Waylaid Dialectic

May 20, 2010

Kindness, Cruelty and the Better Polity Through Suffering Theory

Filed under: Aid,Governance,Migration,Social Justice — terence @ 10:57 am
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Call it ‘Better Polity Through Suffering Theory’. It’s nasty, common and it comes in various forms. On the far left there are those who dismiss the market mitigating effects of social democracy as impediments to real political transformation. People who argue that if we would just stop providing the masses with some security they will eventually rebel, leading to left wing utopia.

The right has it’s own versions. Witness Helen Hughes and Gaurav Sodhi [PDF] arguing against a seasonal migration scheme for Pacific Island workers because it will reduce the impetus for political reform back home. Similarly, opponents of aid sometimes claim that the negative shock of aid withdrawal will lead to pressure for positive political reform.

The common thread in such ‘theories’ (both from left and right) is that you have to be cruel to be kind: deny people benefits now and you will provide the incentive for positive change.

On a society-wide scale this has never struck me as convincing for the simple reason that there are not many examples of countries that have weathered large shocks and become radically better as a result. On the other hand there are plenty of examples of countries that have weathered large shocks either by falling apart or by reverting to authoritarian hyper-nationalism. It’s much easier to break a country (or a community for that matter) than it is to build one. For this reason I’m very wary of any reforms that promise long term gains as a result of short term pain and I’m particularly sceptical of claims that see the pain itself as a tool.

And so, the following really doesn’t surprise me; although I hope it might cause proponents of Better Polity Through Suffering Theory to reconsider their own arguments for a bit.

From VoxEU:

While estimates vary between specifications, we find that roughly a one percentage point decline in growth translates into a one percentage point higher vote share of right-wing or nationalist parties.

May 13, 2010

Trade and Poverty

Filed under: Trade — terence @ 11:26 am
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Ever wondered how much multilateral tariff reduction reduce poverty globally? or whether a simple unilateral reduction in their own tariffs would be beneficial for developing countries?

Anderson, Cockburn and Martin (ACM) have some answers for you at Vox EU*

One day, when I’m not preparing a talk in Tok Pijin for later this afternoon and a seminar for tomorrow I plan to blog more on trade and try to clarify my own thoughts properly, but for now:

  • ACM find that multilateral reductions and unilateral reductions would, on average, benefit the poor in the countries modeled. Yet, while the overall benefit is not to be sniffed at (approx 3% global reduction in poverty) and well worth realising, it remains small in comparison to global poverty levels. Trade policy is important but,  despite all the sound and fury expended over it in the 1990s, it doesn’t come anywhere near explaining the totality of global poverty (although see next point).
  • As I understand it (without having read the actual paper) the article details static benefits associated with changes in relative prices. Therefore someone like Ha Jun Chang could counter and defend developing country tariffs by claiming that even if there are static benefits for developing countries from lowering their own tariffs, what really matters in the long run is the potential positive benefits of such tariffs on economic growth (the industrial policy argument).
  • Note that the impacts of the different tariff cuts ACM model vary quite significantly from country to country (context matters!) and that the impacts will vary within countries too. What might be good for the poor on aggregate will still hurt some who are poor. In response to this ACM call for compensatory policies. Good idea and I agree. Noting though that such policies are much easier to implement in Sweden than Sierra Leone.
  • Also note that in the article developing country government revenue losses are modeled as significant. ACM’s solution is Aid for Trade.

* These are modeled answers of course. Usual disclaimer applies.

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