Current Events

Against Libertarian Populism

Zachary Woodman Current Events, Liberty, Politics , , , , , ,

Over at The Liberty Conservative (which is, in my opinion, something of an oxymoronic name), Alex Witoslawski of the Leadership Institute recently wrote an article defending populism as a strategy for libertarian activists to embrace. I am going to disagree with Alex at almost every turn, but it should be known that I am friends with Alex and mean no ill-will towards him. In fact, he privately asked me for my input and asked that I publish my criticisms publicly.

Alex defines populism as “a political strategy that aims to mobilize a largely alienated base of the populace against out-of-control elites.” In order for a movement to be populist, Alex claims it must use four distinguishing factors:

Messaging: the central message obviously has to revolve around the theme of populism – “the people versus the privileged elites”

Strategy: put simply, the central strategy of populism is to bypass the ruling class – academia, mainstream media, and political establishment – in order to get the message out directly to the masses

Tactics: in order to achieve the strategic goal of bypassing the ruling class, populist candidates and organizations must make use of grassroots organizing, events, digital communication (social media and email), and the alt-media to communicate directly with the masses

Issues: the message of “the people vs. the elites” is closely adhered to on every single issue advocated; in addition to this, the policies advocated for must be sufficiently radical to inspire a core base of supporters who will passionately support the populist campaign/organization as donors and activists.

To cite reasons why libertarians should embrace this populist ethos, Alex cites the recent surprising election of Donald Trump and the relatively successful Ron Paul primary campaigns of 2008 and 2012, and gives the example of Lew Rockwell’s and Murray Rothbard’s infamous paleolibertarian phase in the late eighties and early nineties for inspiration. Let me give eight reasons why principled libertarians–and classical liberals–neither can be nor should be populists:

1. Is Populism even Necessary for Electoral Victory?
It’s not even apparent that populism is always and everywhere the best electoral strategy in the first place. The three best turnouts, for example, in LP history for president were the decidedly non-populist Gary Johnson campaigns and the non-populist, left-leaning Ed Clark/David Koch 1980 campaign, ranking much lower with less than half the votes of Clark/Koch was the much more populist Ron Paul 1988 campaign. For further evidence, there were many similarities between populists and progressive parties in the late nineteenth and early twentieth century, one of the few major differences were the degree of technocracy and even outright elitism that progressives embraced (populists were more Jacksonian, progressives Wilsonian). Which parties and candidates were more popular at polls? Progressives. All this is, of course, anecdotal and casual historical evidence from which no necessary causality can be established, but so are the examples of Trump vs. Cruz and Rand vs. Ron that Alex gives. There’s likely an empirical political science literature on the electoral effectiveness of populist messaging that might shed light on this question, one with which I am admittedly ignorant, but, at any rate, this is an antecedent point to my main argument.

2. The Narrow Focus on Electoral Politics
Even if populism does win elections, it’s not even clear that’s a good goal. As any good anarchist will tell you, electoral victories are not the only, or even a particularly good, measure of a political movement’s accomplishments. Who can cater to a rationally ignorant and irrational voting population has little to do with whether your ideology is actually improving anyone’s lives. In fact, for reasons I’ll get to in a later, if all you’re doing is winning elections, there’s a fair chance you’re making people’s lives worse. The goal should be to minimize the real world importance of elections, to get politics out of people’s lives, not to make electoral politics the end goal. Consistent libertarianism is (or at least should be), in fact, not really a political movement at all; it seeks the abolition of politics to begin with.

3. Populism’s Democratic Ethos Leads to Support for Bad Policies 
Even if you manage to get a majority of voters to vote for ostensibly libertarian politicians, the question of how to implement those principles in real-world policy is much more complex. Populists, because the goal is to “tear down the establishment,” are likely to call for haphazard, potentially dangerous policies which democratize institutions that shouldn’t be controlled by the people (eg., courts, central banks, etc.) and make currently controlled democratic institutions more democratic. It goes without saying that putting coercive institutions in control of rationally ignorant and irrational political actors is pretty rash–be they “elites” like politicians and bankers or “the little guy” like supposedly disenfranchised voters.

Examples of such bad ideas supported by populist libertarians include congressional term limits or auditing the fed. Those policies may have libertarian normative goals, but it requires working technical economics and institutional analysis to know if they’re the best way to work towards those goals. For reasons anyone who knows the first thing about public choice can tell you, the masses will never have such knowledge. In fact, the populist attacks on “the elites” are likely to lead people to detest those who do have such knowledge, exacerbating the Dunning-Kruger effect. (Call me an elitist, but I’d go far as to say that populism of any form is just the political manifestation of the Dunning-Kruger effect.)

4. Populism will Likely Turn into Something Nasty
Because the main thing driving populist movements are “the people vs. the elites” rather than the core principles the movement tries to espouse, there’s good reason to think the base of that movement will abandon many of those principles as it grows simply on the basis that they have something similar to what “the elites” believe. It’s not surprising that many of the younger psuedo-libertarians who supported Ron Paul have since jumped on either the Trump or Sanders bandwagon, or, even worse, have defected into the crypto-fascist, dark corners of the alt-right (Steffan Molyneux and Chris Cantwell’s occultists are examples of this). Even left-wing populist movements often have abandoned leftist principles throughout history (the Jacobins in the French Revolution, for example).

The irrationality of the masses makes it hard for them to have any principles–libertarian or not–for very long. Indeed, even the examples Alex gives are pretty bad examples of libertarians. Rothbard and Rockwell, of course, embraced outright racist and homophobic nonsense to appeal to their culturally conservative base (sometimes using Ron Paul’s name), which is antithetical to the classically liberal ethos of libertarianism which values reducing all forms of coercion–be it through casual institutional forms of oppression or statist coercion.

5. Populism’s Demand for Immediate Change is Likely to Cause Unforeseen Harm
Unlike other methods Alex mentions, populism is a form of immediatism. It really is just a post-enlightenment, first-world, institutionally democratic form of revolution. It’s no coincidence that most populist movements, from Bernie Sanders to Ron Paul rely on the language of revolution to further their appeal. However, there is good reason to be skeptical of any accelerated method of political change–be it “the masses” taking over and overhauling the errors of “the elites,” or violent revolutions like those in late eighteenth century France or early twentieth century Russia.

Institutions and policies often serve tacit functions in society of which we aren’t even focally aware. We are in a radical position of ignorance about what the effects of sudden change that populism demands, such as swapping out entirely who’s in power and changing all policies to the whims of “the masses,” whether those whims are libertarian principles or not. In sum, ironically given the name of the site Alex writes for, populism can never really even be conservative–not in the bastardized tea party or paleo sense, but in the principled Burkean sense. Even if I agree with the ends any political movement aims for, epistemic humility necessitates far more gradualism than populist rhetorical strategy can possibly accommodate.

