Sunday, April 25, 2004

According to a report in the Mexico City daily La Jornada, the IMF and World Bank have agreed that Latin American countries need to invest more in social and infrastructure development, in lieu of focusing on repayment of debt. According to the article in La Jornada:

Washington, DC, 24 de abril. En una discusión promovida principalmente por Brasil y Argentina, América Latina logró incluir en la agenda de la reunión anual de primavera del Fondo Monetario Internacional (FMI) y del Banco Mundial la necesidad de que los gobiernos hagan más inversión social y en infraestructura en lugar de concentrarse en generar excedentes para pagar la deuda pública, como ocurre hasta ahora.

En un cambio de su discurso tradicional, el FMI aceptó que es necesario aumentar la inversión social en América Latina, luego de hacer manifiesta su inquietud por el creciente malestar social en la región, especialmente en los países ubicados debajo de la línea del Ecuador. El organismo consideró que debe buscarse un equilibrio entre elevar el monto que los presupuestos públicos destinan a inversión social y de infraestructura, pero también buscar que la deuda pública mejore su perfil en cuanto a plazos de pago y tasas de interés.

The news item indicates that pressure from representatives from Brazil and Argentina led to the decision by the IMF and Bank to shift emphasis. The IMF and World Bank have usually recognized that the state should provide public infrastructure and social services like education and health care. That part is not new. I guess what is new is the recognition that the limited shares of the budget going to these services in most Latin American countries is not nearly enough. In many cases, social spending committments in Latin America have not recovered from the 1980s debt crisis. Though social spending has increased in most countries during the 1990s, it is no where near the levels of the late 1970s in most places.

The full article can be found here.

In another version of the story, studies suggest that IMF lending policies are actually in part responsible for the deteriorating infrastructure of many Latin American countries. According to an article posted on Bloomberg,

The International Monetary Fund's lending programs may have hurt some countries' ability to invest in roads, ports and utilities and other public works, said Anne Krueger, the IMF's acting managing director.

IMF board members ``generally supported'' plans to change accounting rules to allow governments to spend more on such projects when under IMF loan programs, Krueger said in a statement issued from the Washington-based lender....

...The IMF board said the limitations ``may be an impediment to growth,'' Krueger said in the statement. The lender's policies ``may have contributed in some instances to insufficient spending on infrastructure, at least in the short run.''

It will explore ways it can help boost investment from private industry as well increase spending on these projects even when the lender requires measures to cut budget deficits.

The full article is online.

Interesting that the Bloomberg article focuses on infrasture, while the Mexican article talks also about social expenditures. So, I went to the transcript of the press conference at the IMF website, which is
online. Early in the press conference, there were questions about infrastructure investment.

Anne Krueger said:

Obviously, getting good infrastructure is important for economic growth, and this is something that everybody recognizes. There can, however, also be some projects that are not necessarily so good. So, the first step always is to check and make sure that what is currently being undertaken is, indeed, the highest-return sorts of activities. There are some cases that I can—but won't—name, where that is clearly not true.

That much said, the second thing is that, also for growth, macroeconomic stability is important. Obviously, in cases where there is room and there is financing available, and where there are no macroeconomic difficulties of either two kinds—and I will come back to that in a minute—then there is no problem. The problem arises in countries where either there is already enough macroeconomic pressure or where there is a debt sustainability issue and where, for whatever set of reasons, countries cannot raise taxes or find other room within their budget to finance the appropriate infrastructure.

Now, the trouble is that, of course, if you increase infrastructure and you destabilize the macroeconomy, you might gain a little bit of growth on the one hand, but you lose probably a lot over here by the time you have to restabilize it. So, the question is, in circumstances where a country's debt is sufficiently high so that, even though it could borrow, it would do so only at the risk of getting its debt situation worse, what is the appropriate balance? That is where we have been grappling. We are trying to look and see if we can't find more ways to be constructive in terms of redirecting expenditures to other things within the fiscal accounts.

And the discussion of social spending was in reference to a question about Argentina. The Argentine President, Kirschner, has been taking a hard-line stance with the IMF regarding Argentina's debt. His position is that the debt cannot be repaid at the expense of the welfare of Argentines, especially given that the standard of living in Argentina was devastated by the 2001-2002 economic crisis. This stance is very popular with most Argentines, so Krirshner is unlikely to back down much.

