political institutions.

Acemoglu and Robinson call their points of origin “critical junctures.” As they explain, critical junctures “are major events that disrupt the existing political and economic balance in one or many societies.” Critical junctures launch nations down their respective dependent paths. Because of small differences in initial conditions, the same critical juncture can send nations in radically different directions. But a lot is murky here in terms of understanding the historical foundation of a particular critical juncture. In many cases, I found myself accepting the facts that the authors present as the starting point and then going along for the narrative ride. Origins happen, and until another critical juncture occurs, a nation is pretty much locked in an institutional straightjacket.

What the authors do show is that we really have very little control over the initial conditions that propel nations down a particular path. And if paths are truly as dependent as the authors insist, it is extremely difficult—especially for outsiders—to get a nation to change course, that is, reform its political institutions. Whatever else they accomplish in elaborating the findings of their research, Acemoglu and Robinson bolster the argument, made by economists from P. T. Bauer to William Easterly, that foreign aid generally does nothing, and really can do nothing, to promote economic development.

Here’s my short list of the most important critical junctures in the book:

  • The Black Death
  • The French Revolution
  • The Glorious Revolution—a relatively peaceful resolution to decades of bloody civil war

If pestilence, famine, and war are requisites for institutional change, what chance do USAID, the World Bank, and the various UN agencies have to affect reform, armed only with dollars and expertise?

Less apocalyptic critical junctures described by Acemoglu and Robinson give no cause for cheer among aid advocates, either:

  • Of more than 50 African nations, only Botswana enjoys inclusive political institutions, and only because its leaders acted on their own initiative and in the face of conventional wisdom to break the institutional chains that have shackled all of the other nations on the continent.
  • Notwithstanding the arguments of the authors, the weight of the evidence suggests that America enjoys inclusive political institutions and Latin America does not above all because of climate, geology, geography topography, and differences in the demography of indigenous populations. (Score a point here for Jared Diamond.) English and Spanish colonists set out from Europe with similar intentions. In contrast to their Spanish counterparts, English colonists unhappily found no gold or silver, and in any case, encountered no large concentrations of peoples to enslave. The indentured servants that they imported in their stead proved to be a poor substitute. Paths diverged.

There is little in these stories to guide contemporary aid missionaries.

Why Nations Fail provides no justification for Washington maintaining its foreign aid apparatus. The general reader might close the book relieved to know that China, America’s greatest adversary in the international political economy, will inevitably falter because of its extractive political institutions. Policymakers and practitioners operating in the aid arena have no similar cause for relief. The authors leave some wiggle room in their conclusion, but in my reading, Why Nations Fail closes the door on using aid to foreign governments to foster economic development.

The Real IRS Problem

Warren Gibson Current Events, Liberty , , , ,

It’s heartening to see distrust and resentment of the IRS building up in the wake of the targeting of tea party groups and such. But let’s not overlook the daily predations of the IRS, small and large, which add up to a mountain of costs borne by citizens – not just monetary costs but also mental anguish and occasionally violent confrontations.

Case in point: your humble servant. This morning I received a notice demanding $8,900 in back taxes. Needless to say that ruined my day even though it took me only five minutes to realize that they made a mistake and I owe them nothing. I have high hopes that this will be resolved quickly but you never know. I mentioned my plight to a friend this morning and he chuckled. He once had a $1,400 claim which he fought for ten years until finally he got to the right person at the IRS who found their mistake in five minutes. Did he get an apology? Restitution or compensation of any kind? Of course not.

The complexity of the tax code is often cited as a significant drag on the economy, in terms of time spent gathering information and preparing returns, money paid to tax preparers and tax attorneys, etc.  But there are lots of other bad effects.  No one understands the tax code in its entirety and most IRS agents understand little of it — or worse, what they often think they understand is wrong.  Nor do taxpayers understand it.  This opens the door for errors, misunderstanding, cheating and consequent confrontations, anguish, time and money wasted, and sometimes violence.

If we have to have an income tax (which I’m unwilling to concede), let’s have a simple flat tax and do away with, if not the inherent coercion of any tax, at least the enormous expense and anguish that are part and parcel of the current insane system.

What I’ve Been Reading

Brandon Christensen Books, Current Events, History , , , , , , , ,

Hello all. Apologies in advance for not posting more often since graduation. I’ve been reading a lot of books lately, rather than stuff on the internet, so I haven’t had much to link to lately.