6. Populism Leads to a Breakdown in Discourse and Awful Praxis
Whether you’re a conservative, libertarian, or liberal, if you are existing in a democracy the main thing you should strive for is to be understood by others. In fact, the alleged raison être for democracy–though famously fails at in its present institutional form–is aiming at better forms of government through arriving at some sort of consensus through open and honest public discourse. In order to have any sort of functional democracy in this sense–which, again, we are already woefully lacking in existing democracies–fulfill the primary function of speech, which is understanding. In order to do this, a necessary norm for discourse to function is the assumption of the good will of all participants in discourse.

The first assumption of populism, much like most crude forms of Marxism, is a violation of what is necessary for such discourse. It assumes, after all, that “the elites” are just an out-of-touch, greedy, mean group of people that “the masses” must depose and everything they’ve done is wrong and must be replaced with the vox populi. Anyone, then, who disagrees–even those within populist movements–is liable of being charged with being “one of the elites” (not unlike accusations of being “bourgeoisie” and “counter-revolutionary” after Lenin’s Vanguard Party took control), and ignored, leading to a communicative breakdown. Discussion is shut off, possible perspectives and principles that could improve the state of affairs are ignored if they bear any even superficial affinity to “the elites,” and one of the few sets of norms–those of communicative action taken from the lifeworld–that make existing democracy at least quasi-functional is replaced with simple partisan hackery. Try talking to your standard dogmatic Trump, Bernie, or even Ron Paul supporter (or really any overly partisan hack, including dogmatic Clinton supporters), and you’ll see exactly what I mean.

7. Populism is Inherently Illiberal and Opposed to Liberty

Populism tells us the problem is that “the elites are in power” and demands that the elites be deposed and replaced with “the masses.” But libertarians say the problem isn’t the fact that the wrong people are in power, the problem is that anyone is in power in the first place. As a consequence, classical liberals have always with good reason been very skeptical of the wisdom of the masses, and have had an ambivalent relationship towards any form of democracy. The radically Jacksonian democratic demeanor of populism, which asserts the masses are equipped to use coercive political institutions, is fundamentally at odds with classical liberalism’s value placed on individual liberty–which asserts that nobody is equipped to use coercive institutions. That’s a fine distinction populist rhetoric necessarily blurs, and you can’t expect “the masses” to understand.

Even if you say you’re just using populist rhetoric to depose those in power, the populist faction of our movement (once “the elites” are out of power) are going to ask, “What’s next?” and are liable to be upset when you say “nothing.” As Hayek tells us, one of the main reasons people get so heavily involved in the political process is that they want to be in charge, that’s true of “the masses” as it is “the elites.”

8. Populist Alliances Often lead to the Destruction of Libertarian Values
Alex mentions the rise of the religious right and other right-wing populist movements as possible fruitful avenues for libertarians to ally with and pursue. However, I’m of the opinion that any sort of fusionism is probably a really bad idea. Not just because many on the religious right want to be unfathomably cruel to me because I’m gay, but because libertarians have philosophical, fundamental disagreements with the people in those movements that cannot be bridged. It is simply not true that the religious right and nationalists are “anti-statist in their nature,” the fact that he cites “forced integration” from immigration supported by nationalists (derived from an infamously bad argument by Hoppe) as common ground is telling. Indeed, if you press most “fusionist” “conservatarians” (including paleos) or “liberaltarians” very far, you’ll find that outside of a few superficial single issues on which they agree with some libertarians, they do not even remotely understand or apply the principles very widely at all. If your movement is composed of walking Dunning-Krugers who do not really understand the extent to which coercive is possible and are not able to engage in constructive dialogue and you’re relying on rhetoric of “take power from the elites” to motivate them, you’re probably not going to have a very libertarian movement.

To illustrate, there’s no reason why “populism” needs to take on a right-wing flair for libertarians at all. In Rothbard’s young years, for example, he attempted to ally with left-wing populist progressives from the anti-war movement. Today, I could say, libertarians should ally with left-wing Sanders supporters. They, after all, share a skepticism towards foreign policy intervention, attacks on social freedom for religious freedom, and corporatist crony capitalism. In fact, there’s a case to be made that Sanders’ supporters are more libertarian than Trump’s, though I don’t necessarily agree with it. Regardless, it is worth noting libertarians have philosophically more in common with those on ‘the left’ in general, but that’s, again, an antecedent point.

Alex would probably reply “But Sanders supporters are socialists, and are fundamentally opposed to libertarians.”  Ignoring the fact that neither Sanders nor most of his supporters are really socialists, he’d mostly be right that they are fundamentally opposed libertarianism. Regardless, Trump supporters are nationalist–which Hayek famously called “the twin brother of socialism”–and are fundamentally opposed to libertarians. Alex might reply, correctly, that some right-wingers can become libertarians by engaging with the populist movement, but so can Sanders supporters. All that point establishes is libertarians should communicate with non-libertarians, and work with non-libertarians on single-issues with which we agree, that need not take on a populist flavor.

The Alternative
If we’re going to forego a focus on electoral politics, and not to populism, what should we replace it with? Alex mentions two possible alternatives:

Hayekian educationism, named after Friedrich Hayek’s theory of social change expounded in his essay “The Intellectuals and Socialism,” relies first on persuading a core group of intellectuals to adopt libertarian ideas. Then, according to Hayek’s model, those intellectuals persuade a growing number of what Hayek calls “second-hand dealers in ideas” like journalists, teachers, and politicians to propagate their ideas among the general populace.

Fabian incrementalism, named after the Fabian socialists of late 19th century Britain, relies on a similar group of individuals – intellectuals, journalists, and policy wonks – to persuade government bureaucrats and politicians to adopt gradual changes in policy. This, performed consistently over a long period of time will, theoretically, lead to the adoption of long-term social changes that the reformers set out to achieve.

First of all, Alex misunderstands Hayek’s theory of social change. The claim is n’t that you “persuade a core group of intellectuals to adopt libertarian ideas,” and completely ignore political actors and everyday people, the idea is that ideas coming from intellectuals filter down into the extended order of society and eventually become actualized. It’s not as if you just convince a bunch of professors and philosopher kings that you’re right and they’ll create a libertarian utopia, it’s that you put the ideas out there and they eventually filter down, a messy process which takes an extremely long time (possibly centuries), and one which libertarians have really only barely started.