So, one of the journalists asked Krueger "Coming back to the questions on the fiscal surplus and the social expenditure, in the case of Argentina there is this debate now about increasing the fiscal surplus, but the Argentine government is resisting this idea because of the social problems. How do you see the relationship between the social problems in Argentina and the payment of their debt?" And she replied:

Well, clearly both things came out of the Argentine social crisis earlier in the sense that there was a debt problem, and meanwhile one of the reasons that real GDP plummeted as rapidly as it did, especially in 2002, was precisely because of the default on the debt. So, in that sense, they are related in causation.

I guess if I have a disagreement with the Argentine authorities, I believe that in addressing the issue of poverty and social needs, the most important thing that can happen—not the only thing; social programs are important, and so on—but a very important thing is, of course, to get accelerated growth on a sustainable basis. I believe that getting a resolution of the difficulties with the debtors is going to be critical, because Argentina is going to need to increase investment as it goes forward if it is to sustain anything like its current growth rates, simply because it has had excess capacity and, as that capacity goes down, bottlenecks will appear without that investment.

So, I see addressing the issues, getting the debt issue behind, getting a stronger primary surplus, as related in the sense that that is what will give better assurance of the sustainability of growth. The authorities talk about these as being contradictory and then we look at, for example, Turkey, where they had a crisis that, in many respects, was as severe as Argentina, and they chose to maintain debt service and, in so doing, have been running a primary surplus of 6 1/2 percent of GDP while getting growth rates at around 8 percent and getting their inflation rate way down. It seems to me the record is not that these are opposing objectives but that getting economic growth back on a sustainable footing is an objective that requires, on the one hand, addressing the debt issue and, on the other hand, enables the alleviation of poverty.

You can view the entire press conference online.

posted by Michelle @ 1:40 PM,

Thursday, April 22, 2004

Blogging will be intermittent for the next few days since it is the end of the semester and I have a revolving door on my office through which students I haven't seen all semester pass to ask for last minute extra credit.

Apparently, Latin Americans only weakly support democracy as an institution and have quickly forgotten the crimes of the military regimes throughout the region in the 1960s, 70s, and 1980s. According to a new study by the United Nations, slightly more than half of Latin Americans would support a dictatorship if they thought it would solve their country's economic problems.

According to a story in El Tiempo from Colombia:

Las conclusiones centrales del informe lanzan una alerta sobre la enorme crisis de la democracia. De ese modo, al preguntárseles a los encuestados por su convicción en este modelo político, un 43 por ciento se declara demócrata, un 30,5 por ciento, ambivalente y un 26,5 por ciento (más de la cuarta parte) se reconoce abiertamente antidemocrático.

En esa misma línea, un 58,1 por ciento está de acuerdo con que el presidente de su país vaya más allá de las leyes, y un 56 cree que es más importante desarrollo económico que democracia.

What this says is that 43% expressed a clear preference for democracy, 30.5% were clearly ambivalent, and another 26.6% were unsupportive of democracy. Further 58.1% believe their president goes outside the law and 56% think that economic development is more important than democracy. The full story is online.

According to an article in the New York Times on the same UN report:

Since 2000, four elected presidents in the 18 countries surveyed have been forced to step down because of plunges in public support, and others may now be in peril. The countries surveyed were Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

All of these countries have either introduced or consolidated electoral democracy over the past 25 years, emerging from unrepresentative one-party politics or harsh and repressive military rule. All of them hold regular elections that meet international standards of fairness and enjoy a free press and basic civil liberties....

...The report attributes the erosion of confidence in elected governments to slow economic growth, social inequality and ineffective legal systems and social services. Despite gains in human rights from the days of dictatorship, most Latin Americans, it says, still cannot expect equal treatment before the law because of abusive police practices, politicized judiciaries and widespread corruption.

The full article is online.

In some regards, none of this should be surpising. Many of the military regimes of the 1960s (Brazil 1964, with the help of the U.S. government) and 1970s (Chile 1973, again with the implicit support of the U.S. government, and Argentina in 1966 and 1976) were ushered into power in Latin America on the heels of poor economic performance, high inflation, and high unemployment. And the authoritarian regimes did turn around those economies for a while. But in the end, another round of economic crisis in the 1980s combined with the high social costs associated with the military regimes (deaths and disappearances) led to democratic transitions. Political scientists, for the most part, don't really think that authoritarian regimes are any better than democracies in promoting economic growth. Normatively, we certainly hope that's not the case, anyway.

What is apparent, though, from the UN study and from talking to Latin Americans in general, is that the region needs and wants stable economic growth and will punish political leaders (democratic or otherwise) that don't provide it.

posted by Michelle @ 9:13 AM, 0 comments

Saturday, April 17, 2004

I've spent the last few days at the Midwest Political Science Association Annual Meeting. So, I haven't watched or listened to the news lately.

