Walt, Stephen M, and John Mearsheimer. 2008. “Israel's False Friends”. Publisher's VersionAbstract
U.S. presidential candidates aren't doing the Jewish state any favors by offering unconditional support.Once again, as the presidential campaign season gets underway, the leading candidates are going to enormous lengths to demonstrate their devotion to the state of Israel and their steadfast commitment to its "special relationship" with the United States.Each of the main contenders emphatically favors giving Israel extraordinary material and diplomatic support—continuing the more than $3 billion in foreign aid each year to a country whose per capita income is now 29th in the world. They also believe that this aid should be given unconditionally. None of them criticizes Israel's conduct, even when its actions threaten U.S. interests, are at odds with American values or even when they are harmful to Israel itself. In short, the candidates believe that the U.S. should support Israel no matter what it does. Such pandering is hardly surprising, because contenders for high office routinely court special interest groups, and Israel's staunchest supporters—the Israel lobby, as we have termed it—expect it. Politicians do not want to offend Jewish Americans or "Christian Zionists," two groups that are deeply engaged in the political process. Candidates fear, with some justification, that even well-intentioned criticism of Israel's policies may lead these groups to turn against them and back their opponents instead.If this happened, trouble would arise on many fronts. Israel's friends in the media would take aim at the candidate, and campaign contributions from pro-Israel individuals and political action committees would go elsewhere. Moreover, most Jewish voters live in states with many electoral votes, which increases their weight in close elections (remember Florida in 2000?), and a candidate seen as insufficiently committed to Israel would lose some of their support. And no Republican would want to alienate the pro-Israel subset of the Christian evangelical movement, which is a significant part of the GOP base.Indeed, even suggesting that the U.S. adopt a more impartial stance toward the Israeli-Palestinian conflict can get a candidate into serious trouble. When Howard Dean proposed during the 2004 campaign that the United States take a more "evenhanded" role in the peace process, he was severely criticized by prominent Democrats, and a rival for the nomination, Sen. Joe Lieberman, accused him of "selling Israel down the river" and said Dean's comments were "irresponsible."Word quickly spread in the American Jewish community that Dean was hostile to Israel, even though his campaign co-chair was a former president of the American Israel Public Affairs Committee and Dean had been strongly pro-Israel throughout his career. The candidates in the 2008 election surely want to avoid Dean's fate, so they are all trying to prove that they are Israel's best friend.These candidates, however, are no friends of Israel. They are facilitating its pursuit of self-destructive policies that no true friend would favor.The key issue here is the future of Gaza and the West Bank, which Israel conquered in 1967 and still controls. Israel faces a stark choice regarding these territories, which are home to roughly 3.8 million Palestinians. It can opt for a two-state solution, turning over almost all of the West Bank and Gaza to the Palestinians and allowing them to create a viable state on those lands in return for a comprehensive peace agreement designed to allow Israel to live securely within its pre-1967 borders (with some minor modifications). Or it can retain control of the territories it occupies or surrounds, building more settlements and bypass roads and confining the Palestinians to a handful of impoverished enclaves in Gaza and the West Bank. Israel would control the borders around those enclaves and the air above them, thus severely restricting the Palestinians' freedom of movement.But if Israel chooses this second option, it will lead to an apartheid state. Prime Minister Ehud Olmert said as much when he recently proclaimed that if "the two-state solution collapses," Israel will "face a South African-style struggle." He went so far as to argue that "as soon as that happens, the state of Israel is finished." Similarly, Israel's deputy prime minister, Haim Ramon, said earlier this month that "the occupation is a threat to the existence of the state of Israel." Other Israelis, as well as Jimmy Carter and Anglican Archbishop Desmond Tutu, have warned that continuing the occupation will turn Israel into an apartheid state. Nevertheless, Israel continues to expand its settlements on the West Bank while the plight of the Palestinians worsens.Given this grim situation, one would expect the presidential candidates, who claim to care deeply about Israel, to be sounding the alarm and energetically championing a two-state solution. One would expect them to have encouraged President Bush to put significant pressure on both the Israelis and