A necessary thing that must occur before they actually become actualized is that the general population is at least subsidiarily aware of the ideas, which requires communicating with the general population in some form (which can and should include what Alex calls “grassroots organizing,” like engaging with them through the electronic forms and the alt-media). But that communication cannot take on the populist message for reasons given, it requires education and dialogue, it requires populizers–which can include educators, journalists, communicators, activists, and even to some extent politicians (though they are not acting qua politicians in the ideal typical capacity used in the model when doing this) to communicate with the masses. Contra Rothbard, it’s not about convincing the “ruling class,” it’s about overcoming them.

Regardless, I will agree that the method some beltway libertarians, unfortunately, take from Hayek’s theory of just writing academic journals and white papers is incomplete. You do need to communicate with the masses, but  I am heavily skeptical that this communication needs to be political in nature. Alex’s narrow focus on elections leads him to neglect other, possibly more fruitful, methods of social change. You can engage in direct action, agorism, or entrepreneurial action (eg., what Zak Slayback, et. al. talk about in “Freedom Without Permission“). In these forms, it requires actively defending the masses (in direct action), spreading ideas by improving the lives of real people by providing alternatives (agorism and entrepreneurial action), and making the effects of state intervention felt on people (eg., when entrepreneurial innovations, like Uber and Lyft, are taken away, the hypocrisy of regulation is made clear). They all accomplish the goal of making the ideas known, even if tacitly, among the masses, while adding bonuses of actually doing things that improve their lives without the riskiness inherent in using coercive institutions like elections to do so.

Though those aren’t necessarily at odds with populism (or Hayekian educationalism for that matter; in fact, I think it’s an inherent part of Hayek’s theory of social change), I put far more faith in these than in elections in which irrational, ignorant people only legitimize the state. Socio-political change happens at the micro-level, through everyday social interactions, through lived real-world experiences, through you reading this article, through good discourse and conversation. If you want to change, you need to alter the lifeworld in which individuals live, just focusing on getting “the masses” to turn out the polls is insufficient. Political activism can only get you so far.

A non-argument against immigration

Vincent Geloso Culture, Current Events , , , , ,

I often encounter the argument that immigrants, especially Muslims, are so different from the populations of their host countries that they threaten the institutional foundations of these societies. As a result, the logic goes, we must restrict immigration.

I do not accept that argument as valid nor do I accept it as sufficient (in the case I am wrong) to make the case in favor of further restrictions on immigration.

First of all, the “social distance” between immigrants and the hosts society is very subjective. The caricature below offers a glimpse into how “unsuited” were Catholic immigrants to the US in the eyes of 19th century American natives. Back then, Catholics were the papist hordes invading America and threatening the very foundations of US civilization. Somehow, that threat did not materialize (if it ever existed).  This means that many misconceptions will tend to circulate which are very far from the truth. One good example of these misconceptions is illustrated by William Easterly and Sanford Ikeda on the odds of a terrorist being a muslim and the odds of a muslim being a terrorist. Similar tales (especially given the propensity of Italian immigrants to be radical anarchists) were told about Catholics back then. So let’s just minimize the value of this argument regarding going to hell in a hand basket.

nast1

But let us ignore the point made above – just for the sake of argument. Is this a sufficient argument against more immigration? Not really. If the claim is that they hinder “our” institutions, then let them come but don’t let them participate in our institutions. For example, the right to vote could be restricted to individuals who are born in the host country or who have been in the country for more than X-number of years. In fact, restrictions on citizenship are frequent. In Switzerland, there are such restrictions related to “blood” or “length of stay”. I am not a fan of this compromise measure (elsewhere I have advocated the Gary Becker self-selection mechanism through pricing immigration as a compromise position).*

The point is that if you make the argument that immigrants are different than their host societies, you have not made the case against immigration, you have made the case for restrictions against civic participation.

* Another “solution” on this front is to impose user fees on the use of public services. For example, in my native country of Canada, provincial governments could modify the public healthcare insurance card to indicate that the person is an immigrant and must pay a X $ user fee for visiting the hospital. Same thing would apply for vehicle licencing or other policies. Now, I am not a fan of such measures as I believe that restrictions on citizenship (but offering legal status as residents) and curtailements of the welfare state are sufficient to deal with 99% of the “problem”. 

On Gentrification, Inequality and Zoning

Vincent Geloso Current Events, Economics, Law , , , , ,

On the CityLab blog, Richard Florida posted a piece pointing out that gentrification has virtually no effects on homeowners. I can buy that result, especially since I wrote a policy piece for a think tank back in the summer of 2016 on the issue. The important point that Florida underlines (by citing a paper by Martin and Beck in Urban Affairs Review) is that homeowners are not being displaced, but renters are more likely to be. This will probably fuel some people who are concerned about inequality. I disagree.

I want to point out that my interest in the issue is entirely related to the issue of inequality which some individuals have tried to tie to gentrification (sometimes without understanding that causality can run both ways). If you want to tie the two issues together, then you must realize that there are four “types” of gentrification. First of all, gentrification always appear in an area that is poor and it is always a result of a shift in demand for land in that area. However, that area can be largely unoccupied or heavily inhabited. It can also be in a district where zoning is lax or burdensome. In each of these situations, you will different effects with different interpretations for inequality.

  • Scenario 1 (largely vacant, lax zoning laws): in this situation, demand shifts right but there is slack in the local housing market and in any case, supply can adjust easily. In that case, the effects on rents will be minimal and will probably be smaller than the economic gains in terms of local economic activity. In this situation, there is little displacement and there is in fact a reduction in inequality.
  • Scenario 2 (largely vacant, heavy zoning laws): same happens, except that the restrictions on construction and building conversions put a ceiling on the capacity of a local area to adapt. The effect on rents is ambiguous and depends largely on the relative quantity changes (how many people relative to empty units). There are probably small to moderate gains in the area. There are ambiguous effects on inequality.
  • Scenario 3 (heavily occupied, lax zoning laws): in this situation, the influx of individuals creates a temporary surge in rents. This is because, in the short-term, housing supply is inelastic. In the long-run, the supply is more elastic and new units can be added to counterbalance the price effects. So, there is a long-term benefit that comes after a small bump. More individuals will be displaced than in scenario 1. Overall, a reduction in inequality might occur.
  • Scenario 4 (heavily occupied, heavy zoning laws): in this situation, the influx happens in a market where the supply is highly inelastic (short and long-run). In that case, the shift in demand creates a substantial increase in rents. This is where gentrification can hurt and be tied to inequality.