Here is a list of a few books I have been working on:

  • 1493: Uncovering the New World Columbus Created by the science journalist Charles C Mann. I know I’ve blogged about this book before, but I’ve finally got a little bit of free time to hunker down and read the whole thing. I’m about halfway through and it’s really good.
  • Mastering Space: Hegemony, Territory and International Political Economy by the Marxist political geographers John Agnew and Stuart Corbridge. This is a pretty crummy book, but it was recommended because of some good critiques of the IMF and the World Bank that it supposedly has. I’ll keep ploughing through and hope for the best.
  • The Embarrassment of Riches: An Interpretation of Dutch Culture in the Golden Age by the historian Simon Schama. This is a very well-written book about Dutch culture (not Culture) in the seventeenth century and so far I have not been disappointed. Schama eschews the political and economic aspects of the Dutch republic in favor of examining the everyday lives of its citizens.
  • Democracy in Botswana which is edited by John D Holm and Patrick Molutsi. I picked this up for a research project I was doing last quarter and have not been able to let it go yet. It brings together a compendium of talks given at a conference held in Gaborone in 1989 to assess Botswana’s current status in the world, in sub-Saharan Africa and according to the citizens of Botswana.

Of the four books, I’d recommend 1493 to the intelligent layman, but the other three are definitely tough slogging.

Libertarian Countries and Libertarian Societies

Fred Foldvary Current Events, Liberty , , , , , , , ,

by Fred Foldvary

Michael Lind in the 4 June 2012 salon.com in his article “The question libertarians just can’t answer,” asked, “Why are there no libertarian countries?”  One answer is simply that there are very few pure libertarians. But another answer is that most folks are libertarian enough that they establish libertarian societies, by which I mean not just organized clubs but also informal social gatherings and happenings.

The essential libertarian proposition is “live and let live.”  In a libertarian society, there are no restrictions on peaceful and honest human action.  Most people believe that it is morally wrong to coercively harm others, and they have been brought up to have some sympathy for others, so that they don’t want to hurt others.  Therefore most gatherings such as concerts, athletic events, and street traffic is peaceful. Thus much of the world operates in a libertarian way, without governmental direction. If you host a party in your house, you seldom need a government official there to keep the peace.

This social libertarianism has limits, as those who do not conform to cultural standards such as dress codes would encounter some intolerance.  Nevertheless, there is an almost universal agreement that assault and theft are evil, and a widespread aversion to such anti-social behavior.  When most folks are pro-social in their behavior, they demonstrate a wide and deep level of libertarianism.

Why does the US government impose restrictions such as prohibiting trade with Cuba?  Most Americans probably favor free trade with Cuba. But a minority special interest opposes trade with Cuba and has the political clout to stop it. So the basic reason why the US does not have full freedom is the inherent dysfunction of our system of selecting the chiefs of state. That system is mass democracy.  The failures of mass democracy have been documented and analyzed by the branch of economics called “public choice.”

The two basic reasons why there are no libertarian countries are:

1. Very few people understand or even know about the ethics, economics, and governance of pure liberty.  Pure freedom is not taught in schools, and it is not in the predominant culture.

2. Mass democracy enables special interests to skew policy that favors a few at the expense of the many.

However, the general concept of “freedom” and “liberty” is universally admired.  People have a genetic dislike of being controlled. But their moral views have been skewed by thinking their religious and cultural views are universal.  Ignorance is therefore the ultimate reason why libertarianism is not more widespread.

In another essay on 13 June 2013 Lind says, “Grow up, Libertarians!”  It shows that Lind does not know the meaning of the word “freedom.”  He writes that fighting evil requires limiting the “freedom of employers to buy and sell slaves.”  He has a physical definition of “freedom,” rather than the ethical meaning of there being no restrictions other than on coercive harm to others.  The ownership of a slave is not ethical freedom.

He then says that libertarians propose “the replacement of all taxes by a single regressive flat tax that would fall on low-income workers.” Anyone who advocates such as tax is not a pure libertarian. Lind confuses libertarianism with conservativism.

Michael Lind concludes with the statement, “libertarianism as a philosophy is superficial, juvenile nonsense.” Wow – perhaps he has never read freedom philosophers such as John Locke, John Stuart Mill, Herbert Spencer, and John Hospers. We need a serious explanation of why the basic libertarian idea – live and let live – is superficial nonsense.

There seems to be a simple explanation for Lind’s views on libertarianism – he simply does not understand it.

