Archive for January, 2012

Bad economy? Blame economists…

I was going to let this lie. But I just can’t. Aditya Chakrabortty’s latest article isn’t wrong per se, its just very very strange. It is entitled “Who came up with the models for executive pay? No it wasn’t the bankers, it was the academics” It is technically true that it is “academics” in the plural, as it was both Jensen AND Murphy who wrote the SINGLE paper on which he bases his entire straw-man assault on all economists. But this is the only example he gives of any economic paper which helped create the financial crisis. Which if the whole subject of “economics” is to blame, seems a bit odd.

I don’t deny that some economists, nay, probably many, were probably responsible for the financial crash. But it’s just so terribly argued as to be absurd. He derisively remarks that Jensen and Murphy’s “argument is well summed up by the… title: “CEO Incentives: It’s Not How Much You Pay, But How“, before proceeding to base his following argument on the premiss that this model promotes excess greed. What? Summed up by not HOW MUCH but instead HOW? As in, payment should be linked to company performance, and not just high irrespective of performance? And this is causally linked to excess greed? The mechanisms which made companies grow unsustainably, which led them to disregard their risk and lose track of their liabilities, certainly helped to cause the crisis, and this unsustainable growth may have been incentivised by linking of executive pay to stock-options. But the whole furore about Stephen Hester’s bonus is that his bonus did not seem to be linked to the historically poor performance of RBS. Maybe stock options aren’t the best way to keep executive pay in line with performance. But the responsibility must surely lie with the bankers who myopically targeted short-term growth and disregarded longer-term disaster, rather than the economists who suggested that pay should be linked to performance? And surely the fact that the banks were then bailed out and didn’t face performance related cuts in salary is a cause for concern, but isn’t an outcome that Jensen and Murphy would support in any way?

I don’t even want to get into a long debate on the pros and cons of this one paper, however. Let’s say that there were a given number of economists in the country/the world whose advice directly helped to cause the crisis (and Jensen and Murphy can be included if Chakrabortty likes, fine by me). Even then, this sort of statement would still not be tolerable:

 It’s the same discipline that spoke all that nonsense about markets always being efficient that is now deciding how to reform the economy.

This is silly beyond words. I mean, I’m nearly speechless with how crass this is. The “profession”, so far characterised by one article, whose merits are up for debate, spoke all that nonsense about markets always being efficient? The only way  can try to illustrate  the farce that this statement amounts to is with regards to Brass Eye’s science “in the dock” skit. There isn’t “good” science and “bad” science, the science is a task of trying to determine what theory more accurate. It’s the same with economics; as a profession, it’s a debate, not a consensus. SO many economists predicted the financial crisis. I mean, what about Larry Elliot, the Guardian economics editor, for one! I think his background in, urm, economics helped him out when he wrote Fantasy Island. Even more economists don’t believe that markets are fully efficient. Simon Wren-Lewis did a good blog post about how the 80 economists who signed an open letter, against austerity and early cuts in public spending, have been vindicated since the government ignored them and the country has correspondingly slid back into negative growth. He thoroughly dismantled a Wall Street Journal’s asinine and pathetic excuse for an interpretation of the Laffer curve this morning in a lecture, the clear implication being that the financial sector should be being taxed more than it is at the moment, not less, as the WSJ was trying to argue. And the simplest macroeconomic reasoning explained why.

I really expected more from the Guardian, being a publication which should know better than to write off whole sectors, professions and disciplines as nonsense without making a few simple distinctions. But then, that’s journalists for you eh? Lies and misinformation everywhere. And what’s worse, it’s the same discipline that hacked all our phones and broke ethics codes that is now deciding how the media should best be regulated. Dis-gusting.

Jonas Savimbi and agency in Angola

At the end of last year I had to give a presentation on the subject of civil conflict in Africa. I focussed on the Angolan civil war, and went through some plausible (and several implausible) theories. I talked about greed and grievance, superpower interference, the political instrumentalisation of ethnicity, problems of co-ordination in finitely repeated games and the need for rational rebel leaders to motivate rebels through seemingly non-rational choice methods. It was all very clever (and very verbose, I overran hugely). But there was one nagging concern I had throughout. As I brought the talk to its (overdue) conclusion, I had to concede one point.

… or maybe, Jonas Savimbi was just an atypically, irrationally belligerent person

It’s a really big issue with political science in general. We have a very limited dataset, which is liable to skewing by a few outliers. And when the war between the MPLA and UNITA ended a few days after the rebel leader’s death, then that poses big problems for any grand inferences that we might draw about civil war in Africa, any dataset of which will include Angola as a prominent example.