These four scenarios are important because they show something important that some people have to understand. Gentrification can increase inequality. However, that depends on the context and the institutions (zoning) surrounding the area in which it happens. In all cases, gentrification is a normal process that can’t really be stopped but turns sour because of zoning laws. Thus, if you really want to tie gentrification to inequality, it should twice removed since the first parents are zoning laws and construction limits.

Trump Is Right!

Edwin van de Haar Current Events, Politics , , , ,

It is easy to emphasize all that is bad about the new American President. For sure, I think he is a clown who will do a few bad things to the US and the world at large. His protectionist agenda is of course a libertarian nightmare, which will also make the people who elected him worse off. Still, the US President is not a dictator, so some trust in the institutions and the actors that fill them still seems appropriate.

Trump is also plainly right on a number of issues. Foremost, his plea (also in yesterday’s inaugural address) for the partners of the USA, especially in NATO, to contribute in equal measure. This is not new, all recent American Presidents have pointed this out to their European allies. It is simply outrageous to let Mrs Jones from North Dakota pay for the defense of other rich countries, such as my home country of The Netherlands. The Europeans got away with major free riding. Only recently did they start to get their act a little bit together, as the Russian threat is looming again. The defense budgets in almost all European NATO members have decreased drastically since the early nineties, which is plainly immoral if you are in the world’s most important security organization together. So hopefully Trump will pressure them to the max.

He is also right in pointing out that many US foreign interventions have been a disaster. And it is good that he wants some closer scrutiny from now onwards. I am not a great fan of military intervention, although I also do not want to rule them out them perennially (as opposed to many others in the liberal tradition). Many of the interventions over the past few decades have lead to nothing though, and created their own follow-up problems. So it’s pretty good if that same Mrs Jones is not likely to lose her son or daughter at the battlefield in some faraway country.

And of course Trump is right in asserting that the government is not ruling the citizens, but is just a service provider on behalf of the people, and fully accountable to them. Sure this is bit more complicated in practise, but it is the only proper principle.

So in these three respects: hail to the new chief! Hopefully he sticks to them and does not screw up too dramatically at all other policy fields.

Is Trump So Old? Its all relative really!

Vincent Geloso Current Events, History, Politics , , , ,

Today is inauguration day. Donald Trump will officially be the 45th President of the United States of America. Many have pointed out that Trump is the oldest president (slightly above 70 years of age). I disagree.

Old is not a “purely” absolute concept. Advances in living standards mean advances in our ability to live longer lives. Not only do we live longer lives than in the past, but at any point in our life, our health is better. Someone who reached 65 years of age in 1900 probably did not have the same health prospects as someone who reaches that age today. Basically, the “quality” of old age has increased over time (see this great book on the economic history of aging). So, when people say “old”, I ask “old as compared to what”.

To meet that test, I took the CDC data on life expectancy as well as soon historical database  from 1900 to today. I combined it with David Hacker’s work on life tables in the US from 1790 to 1900 which can be found in this article of Historical Methods.  Hacker’s data concerns only the white population. I took only the age expectancy at birth of males. Then, I plotted the age of the president at the time of inauguration as a share of the life expectancy at birth (E0). This is the result:

inauguration

As one can see, the age of presidents as a share of life expectancy is falling steadily since the early 1900s. In this light, Donald Trump is not the oldest president. In fact, the oldest president is …. drumroll…James Buchanan (1.85 times the life expectancy of white males at birth). Moreover, in this light, the youngest president at inauguration is not Teddy Roosevelt (Kennedy was the youngest elected). Rather, the youngest is Barack Obama followed very closely by Bill Clinton and John F. Kennedy.

I find this post to be interesting as it shows something more important in my eyes: how the poorest in society have done. Presidents have generally stemmed from the top of the income distribution. Over time, the ages of presidents at inauguration (in absolute terms) has not followed any clear trend. The drop seen in the graph above is entirely driven by increases in the life expectancy of the “average” American. In a certain way, it shows that the distance between that “Joe the Plumber” and the “Greatest Man in America” (huh…Lord Acton anyone?) seems to be diminishing over time.

The Asian Age

Edwin van de Haar Books, Current Events, Economics, Liberty , , , , , ,

I love Asia. Ever since my student days I have had a keen interest in South East Asia and China, with my course on the Politics of the Asia Pacific at the London School of Economics in the run up to the handover of Hong Kong as a high point. This was followed almost a decade later with four years of living in Manila, with time spend as a freelance journalist covering Philippine politics and society, as well as teaching for three years at the European Studies Program at the elitist Ateneo de Manila University. I also had the opportunity to travel to almost all countries in the region (with the notable exceptions of Laos, Taiwan and the Koreas, but one should keep something to be desired). I admire the resilience of the Asians, their humour, great work ethics, the beauty of their countries, and of course their sumptuous food.

As a classical liberal I always have a keen interest in the economic developments of the region, which to me serve as the prime evidence for the great and positive impacts freeing up economies have. The rise of Asia in essence is the empirical proof that classical liberal ideas work, that capitalism has the capacity to improve the life of millions of people, in a very short term. This despite the imperfect implementation of capitalism throughout the region, so there is much room for further improvement. In this light it is also interesting to see how long economic freedom and political lack of freedom can co-exist. Classical liberal ideas predict, most clearly expressed by Milton Friedman in Capitalism and Freedom, that one follows the other. Economic and political freedom cannot be separated forever (nor forever suppressed together, as the experiences in the former Soviet bloc continue to make clear, even despite Putin’s increasing autocratic rule).

For an international relations observer from Europe, the developments in the Asia Pacific are of particular interest, because the rise of Asia seems to go together with the fall of Europe as a geopolitical player. Or more precisely: the fall of the middle rank European powers, as the European Union itself is a significant player in trade politics only, the only field where it represents all member states and policy is determined at the European level, with a leading role for the European Commission.

The recent book Easternisation: War and Peace in the Asian Century, by Financial Times journalist Gideon Rachman, deals precisely with this issue.

blog-easternisation

It is a great book, bringing together Rachman’s extensive experience in the US, Asia, and Brussels. Often, books written by journalists lack sound analysis for the mid to long term, and historical perspective. While Easternisation is not an academic tome either, it does provide sufficient deep analysis, especially by tackling developments in all important countries which play a role in the process. It is not just another volume of simply USA or EU bashing, as we have seen before with the huge literature on the alleged Japanese take-over of the US economy.

Rachman’s main argument is that the influence of the West, Europe in particular, has crumbled. This may lead to a major conflict in the Asia Pacific, most notably between China and the US, which also endangers the global economic order. Yet many other conflicts are also building up, in a region which heavily invests in armaments. In short, in the 21st century, ‘rivalries between the nations in the Asia Pacific will shape global politics, just as the struggles between European nations shaped world affairs for over 500 years from 1500 onwards’. I think this is an important message, which should be taken seriously by everybody. Certainly by the Europeans, who are in danger of just inhabiting the world’s largest open air museum within a few decades.  One thing is certain: the Asians will not wait for them to come to terms with the current shift of power.

