Inequality that barks, and dogs that don’t

6 Oct

Jennifer Hochschild, professor of Political Science at Harvard, begins her 1981 book, ‘What’s Fair: American Beliefs about Distributive Justice’, with an excerpt from Arthur Conan Doyle’s story, Silver Blaze, featuring the popular fictional detective Sherlock Holmes. In that excerpt, Holmes remarks on the ‘curious’ fact that the dog didn’t bark even when the ‘evidence suggested that it should have’. Hochschild uses this analogy to remark on the ‘curious’ fact about the American polity that it has steadfastly shied away from socialism (even socialist rhetoric) despite rising inequality and the large pool of likely beneficiaries of socialist policies. Politics has also been largely absent of demands of more income redistribution. I carry Hochschild’s analogy further – to somewhat disastrous extremes – all in service of conveying something simple. After all, all is fair in love, war, and blogging. Even dogs.

Before we investigate, ‘why the dog doesn’t bark’, it is incumbent upon us to identify who the dog is, why it should bark, and when, and how loudly? And does it bite? And we must investigate whether the implicit and naive assumption – that barking will result in anything – is actually correct. Only after we answer these, will we tackle some version of Hochschild’s question.

The Dog

The definition of the ‘dog’ depends heavily on the counter-factual that we want to use. For example, is it the bottom 95% of the income earners, or the lowest two quintiles of the income distribution, or the group below median income, or the minority of the federally defined ‘poor’? All of these ‘groups’ can in sense coalesce together to demand more redistribution of income taxes, certainly a ‘progressive’ income tax with substantially higher marginal tax on incomes above their own. But theoretical counter-factuals base their premise of group formation on automatic group formation on basis of economic interests. Such counter-factuals ignore things like extant cross-cutting social cleavages (for example race – disingenuously captured as ‘South/Non-South Dummy’, the Baptist/Southern Baptist dummy etc. in Political Science literature) that come in way of ‘class consciousness’, atomistic drives of the new labor and consumption regimes, apathy, ‘political culture’, historical narratives, and the near absolute dispersion of legitimizing discourses of inequality offered by the ‘society’. These reasons damn the existence of a dog to only those instances when political entrepreneurship meets economic realities powerfully enough to overcome the centrifugal forces mentioned above. So perhaps then the problem really is that the dog doesn’t bark because mostly there is no dog.

However, political coalitions around class do form, and if evidence presented by scholars is anything to go by – they are most salient and most persistent among the rich end of the spectrum. Larry Bartels has recently shown that policy choices reflect elite opinion much more so than mass opinion. “In almost every instance, senators appear to be considerably more responsive to the opinions of affluent constituents than to the opinions of middle-class constituents, while the opinions of constituents in the bottom third of the income distribution have no apparent statistical effect on their senators’ roll call votes. Disparities in representation are especially pronounced for Republican senators, who were more than twice as responsive as Democratic senators to the ideological views of affluent constituents.” (Bartels, 2005 – Economic Inequality and Political Representation).

Hochschild, relying on census data from 1929 to 1977, puts forth the fact that while the shares received by poorest two quintiles has changed little between these years, the largest change has been transfer of money from the richest quintile to the third and fourth quintile. Hoschschild’s story is about the ‘Director’s law’ (after economist Aaron Director), which goes something like this –‘Government has coercive power, which allows it to engage in acts (above all, the taking of resources) which could not be performed by voluntary agreement of the members of a society. Any portion of the society which can secure control of the state’s machinery will employ the machinery to improve its own position. Under a set of conditions to be discussed below, this dominant group will be the middle income classes.’ (George Stigler’s summary).

So perhaps there is a dog – a rich and a middle class dog, just not a ‘poor dog’. And that is in itself a ‘mystery’.

To bark or not to bark? And when to bark?

