Wednesday, September 28, 2005

Why do benevolent politicians lie?

Some people say that the reason politicians lie is because the public doesn't want to hear the truth. People want to hear what they want to hear. When two candidates are running and one of the tells the truth and the other says what the public wants to hear, the one who says what the public wants to hear wins the election. Thus, and there are exceptions to this, if you want to win an election, you better start lying, because the guy who's telling you the truth doesn't have a chance.

The 1988 presidential election is an example of this. You will recall the famous lie, "Reeeaaad myyy llliiipsss, nnoooo neeewww taaaxxxeeesss" was the famous lie that Bush (father) told over and over again. Maybe Bush could say that the public misunderstood him and he was saying "Know new Taxes". I caught it at the time. I don't know why everyone else didn't see through it.

But Bush had to tell that lie because Dukakas said that in order to reverse the Reagan deficit, there's going to have to be a tax increase. But that's not what the public wanted to hear. The public wanted to be lied to. So Bush gave the public what they wanted. But had Bush told the truth, he would have lost the election to someone who would lie. In 1988 the public didn't want to hear that the Reagan debt was real and had to be paid back.

By 1992 the situation had changed. The deficit was growing exponentially and Bush didn't have a plan. "Read my lips" wasn't going to work twice. In 1992 the voters were ready for the truth about the deficit and wanted a man with a plan on how to fix it. In this case Clinton told the truth, but the public wanted to hear the truth and the Clinton plan had merit. Clinton run and one on the issue of fixing the economy and taking fiscal responsibility. But had Clinton run in 1988 and told the truth he would have lost. In 1992, the truth worked.

One of the final conclusions in Stokes is that policy switchers in Latin America 1990's did not act shirking, say, pursuing their own interest. In fact, they just wanted to remain in office, to be reelected, and in many cases they succeed. Those who promoted security-oriented agendas in campaign and after being elected, change their mind to efficiency-oriented (market) policies were succesful in addresing the economy. Markets were very jealous watchers of those politicians, and they knew that. Lenders buffered those governments to the neoliberal policies, but they also gave those switchers support, confidence and approval to stabilize their economies. And this tandem proved fabulous for a while, compared to consistent governments, who failed to produce growth and stability.

But, why do benevolent politicians lie? Are politicians forced to lie about their unpopular programs if they want to be the minimal chance of being in office? This would be a real unpleasant world if this was true. In that world, politicians only could be believed in their final goals, not in the means they say are the appropiate to get these goals. And one never is sure about the relation between means -that you can see-and goals -that you just can expect, at best.

Are cuts in taxes the best mean to stop the budget deficit in the US? Or, in a debt crisis, when a raise in taxes is needed, who should pay most for the new increase?
Obviously this is a game of winners and losers, specially in the case of unpopular policies. And each social group has it preference, if we can categorize them according to some criteria on the impact the new policy will have on them -tax the rich, tax the poor. Alesina and Drazen (1991)analyzed that to discover that this is a war-of-attrition game, in which both sides compete maintaining the unsustainable status quo, until some of both groups accepts to bear the biggest part of the painful reform. That explains why some unpopular policies are delayed more or less time: when a new election creates a majority that overcomes the equilibrium between both groups, or when one of the groups cannot shield itself much more time under the crisis (think on hiperinflation, f.ex.), the other group impose its economic receipt. And curiously they found that most of the times it is a regressive solution, against the poor.

In this social tension and conflict, politicians lie. And they switch their promises. They try to avoid those scenarios of mass discussion about the means, that delay and delay the painful reforms. And, additionally, increase the social costs of those reforms! Sometimes a quick reforming start is a second-best solution v. a big debate about who should bear the costs of the reform, specially if it is true that poor groups are more likely to lose the debate...

Wednesday, September 21, 2005

Mandates and Democracy

According to O'Donnell (1994), representative democracy requires from elected politicians to hold to the voters' mandate. That is, what they promised, it should be fulfill. And if they don't succeed in doing so, they should be fired in the next elections.

Stokes (2001) sings a different song. Her vision of representative democracy accepts that politicians change their mind after being elected if they think there are better roads to wellbeing. So, in the concept of mandate, there is a distinction between preferred goals and preferred ways to achieve them. Politicians should attend to the first element in any case, in order to be accountable; but they can switch their mind about the best means to get those goals without being attempting against democracy.

In the case of Latin American states, there is a curious correlation between the strenght of political parties (age, cohesion, militants, etc) and doing policy switches. Switches to neoliberalism occured in a set of nations (including Argentina, Peru or Venezuela), but turned to be massively supported after they took place. Corruption and stagnation would defeat those presidents two or more terms after the policy switches, but the initial support grew to astronomic levels in all those countries.

Germany, Coalitions and Reforms.

Germany is yet in the news as the German parties try to address some kind of multicoloured coalition. Parliamentarism offers that kind of stuff: results in which there is no a clear winner and a set of temptative coalitions to rule a country in one direction or another.

Fortunately for the traditional Volksparteien parties, SPD and CDU, the hecatomb in the polls was minimised because no populist neither nationalist party grew at the expenses of the traditional actors, unlike Austria, Denmark or Switzerland. The German past has much to do with that.

Politicians at the stakes
Politicians and parties have two kind of preferences, staying in office and executing their preferred policies, and not necessarily in that order. All of them can agree in the first point, but obviously they will have to accomodate the second point in order to present a reforming agenda for an economy that languishes. And this is where the discussion grows.

The media is asking if German politicians would be able to get an agreement and conform a new government. They need some figure, a chancellor, apart from the soup of acronyms, to cover their front page and to keep the attention of the audience.

Unfortunately, they are not focussing the attention in the real dilemma: a government will be formed for sure, but his ability to reform is not granted. I found, in a recent paper, that coalitions with parties of different ideologies (at the left-right from the median voter) are unable to impulse great reforms. Only parties in the same side of the ideological spectrum were able to impulse big reforms in the 110 coalition cases that I found in the last three decades in Europe.

Any kind of coalition formed by three or more parties from different segments of the Left and the Right is condemning Germany to the Status Quo and failed reforms that won't fulfill the needs of more than five million of unemployed voters and sluggish wages. In the next five years, the competition from China and other emerging economies will be ferocius, and the next call to the ballot-box can be more dramatic. A Grand Coalition will calm now the markets, but it's a ticket for an express to the Hell. Both big parties will be accused of the blockade in the reforms.

A red-red-green coalition will entail radical reforms for sure. A black-yellow + a variant ally (SPD, Green) will likely do the same. But a big mix is a passport for more stagnation in Central Europe. Theory and evidence (1) (2) (3) is clear about that.

Tuesday, September 20, 2005

Reset and Go...

Three months after the last post, I have decided to try a dramatic effort to put forward my research: an Spartan daily schedule, and I'm comitted in being really strict with that.

Note: the time lenght of each spell is adaptative to contextual needs.