Summing up: the year of irrationality

Rick Weber Current Events, Economics, Liberty, Politics , , , , , ,

Brandon says I’ve got one last chance to write his favorite post of the year. But it’s the end of a long semester and I’m brain dead, so I’m just going to free ride on his idea: a year end review. If I were to sum up the theme of this year in a word, that word would be irrational.

After 21 months of god awful presidential campaigning, we were finally left with a classic Kodos vs Kang election. The Democrats were certain that they could put forward any turd sandwich and beat Trump, but they ultimately lost out to populist outrage. Similar themes played out with Brexit, but I don’t know enough to comment.

Irrationality explains the Democrats, the Republicans, and the country as a whole. The world is complex, but big decisions have been made by simple people.

We aren’t equipped to manage the world’s complexity.

We aren’t made to have direct access to The Truth; we’re built to survive, so we get a filtered version of the truth that has tended to keep our ancestors out of trouble long enough to get laid. In other words, what seems sensible to each of us, may or may not be the truth. What we see with our own eyes may not be worth believing. We need more than simple observation to actually ferret out The Truth.

Our imperfect perceptions build on imperfect reasoning faculties to make imperfect folk economics. But what sounds sensible often overlooks important moving parts.

For every complex problem there is an answer that is clear, simple, and wrong.

Only a small minority of the population will ever have a strong grasp on any particularly complex thing. As surely as my mechanic will never become an expert in economics, I will never be able to do any real work on my car. The trouble arises when we expect me or my mechanic to try to run the country. The same logic applies to politicians, whose job (contrary to what your civics teacher thinks) is to get re-elected, not to be a master applied social scientist. (And as awful as democracy is, the alternative is just some other form of political competition… there is no philosopher king.)

But, of course, our imperfect perception and reasoning have gotten us this far. They’ve pulled us out of caves and onto the 100th floor of a skyscraper*. Because in many cases we get good enough feedback to learn a lot about how to accomplish things in our mysterious universe.

We’re limited in what we can do, but sometimes it’s worth trying something. The trouble is, I can do things that benefit me at your expense. And this is especially true in politics (also pollution–what they have in common is hot air!). But it’s not just the politicians who create externalities, it’s the electorate. The costs of my voting to outlaw gravity (the simplest way for me to lose a few pounds) are nil. But when too many of us share the same hare-brained idea, we can do some real harm. And many people share bad ideas that have real consequences.

Voting isn’t the only way to be politically engaged, and we face a similar problem in political discourse in general. A lot of Democrats are being sore losers about this election rather than learning and adapting. Trump promised he would have done the same had he lost. We’re basically doomed to have low-quality political discourse. It’s easy and feels (relatively) good to bemoan that the whole world is going to hell.

We’re facing rational irrationality. Everyone is simply counting on someone else to get their shit together, because each of us individually is more comfortable with our heads firmly up our asses.

It’s a classic tragedy of the commons and it should prompt us to find some way to minimize the harm of our lousy politics. We’ve been getting better at this over the centuries. Democracy means the levers of power can change hands peacefully. Liberalization has entailed extending civil and economic rights to a wider range of people. We need to continue in this vein. More freedom has allowed more peace and prosperity.

 

So what do we do? I’d argue that we should focus on general rules rather than trying to have flawed voters pick flawed politicians and hope for the best. I don’t mean “make all X following specifications a, b, and c.” I mean, if you’re mad, try and sue someone. We don’t need dense and exploitable regulations. We don’t need new commissions. We just need a way for people to deal with problems as they arise. Mind you, our court system (like the rest of our government) isn’t quite ready for a more sensible world. But we can’t be afraid to be a little Utopian when we’re planning for the long run. But let’s get back to my main point…

We live in an irrational world. And it makes sense that it’s that way; rationality is hard. We can see irrationality all around us, but we see it most where it’s cheapest: politics and Facebook. The trouble is, sometimes little harmless irrational acts add up to cause real harm. Let’s admit we’ve got a problem with irrationality in politics so we can get better.

*Although that’s only literally true in 17 cases.

SteemFest interview

Chhay Lin Lim Current Events , , , , , , , , ,

The first ever international Steemit conference was held on November 11, 12 and 13. I loved the positive vibe that radiated from the community and I enjoyed meeting people I have had known only from the Steemit online platform.

Steemit is a social network that looks quite similar to Reddit and that rewards people with the cryptocurrency Steem for blogging and curating content. SteemFest, consisting of 206 attendees, had a remarkable mix of people from different nationalities. They joined the event from 32 different countries including Russia, China, India, Japan, Panama, Lithuania, Cambodia, Mexico, and the US. There were also many female attendees, something that you don’t see often in other cryptocommunities. 35% were female and 25% were developers. The event attracted famous writers like for example Neil Strauss, bitcoin artists like Tatiana Moroz, and Ned Scott who is the co-founder of Steemit. I loved listening to people’s stories and how they got involved with Steemit. I met someone who lived together with Vitalik Buterin (founder of Ethereum) in Barcelona, a homeless person who tries to get by by living on the cryptocurrency Steem, and so many other interesting people.

I was one of the 35 speakers at the event, and was also interviewed on some of my libertarian philosophical views. You can see the interview above.

If you’d like to know more about Steemit, then visit Steemit.com to see what it’s all about.

2016: Year in Review

Brandon Christensen Current Events, Liberty , , ,

I hope you have all been enjoying the run-up to your holiday season. Happy Holidays, Merry Christmas, Happy Kwanzaa, Happy Hanukkah, etc. to the whole world, from me.

NOL had another great year, and it wouldn’t have been so great without you. Some of the older Notewriters have parted ways or disappeared from the blogosphere, and some newer blood has stepped up to fill in the gaps, including Nick Cowen, Lode Cossaer, Mark Koyama, Vincent Geloso, Zak Woodman, Adrián Lucardi, and William Rein. Keep your eyes peeled to NOL in 2017, baby!

Below are some of the top posts of 2016. (I am only going by the numbers this ’round, but I’ll try to patch together some of my favorites next week.)

These posts summed up the most viewed posts of 2016, but as I mentioned above I am going to highlight my favorites of the year next week.