Should it on ‘perceiving’ the narrowing of the opportunities to move to the next class bracket? Or should it be on coming in contact with ‘increased’ inequality between ‘class peers’, as is so nicely documented in a recent series of articles in New York Times –the chronicler of the anxieties of the rich – that show that inequality is the greatest (and gallingly so) in the top 1% with top .001% earning far more than the .01%, which in turn earns substantially less than the next .1%. Or should it be the expansion of difference between the 25th percentile and the 75th percentile? Or having dramatically lower income than say our parents? A lot depends on how we define the dog, and what the dog sees. Both the dog and dog’s vision, if it wasn’t clear from the discussion above, is as much politically constructed as socially (if the two can be pried apart). Perhaps the answer is best approached via historical examples – times when we can be reasonably sure the dog did something or it looked like the dog did something.

If we go back to 1870s, the era of ‘Robber Barons’ and the original ‘gilded age’, the post-reconstruction era of lavish wealth, and even more gratuitous displays, we are at a point of history with indisputable and egregious inequalities. This era with its early stages of thuggish capitalists bought not only the rise of labor but also the trust busting presidency of Teddy Roosevelt. Perhaps there the dog did whimper. Similarly, there is a period again starting 1933 when there is a precipitous climb in the marginal income tax rate, partly brought upon by the war, and by FDR. The top marginal rates as recently as Eisenhower era were over 90%, and now top off at a miserly 35%. It is relatively unclear –except perhaps for rise of communist parties in US and a response to the depression, why we saw such a rise in redistribution of income. But it seems that that was the last time the dog whimpered.

Data from Piketty and Saez, among others, suggests the oncoming of a new gilded age. For example, according to census data, in 1967, households at 95th percentile had six times more income than ones at 25th percentile, the ratio in 2005 had grown to 8.6. It may yet be that the dog rises again, albeit slowly and feebly. And it may gnaw at immigrants, when it rises, before it gnaws at ‘greedy’ Wall Street guys. Oh, it’s already happening.

The Curious Incident: Why the dog doesn’t bark sooner, or bite?

Sven Steinmo, the clear eyed analyst attributes it to the ‘Political culture’ – the pull yourself up the bootstraps entrepreneurial anti-statist immigrant culture, constitution – the deliberately ‘anti-democratic’ (in words of American historian Gordon Wood) fragmentary government structure, weak parties, weak labor, weak government, and the fact that elites play a critical role in shaping people’s preferences. For Hochschild it is the lack of feudal history, the rapid rise of petit bourgeoisie, people being better off than their parents – at least much of the 19th and 20th century as the vast natural resources of US were exploited to carve out wealth, the fact that people have ‘chosen’ Capitalism (gain) over distributive ideas, deliberate fragmented structure of the government, the fact that poor limit their dreams, the fact that poor don’t demand absence of difference but just end of ‘unjust’ differences, and that the fact that people just want an ‘equal opportunity to be unequal’. For Gunnar Myrdal, the Swedish political scientist and economist and Nobel Prize Laureate and most significantly author of the Carnegie (who wanted someone from outside US for objectivity) funded ‘An American Dilemma: The Negro Problem and Modern Democracy’, it is the ‘American creed’. And perhaps because things haven’t been that bad, mostly. We never ask if things can be better for democracy isn’t about that. It is just mostly avoiding famines. (Amartya Sen)

Military Experience of US Presidents

23 Apr

The military regularly ranks as the most trusted institution on public opinion surveys. Veterans are regularly deified by politicians of every stripe as heroes rendering extraordinary service to the country. Even when politicians are articulating their dissent over the Iraq War, they frequently take the time to praise the veterans and to reiterate America’s commitment to its veterans.

The unique status of the veterans and the military in modern American consciousness can perhaps be traced to the revolutionary origins of the United States. The military success in the “War of Independence,” and the “Second War of Independence,” and the heroism of the founders, is an essential part of America’s collective memory (and an essential part of the school history curricula). Tony Judt, writing for NYRB mentions that one of the reasons militarism continues to persist in US is because –

“Americans, perhaps alone in the world, experienced the twentieth century in a far more positive light. The US was not invaded. It did not lose vast numbers of citizens, or huge swathes of territory, as a result of occupation or dismemberment. Although humiliated in distant neocolonial wars (in Vietnam and now in Iraq), the US has never suffered the full consequences of defeat. [Judt makes a reference here to South’s defeat in the Civil War and subsequent reaction as exception that proves the rule] Despite their ambivalence toward its recent undertakings, most Americans still feel that the wars their country has fought were mostly “good wars.” The US was greatly enriched by its role in the two world wars and by their outcome, in which respect it has nothing in common with Britain, the only other major country to emerge unambiguously victorious from those struggles but at the cost of near bankruptcy and the loss of empire. And compared with other major twentieth-century combatants, the US lost relatively few soldiers in battle and suffered hardly any civilian casualties.”