I’m Done

Brandon Christensen Current Events, Links , , , , , , ,

Whew. Finals are over. Expect a lot more from me over the next little while. Nothing tonight, of course (I’m gonna sleeeep), but more is coming.

Thanks for all of your thoughtful comments and criticisms. I’ve got a link for the evening, and it’s an old article (2001) from the Economist. An excerpt:

The affinity of totalitarianism and economic isolation was obvious in the case of the Soviet Union and communist Eastern Europe; it is still plain today in the case of North Korea, say. But democracies are capable of oppression too. It would therefore be wrong to conclude that integration is undesirable merely because it limits the power of government, even if the government concerned is democratic. One needs to recognise that some constraints on democracy are desirable, and then to ask whether the constraints imposed by markets are too tight.

These issues are rarely, if ever, addressed by the critics of globalisation: it is simpler to deplore the notion of “profits before people”. The sceptics either insist, or regard it as too obvious even to mention, that the will of the people, democratically expressed, must always prevail. This is amazingly naive. Even the most elementary account of democracy recognises the need for checks and balances, including curbs on the majoritarian “will of the people”. Failing those, democracies are capable of tyranny over minorities.

The sceptics are terribly keen on “the people”. Yet the idea that citizens are not individuals with different goals and preferences, but an undifferentiated body with agreed common interests, defined in opposition to other monolithic interests such as “business” or “foreigners”, is not just shallow populism, it is proto-fascism. It is self-contradictory, as well. The sceptics would not hesitate to call for “the people” to be overruled if, for instance, they voted for policies that violated human rights, or speeded the extermination of endangered species, or offended against other values the sceptics regard as more fundamental than honouring the will of the majority.

Read the whole thing. I don’t agree with everything in it, but in my opinion it is a damning indictment of the anti-globalist movement. A return to the good old days of yesteryear would have catastrophic consequences for the world. See, especially, Dr Delacroix’s writings on the virtuous benefits of globalization and the self-defeating measures of protectionism.

Eye Candy

Brandon Christensen History , ,

It’s just beneath the fold…

Continue reading →

Snowden and Me

Jacques Delacroix Current Events, Politics , ,

Much unnecessary hoopla about Mr Snowden. Much conspiracy theorizing on conservative radio (but not on Rush Limbaugh).

I think things are pretty much the way they look. He has not worked for the Chinese or anyone. Not much that is very new has been revealed. The new things for some people on this blog is that Mr Obama is just as bad (OK, almost as bad ) as Mr Bush. N. S. !

Mr Snowden is almost certainly not guilty of spying: You have to spy for somebody or for something.

Personally, I think he is probably guilty of violating some contract or other that he signed. That’s worth a year in Club Fed with Bernie (what’s his name again?)

Personally, I did not like the blank surveillance cover and the data mining before. I still don’t. I don’t like big government and I don’t like big government doing big things. What’s so hard to understand?

There is one thing I learned again that  I already knew: College is overrated. Mr Snowden, the high-school dropout was earning $200,00 a year, in Hawaii. Of course, he was working for the Fed. Government.

Update: Booz -Allen says that no, he must be bragging, it was only $120,000. That’s before bonuses, of course.

Around the web: other civil libertarian perspectives on privacy

muricaderp Links, Politics , , , ,

1) Scroll back through Umair Haque’s Twitter feed to June 10 for a series of salty, pointed critiques of David Brooks’ recent hatchet job-cum-subsidiarity Jeremiad.

2) Three essays from Jacob Bacharach:

A) “Peeping Thomism,” an accidentally timely call for, among other things, hiring managers to grow up and cut out their censoriousness about stuff that their applicants post on social media: “But, says the Director of Human Resources and the Career Counselor, social media is public; you’re putting it out there. Yes, well, then I’m sure you won’t mind if I join you guys at happy hour with this flip-cam and a stenographer. Privacy isn’t the responsibility of individuals to squirrel away secrets; it’s the decency of individuals to leave other’s lives alone.”

B) A calm but firm call for his own demographic to stop falsely denigrating the less educated (Bacharach is a novelist by trade).

C) On David Brooks, his “conservatism,” and the amazing entitlement of certain posh people.