But, I have listened to lots of political science presentations and commentary on papers. What I've learned is this....additional control variables or pet explanatory variables are like, well, you-know-the-saying, and everyone has one. Nearly every discussant or commentator from the audience has some useful suggestion for some poor paper presenter like:

"I understand that you are trying to explain the breakdown of coalition governments in Europe in the 1990s, but have ever considered including the per capita coffee consumption as a predictor of coalition breakdowns? I find that it makes my colleagues and I consume different amount of coffee and it tends to make some of us more cranky than others--really quite terrible in faculty meetings [irritating chuckle and nod to the guy in a cheap suit and comfortable shoes sitting next to him]. Maybe you should include coffee consumption in your analysis to see if it has an effect."

Luckily, the discussant for my paper had more useful things to say.

And, hopefully tomorrow, I will pass along the favor to others. We'll see how that goes.





posted by Michelle @ 12:45 PM, 0 comments

Monday, April 12, 2004

Geez. Great advertising for gambling here. Who knew that there were "professional gamblers" out there. Seems like a bad business to be in, since statistically you will always lose money.




posted by Michelle @ 11:36 AM, 0 comments

Saturday, April 10, 2004

Kosher coke.


posted by Michelle @ 11:37 AM, 0 comments

Friday, April 09, 2004

Midwest paper, Part 3.

Part 3: Social spending stability and political veto players

In the final part of the paper, I argue that a theoretically appropriate test of the veto players argument requires a dependent variable that measures the amount of spending change--social spending stability. Social spending stability is constructed as the absolute value of the annual change in social spending.

To measure the number and dispersion of veto players, I use a measure of political constraints developed by a professor named Henisz. This measure represents the theoretical argument made by Tsebelis.

And.....it turns out, when you use the theoretically appropriate measure, increases in the number and dispersion of veto players results in more social spending stability.

Obvious, right. Well, somewhat, but it also explains why the other results (using the level of spending) are inconsistent.

So that's it. I just gotta finish writing it.



posted by Michelle @ 7:33 PM, 0 comments





Part 2 of the midwest paper....(which is still not done....EEEK).


Second: social spending and democratic political institutions. Though Tsebelis has a good argument about why veto players reduce change, some political scientists insist on trying to explain variations in levels of social spending by differences in political institutions. For instance, when you have many political parties in the legislature or parliament, you're likely to see more (a higher level of ) spending on social programs because of logrolling. (The Tsebelis-type argument says you can't predict the level of spending, just the rate at which it will change.) Swank calls this a characteristic "inclusive electoral institutions," like proportional representation (which is directly related to the effective number of parties).

On the other hand, "dispersion of decision-making authority" (Swank) results in lower levels of spending. Dispersion is higher in governments with federalism, bi-cameralism (that's 2 houses in the legislature), and the use of referendums. The book by Swank and articles by Birchfield (my friend, Vicki) and Crepaz (1998) and Crepaz and Moser (2004) all model these relationships in OECD countries.

For OECD data on social programs and inequality, this literature finds that proportional representation and more parties leads to higher levels of spending, and that federalism, bi-cameralism, and divided government lead to lower levels of spending.

So....I try to see if the same results apply to middle-income countries in my sample. And they don't...or at least not consistently.

Why? Because....the Tsebelis notion of political veto players is probably right....Institutions don't predict levels of spending well, but they should predict the amount of change in spending. That is, political institutions and veto players can predict the amount of "social spending stability" (an analogue to Tsebelis's notion of "policy stability").

Coming soon....Part 3: Social spending stability and political institutions.




BTW: Look Freaks and Geeks on video. Listen to the review on NPR.

posted by Michelle @ 3:54 PM, 0 comments

Thursday, April 08, 2004

Random news story: Princeton plans to curb grade inflation.




posted by Michelle @ 5:03 PM, 0 comments





Quick update on the Midwest paper. The results look good, and the write-up is underway. Essentially, the work progresses in three parts.

First: Spending and political regime type (the fancy way we political scientists refer to the difference between democracies and authoritarian regimes): Theory says that democracies should spend more on social programs on average because the median voter in a democracy demands more social spending than the (hypothetical) median voter in an authoritarian regime. This is one instance where a political scientist has come up with a cool formal model to demonstrate this relationship. See the new book by Carles Boix (just how do you pronounce that, anyway?). My results suggest that democracies do spend more on average on social programs.