NOL has been around since 2012 and I’m starting to see a number of posts attain “classic” status, which simply means that they are popular year after year and thus have a bit of staying power. Barry’s post on Foucault’s political thought always brings in a bunch of traffic, as does my post on libertarian intelligence. Amit’s post about migration from Bangladesh has become a classic since only last year, as has Rick’s “Gun control: Centralized vs Dispersed.”

Thanks for another great year, dear readers, this place wouldn’t be around without you. So keep stopping by, keep those comments coming, keep arguing with us (and each other), and I hope you’ll stick around for another year in 2017.

Next week: My favorite posts at NOL for 2016!

Minimum wage, measurements and incarceration rates

Vincent Geloso Current Events, Economics , , , , , , , ,

A few weeks ago, I published a blog post about how incarceration rates affect our measurement of the relative economic conditions of Blacks in America. My claim was that the statistics are hiding a reversal of the painfully achieved advances secured between 1870 and 1960. Basically, my claim was that those who (in greater numbers) found their ways to a prison cell tended to be at the bottom of the income distribution, were more susceptible to be unemployed and had lower wages. This creates a composition effect whereby the official surveys cream-skim the top of black wage, income and employment distributions.

But, could this problem also affect our measurement of the effects of minimum wage? Let me be clear before you continue ahead, I am just asking this question because I could find no satisfactory answer to (or even mention of) this issue.

In recent times, minimum wage surveys have tended to find some gains in earnings for some workers following increases in minimum wage rates. Regardless of how you look at the prison population, it increases  – albeit at a decelerating rate since the early 2000s – since the 1980s. Coincidentally, that starting point is also the point at which the famous Minimum Wage Study Commission was published (1981). That report basically cemented the point made by George Stigler (i.e. minimum wages are not desirable). That report surveyed the entire literature to summarize the amplitude of the effects. That literature encompassed articles written between the end of the Second World War and … well… 1981. If you look below at the graph, incarceration rates were more or less constant during that regime. Thus, if there were composition effects associated with surveys of wages, incomes and employment, they were more moderate than after 1981 when incarceration rates surged.

minwage

But, its also after 1981 that some papers began to find some positive effects of minimum wage increases. These studies took place under a growing composition problem in surveys of wages, incomes and employment. Take the famous Dube, Lester and Reich paper in the Review of Economics and Statistics  who used data from 1990 to 2006. During that period, the male incarceration rate surged from 297 per 100,000 to 501 per 100,000. I understand that DLR used a time fixed effect method, but would that be sufficient to at least deal with the issue of shifting labour supplied (it won’t for the data bias issues described notably by Bruce Western)

If we assume that those who are plausibly affected by minimum wages (i.e. lower income individuals) are also those more likely to end up in jail in the United States, then there is clearly a bias. As they are dropped from the labor market (or as they join the prison population), they leave only the workers least affected by the minimum wage inside the samples. That is one possibility.

The other possibility – which is that surveys do not suffer from a large composition, but which is not mutually exclusive to that composition problem – is that the growing prison population represents a year-over-year reduction in the labor supply which offsets the effects of hikes in the minimum wage (or maybe even eliminates them entirely if the shift is big enough).

minwage2

I have tried many variations of this google scholar research and went back to my copy of the Handbook of Labor Economics and my Economics of Inequality, Poverty and Discrimination  (a book worth reading by the way) and I found very little on this point. Very few scholars have considered the possibility of this problem (which implies a shift of the labor supply curve concurrent with minimum wage hikes and a composition problem where those affected are simply not measured anymore). Yet, I feel like this is a defensible claim. In England, where some studies also show minimal effects or positive effects of the minimum wage, there has also been an increase in the prison population. In contrast, Canada – whose prison population is declining moderately (meaning that the labor supply is increasing as the minimum wage is being increased – the studies do tend to find the “conventional” result.

Am I crazy or is this a case of poor measurement? Personally, I feel that there must an answer, but please tell me I did not just stumble on this!

Trump and Tillerson Could Save Our Bacon

Warren Gibson Current Events, Liberty, Politics , , , ,

If Trump is anything like the deal-maker he claims to be, and if Tillerson can translate the expertise and connections he gained as CEO of a gigantic international corporation into diplomatic skills, we could be spared from a nasty confrontation with a nuclear-armed Russia.

Putin is not a nice man. His incursions into Crimea and Ukraine are inexcusable. But he does have a rationale for his claim of aggressive threats from NATO, and this has served hun well in diverting attention away from the drastic declines in liberty and prosperity in Russia. As this article indicates, the West promised not to expand NATO into Eastern Europe but did so anyway, even threatening to include Ukraine and Georgia, which are geographically Russia’s underbelly. How would we like it if the Soviet Union had proposed including Cuba in the Warsaw Pact?

Trump and Tillerson should make a deal with Putin. It must give Putin incentives to pull out of Ukraine and perhaps Crimea, although the latter was historically Russian and Tatar. It must give him something to brag about to his people.  This in contrast to Obama, who declared Russia to be merely a regional player.  Who could blame all Russians for taking this as an insult? He should have praised Russia as a major international player, capable of great contributions to world peace, while taking quiet steps to keep them from making trouble.

The Baltic states are indefensible. Neutralization has worked well for Finland and it ought to work well for the Baltics and Ukraine. Putin could be given a green light to take over Belarus, a socialist basket case that is ethnically very similar to Russia. He could even be invited to join NATO.  This may not be so crazy given that Russia and the West share Christian roots and a common threat from Islamo-fascists.

Some would bring up Chamberlain’s capitulation to Hitler. Skillful negotiations should be able to avoid that trap. The stakes are high, and right now Trump and Tillerson are our best hope of avoiding a possible catastrophe.

On Capitalism and Slavery : Pêle-Mêle Comments

Vincent Geloso Current Events, Economics, History , , , , , , , , ,

Last week, a debate was initiated via an article in the Chronicle of Higher Education that relates to the clash between historians and economists over the topic of slavery. The debate seems acrimonious given the article and at the reading of a special issue of the Journal of Economic History regarding the Half has never been told by Edward Baptist, its hard to conclude otherwise. Pseudoerasmus published comments on the issue in a series of posts and a Trumpian twitterstorm (although the quality is far from being Trumpian). I find myself largely in agreement with him in response to the historians, but there are some pêle-mêle points that I felt I needed to add.