3) From Karen Garcia, a week-in-review summary of the PRISM bombshell. Garcia is a top-notch blogger whose archives I’ve been combing since discovering a link in one of her comments on Brooks’ “unmediated man” column. Other essays especially worth reading, on tangential but related topics, include her back story about Cornwall-on-Hudson homeboy David Petraeus and her evisceration of the covert classism of the Obamas’ 2012 Christmas message to the nation.

Impeach James Clapper

muricaderp Politics , , ,

It’s very simple. The Director of National Intelligence needs to go. He lied to Congress about the NSA’s totalitarian PRISM program. That’s as serious and subversive a lie as can be told to Congress about any topic. It’s exactly the kind of official misconduct that the impeachment process was established to check and punish.

I encourage those of you who agree that Clapper should be impeached to reblog what I’ve written, either verbatim or modified as you see fit. So far, there has been a strong and encouraging grassroots response to the White House petition to pardon Edward Snowden, a fair amount of it from latent civil libertarians who have been shocked into engagement by the egregiousness of what Snowden has exposed. A campaign to impeach Clapper, whom Snowden’s leaks have exposed as a liar, would dovetail perfectly with the one to pardon Snowden. Clapper has already provoked a number of members of Congress with his lie about PRISM, so timely pressure from constituents could be what it takes either to pressure him out of office or to get him formally removed.

A couple of side notes on the official reaction to PRISM (the metadata, if you will):

1) Rudy Giuliani offered a cretinously jingoistic defense of Clapper in an interview with Greta Van Susteren last night (6/11), premised largely on Clapper’s distinguished service as a military officer, the underlying ethics being that we dasn’t criticize the troops. It’s worth noting that by that standard Edward Snowden would also be shielded from all criticism, although perhaps less fully shielded since Clapper had the patriotism not to truncate his military career by breaking both legs in a special forces training accident. It goes without saying, but shouldn’t, that one doesn’t hear this sort of defense offered on Bradley Manning’s behalf, and not just because he’s a young grunt. Nor does one hear it made in defense of Robert Bales or Nidal Hasan, except perhaps by their defense attorneys, because it would sound absolutely absurd to say such a thing about someone under court-martial for mass murder. I submit that it’s no less absurd or evil when said about a spook who has been caught lying to Congress about a totalitarian eavesdropping program.

The interview got weirder than that. When Van Susteren confronted Giuliani with a chronology of Clapper’s evasions, Giuliani suddenly changed tack and accused Clapper of being a loose cannon for not having formulaically stated that he could not answer the question or offered to answer it in closed-door session. By mayoral fiat, an esteemed officer and gentleman was turned into a blithering fool who didn’t know when to keep his mouth shut. This makes the notion of Giuliani as some sort of mobster at least look plausible.

2) This vile mashup of pop psychology, pop sociology, generational smears, class snobbery, and milquetoast despotism is bad even by David Brooks’ usual standards.

From the Comments: Federalism, Local and Global

Brandon Christensen Comments , , , , , ,

From a post of mine on Native American sovereignty, and prompted by the thoughts of readers, I muse a little more:

Hank,

Thanks for the great link. My few thoughts, I am not so sure that Native Americans would choose sovereignty over membership into the federation currently in place. I lived near a reservation in northern California (and I’m sure you have the same sort of deal in Montana) and have some fairly extensive contact with Navajo Indians as well (they prefer the term ‘Indian’ to ‘Native American’, so long as they know you). These are people whose ancestors have fought for the US in all of its major wars over the past century. They are intensely patriotic.

What I think would emerge from working with the Indian tribes is a system where all of the major reservations were turned into regular states (like Montana and California) and the minor ones would just disappear. Indians would then be full-fledged American citizens but could still do what they liked culturally with their heritage, much as everybody else does.

Again, this is what I think would happen. If they wanted full-fledged sovereignty we should grant it (and include generous reparations for stolen property), but I think everybody would opt in for a spot in the federal system we have (despite its shortcomings, it’s still a very, very good system).

This leads to me to an odd-but-perhaps-pertinent musing: I am not so sure that the majority of Europeans, South Koreans and Japanese would want our troops to leave their states. Hear me out on this. Our military essentially provides for the defense of these states, and as a result their these societies are able to use resources that would otherwise go to military expenditures for welfare programs. As Americans, we can see why this is a bad thing, but the states we occupy militarily don’t necessarily think that it is such a bad thing.