the Palestinians at the recent Annapolis conference and to keep the pressure on when he visits the region this week. As Secretary of State Condoleezza Rice recently observed, settling this conflict is also in America's interest, not to mention the Palestinians'.One would certainly expect Hillary Clinton to be leading the charge here. After all, she wisely and bravely called for establishing a Palestinian state "that is on the same footing as other states" in 1998, when it was still politically incorrect to use the words "Palestinian state" openly. Moreover, her husband not only championed a two-state solution as president but he laid out the famous "Clinton parameters" in December 2000, which outline the only realistic deal for ending the conflict.But what is Clinton saying now that she is a candidate? She said hardly anything about pushing the peace process forward at Annapolis, and remained silent when Rice criticized Israel's subsequent announcement that it planned to build more than 300 new housing units in East Jerusalem. More important, both she and GOP aspirant Rudy Giuliani recently proclaimed that Jerusalem must remain undivided, a position that is at odds with the Clinton parameters and virtually guarantees that there will be no Palestinian state.Sen. Clinton's behavior is hardly unusual among the candidates for president. Barack Obama, who expressed some sympathy for the Palestinians before he set his sights on the White House, now has little to say about their plight, and he too said little about what should have been done at Annapolis to facilitate peace. The other major contenders are ardent in their declarations of support for Israel, and none of them apparently sees a two-state solution as so urgent that they should press both sides to reach an agreement. As Zbigniew Brzezinski, a former U.S. national security advisor and now a senior advisor to Obama, noted, "The presidential candidates don't see any payoff in addressing the Israel-Palestinian issue." But they do see a significant political payoff in backing Israel to the hilt, even when it is pursuing a policy —colonizing the West Bank—that is morally and strategically bankrupt. In short, the presidential candidates are no friends of Israel. They are like most U.S. politicians, who reflexively mouth pro-Israel platitudes while continuing to endorse and subsidize policies that are in fact harmful to the Jewish state. A genuine friend would tell Israel that it was acting foolishly, and would do whatever he or she could to get Israel to change its misguided behavior. And that will require challenging the special interest groups whose hard-line views have been obstacles to peace for many years.As former Israeli Foreign Minister Shlomo Ben-Ami argued in 2006, the American presidents who have made the greatest contribution to peace—Carter and George H.W. Bush—succeeded because they were "ready to confront Israel head-on and overlook the sensibilities of her friends in America." If the Democratic and Republican contenders were true friends of Israel, they would be warning it about the danger of becoming an apartheid state, just as Carter did.Moreover, they would be calling for an end to the occupation and the creation of a viable Palestinian state. And they would be calling for the United States to act as an honest broker between Israel and the Palestinians so that Washington could pressure both sides to accept a solution based on the Clinton parameters. Implementing a final-status agreement will be difficult and take a number of years, but it is imperative that the two sides formally agree on the solution and then implement it in ways that protect each side.But Israel's false friends cannot say any of these things, or even discuss the issue honestly. Why? Because they fear that speaking the truth would incur the wrath of the hard-liners who dominate the main organizations in the Israel lobby. So Israel will end up controlling Gaza and the West Bank for the foreseeable future, turning itself into an apartheid state in the process. And all of this will be done with the backing of its so-called friends, including the current presidential candidates. With friends like them, who needs enemies?
Mullainathan, Sendhil, Jeffrey R Brown, Jeffrey R Kling, and Marian V Wrobel. 2008. “Why Don't People Insure Late Life Consumption? a Framing Explanation of the Under-Annuitization Puzzle.” In .Abstract
According to standard economic models, a risk-averse consumer who faces uncertainty about length-of-life should place a high value on life annuities that provide guaranteed income for life. Yet numerous studies show that few consumers voluntarily annuitize their retirement savings. As public and private pension systems around the world continue the ongoing shift from traditional defined benefit plans, which typically pay benefits for life, to defined contribution structures which rarely require annuitization, retirees find themselves increasingly exposed to longevity risk—the risk of being unable to sustain their consumption should they live longer than average.
