Friday, December 16, 2005

A footnote and Sunday's election

I was just reading a paper by Overland et al (2005) on political instability (one of the big topics in my thesis) and found a very interesting footnote that deals with how politics work in several countries, many of which are Latin American.
The paper basically develops a model on how a (endogenous) probability of political catastrophe affects growth in dictatorships.
The footnote in question says that
Barro (1996a) states: “. . . the effects of an autocracy are adverse, however, if the dictator uses his or her power to steal the nation’s wealth . . . .” Bardhan (1997) writes, “when public resources meant for building productivity-enhancing infrastructure are diverted for politicians’” private consumption . . . growth rates obviously will be adversely affected.” De Long (1997) lists a group of countries in which “. . . the average person is probably poorer in absolute terms than their counterparts back in 1965 . . . .” This group includes Mozambique, Togo, Ethiopia, Tanzania, Senegal, Ghana, Zaire (now Republic of Congo), Uganda, Argentina, Bolivia, Chile, El Salvador, Peru, Nicaragua, and Jamaica. De Long attributes these countries’ steady decline to “Government by Thieves” or "kleptocracy” – situations where the leaders have “sacrificed economic development and the long-run interests of all to the short run interests of a relative few” (Ch. 21: 3).

Most people interested in Latin American politics will find this statement interesting, not least because of the inclusion of Chile -whose government is usually regarded as the most efficient in South America- among the kleptocratic regimes.
Otherwise, it is well-known that elections (at least in Argentina, Bolivia and Peru) usually choose the least-bad candidate rather than the best one. All politicians down there do have skeletons in their closets and reelection has never corrected ther ways.
In the case of Bolivia, it is easy ot single out the incentive problem faced by most politicians: Ever since Bolivians regained democracy (in 1982) not a single time voters have chosen to keep the incumbent party in office. This means that elected officials know they will be on their way out once the 5-year period has passed and instead of focusing on an efficient and transparent rule, they just try to make the most out of it so they never actually need to be reelected.
What happens then is that the kind of people going into politics in Bolivia, are neither the best prepared nor the most idealistic, but the ones who want to make a quick buck or two. Actually, in real life, some years ago a very close friend of mine once heard some guy boasting about his father's contacts with one party, meaning that he would soon be joining as a militant, get a government job, get rich and just enjoy life. It is lucky that since the guy said that, the party he wanted to join is facing extinction, but the attitude remains there. Is there a light in the end of the tunnel when this kind of people is ruling the country? As the Jose Luis Paredes case shows, things have not changed much.
Thus, once again Bolivia goes to the urns on Sunday. The optimal choice is once again unclear. WHile it is clear that Evo Morales is explicitly the worst that can happen a question remains on the competence of their competitors. As Tuco from The Economist en su Laberinto noted when Podemos' plan was first unveiled, Quiroga has been desperate to join the populist bandwagon just to catch more votes. So, other than proposing several subsidies for each and every person, Podemos' plan shines for its lack of realistic proposals. When we match this to the decision to allow all of the political debris from other parties to run under his wing, what do we really get? Simply put, nothing. Doria Medina's UN plan suffers from similar ills. It seems that the most they did was getting a high-profile Cruceno for vice-presidential candidate. Otherwise, UN has looked happy to run for third place, knowing that would mean a place in next government, whatever the results. Interestingly, as Ciao! notes, this plan seems to have backfired.

I guess the only thing left to do now is wait.

BARDHAN, P. (1997): "Corruption and Development: A Review of Issues," Journal of Economic Literature, 35, 1320-46.
BARRO, R. J. (1996): "Democracy and Growth," Journal Of Economic Growth, 1, 1-27.
DE LONG,J. (1997): "Slouching Towards Utopia? The Economic History of the Twentieth Century."
OVERLAND, J., K. L. SIMONS, and M. SPAGAT (2005): "Political Instability and Growth in Dictatorships," Public Choice, 125, 445-470.


Blogger Antonio Saravia said...

Just waiting...doesn't look good...

4:12 PM  

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