As a result, I would be open to our continued occupation of these states under one condition: that traveling, working, starting a business, living, moving, etc., etc. between the US and the states whom we subsidize militarily is as easy to do as it is here in the US. So, for example, moving/etc. from Connecticut to Hesse or Nankaido would be as easy as moving/etc. from Texas to South Dakota. If this were to happen, then I could accept a continued US presence in these regions. What do you think?

Update (6/11): I was inspired to bring this up because of an old post on this subject by Dr Foldvary in the Progress Report. Do be sure to check it out.

Around the Web

Brandon Christensen Current Events, Links , , , ,
  1. Letting Nelson Mandela Go
  2. Nothing New About China’s New Grand Strategy
  3. Cambodia’s Orphan-Industrial Complex
  4. The Rise of Nullification

Just Testing…

Brandon Christensen Current Events, Links ,

…the new link to our Facebook page. You guys can check it out here.

PS: How Companies Learn Your Secrets.

Cognitive Blocks and Libertarianism

Brandon Christensen Economics , , , , , , , , , ,

Last year Brian Gothberg, who was lecturing at a summer seminar I attended in 2009, left the following comment in response to a post about media coverage and Austrian economics:

I think there’s a perceptual or cognitive block, that simply makes it hard for many people to see government activity in the foreground of the story, as an actor which actively and (often) arbitrarily changes outcomes. It reminds of the recent Brian Greene programs on cosmology on PBS. In one, he compares the treatment of space, through most of scientific history, as simply being the unadorned theater stage, upon which the truly interesting things actually happen. It’s only later that Einstein (using Riemann’s math) described space as having positive, unambiguous characteristics. After Einstein brought space itself into the foreground, you could make statements about particular things that space did do, and other particular things that space did not do.

Another example: at a gathering of friends with children, my wife and I were observing a small boy (3-ish) who kept biting the other children. When it came to tears, parents would come in and intervene, and scold him. Later, we watched the same parents — who were baffled at the boy’s biting — laugh and giggle as the father playfully bit his son. Apparently, nobody had ever brought the father’s behavior into the foreground, for their scrutiny, as a possible influence on the son’s problem. Sometimes, the obvious does stare people in the face. I think that the way we describe the role and actions of government, in the press and schools, goes a long way to explain this cognitive block. Libertarianism is nothing like common sense; not nearly.

I was reminded of this as I read the following 2008 piece by Roger Lowenstein in the New York Times, where he documents the regulatory regime that was built by the state in the years leading up to the Great Recession. Check this out: Continue reading →

Updates and Accolades

Brandon Christensen Current Events , , ,

Hello all. I’ve been busy lately. Will hopefully have some cool stuff starting next weekend or so.

In the mean time, The American Conservative recently highlighted Notes On Liberty for being a libertarian blog that is actually worth reading.

Also, I happened to win the first ever annual monthly blog contest now being put on by the Foundation for Economic Education. This is a huge honor, and I probably would not have pursued it without your readership and, more importantly, your critiques over the last year and a half.

I know I’ve mentioned this before, but RealClearHistory also gave Notes On Liberty a shout-out for some of our work on colonialism back in February.

All three organizations are well worth adding to your daily reading routine. I’ll be graduating from college next weekend. My school’s quarterly A&E magazine did a feature on me and you can check that out here.

Logical Fallacies in the Press

Brandon Christensen Current Events, Liberty, Politics , , ,

Hank blogs about yet another hit job on libertarianism in the press, this time coming from some hack named Michael Lind in Salon. Unfortunately, the whole thing is based upon a logical fallacy that is buried in the seventh paragraph of the piece. Lind wonders aloud:

But think about this for a moment. If socialism is discredited by the failure of communist regimes in the real world, why isn’t libertarianism discredited by the absence of any libertarian regimes in the real world?

This is a basic logical fallacy known as (in Latin) argumentum a silentio, or an argument from silence. An argument from silence is a conclusion drawn based on the absence of evidence. Logical fallacies coming from the enemies of freedom are not always to be ignored, and Hank did us all a service by trying to earnestly straighten out Lind’s fallacious reasoning, but at the same time, we know from careful research that most arguments are based off of dishonesty, plain and simple.

Here is the upside, though: as Dr Gibson points out, the fact that the press is even paying attention to libertarian arguments suggests that more savagery from the Left is coming our way. Given that the Left is morally and ideologically bankrupt, this should serve as some small comfort to those of us who yearn for a less paternalistic and condescending society.

Addendum (6/6): Will Wilkinson has more over at Democracy in America. Tom Woods chimes in as well.