I saw Adekeye Adebajo give a talk today, about peacekeeping in Africa. He spoke quote derisively (and pretty fairly) of theories “cooked up in Western laboratories” to explain conflict, which immediately reminded me of Collier’s Greed and Grievance piece (which, despite my respect for the guy, I am really not a fan of). Adebajo emphasised the link between Savimbi’s death and the end of the war and said roughly that “while you never advocate assassination, these factors need to be taken into account in African conflicts”.

But as problematic as Western theory laboratories are, I’m not going to concede that Jonas Savimbi was solely responsible for the continuation of the Angolan War, or, more accurately, that his death caused its end. His death was a symptom of the last days of the war, and not necessarily its cause. Run the following thought experiment; Fidel Castro has been subject to more assassination attempts than your average guy. Imagine if one had succeeded, and think of the chances of the collapse of Communism in Cuba. Quite plausibly pretty high, right? Now think about if he had died in the Bay of Pigs invasion, which was, in this counterfactual world, a massive success, or died in the early 80s where in a parallel world Reagan decided to invade Cuba. Then what would you say the chances of the collapse of Communism in Cuba were? Almost definite, right?

My point is that Savimbi wasn’t picked off by a sniper while his rebels were riding high. He died in a firefight in a swamp, in retreat, as UNITA were being overrun by the MPLA, whose oil and general government resources placed them in far better stead to fight a drawn out war. It’s tempting to draw the conclusion that his death was directly responsible for peace, and its possible that the death of the leader was the final straw for UNITA, who then decided to pack it in. But it’s as an erroneous inference as those Western laboratory tests who try to explain the motivations of every fighter with reference to solely the marginal product of their fighting to explain peace with recourse to the individual Savimbi and his death. Maybe there was a omitted variable, ie the MPLA actually wearing down UNITA, that caused both Savimbi’s death and the peace deal?

I don’t want to downplay Savimbi’s personal agency. At critical junctures, notably after the Angolan general election of 1992 when he returned to the bush, he played a defining role in the course of Angola’s history, and rarely for the better. However, his dying when he did doesn’t prove he was the only thing sustaining the war. If he’d had an aneurism while the diamonds were still profitable, and UNITA was doing better militarily in the mid ’90s, then we’d have seen the extent of his personal influence in sustaining the war. But I’d hazard that in February 2002, when he died, the war itself was on its last legs anyway. And, unlike Adebajo’s suggestion, a bullet in the mid 90s might not have made all that much of a difference.

Michael Sata and the alleged “China Factor”

More on Zambia, while we’re on the topic, and more from Nic Cheeseman…

When Sata’s Patriotic Front won the Zambian Presidential election last year, some emphasised that his victory reflected growing resentment at Chinese influence in Zambia (see, for example, here). Others picked up on the fact that Sata’s anti-China sentiment was not being realised in office, implying a cozying up to (or at least a tolerance of) of China (see here). Yet others highlighted that he seemed to have toned down his rhetoric on China. When he didn’t win two years prior, he had deployed very anti-Chinese rhetoric. Therefore, by somewhat unclear mechanisms, his success was a result of his softening on China. The implication from such arguments is that, in a sinister way, China calls the shots in Zambia (see here).

I want to introduce another variable to this analysis, which is less conspiratorial and suggests that maybe there’s a more simple explanation to Sata’s seeming inconsistency on (and warming towards) China. Maybe it just isn’t a major issue for the electorate. Our friend Dr. Cheeseman highlighted this to me a few weeks ago. Afrobarometer data suggests that many policy priorities of the Patriotic Front appealed to voters. They wanted government intervention. They wanted more money in the average person’s pockets (interestingly, people were more interested in objective, abstract economic equity than personal gains). But they were surprisingly ambivalent about China’s involvement in Zambia.

Can you blame Sata for toning down the rhetoric given this? I don’t deny that China has strategic and powerful interests, and that Sata may have wanted to disrupt the status quo until he got to office and found that it served those in power quite well. But why pick an unnecessary fight when it’s not even demanded by your voters?

So while Paolo von Schirach may claim that the anti-Chinese sentiment was a strong theme in the election, it’s just not borne out by the evidence.

The Patriotic Front and the end of clientelism in Zambia?

I saw Dr Nic Cheeseman give a lecture with Dan Paget today, entitled “When does political competition become less ‘ethnic’ and more clientelistic?” Their recent work has been on Brazil, India, Ukraine and Zambia, but, being African Studies guys given a talk at St Anthony’s, they focussed fairly exclusively on Zambia (which was fine by me). I’ve seen Dr Cheeseman give a couple of lectures on the PF and party systems in the Zambian context, and can safely say that he’s the best lecturer on the PF and party systems in the Zambian context I’ve ever seen. Which perhaps isn’t saying a lot. But he is bloody good.