Another possible reason for this continued ‘heroification’ of military and veterans is because as a country of immigrants, people do not have the shared history to rally around. In its absence, people have opted to rally behind things that exclude no one. That instinct has been buttressed by generations of strategic political actors and mass culture producers.

The other unique fact that brings the above arguments in sharp relief is the disproportionately (as compared to other countries –excepting ones with mandatory military training) large number of veterans in the US. According to the Statistical Abstract of United States for 2004-2005, the country had 24.9 million veterans. The large veteran population is a result of two things — having one of the largest standing armies in the world, and the preponderance of personnel who serve the army only for a few years (many a times as a way to have their college tuitions paid.)

Given the factors outlined above, it shouldn’t come as a surprise that the American presidency has been dominated by men with prior military experience. The sheer numbers, however, are still surprising. For 137 of the 219 years the country since its independence, the country has had a military veteran as a president. 29 of its 43 presidents have been veterans. And the longest time America has gone without electing a veteran was the 32 year period starting with Taft in 1913 and ending with Roosevelt’s death in 1945. (Incredibly, during this time, the country took part in the two World Wars.)

There are three potential concerns about the numbers. Eight years of George W. Bush’s “service” in the National Guard have been excluded. Five years of Lincoln presidency have been included (Lincoln participated very briefly in the Black Hawk War of 1832). And Millard Fillmore’s tenure isn’t included as his experience in the military was after he had left his presidency. One can raise questions about the inclusion of some other presidents including Madison (whose service was brief again), however, as one can see, such tinkering is unlikely to impact the numbers much.

Note: Data on military experience of UK PMs and US Presidents.

First Amendment and lobbying: Where the law stands and beyond

17 Mar

Oregon Supreme Court (1998) defines lobbying as “influencing, or attempting to influence, legislative action through oral or written communication with legislative officials, solicitation of others to influence or attempt to influence legislative action or attempting to obtain the good will of legislative officials.” [see David Fidanque and Janet Arenz, Petitioners on Review, vs. State of Oregon ]

The proponents of lobbying argue that any law curtailing it impinges on two core First Amendment clauses – that Congress shall make no law abridging the right of the people “to petition the Government for a redress of grievances”, or curtailing “freedom of speech”. In return, states have argued that they have substantial interests in preventing actual corruption, and perception of corruption, and given lobbyist’s common perception of being dishonest, and a vast array of empirical evidence as to the actual incidence of corruption, they have interests in placing restrictions on lobbying.

Courts have for long upheld citizen’s rights to petition the government taking note that the idea of democratic government implies in part a right of the citizen to petition (Capps, 2005). The “right to petition”, as numerous legal scholars have noted, predates the Bill of Rights and hence is sacrosanct. Furthermore, Courts have also for long upheld the idea that lobbying, in essence, is a way of petitioning one’s representatives. In Liberty Lobby, Inc. v. Pearson (390 F.2d 489, 491, 492 (D.C. Cir. 1967)) [For details on case citation], the Court of Appeals for the D.C. Circuit found that people involved in trying to effect congressional action by engaging in lobbying activities were exercising their right to petition.