On Historians Versus Economists

To be honest, when I took my first classes in economic history, it seemed clear that there were important points that were agreed upon in the literature on slavery. The first was that the accounting profitability of slavery was not the same as the economic profitability (think opportunity cost here) of slavery. Thus, it was possible that (concentrating on the US here) the peculiar institution could more or less thrive regardless of the social costs it imposed (i.e. slavery is a tax on leisure which also increases the expropriation rate from slaves, and non-slaveowners often had to shoulder the cost of enforcing the institution). This argument is not at all new; in fact it is basically a public choice argument that Gordon Tullock and Anne Krueger could have signed on to without skipping a heartbeat (see Sheilagh Ogilvie – one of my favorite economist who does history in equality with Jane Humphries). The second point of agreement is that no one agreed on how to measure the productivity of slavery in the United States and the distribution of its costs and gains. The second point has been a very deep methodological debate which related to the method of measuring productivity (CES vs Translog TFP – stuff that would make your head blow and which also lead to the self-invitation of the Cambridge Capital Controversy to the debate). The quality of the data has been at the centre-stage as well, and datasets on slave prices, attributes, tasks and many other variables are still being collected (see notably the breathtaking work of Rhode and Olmsted here and here).

Thus, I will admit to being unimpressed by the use of oral histories to contest that literature. In addition, the absence of theory in Baptist’s work yields an underwhelming argument. Oral histories are super-duper important. The work of Jane Humphries on child labor is a case in point of the need to use oral histories. She very carefully used the tales told by children who worked during the industrial revolution to document how labor markets for children worked. The story she told was nuanced, carefully argued and supported by other primary evidence. This is economic history at its best – a merger of cliometrician and historian. In fact, while this is an evaluation that is subjective, the best economists are also historians and vice-versa. The reason for that is the mix of theory with multiple forms of evidence. But they key is to have a theory to guide the analysis.

Unexpectedly for some, the best exposition of this argument comes from Ludwig von Mises in his unknown book Theory and History. I was made aware of that book in a discussion with Chris Coyne of George Mason University and I proceeded to reading it. I was surprised how many similarities there were between the Mises who wrote that book and the Douglass Norths and the Robert Fogels of this world. The core argument of Theory and History is that axiomatic statements can be applied to historical events. The goal of historians and economic historians is to sort which theory applies. For example, the theory of signaling and the theory of asymmetric information are both axiomatically true. Without the need for evidence, we know that they must exist. The question of an economic historian becomes to ask “did it matter”? Both theories can compete to offset each other: if signaling is cheap, then asymmetric information can be solved; if it is not, asymmetric information is a problem. Or both may be irrelevant to a given historical development. To explain which two axiomatic statements apply to the event (and in what dosage), you need data (quantitative and qualitative). Thus, Theory and History actually proposes the use of econometrics and statistical methods because it does not try to predict as much as it tries to a) sort which axiomatic statements applied; b) the relative strengths of competing forces; c) the counterfactual scenario.

Without theory, all you have is Baptist’s descriptions which tell us very little and can, incidentally, be distorted by he who recounts the tales he read.

On the Culture of Peasants/Slaves/Slaveowners

When I started my PhD dissertation Canadian economic history, the most annoying thing I saw was the claim that the French-Canadians had “different mentalities” or “more conservative outlooks”. This was basically the way of calling them stupid. This has recently evolved to say that they “maximized goals other than wealth”. Regardless, this was basically: the French-Canadian was not culturally suited for economic development.

But culture is not a fixed variable, it is not an exogenous variable. Culture is basically the coherent framework built by individuals who share certain features to “cut out” the noise. Everyday, we are bombarded with tons of pieces of information and there is no way that the human brain can process them all. Thus, we have a framework – culture (ideology does the same thing) – which tells us what is relevant and what is irrelevant and what interpretation to give to relevant information.

People can cling to old beliefs for a long time, but only if there is no cost to them. I can persist in terrible farming practices if I am not made aware of the proper valuation of the opportunity I am foregoing. For example, British farmers who arrived in Quebec in the 19th century tended to use oxen as they did in England for tilling the soil. They had probably been taught to do that by their parents who learnt it from their grandparents because it was part of the farming culture of England. The behavior was culturally inherited. However, when they saw that the French-Canadians were using horses and that horses – in the Canadian hinterland – got the job done better, they shifted. The culture changed at the sight of how important was the foregone opportunity by continuing to use oxen. Where the British and the French co-existed, both were equally good farmers. Where they could not observe each other, they were all sub-optimal farmers. Seeing the other methods forced changes in culture.

The same applies to slaveowners and slaves! Slaveowners were a more or less tightly knit group that frequented similar circles and were constantly on the lookout to increase productivity. If some master had noticed that he could increase production by whipping more slaves, why would he not adopt this method? Why would he leave 100$ bill on the street? Why did the masters growing cotton in South Carolina not adopt the method of whipping adopted by growers in Louisiana? Without a theory of how culture changes (and what purposes it serves beyond the simplistic Marxist power structure argument), there is no answer to this question. With the work of Rhode and Olmstead, there is an answer: the type of cotton that had higher yields was not suited for growing everywhere! In this case, we are applying my comment from the section above on Historians versus Economists. There are competing theories of explaining increasing output: either some slave masters were unable to observe the other slave masters and adopt the torture methods they had (which would need to be the case for Baptist to be right) or there were biological limitations to growing the better crops in some areas (Rhode and Olmstead).

Two competing theories (they are not mutually exclusive though) that can be tested with data and they set a counterfactual. That is why you need theory to make good history.

One last thing: slave owners were not capitalists

This is probably the most childish thing to come out of works like those of Baptist: to assert that because slaves were capital assets, that the owners were capitalists. That is true if you want to adhere to the inconsistent (and self-contradicting) Marxist approach to capital. In fact, as Phil Magness pointed out to me, slave owners were not free market types. They were very much anti-capitalists. Slavery apologists like Fitzhugh and Carlyle were even more anti-capitalists than that. It’s not because you own capital that you are a capitalist unless you adhere to Marxist theory.

But, capital is just a production input. Its value depends on what it can produce. As Jeffrey Hummel pointed out, there is a deadweight loss from slavery: enforcement costs, the overproduction of cotton because slavery is basically a tax on leisure and the implicit taxation of the output produced by slaves. All three of these factors would have slowed down economic growth in the south. Thus, as capital assets, slaves were relatively inefficient.

Does socialism need to be corrupt?

Bruno Gonçalves Rosi Current Events, Liberty, Politics , , , ,

Brazil is going through a deep crisis right now. It is tempting to say that this is the greatest crisis in the country’s history, but I am quite afraid to make this comment. Unlike England and the United States, which have experienced significant institutional stability in the past 200 or 300 years, Brazil has gone through several political breakdowns in its history, and the current economic crisis is far from the hyperinflation of the 1980s. But there is a characteristic that links the present crisis to the previous ones: the presence of a tendentially authoritarian state.