They really touched on a contradiction at the heart of Sata’s PF which I’ve been pondering over quite a lot recently. On the one hand, Sata has replaced an incumbent on the basis of a policy-based popular appeal, and has been given a particular mandate to tackle corruption, for state intervention in the economy, etc. This is unusual in an African context. On the other hand, we have a frustrated former secretary of the MMD who has mobilised an ethnic constituency in the Bemba community to form an opposition party which is run by its own elite. There is no institutionalisation of civil society roles, even if civil society’s support was vital in delivering their win. It’s true that populism and not clientelism won Sata the election; the amount of money Banda used to try and buy people off far exceeded the PF’s total expenditure. But now that Sata has the tools of the state at his disposal, clientelism becomes eminently more practical.

Cheeseman and Paget thus classify the Patriotic Front as an “ethnic-uninstitutionalized programmatic party” (I know, snappy right?); whose clear political programme may be undermined by its ethnic base and elite control. That is, politics may be depoliticised once again. Think about what happened in the years after the MMD kicked out UNIP, and we may have history repeating itself.

The truth, however, is that it’s really too early to tell. The PF has reflected some of its programme promises in its early days in office, attempting, for example, to make inroads into tackling corruption. While Sata had his son investigated for alleged flamboyant spending, questions remain over whether it might be a vehicle to pursue political opponents (echoing Chiluba’s mid-nineties assertion that Kenneth Kaunda, essentially the founder of the independent Zambian state, was in fact Malawian and therefore not a citizen).

I am more optimistic than this. Even though there is a risk in the PF having access to clientelistic tools, the MMD no longer has such access, so may need to come up with real policy programmes and scrutiny itself. Cheeseman and Paget observed that “programmatic contagion” had not yet spread across the whole party system, but it might still. More fundamentally, while the structures of the PF may not have an explicit role for civil society, there is still the electoral connection, and external pressure from trade unions and civil society – shown to be so effective through Zambia’s history – will remind Sata that he has promises he must keep. If there’s one thing Zambian political history of the last two decades has shown, it’s that irresponsible, unresponsive ruling parties can be replaced. And as no-one knows better than Sata that complacent regimes in Zambia can’t just buy their way to victory.

Defiance and anger in Somalia

This morning, President Obama had that familiar sensation of being able to report on a successfully executed US Navy Seals mission the day after giving a landmark speech. But as much as he might relish that “I know something you don’t know…” game that he plays, it’s not what I want to write about today. It goes without saying that my thoughts are with all the families involved, too. I know someone who has worked extensively with the Danish Refugee Council on Somalia, and who was in Copenhagen on Monday, where spirits were still very low. Their relief, and the relief of the families of Poul Hagen Thisted and Jessica Buchanan, must be immense.

What really struck me though is something that is often overlooked, distorted or plain lied about: the views of Somalis. Muhammad Sahal, an elder from Galkayo, said the following, quoted in a Guardian article:

We are really happy with the successful release of the innocents kidnapped by evildoers.

They were guests who were treated brutally. That was against Islam and our culture … these men [the pirates] have spoiled our good customs and culture, so Somalis should fight back.

The Danish Refugee Council’s report is also illuminating:

Since 25 October 2011, when the kidnapping of 32 year-old Jessica Buchanan and 60 year-old Poul Hagen Thisted took place, the Danish Refugee Council has received unique support from influential clan leaders, elders, and politicians in Somalia, while Somali civil society have shown strong support by taking to the streets to demonstrate and demand the release of Poul and Jessica.

“The Somali society has all along condemned the kidnapping and over time increased their pressure on the criminals involved with the kidnapping. The Somali society has continued their strong support to this day. We have been congratulated from all corners of the Somali society, and we have been told of celebrations in the the capital Mogadishu, in Galkayo and in the streets of Adado, where the local community has worked very hard to help Poul and Jessica. We are grateful for their strong support. Their efforts have not been wasted,” says Ann Mary Olsen.

We plain don’t hear about this in Britain, unless you’re really trying to find it. News anchors seem perplexed enough by the fact that people in the Middle East have been protesting for democracy in the last year. They struggled to figure out why, until the Islamist majority in the new Egyptian parliament gave their favoured narrative its natural conclusion. But people on the streets in Mogadishu actively supporting the cause of Westerners? Whichever way you slice it, that doesn’t fit into what our media would expect. So we don’t hear about it. Instead, Somalia is the land of two things: pirates and “al-Shabaab”. Notwithstanding the fact that their people like and support neither.