However, the courts have long also recognized that while the right to petition is an essential one, it is also a limited one (Capps, 2005). Hence, the courts have ruled that there is no absolute right of a citizen to speak in person with public officials. In absence of absolute rights, and citing countervailing interests like state’s interest in preventing corruption given the likelihood that lobbying will “promote the temptation to use improper means to gain success”, and maintaining confidence in the public decision-making process, the courts have sided with the government in a host of cases to restrict contingency fee arrangements, impose registration and disclosure requirements on lobbyists, prohibit lobbyists from making political contributions when legislature is in session (N.C. Right to Life, Inc. v. Bartlett, 168 F.3d 705, 717-18 (4th Cir. 1999)), among others. Courts, while ruling in these decisions, have noted that barring such practices do not substantively curtain the right to petition as they don’t impose a significant (or merely unsubstantiated) burden on the petitioning process, and should a law do so, it may be grounds for it being invalid. For example, in the Oregon Supreme Court decision cited above in the definition of lobbying, the Court found that the biennial registration fee imposed by the state on the lobbyists to be in excess of costs of registration itself, and hence invalid.

The underlying strain in these cases has been the need to balance the needs of the citizenry to openly petition its representatives in line with the basic tenets of a representative government, and the needs of the executive and legislative branch to safeguard the system itself from threats of corruption. While deciding on these cases, the courts have always been keenly cognizant that in line with the constitution’s dictum of three equal and separate branches of the government, they have limited rights in imposing the standards of operation within each branch of governance, for as long as they do not violate the freedoms and rights guaranteed in the constitution. Simultaneously, the court has recognized in the past the merit of not only reducing the actual occurrence of corruption, but also reducing the perception of corruption. In both Buckley v. Valeo (424 U.S. 1 (1976)), and McConnell v. FEC (540 U.S. 93 (2003) – brought after the enactment of McCain-Feingold or BCRA/Bipartisan Campaign Reform Act) the Court has recognized the need to mitigate perceptions of corruption and actual incidence of corruption, and congressional authority to pursue legislation towards that purpose. The Court’s arguments, offered on maintaining the sanctity of the election process of legislators, should theoretically apply to the legislative process as well.

The “freedom of speech” arguments for lobbying stand on less firmer grounds. The right to “freedom of speech” is not and should not be seen as a law guaranteeing the “right to be heard”. Similarly, there is no law protecting the right of a citizen to have a private hearing with the legislator, or more broadly speaking, private speech.

The Courts have sided with the government in a significant number of cases where the state has shown a plausible case for restricting lobbying based on corruption concerns, and wherever they have found that the restrictions don’t disadvantage some content over other. However there are legitimate important rationales that undergird the right to lobby (petition) and courts have been cognizant to not support legislation that is overly broad. The law, however, doesn’t provide guidance on voluntary disavowal of money from lobbyists for campaigning (without the “magic words” that breach express advertising standard), and nor does it restrict lawmakers from running on a platform that upfront states that the said candidate will not accept ‘favors’ (legal ones) from lobbyists, or will not join a lobbying firm if his or her reelection bid fails (close the “revolving door”). Congress and the Executive – both have significant leeway in enacting significant ethics reforms that will likely sharply curtail the power of “special interests”, and a myriad options (including the one chosen by Edwards and Obama) remain open remain for lawmakers to not ‘choose’ to be influenced by ‘lobbyists’. Combating the influence of special interest would, however, require more widespread measures – especially as public opinion polls become the key determinants of candidate policy positions and as lobbyists’ influence in manipulating opinion through media or ‘astroturfing’ increases. Fewer options exist to combat that except perhaps a more active citizenry.

Last thoughts: “Democratic Senator Max Baucus, the new chair of the tax-writing Senate Finance Committee, is offering special interests a chance to go skiing and snowmobiling with him — $2,000-dollars a head, or $5,000-dollars from a political action committee.” reports ABC 7.

References

“Gouging the Government”: Why a Federal Contingency Fee Lobbying Prohibition is Consistent With First Amendment Freedoms”. 58 Vanderbilt Law Review 1885. Meredith A. Capps. (2005)

Difference in Coverage of Clinton and Obama

12 Mar

The following tables tally up the articles that mention “Barack Obama” or “Hillary Clinton” in their body or title. The results show that both New York Times and Washington Post cover Obama at much lower rates than average rate of coverage in “US Newspaper and Wires.”

The differences are particularly significant given that most articles follow the “horse race” format, and hence mention both Obama and Clinton.

