Thinking Aloud: Surprise! More Money=More Electoral Influence

Sept. 1, 2014 by Darius 

The 2010 landmark Supreme Court case Citizens United v. Federal Election Commission certainly changed US politics.  But did it give one side a bigger advantage than the other?  Perhaps not surprisingly, the answer is “yes.”  According to a new study by a team of economists, eliminating restrictions on campaign donations by unions and corporations has benefited Republicans running in state races by a statistically significant margin.

The study compared outcomes in the 22 states that had campaign finance laws struck down by Citizens United with outcomesin the 28 states that never had such laws.  It found that corporate money outweighed union money enough to mean that Republicans were 6% more likely to win a statewide election.  That may not seem like a lot, but it is certainly enough to make the difference between who controls a state’s legislature or governor’s office.

This study, by mathematically demonstrating that labor unions (which lean heavily Democratic) cannot keep up with corporations (which lean heavily Republican), is another data point chronicling the ascendance of corporations and the declining influence of labor across the country.  Given that I’m writing this on Labor Day, that news is both timely and sad.labor

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News You Really Need To See: “In New Pledge, NATO Nations Would Band Together Against Cyberattacks”

“In New Pledge, NATO Nations Would Band Together Against Cyberattacks”

The New York Times, September 1, 2014, p.A5

“When President Obama meets with other NATO leaders later this week, they are expected to ratify what seems, at first glance, a far-reaching change in the organization’s mission of collective defense: For the first time, a cyberattack on any of the 28 NATO nations could be declared an attack on all of them, much like a ground invasion or an airborne bombing. … But in interviews, NATO officials concede that so far their cyberskills are limited at best.  While NATO has built a gleaming new computer security center, and now routinely runs computer exercises, it possesses no cyberweapons of its own — and, apparently, no strategy for how it might use the weapons of member states to strike back in a computer conflict.  In fact, its most powerful members, led by the United States and Britain, have spent billions of dollars on secret computer offensive programs — but they have declined so far to tell NATO leaders what kind of weapons they might contribute in a NATO-led computer conflict. … NATO’s tentative steps into the realm of computer conflict, at a moment when Russian, Chinese and Iranian ‘patriotic hackers’ have run increasingly sophisticated campaigns, show the alliance’s troubles in innovating to keep up with modern warfare, at a moment when it is also facing one of its greatest political challenges since the end of the Cold War.  The change in NATO’s definition of an ‘armed attack’ will leave deliberately unclear what would constitute a cyberattack so large that the alliance might declare that the action against one of its members could lead to response by the entire alliance under Article V of its charter.”

Quickie Analysis:  More of a statement to potential enemies than an actual plan among allies.  

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Thinking Aloud: Poised for the Future, a New Growth Index

Aug. 31, 2014 by Darius 

Which countries are poised to be the big winners in terms of economic growth in the coming decades?

I’ve created a new metric, which I’ll call the Poised for the Future Index, which combines three measurements: improvements in a country’s levels of educational attainment, its corruption levels, and its political stability.   Over the next few weeks, I’ll present the leaders on the Poised for the Future Index.  Today I’ll discuss my methodology and thought process.

The first factor relates to education.  If a country wants to grow its share of the world economy, it needs to continue to make improvements in education.  A country need not be tops in educational attainment to experience rapid growth; in fact, the countries with the highest levels of educational attainment are more likely to grow relatively slowly because they also have correspondingly high labor rates.  Instead, a country that has made solid improvements in its average educational levels is poised to grow.  Specifically, I look at the change in a country’s score on the UN Education Index, which combines mean years of schooling in a population and expected years of schooling for children.  The Poised for the Future Index reflects, first of all, countries that have seen the greatest increase in their UN Education Index score from 2005 to 2013.  Unfortunately for some countries, though, even great growth cannot overcome a low baseline education level.  Therefore, the Poised for the Future Index includes only those countries with a score on the UN Education Index above 0.600 (0 being low and 1 being high).  Burundi, Burkina Faso, Djibouti, and Mali, for example, have all seen impressive growth in their levels of educational attainment over the last eight years but still don’t make the standard of .600 on the UN Education Index so they didn’t make the Poised for the Future Index.

The second factor is corruption.  Neither foreign nor domestic businesses are going to be eager to invest in countries with high levels of corruption.  Corruption sucks away money that could go to so many other things, making it a true parasite on any country’s economic future.  My Poised for the Future Index only includes countries ranked by Transparency International as among the 75 least corrupt countries in the world.  Iran, Angola, Nepal, Mongolia, Benin, China, Cameroon, Algeria, and others all fell off the list because they could meet the educational standards but not the corruption standards.

The final factor is political stability.  Countries that lack basic political stability will not be able to succeed in attracting investment or growing economically; after all, who wants to invest when your factory might be ransacked by insurgents or taken over by the military?  For this reason, only countries with a score of 75 or lower on the Fragile States Index can qualify for the Poised for the Future Index.  Rwanda and Bhutan, for instance, both had the necessary improvements in educational attainment and the requisite lack of corruption, but neither one made the Fragile States cutoff.

Next week, we’ll begin our examination of the countries on the Poised for the Future Index.