But the thing is, when every story about Somalia is about al-Shabaab, insiduously, Somalis become equated with al-Shabaab. When I did some research on humanitarian access in al-Shabaab controlled regions last year, I found that, like with pirates, there is very little to support the idea that al-Shabaab is in any way popularly supported, certainly on ideological grounds. When al-Shabaab was rumoured to have been kicked out of Beledweyne, a major city in the Shabaab controlled Hiraan region, there was excitement and relief. It was unfortunately chimerical. Wherever there is tolerance of al-Shabaab, it is either because of coercion, or appreciation of the rough stability and order they bring to certain areas of a basically stateless country. Citizens much more prefer the work of bodies like the Danish Refugee Council, providing the order and the services without the dogma. Somalis want peace, they want food, and they want a voice; they do not want fundamentalism.

It strikes me that we’re very bad at not reducing the views of whole nations to easily digested giblets. It’s why things like the Arab Spring come as such a shock – because we’ve never really known what was going on to start with. If al-Shabaab are defeated, like that small group of pirates were yesterday, then a few papers might pick up on the relief of locals, most probably after the event. But it shouldn’t take a revolution every single time before we stop painting whole populations with the same brush. And if we insist on doing so, it would also help if the brush was an accurate colour.

Some appreciated historical support

For all those who are still dubious how Romney can recover from the crushing defeat in South Carolina, I introduce to you Jonathan Bernstein:

…while [Romney] would have shut down the nomination contest entirely by winning tonight, the truth is he’s probably a bit closer to winning it all now than he was after New Hampshire, and a lot closer than he was, say, before Iowa. A little history might help explain that.

In 1996, Bob Dole actually lost 5 of the first 6 states, although several of those had asterisks because they were jumping the line, and Dole (and some others) chose not to compete in them. Still, five out of six, including losing New Hampshire went to Pat Buchanan. And yet following those six states, Dole — it turned out — had basically won the nomination. Why? The most serious threats to him were Texas Sen. Phil Gramm, who was finished after a terrible fifth in Iowa, and then ex-Gov. Lamar Alexander (Tenn.), who lost steam after finishing third in both Iowa and New Hampshire. Dole finished second in New Hampshire, but just behind implausible nominee Pat Buchanan, and there was never really much doubt that Dole would beat Buchanan one-on-one.

SC was a result that tested the faith of many Newt-sceptics. But I’m glad I’m not alone in continuing in the conviction that he can’t win the nomination (not least as JB is a leading light among the Newt-sceptic clan).

Also, this wasn’t actually a WaPo front page, but we all wish it was.

On humble pie and more serious matters

Ok it goes without saying that the only thing which really mattered yesterday was the awful awful news from Nigeria. I don’t really know enough about the tremendously complex situation in and history of Nigeria to be able to comment in any way profoundly or insightfully on any sort of “broader significance” of the attack, but my thoughts are with the people of Kano and their families in Nigeria and abroad.

Readers of my blog may also be doubtful of my ability to talk about the Republican nomination race profoundly and insightfully, but despite Gingrich’s surprising domination in South Carolina, I stand by much of what I wrote last time out.

a) Rick Perry was polling too badly to have made a decisive difference to Newt’s victory. And who knows the effect of the endorsement but, frankly, for the reasons given by John Sides last time out, any attribution of causation from the correlation of Perry pulling out and Newt’s big win is fallacious.

b) The Republican party elite still hate Newt. So it’ll be interesting to see which way the nomination process turns now; will they reluctantly back him or start the smears all over again? The point is just because the people of South Carolina have decided their nominee, it doesn’t mean the Party insiders have. The much vaunted stat of “every winner of SC since 1980 has gone on to win the nomination” again implies a fallacy; this result is caused by the momentum gained and subsequent support of party elites to rally around their preferred candidate by this point, not because everyone thinks the people of South Carolina are themselves especially prescient, and so will fall into line with their view.

c) The role of momentum seems to be a bigger factor in this race than in previous ones. Given that quite clearly all the candidates are unacceptable to the party, the timing of your surge seems like it can be key. Early surgers Bachmann Cain and Perry found it hard to sustain their momentum and crippled under scrutiny, whereas Santorum and Paul are still in the mix. The weird thing about Gingrich is that he has had multiple surges now, and is still in there, surviving the knocks. There are a few reasons for this. Newt’s baggage has been out in the open for a while now, so it’s harder to score politically off it. Sure, the issues may be similar to ones Cain have, but people had already internalised it about Newt in the way they hadn’t about Cain, so it resurfacing doesn’t affect preferences so much. Then there’s also name recognition and stature; for every person who realises what a bad president he’d be, there’s three who remember the nineties and remember he didn’t like Clinton and that’s about it. I’ve heard some supporters mention his “proven ability to lead”, a preposterous claim but one which helps to get him votes at a national level. These variables maybe make him less inconsequential than I previously claimed. But surely Romney is still going to walk away from this the nominee. And so, surely Newt’s biggest contribution to this will be to to damage Romney’s campaign before that happens. And, whether Newt wins or Romney emerges battle-scarred, surely this all plays into Obama’s hands. Surely?