  WP Clinton* WP Obama* NYT Clinton* NYT Obama* LN Obama* LN Clinton*
Apr-07 85 81 98 113 3479 2324
May-07 110 87 110 93 3309 2373
Jun-07 122 101 112 78 3425 2874
Jul-07 142 104 104 82 3820 3276
Aug-07 119 109 103 76 4070 3201
Sep-07 152 115 160 94 4088 3649
Oct-07 171 108 159 95 4813 4742
Nov-07 174 111 164 108 4391 4445
Dec-07 195 169 194 164 6134 4774
Jan-08 342 354 357 335 15276 10540
Feb-08 315 330 409 436 18857 11658
  LN Ratio WP Ratio NYT Ratio
Apr-07 1.50 0.95 1.15
May-07 1.39 0.79 0.85
Jun-07 1.19 0.83 0.70
Jul-07 1.17 0.73 0.79
Aug-07 1.27 0.92 0.74
Sep-07 1.12 0.76 0.59
Oct-07 1.01 0.63 0.60
Nov-07 0.99 0.64 0.66
Dec-07 1.28 0.87 0.85
Jan-08 1.45 1.04 0.94
Feb-08 1.62 1.05 1.07
Avg. 1.27 0.81 0.78

*Article count from LexisNexis Power Search with search term “Barack Obama” and “Hillary Clinton” respectively. The source field was constrained to “New York Times”, “Washington Post”, and “US Newspaper and Wires” respectively.

Spincycle supports Obama

17 Jan

Chaste, a contributor to the site, has crafted a persuasive argument – with a little help from me – as to why Obama is the better candidate in the Democratic primary. Read more –

Why Obama?
The system of democracy that we have been assigned to only allows us to make comparative judgments between candidates standing for election. We do not get to vote for “ideal” candidates but merely the best among the ones who are running. At this stage, Democratic partisans and independents (in some states) get to choose between Hillary Clinton and Barack Obama. One of these candidates will eventually represent the Democratic Party in November against a Republican candidate.

The past eight years in this country have been an unmitigated disaster – they have not only been financially ruinous (an average of about $12,000 of debt has been added to the already burdened back of an average American, the dollar has plummeted), they have also proven to be catastrophic for America’s reputation and caused grievous harm on vitally important issues like climate change. All of the major Republican candidates running today – while careful in distancing themselves from Bush – espouse positions that are virtually indistinguishable from that of Bush. There is little doubt in my mind that if we elect another Republican to the White House, we are going to see a rehash of the policies that have proven to be so ruinous. So for all who are concerned about having another Republican in White House come January 2008, it is important to pay attention to electability.

As Frank Rich points out in his column for the NY Times, Republicans are all set to dig up the unending mounds of dirt that emerged from the White House under Clinton Era. The Clinton closet hides more than Lewinsky’s stained blue dress; it also contains sodden episodes like the Whitewater kickbacks, the White House as guest house for donors, pardoning of Marc Rich, the Clinton library donation from the Saudis, among many others. More than that, Hillary is widely seen (justly or unjustly) as a “divisive” candidate unlikely to win any converts among independents. There is now empirical evidence –from the four contests and national opinion polls – that that is indeed true, as Obama has handily won amongst independents in each of the contests and leads amongst independents nation wide.

Let me move next to discussing their stances on the Iraq war –a core issue for a lot of Americans not only for its price tag, estimated at over $2 trillion by Columbia and Harvard professors, but also for the active disinformation campaign by the administration and the complicity of press and “opposition” leaders.

Senator Obama had the judgment and the courage to call the Iraq war correctly from the beginning. This was no happenstance or knee-jerk response. “I am not opposed to all wars. I’m opposed to dumb wars,” he had said in 2002. His argument was based not only on the insultingly egregious evidence presented for going to war but also steeped in pragmatism – he accurately predicted that American troops won’t be greeted with flowers in Iraq. His sound judgment is in part the product of his abiding interest in foreign policy: his major at Columbia was International Relations. It is also due in part to his life experiences: as a boy with a Kenyan father—and later an Indonesian stepfather—who spent four years growing up in Indonesia, and who lived in the multicultural swirl of Hawaii. Fareed Zakaria, a former managing editor of Foreign Affairs Magazine and currently Editor of Newsweek International, said that Senator Obama is the only candidate who knows “what it means not to be an American”, an understanding critical to a successful foreign policy in our time. Senator Obama is an admirer of the foreign policy of President Truman who combined the establishment of NATO with the Marshall Plan, and of President Kennedy who combined a military build up with the establishment of the Peace Corps. He wants to make Foreign Aid a strong component of American foreign policy to establish American military and moral leadership. He is currently the only candidate running for office who is open to talking to Iran without any preconditions.