Although Brazil was governed by an openly socialist party only between 2003 and 2016, this does not mean that socialist characteristics were not present in the country much earlier. One of the central theses of F.A. Hayek in the Road to Serfdom is that the democratic socialist parties of Western Europe (notably the Labor Party in England) had more features in common with the Nazis and fascists than they would have liked to admit. In other words, the differences between left (even a moderate left) and extreme right were illusory: they both had the fundamental characteristic of trying to plan society centrally.

The opposition between spontaneous order and central planning was one of the central theses in Hayek’s career. In Fatal Conceit he develops this theme a lot, showing how the opposition between central planning and lack of planning is a fallacy: society will forcibly be planned. The question is by whom: for a small group of people on behalf of all the others, or for a large group of individuals, each with limited responsibilities? According to Hayek, this distinction between central planning and individual planning is one of the central separations between an authoritarian society (left or right) and a truly free society.

It is difficult to say if the PT (“worker’s party”) government between 2003 and 2016 was the most corrupt in Brazilian history. Homesick people can always claim that corruption was also present in previous governments (it was just not investigated), and possibly they would be right. Before becoming a country ruled by a socialist party, Brazil has always been a patrimonialist country. And this is a fundamental point that adherents of socialism cannot understand: Brazil has never been a capitalist country, at least not in the sense that the liberal tradition employs.

Starting from Hayek, we conclude that central planning is impossible. Planners do not have the information they need to make their plans. As Mises taught, without private property there is no price formation, and without price formation the economic calculation is impossible. This opens space for what Hayek calls a fatal conceit: the assumption that it is possible to run a country from a central body, a presupposition that not only fails to achieve its goals, but also leaves piles of corpses on the way.

The PT government was probably the most corrupt in Brazilian history because it was what most rejected capitalism. The opposite of the free market is the attempt to centrally plan the economy. To centrally plan the economy, an army of administrators is needed. To watch over these administrators, a host of supervisors is needed, and so on. Corruption is inevitable.

Socialist governments are always among the most corrupt, and the reason is simple: the more government, the more corruption. A simpler, more decentralized government is not perfect. But it’s the best we can wish for. It would certainly be a government with less control over money, and thus less likely to steal.

In Cuba, not having a car might save your life

Vincent Geloso Current Events, Economics , , , , ,

My two blog posts on the health statistics of Cuba have convinced me to try to assemble a research article on the topic of assessing health outcomes under Castro’s regime. My first blog post was that there is a trade-off (the core of the article) that Castro decided to make. He would use extreme coercive measures to reduce some forms of mortality in order to shore up support abroad. The cost of such institutions is limited economic growth and increased mortality from other causes (dying from waterborne diseases or poverty diseases rather than dying from measles).

When I thought of that, I was inspired by Werner Troesken’s Pox of Liberty on the American constitution and the disease environment of the country. I was mostly concerned by direct medical interventions. However, the extent of coercive measures used by Castro go well beyond simple medical care (or medical imposition). Price controls, rationing and import restrictions on many goods could also help improve life expectancy. Indeed, rationing salt at 10g (hypothetical number) per person per day is a good way to prevent dietary diseases that emerge as a complication from overconsumption of salt. That will, by definition, raise life expectancy.

And so will bans on importing cars.

There is an extensive literature on the role that car fatalities has on life expectancy. This paper in Demography (one of the top demographic journals) finds that male life expectancy in Brazil is lowered by 0.8 years by traffic deaths. And traffic has very little to do with the quality of health care services. Basically, the more you drive, the more chances you have of dying (duh!). But, people don’t care much because the benefits of driving outweigh the personal risks.

In Cuba, people don’t get to make that choice. As a result, the very few drivers on Cuban roads have few accidents. According to WHO data, the car fatality rate is 8.15 per 100,000. There is also only 55 cars per 1,000 persons in Cuba. The next closest country is Nicaragua at 93 cars per 1,000 and the top country is Uruguay at 584 cars per 1,000. When you compute reported (rather than WHO estimated) car fatalities per 1,000 cars (rather than persons), Cuba becomes the unsafest place to drive in Latin America (1.46 fatalities per 1,000 cars) after El Salvador (2.22 fatalities per 1000 cars but only 129 cars per 1000), Ecuador (1.78 fatalities per 1000 cars but only 109 cars per 1000) and Bolivia (1.53  fatalities per 1000 cars and only 113 cars per 1000).

The graph below shows the relation between car fatalities per 100,000 inhabitants and life expectancy. Cuba is singled out as a black square. Low rate of car fatalities, higher life expectancy. Obviously, this is not a regression and so I am not trying to infer too much. However, it seems fair to say that Cuba’s life expectancy can easily be explained by the fact that Cubans face stiff prohibitions on the ability to drive. Those prohibitions give them a few extra years of life for sure, but would you really call that a ringing endorsement of the health outcomes under Castro’s regime? I don’t…

life-expectancy

Regional jealousies and transboundary rivers in South Asia

Amit Ranjan Current Events, History , , , , , , , ,

In the final reckoning, Pakistan got about 80 per cent of the Indus and India 20 per cent. India has limited rights on the western rivers and cannot undertake projects on those rivers without providing all the details to Pakistan and dealing with Pakistan’s objections. Why did India put itself in that position? The answer is that if Pakistan got the near-exclusive allocation of the three western rivers, India for its part got the eastern rivers. This was important from the point of view of the Indian negotiators because the water needs of Punjab and Rajasthan weighed heavily with them in seeking an adequate allocation of Indus water for India. Yet, Punjab had a serious grievance over the signing of the IWT [Indus Waters Treaty] by the union government. Citing provisions of the IWT which caused transfer of three river waters to Pakistan, Punjab had terminated all its water-sharing agreements with its neighbouring states in 2004.

The demand of Kutch (in Indian Gujarat), which used to fall into a catchment area of River Indus, decades back, was not taken into consideration despite many petitions, arguing about their historical claim on its water, sent by the prominent Kutchi leaders, in 1950s, to India’s Ministry of Irrigation and Power. Also people from the Indian side of Kashmir always show their ire against the IWT. On 3 April 2002, the Jammu & Kashmir Legislative Assembly, cutting across party affiliations, called for a review of the treaty. The state government has been contending that in spite of untapped hydroelectric potential, the state has been suffering from acute power deficiency due to restrictions put on the use of its rivers by the Indus Treaty. They claim that their interests were not taken into consideration and their views were not taken while signing the treaty. (6-7)

This is from my latest paper, “Disputed Waters: India, Pakistan and the Transboundary Rivers,” published by Studies in Indian Politics, and which you can find here.

Here is a map of all the Indian states mentioned in the excerpt above:

blog-india