Saturday, January 6, 2018
This is the last post of this blog. For more than six years, I have posted my comments about economics, politics, about my work as an academic and some of my readings. I feel it is time for a change. To introduce new things, the old ones have to end, even if the new ones are not born yet. The blog format makes possible communication, diffusion and also the self-organization of ideas in experimental form. It has been great fun, and I do not exclude at all to repeat the experience, perhaps under another title. I will miss it, and as a substitute perhaps I will start writing some private notes to keep my disorganized ideas somewhere. During the life of the blog, I have commented about the global financial crisis and the eruption of national populism. When I started, I would not have believed that the Brits would vote to leave the EU, that a dangerous clown would preside the USA and that Catalonia would be divided by a national-populist revolt. I have written about political economy, behavioral economics, public economics, sports economics or simply sports. The blog has witnessed terrorist attacks, but also signs of hope in the decline of violence, the organization of movements for redistribution and civil rights, and the rise of pro-European candidates to fight the extreme euro-phobic right. As the world changes, one modestly tries to understand it and to think about ways to (with others) make a difference and promote forms of collective action based on sound ideas. We should all try to contribute, even in the middle of difficulties, to give credible and sustainable hope to those that have fear or are vulnerable to it. That means fighting populism, corruption and inequality at the same time. Thanks for reading me.
Wednesday, December 27, 2017
The book written by Federico Finchelstein, "From Fascism to Populism in History," is an excellent account of the movements that have challenged democracy as a result of the successive socio-economic and institutional crises of the last 150 years. It challenges simplistic definitions of populism based on contemporary examples, to give a broader perspective that includes present and past movements not only from Europe and North America, but also from South America (most notably, Argentinian Peronism), Asia and Africa. These broader perspective manages to find elements in common of movements as diverse as the American populists of the XIXth century, the Latin American populisms and the current conservative national-populism of Trump, Le Pen, Putin, Orban, Erdogan and others. These elements are placed in historical context and include the well-known emphasis on the people as opposed to the elites, but also the almost religious role of the leader, the scapegoating of internal and external enemies, and how these features have interacted with different communication technologies such as mass television and Internet-based social networks. A key and illuminating aspect of the book is how it addresses the relationship between fascism and populism. Although one lesson of the book is that one should try to avoid simplistic lessons, perhaps one way to summarize this relationship is that populism is not pre-fascism, as it is sometimes claimed today by critics of Trump, Farage and similar leaders, but it is post-fascism, in the sense that in an evolutionary sense it has learned from the experience of fascism. The movements led by Mussolini, Hitler and Franco were successful attempts to destroy democracy (from within or from without) in which violence and the cult of violence were crucial features. Instead, populism does not attempt to destroy democracy, but to use it, to manipulate it, to erode those democratic institutions that constrain the destabilizing strategies of populist leaders. Finchelstein also argues that traditional political ideologies are secondary in analyzing populism, which is especially clear in the case of Peronism, where the relevant leaders have defended ideologies that go from almost fascism, to neo-liberalism to socialism. Admitting that I am biased, something I missed in the book, which pretends to be a global perspective on populism, is a chapter or a section on the secessionist populisms of Europe and other places. As in other studies of populism, only the Italian Northern League is mentioned among these separatists movements, but Catalan, Scottish, Quebecquoise or Corsican nationalists also share many of the characteristics of the other populist movements described in the book. Some of these movements started as national-populist attempts to manipulate democracies in their starting periods, but ended up in dramatic wars, as was the case in Yugoslavia. But then this would perhaps break the clean distinction between violent fascism and peaceful populism.
Friday, December 22, 2017
Tuesday, December 19, 2017
The dramatic choice in the South African ANC (the party of Mandela) between a politician that was previously married to president Zuma and the key node in the network of political connections of private sector firms, illustrates two of the greatest challenges of democracy today: populism and corruption. Of course, I apologize for addressing a topic about which I have very little expertise. But what reaches this corner of the world is the legacy of one of the best political movements in history being ruined by two of the contemporary viruses in politics. The British magazine The Economist argues that Cyril Ramaphosa, the politician that became a business man to become now again a politician, is the better option, and it is the one that has been finally chosen. Now he is a multi-millionaire, rivalling perhaps with Silvio Berlusconi from Italy or with Sebastián Piñera from Chile as paradigms of vertical integration in politics. The alternative according to The Economist was a member of the Zuma clan, responsible for many allegations of corruption. In the recent past, this clan has tried to hide the allegations by adopting a populist face, attacking business elites, using methods according to some similar to the ones used by Robert Mugabe in Zimbabwe. Although business connections may be seen by some as a way to avoid short term political populism (by which I mean anti-elitist rhetoric to achieve immediate benefits at huge costs in the future), one fears that when these connections are illegitimate what they do is just to transfer any future benefits to an olygarchy. In Chile, the last presidential election was between the billionaire Piñera and a TV star, Guillier. In Italy next year, the choice may be between Berlusconi and a TV clown. Unless we find ways to reform politics and institutions in a serious and robust way, that is perhaps the kind of choices that we will be facing everywhere.