Senator Obama also has a clear grasp of economic policies. Recently, a Washington Post writer decided to grade all the candidates based on the stimulus packages they proposed to address the recent economic downturn. As the candidates put together these responses relatively quickly, they accurately indicate the quality of the candidates’ understanding of the economy. Senator Obama topped with an A-, Senator Edwards and President Bush had a B-, and Senator Clinton had a C+; the best grade for a Republican candidate was a D+. The article is a very good read so I would recommend that you read it in full.

Senator Obama gives us grounds for trusting his integrity because of his record of putting his money where his mouth is. After graduating from Columbia, he worked for several years as a community organizer on the south side of Chicago, not the regulation one year that most law school applicants work to beef up their resume. After graduating Magna cum Laude from Harvard law, he chose to be a civil rights lawyer rather than making millions as a corporate lawyer.

Senator Obama also has a record of bringing people together to get things done. He has done this at least since his days at Harvard Law when he emerged as the consensus candidate as the president of the Harvard Law Review after bitter acrimony between ideological factions (no mean feat as law students like their own opinions very much, and have nothing to lose from being obdurate). In the U.S. senate, he has worked with respected Republicans like Senator Lugar over the control of conventional weapons like hand-held anti-aircraft missiles and land mines, as well as with Republican ideologues like Senator Coburn over corporate transparency legislation.

Senator Obama’s main opponent, Senator Clinton often offers up her experience as the reason for preferring her. While Senator Clinton was very competent and successful in her long career as a corporate lawyer, her career in public life has unfortunately been marked by incompetence. Her mishandling of Health care reform not only resulted in the Republican landslide of 1994 that swept away strong Democratic majorities in Congress; it put off any serious consideration of Health care reform for more than a decade.

If part of the debacle of her Health care effort may be attributed to political inexperience, no such excuse exists for her vote to authorize the war on Iraq in 2002. At the same time, Senator Clinton also voted against the Levin amendment, which would have required Mr. Bush to come to Congress for war authorization if he failed to obtain a U.N. resolution. The two votes combined make it clear that Senator Clinton’s authorization for the war on Iraq was unequivocal, and not conditional on exhaustive diplomacy as she would have us believe. Senator Clinton had access to the entire National Intelligence Estimate. The full report had considerable reservations about the WMD claims spun by the Bush administration. To date, she has consistently refused to say whether she did or did not red the full report, instead maintaining only that she was briefed on the report. Failure to read the report in an important matter like war would suggest incompetence and a lack of seriousness; her vote after reading the report would suggest that she attached more importance to the spin of the Bush administration and TV Pundits than to the assessments of career civil servants even in important matters like war. (NY Times, Hillary on War)

To err may be human, but not to learn from one’s mistakes is incompetence. Senator Clinton has refused to acknowledge that she even made a mistake in her war authorization vote, which suggests a temperament on which experience is wasted. An instance of this was her vote for the Kyl-Lieberman resolution in 2007, which urged the Bush administration to declare Iran’s Revolutionary Guards (numbering about 120,000) a “terrorist” entity. Many saw this resolution as the basis for a possible invasion of Iran in the future. Senator Clinton claimed that her vote would help negotiations with Iran. Yet calling a major state agency “terrorist,” will only make it difficult for the Iranians to compromise, and the “terrorist” label would increase domestic U.S. pressure against meaningful negotiations with Iran. Senator Clinton’s use of such flawed logic as the basis for a possible war creates grave doubts about the quality of her thinking. Fortunately, The Bush administration adopted a much more judicious and restrained approach than that advocated by Senator Clinton, and declared only a small subset of the Revolutionary Guards as a “terrorist” entity. The tension was further defused recently when the National Intelligence Estimate concluded that Iran has had no nuclear weapons program for the past few years. It however very powerfully brings into question Senator Clinton’s judgment.