At the same time, however, broad literatures suggest that authoritarian regimes are able to implement adjustment policies, structural reforms, etc. more easily than democratic regimes. Variants of this argument usually make general references to the fact that democratic governments have to respond to voters and special interests, while authoritarian governments can just repress dissident voices. Another way to think about this is in terms of veto players. While authoritarian governments are not always unitary actors (i.e., there might be junta or divisions between the army and navy), the number of veto players and their ideological distance from one another are usually going to be fewer and smaller than the veto players and ideological distances in democracies. All this is inspired, in part, by that book by G. Tsebelis that I was telling you about the other day.

So....presumably if adjustments need to be made to the amount of money that is being spent on education, health care or social security in order to enhance the competitiveness of a country's economy, an authoritarian regime would be able to take more definite or deliberate action to make those adjustments. That is, authoritarian regimes (b/c they have fewer veto players and the ideological distances among those that make up government are likely to be small) should "respond" to globalization pressures more dramatically than democracies. My results support this interpretation, too.

Though democracies, on average, spend more than authoritarian regimes on social programs...as globalization increases (especially trade integration), authoritarian regimes begin to outspend democratic regimes. I have a really nice graph to depict this. Maybe some day I'll figure out a way to post it here.

But that's just part 1. Stay tuned for parts 2 and 3.

In the mean time, I have to go to class and collect papers. My kiddos are proposing institutional reforms that will turn around Latin America's economic development. I'll let you know what they think.



posted by Michelle @ 1:51 PM, 0 comments

Wednesday, April 07, 2004

Georgia Tech has been in the news again--this time on NPR. The International Affairs student that has been stirring up controversy on campus (see yesterday's post) was interviewed for Morning Edition, along with Stanley Fish.

Listen.



posted by Michelle @ 10:19 AM, 0 comments





Not only is academic freedom at risk in Georgia, but a Georgia Representative in the House introduced a bill last fall to protect our youth nationwide from insidious indoctrination by liberal college professors.

I love this state.



posted by Michelle @ 9:36 AM, 0 comments

Tuesday, April 06, 2004

Here we go again. This recent article in the local Atlanta Journal Constitution, owned by Cox Communications (which owns 17 newspapers and 25 non-dailies, among cable and other media outlets), was written by two Georgia Tech students in response to the article run last week in the AJC regarding academic prejudice at Tech.

Here are the highlights of the article by Doug Gladden and John Putrich:

.....To recap the story, a Tech professor is accused of saying to a student: "You don't know what you're talking about. George Bush isn't doing anything for you. He's too busy pimping for the Christian Coalition."

As students in that class, we feel obligated to speak out on behalf of a professor whom we believe to be fair and highly capable. It doesn't matter whether or not we agree with what she said. What matters is that alleging "indoctrination" or "discrimination" based on the remark she made is nothing more than a political witch hunt.

The professor was reviewing for an upcoming test when two students decided to engage her in a debate that had nothing to do with the topic at hand. Keep in mind that these same students have previously started discussions on current events rather than the course material. They routinely tried to steer these discussions to get an opinionated reaction from the professor.

After they made their point, the professor replied with her own view, and then encouraged the class not simply to be flag-wavers for any party, but to learn about and support issues rather than a party platform. The professor's remark was much more a way to end the debate and return to the material in the course rather than an attempt at indoctrination....

...The reality is that students on this campus are starting a "Students for Academic Freedom" organization and are desperate for a test case. The student filing the grievance had stated, upon failing her first test in the class, that she thought it was due to her political views. We would suggest that the grade had nothing to do with political opinion and everything to do with the student not knowing the material on the test.

You can read the full article.

For those that aren't familiar, Students for Academic Freedom is an organization that is interested in making sure liberal professors don't indoctrinate our youth.

I'm not sure if the organization was really founded by students or just David Horowitz, who also wrote the Student's Bill of Rights. I'm not sure that's the Bill of Rights that my students would have written. At Tech, they'd like their profs to show up prepared, show some interest in them, and teach. They are smart enough to not be indoctrinated.

But I digress.... The Students for Academic Freedom website has other useful information like "How to Research Faculty Bias." I thought this might suggest that students look up our scholarly research and try to find hidden agendas.

But no, the SFAF wants students to investigate our private political preferences. The site encourages students to look up the political affiliations of professors through voter registration records (with helpful advice, like, "start with literature and comparative politics" and "try to include one science or technology department" with a handy list of the science departments to include). The research design is not exactly bias free, since they are encouraging students to "oversample" fields that are likely to have more lefty profs and under sample the righty sciences.