Friday, December 15, 2017
A long time ago, the first teacher that tried to teach me Game Theory was Clara Ponsatí. In those years and at least in that particular class, she was not a very good teacher and I was not a very good student. I had to wait for some years to know the basics of Game Theory when I had more time to be a good student and I had a better instructor in James Dow at the European University Institute (Dow had met Ponsatí in the USA in their formative years). She is now fugitive from Spanish justice in Brussels (she says she is "in exile"), because she was part of the Catalan government that tried to violate the rule of law in October. She had been appointed as Regional Education Minister just months before the failed declaration of independence because she was believed to be a Taliban of Independence, according to media commentators. She published a short article in 2012 (I can only find a version in Spanish here), entitled "Benefits, Costs and Game Theory" where she argued that the only reasonable equilibrium in a game between the Spanish median voter and the Catalan median voter was for the Catalan median voter to declare independence and for the Spanish median voter to accept it, "because the costs of conflict for Spain were not affordable." It is basically the same argument of those in favor of Brexit in the UK: the EU negotiators will have to accept the conditions of the UK negotiators because the costs of a hard Brexit or of no agreement would not be affordable for the European Union. Both in the case of Europe and in the case of Spain, we have seen that the predictions of the nationalists (even the best educated of them) could not be farther away from reality. What was wrong in their analysis? First, probably that decision makers in Spain and Europe do not take only into account the economic costs in the two by two game, but also the overall politico-economic costs of disincentivizing any other separation attempt. Second, the relevant players were not only the representative voters in Spain and Catalonia, but the diverse voters holding different positions in both societies. Finally, Ponsatí assumed that absent the "irrational" opposition of Spain and any veto of the European Union (that would fall under the acceptance of an abiding Spain), the economic benefits of independence were overwhelming. Today, more than 3000 firms (see this article in The Economist) have moved their headquarters out of Catalonia, and hundreds of thousands of small investors moved their savings to other regions, only after the threat of independence. I still believe, after what I learned from James Dow, that Game Theory can be very useful to understand politics and economics (and beyond), and I enjoy teaching it at a basic level in my courses on Microeconomics, Public Economics and Sport Economics. In some rare cases, 2x2 games are not rejected by real data from real interactions (like in soccer's penalty kicks). Most of the times, though, real world games are much more complex than simple blackboard (or power point) 2x2 interactions.
Wednesday, December 13, 2017
We are finishing another edition of the course on soccer and economics at the Study Abroad program of the Autonomous University of Barcelona. Most students are from the USA and one of the groups just presented their essay about the limits to soccer success in their country. Of course, a key issue is that resources are already being spent on other sports, such as American football, baseball and basketball. Although soccer is increasing its popularity because of the expansion of demographic groups such as hispanics and women's soccer is very successful, most fans still see the NBA, the NFL and the MLB as the most important sports leagues. Although basketball is probably expanding and American football is declining (see an article in The Guardian by the famous former basketball player Kareem Abdul-Jabar), they are still above soccer in the preferences of Americans. According to my students, one possible reason is just history: in the XIXth Century, the USA wanted to re-affirm its identity by distinguishing itself from British sports such as rugby or cricket, and that is how American football and baseball started and expanded. This gave them a starting advantage, and the era of big economic growth of the United States additionally favoured these leagues. When soccer became a global industry at the end of the XXth century, it was perhaps too late to become the leading sport in North America. It can still grow of course, and the elimination from the next World Cup should not be seen as a drama (at least, they will be in the good company of Italy, The Netherlands and Chile). Countries that do not have a strong soccer tradition can easily catch up by importing resources such as managers or veteran players, or by exporting their best players to the best leagues and asking them to come back to play for the national team, as explained by Branko Milanovic in an article published in 2006. But once they achieve a decent level, they find much more difficult to achieve excellence. Like in other industries, imitation is easy but excellence requires innovation and the creation of new styles of doing things, and this probably only comes with role models, cultural environments and strong communities transferring a passion for something from generation to generation. That is what is argued in a recent academic article by Stefan Szymanski and Melanie Krause. Perhaps that is why Messi is Argentinian and not form the USA or China -although many are trying to produce "the new Messi," in some cases with a lot of money.
Monday, December 11, 2017
I started reading this article in The Guardian by Matthew D'Ancona believing that it would relate the Isareli-Palestinian conflict with the Brexit controversy about Northern Ireland (something that keeps my analogy-prone mind in good shape), but I found something much better. Actually, two things. First, a great metaphor about the lies of Brexit based on the re-invention of the wheel: "So, here’s an idea: let’s abolish the wheel. Let’s escape the tyranny of the circular device, and spend the money saved on axles, spokes and hubs on – oh, I don’t know – the NHS. Let’s take back control of rotation! But wait a minute. This can’t be done overnight. We shall still need some means of transporting ourselves and our goods until we have formally renounced the wheel, but before we have agreed on a new device. There’ll probably need to be an “implementation period” in which we remain “aligned” with the existing circular format. Then, when we’ve finally got rid of the old system – let freedom ring! – we’ll need a new, bespoke mechanism. What we’ll want is our own round component that rolls around an axis; an independently designed disc that turns reliably to enable easy movement. Something that gyrates smoothly along the ground. I wonder what we should call it." Second, a very useful insight about clarity and ambiguity, which should be read by those in Spain and Catalonia that fell in love with the Clarity Act of Canada: "As so often, it was our old friend “constructive ambiguity” that got May, her party, the Irish government and Brussels over the line. You can read the text as a victory for British sovereignty, a significant retention of power by the EU, a step towards Irish unity or a safeguarding of the union. This kind of ambiguity was essential to the Good Friday agreement, which entrenched an open-ended process founded upon euphemism. In contrast, the Brexit talks assume and depend upon the eventual achievement of clarity – even if, in many cases, that point is not reached until long after the UK’s formal departure on 29 March 2019." And to wrap it up there is a final part of the article that is the perfect illustration of the big topic of behavioral political economy: expressive voting versus rational choice. I leave it to you to enjoy it.