Senator Clinton has chosen to run a divisive campaign making liberal use of the gender and race cards. She has recruited surrogates including her own husband to launch a vitriolic campaign, which has only divided the Democratic Party. These are the actions of a candidate who is in ONLY to win. Senator Clinton was already a polarizing influence in the nation as a whole (though this is not entirely her fault). Her calculated dividing of the Democratic Party bodes ill for her chances in November if she is the candidate, and for passing her agenda if she becomes President.

The foregoing shows that when it comes to the qualities we seek in a president, such as soundness of judgment, clarity of understanding, quality of thought, and integrity, Senator Obama is by far the better candidate. He has a much clearer understanding of both foreign policy and of the economy. The domestic programs of all three Democratic candidates are substantially comparable. Senator Obama’s proven record of uniting people and working across the isle gives him a much better chance of turning his program into legislation.

For all these reasons, I urge you to vote for Senator Obama in the primary on Feb 5.

Links:

Get Involved

On February 5th 22 states go head to head in contests that will essentially decide the Democratic candidate. If you support Obama’s candidacy, and would like to get involved, please go to Barackobama.com to learn more about how you can contribute. You can donate towards the campaign by clicking here.

A Small Government: US Federal Budget As Proportion of the Economy

11 Dec

The US federal budget is larger than that of any other country in absolute terms. The US government spends more than $2.3 trillion every year, about $500 billion dollars more than Japan, which has the second largest budget in the world at around $1.7 trillion.

Yet, as a proportion of the economy, the US federal government budget is small. The US federal budget of $2.3 trillion is about one-fifth (.197) of its $12.5 trillion GDP. The average budget-to-GDP ratio in developed countries in Europe is about twice as much. For example, UK’s budget of $951 billion is nearly half of its $2.228 trillion GDP, while France’s budget of $1.144 trillion is a little more than half of its $2.055 trillion GDP. The US budget-to-GDP ratio is closer to the ratios in the developing world. For example, India’s GDP of $720 billion is nearly five-times bigger than its budget of about $135 billion. Surprisingly, the US budget-to-GDP ratio also matches the ratio of its left-leaning northern neighbor, Canada.

Petro-economies like Saudi Arabia have budget-to-GDP ratios that fall between those of the developing world and the developed economies in Europe. Petro-economies also fall in the middle in terms of budgetary dollars spent per person. Nigeria, unsurprisingly, is an exception in this regard, with budget numbers far below that of other petro-economies.

In terms of dollars spent per person, United States is far behind developed EU economies. The budgetary allocation per person in the EU is more than double that in the US.

There are two key caveats in interpreting all this. An exclusive focus on the federal budget understates the total government spending for countries with strong federal structures like the US. But the good thing is that federal spending and state and local spending are not inversely proportional in countries with strong federal structures but are strongly correlated. Hence, while relying solely on federal budgetary expenditure does understate the impact, it doesn’t do it by as big a margin as one would expect. Take, for example, the US, whose total budget at the state level is around $600 billion, adding which pushes total government spending to $3 trillion or still about .25 of the GDP.

Secondly, one must look at not only the size of the budget but also where it is spent. For example, the US military budget accounts for a fifth of its net budget by conservative estimates. In sheer numbers, US military budget exceeds the total military spending of the rest of the world, but in terms of its size relative to US GDP, it is a measly 4%.

Developed countries pool:

Country

GDP (in trillions, 2005 estimate, unless mentioned otherwise)

Budgetary Expenditure (in trillions, 2005 est. unless mentioned otherwise)

Proportion of budget/GDP

Population
(millions)
(2006 est.)