Not only do they encourage their students to do all this important (biased) research, but to share their results:

Once returned from the registrar’s office, enter the party affiliation in the Excel file, and email the results in an attachment to: info@sfaf.org. Your contribution and hard work are greatly appreciated, and will be acknowledged.

Great. Encourage students to "investigate" and intimidate their professors.

However, if the folks at sfaf.org were really on top of things, they would know that:

1. Most of that info is available online.
2. That Fundrace.org is a great tool for that type of research.

Luckily, here at Tech, the climate is pretty conservative, since we've got all those engineering types on campus. In fact, one of my students told my class that he saw a Math professor tear down posters that he was hanging for a peace rally in the spring of 2003 (i.e., height of the Iraq conflict). No, that's not intimidating....(and yes, he had permission to hang the flyers up on campus).

Just food for thought.

I gotta get back to my Midwest paper.

posted by Michelle @ 9:45 PM, 0 comments





So, the Jackets let the NCAA championship slip through their fingers. I'd like to be able to say that it was an exciting game, but that only applies to the last 3 minutes unfortunately.

On other fronts, I am still working on my paper for the Midwest Political Science Association meeting in Chicago. Essentially, I'm trying to explain how domestic political institutions constrain the abilities of middle-income states to respond to globalization pressures and adjust their commitments to social spending (health, education, and social security). Essentially, I could also answer a lot of other questions with the same data, but that would be a book rather than a paper. So, I'm having trouble keeping the paper focused because I know that readers will respond by suggesting a lot of other "factors" that I should control for. Then, there is no agreement on how to model this type of data, so the methodologists will have lots of suggestions on that account. Troubling.

Overall, though, it appears that domestic institutions matter. Authoritarian regimes are much more likely than democracies to increase their investment in health and education in order to keep up and maintain their competitiveness in the world market. Democracies must get bogged down in debates about the appropriate "level" of health and education spending, and in the end, fail to invest enough in human capital. This is interesting because usually we (political scientists) think that the median voter in a democracy will demand higher human capital investment than the median voter in an authoritarian regime (i.e., the bourgeoisie that back the dictatorship).

My efforts to determine how different political institutions in democracies affect social spending commitments are more complicated. In essence, one body of political science literature on political institutions suggests that as the number of veto players (or decision-makers) increases, the likelihood of change decreases. This intuitive and simple argument explains why divided governments in the U.S. are unable to pass budgets or enact significant legislation: the parties just don't agree and there is a division of power between the executive and legislative branches. Of course, some political scientists have formalized this simple idea so as to make it nearly incomprehensible. See, for instance, the recent (in academic time) book by George Tsebelis. My goodness, that book takes a nice simple argument, and makes it overly complicated.

But anyway....Back to my story. So this body of literature suggests that as the number of actors involved in decision-making increases, policy change becomes less likely. The number of actors, in itself, does not predict the direction of change, just the amount of change. To test this straightforward proposition becomes more complicated, because usually we're interested not only in the size of change but also whether the change is resulting in more or less spending. So, to really "test" the hypothesis of the veto player literature, I need to look at the effect of political institutions on the amount of change, regardless of the direction of change. When I model the effect of institutions on the size of change, the effect is consistently negative; more veto players lead to less change. This effect, however, is difficult to demonstrate in a picture, so I'm not sure if I'll convince the skeptics out there.

And, of course, to make matters worse. There are two guys out there that have both published studies on OECD countries that say that there are different types of political institutions. That more parties can lead to more social spending, but divided power (say, between a legislative and executive branch or due to federalism) reduces social spending. These are the results in Duane Swank's recent book and in a super-recent (even by academic standards) article by Crepaz and Moser in Comparative Political Studies. Note, however, that we are now talking about the effects of institutions on more or less spending, rather than just the amount of change in spending. Of course, when I run similar models to theirs using my data for middle-income countries, I don't get the same results. Something fishy is going on....



posted by Michelle @ 10:03 AM, 0 comments

Friday, April 02, 2004

Well, well, well. Georgia Tech is in the Final Four, who would have thunk it? Of course, the success of our men's basketball team also means that my students want extensions on assignments, excused absences to go to San Antonio, and are just generally getting rowdy.

I'm behind on finishing my Midwest PSA paper, as usual. I have the data and results, it's just a matter of writing it all up. Which, in part, explains why I'm behind on my weblog....I haven't even had time to read anything interesting.

Hmmmm....



posted by Michelle @ 8:56 AM, 0 comments