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News You Really Need To See: “Facing Hard-Liners and Sanctions, Iran’s Leader Toughens Talk”

“Facing Hard-Liners and Sanctions, Iran’s Leader Toughens Talk”

The New York Times, August 31, 2014, p.A11

“For more than a year, Iran’s president, Hassan Rouhani, had been walking a political tightrope by trying to restore some level of relations with the country’s archenemy, the United States.  His hard-line opponents pelted him with eggs for his efforts, while those who voted for him hoped for a possible thaw. … But on Saturday Mr. Rouhani struck a starkly different tone.  In a news conference that marked his being in office more than a year, Mr. Rouhani echoed the longstanding Iranian view that the United States can never be trusted.  Not only did he rule out any cooperation on fighting regional terrorist groups (after suggesting the idea himself last month), he also hinted that American actions were responsible for creating the Islamic State in Iraq and Syria, as well as Al Qaeda and the Taliban, a mantra offered by the Iranian leadership. … In addition, he expressed doubt about whether the United States had ‘adequate good will’ to resolve the nuclear issue, and called new sanctions by the Obama administration over the nuclear program ‘a very ugly move.’ … Some analysts said Mr. Rouhani’s angry tone Saturday might be aimed at pre-empting criticism from influential hard-liners who may be waiting for the right moment to attack the government.  Already some hard-liners are calling for an end to the talks because of the new sanctions.”

Quickie Analysis:  Rouhani has received precious few “deliverables” for his initial softer stance on the US.  Due to domestic pressures, his clock is ticking.

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Thinking Aloud: Yemen’s Unhealthy Habits

Aug. 30, 2014 by Darius 

Yemen isn’t a country that gets a lot of press attention.  For the last few weeks, the capital, Sanaa, has been rocked by protests led by the Houthi movement of northern Yemen.  The protesters originally demanded that the government reinstate fuel subsidies and have since expanded their demands to include a new government altogether.  Like everything else in Yemen, these fuel subsidies are more than meets the eye.

Yemen has some oil reserves but far fewer than those of its Gulf neighbors, and oil production peaked several decades ago.  Nevertheless, the government has subsidized fuel for decades.  Like any subsidies tend to, these fuel subsidies have grown to represent a larger and larger portion of Yemen’s budget.  In the last few years, they have become 30% of the total.

So what are these subsidies used for, anyway?  Some go to “normal” uses, like cars and trucks.  But a large chunk of fuel is used for khat production.  Khat is a mild stimulant, chewed as a leaf, that is wildly popular in Yemen – 50% of men chew it every day, typically for several hours every afternoon – and it is only used fresh.

Where does fuel enter into khat production?  It turns out Yemen isn’t just running out of oil.  It’s also running out of water – at an even faster rate.  Five years ago, it was estimated that 40% of Sanaa’s residents might need to relocate for lack of water within 25 years.  Since then, the problem has only gotten worse.  Why is Yemen using water so quickly?  To irrigate khat.  How is the water gotten out of the ground to irrigate the khat?  Diesel pumps.  And now the circle back to fuel subsidies is complete.

Yemen’s fuel subsidies serve an absolutely horrendous vicious cycle.  The government spends 30% of its budget on fuel, which depletes Yemen’s water supply to produce a drug that further impedes economic productivity.

Clearly, the financially responsible thing to do is to get rid of the fuel subsidies entirely, as the government tried to do.  Unfortunately, the mass protests are a sign of how unpopular that move has been.  Yemenis can’t usually agree on much of anything, but they can apparently agree that the government should keep spending 30% of its budget to fund the nation’s collective drug habit.

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News You Really Need To See: “Suriname Leader’s Son Pleads Guilty”

“Suriname Leader’s Son Pleads Guilty”

The Washington Post, August 30, 2014, p.A3

The son of the president of Suriname pleaded guilty Friday to charges he sought to offer a home base in his South American country to the Lebanese militant group Hezbollah.  Dino Bouterse, once picked by his father to lead a counter-terrorism unit in Suriname, told a judge in federal court in Manhattan that as part of the scheme he provided a false Surinamese passport to a person he believed was a Hezbollah operative.  He also pleaded guilty to drug trafficking and firearms charges.  The guilty plea came a year after Bouterse’s arrest in Panama on charges he conspired to smuggle cocaine into the United States.  He had already been extradited and jailed in the United States when authorities added terrorism charges to his case.  Those charges accused him of agreeing to accept a multimillion-dollar payoff in exchange for allowing large numbers of Hezbollah fighters to use Suriname as a base for attacking American targets.”

Quickie Analysis:  “Suriname” and “Hezbollah” are not two things that normally go together.

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Thinking Aloud: “The Lives of Others”

Aug. 29, 2014 by Darius 

If you’re looking for a good movie for the weekend, I would highly recommend the German film The Lives of Others.

The Lives of Others takes place in East Germany in 1984.  The country is under control of the Stasi, probably the most comprehensive state security apparatus in history (see  Gerd Wiesler is a captain in the Stasi, responsible for interrogating prisoners and conducting surveillance of suspected dissidents.  He is a true believer in the cause of socialism and the East German state, throwing himself into his work with all his being.  Captain Wiesler is tasked with investigating Georg Dreyman, a popular writer and playwright who appears to be “clean” politically.  When Wiesler learns that the assignment was not due to any evidence against Dreyman but because a top government minister wanted to make sexual advances on Dreyman’s actress girlfriend, he begins to doubt himself, his mission, and the entire East German system.

Two things set apart The Lives of Others as a film.  The first is the great attention to detail in the film; viewers are completely transported to 1980s East Germany.  There are a few historical inaccuracies to allow for the plot, but The Lives of Others is quite historically accurate in most regards, uncomfortably so for East Germans by some accounts.  The second aspect of The Lives of Others that stands out is the acting.  The lead actors play their roles marvelously, especially Captain Wiesler.  Unfortunately, Ulrich Mühe, who played Wiesler, died of stomach cancer in 2007, shortly after the film came out.

There are no car chases and few funny moments in The Lives of Others, but it is a very engrossing movie.  Definitely worth two hours and 15 minutes of your weekend.

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