Budget expenditure per
Person (thousands)

Germany

$2.73

$1.362

.498

82.4

16.529

France

$2.055

$1.144

.556

60.6

18.877

UK

$2.228

$.951

.426

60.4

15.74

Italy

$1.71

$.8615

.503

58.1

14.827

Norway

$246.9 billion

$131.3 billion

.531

4.5

29.177

Switzerland

$367 billion

$143.6 billion

.391

7.48

19.197

Asia Pacific

Japan

$4.664

$1.775

.380

127.4

13.932

Australia

$612.8 billion

$240.2 billion

.391

20.09

11.95

Developed North American economies

USA

$12.49 trillion

$2.466 trillion

.197

295.7

8.3395

Canada

$1.035

$152.6 billion(est. 2004)

.147

33.09

4.611

Developing country pool:

Country

GDP (2005 est.)

Budgetary Expenditure (2005 est.)

Proportion of budget/GDP

Population
(millions)
(2006 est.)

Budget expenditure per
Person

India

$720 billion

$135 billion

.1875

1,095

123

Pakistan

$89.55 billion

$20.07 billion

.223

162

124

Indonesia

$270 billion

$57.7 billion

.213

245

235

Brazil

$619.7 billion

$172.4 billion

.278

186

927

China

$2.225 trillion

$424.3 billion

.190

1,306

325

Chile

$115.6 billion

$24.75 billion

.214

16

1546

Petro-economies

Iran

$181.2 billion

$60.4 billion

.333

68

888

Saudi Arabia

$264 billion

$89.65

.339

27

3320

Venezuela

$106.1 billion

$41.27 billion

.388

25.375

1626

Nigeria

$77.33 billion

$13.54 billion

.175

128

105

All figures from CIA World Fact Book which can be accessed at: https://www.cia.gov/redirects/factbookredirect.html

Rational Ignorance: Celebrities or Politics

29 Nov

It is a commonly held belief that people are too busy to be informed about policy issues. The argument certainly seems reasonable given the oft-repeated assertion that people are leading increasingly hectic lives with little time for leisure, except that it doesn’t stand well to scrutiny. Americans, as I corroborate below, have ample leisure time and ample access to informational sources.

An average American child between the ages of 8 and 18 spends about 44.5 hours per week, or six and a half hours daily, consuming media, according to a 2005 Kaiser Family Foundation report. More than half of this time is spent in watching television programs, movies and other videos. The figures are comparable for American adults, who watch more than four hours of television each day or twenty eight hours each week on average, according to a Nielsen study. Even if we assume that Americans do other tasks, say cook or clean, simultaneously for part of the twenty eight hours, it is reasonable to conclude that Americans do have fair amount of leisure time which they spend primarily watching television.

Given that people have ample leisure time and access to information, why do people choose not to be informed about politics. Some researchers have argued that people don’t care about politics because they are rationally disinterested – they don’t feel that they can make a change hence they don’t care to be informed about it. Inarguably fan support is at best peripheral to whether a sports team will either win or lose, then why do people often times posses close to perfect information on the teams (or sport) they follow, and argue passionately over the matters related to sports?

Americans are not information averse; they are surprisingly well informed about things they care to know about like celebrity gossip and football. They also spend fair amount of time and energy collecting, regurgitating and discussing this information. While talking about sports people show a surprising amount of talent for remembering and accurately interpreting statistics. So why is it that Americans are willing to spend time and energy in collecting entertainment and sports while showing little interest in foreign or even domestic policy?

Admittedly policy issues are generally more complex than celebrity news and perhaps people’s interest in entertainment news is driven by the fact that consuming entertainment news is less cognitively demanding. The explanation seems inadequate given people (perhaps mainly men) do keep track of elaborate sports statistics and present well articulated positions on why a certain team is better than the other. One can perhaps argue that given the general lack of morally divisive issues, people feel more comfortable discussing entertainment news than say abortion. But then certainly there are policy issues that are bereft of morally divisive issues. It seems though that most political information is presented in identity packets rather than ideational packets as in choices are explained and understood as liberal or conservative choices. Choices marked with identity dissuade analysis and reflection, as research has shown, and combined with the chronic lack of factual information on relevant policy topics on American television, there isn’t much hope that people will get to critically think about the problem.