Presented at the American Economic Association, January 5, 2008.Download PDF
Shepsle, Kenneth A, and Alvin Rabushka. 2008. Politics in Plural Societies: A Theory of Democratic Instability. Pearson Education. Publisher's VersionAbstract
This landmark study in the field of comparative politics is being celebrated for its return to print as the newest addition to the "Longman Classics in Political Sciencer" series. Politics in Plural Societies presents a model of political competition in multi-ethnic societies and explains why plural societies, and the struggle for power within them, often erupt with inter-ethnic hostility. Distinguished scholars Alvin Rabushka and Kenneth Shepsle collaborate again in this reissuing of their classic work to demonstrate in a new epilogue the persistence of the arguments and evidence first offered in the book. They apply this thesis to the multi-ethnic politics of countries that are of great interest today: Iraq, Lebanon, Sudan, Yugoslavia, and more.
(Longman Classics Edition)
King, Gary, Kosuke Imai, and Clayton Nall. 2008. “The Essential Role of Pair Matching in Cluster-Randomized Experiments, Application to the Mexican Universal Health Insurance”.Abstract
A basic feature of many field experiments is that investigators are only able to randomize clusters of individuals—such as households, communities, firms, medical practices, schools, or classrooms—even when the individual is the unit of interest. To recoup some of the resulting efficiency loss, many studies pair similar clusters and randomize treatment within pairs. Other studies (including almost all published political science field experiments) avoid pairing, in part because some prominent methodological articles claim to have identified serious problems with this "matched-pair cluster-randomized" design. We prove that all such claims about problems with this design are unfounded. We then show that the estimator for matched-pair designs favored in the literature is appropriate only in situations where matching is not needed. To address this problem without modeling assumptions, we generalize Neyman’s (1923) approach and propose a simple new estimator with much improved statistical properties. We also introduce methods to cope with individual-level noncompliance, which most existing approaches assume away. We show that from the perspective of, among other things, bias, efficiency, power, or robustness, and in large samples or small, pairing should be used in cluster-randomized experiments whenever feasible; failing to do so is equivalent to discarding a considerable fraction of one’s data. We develop these techniques in the context of a randomized evaluation we are conducting of the Mexican Universal Health Insurance Program.
Walt, Stephen M. 2008. “America Needs Realists, Not William Kristol”. Publisher's VersionAbstract
In its response to letters protesting the recent hiring of hard-line neoconservative William Kristol as a weekly Op-Ed columnist, the New York Times described the decision as the result of a "long and thoughtful process" by a paper committed to "vibrant political discourse." Editorial page editor Andrew Rosenthal said critics of the move were being "intolerant" and complained about a "weird fear of opposing views."Hiring Kristol did not bring an "opposing view" to the Times' Op-Ed page, of course, because columnist David Brooks already represents the same worldview that Kristol does. Nor does the Times' roster of liberal pundits provide a full complement of "opposing views." Most liberal commentators share the neocons' belief that it is America's right and responsibility to exercise "global leadership," even when that role involves the aggressive use of American military power and constant interference in other countries' affairs. The Times' Thomas Friedman was an energetic supporter of the Iraq war until it went south, and Nicholas Kristof is a passionate advocate of U.S. intervention in Darfur. Columnists like Maureen Dowd and Frank Rich have been sharply critical of the neoconservatives' worst follies, but both proceed from the familiar liberal internationalism that has characterized the American foreign policy establishment for many years.Even now, neoconservatives do not lack other mainstream outlets for their ideas. Charles Krauthammer, Robert Kagan, Fred Hiatt and Jonah Goldberg appear regularly on the editorial pages of the Washington Post or Los Angeles Times, and prominent neocons routinely publish in the Wall Street Journal, the Washington Times and the New York Sun. Not to be outdone, the supposedly liberal Boston Globe publishes neocon Jeff Jacoby twice a week. The neoconservative outlook is ubiquitous in journals of opinion like the New Republic, Commentary or Kristol's own Weekly Standard and is regularly heard on major radio and TV talk shows. Even National Public Radio and Comedy Central give neoconservatives a platform with surprising frequency.What's missing in America's mainstream media is the voice of realism. As the label implies, realists think foreign policy should be based on the world as it really is, rather than what we might like it to be. Realists see international politics as an inherently competitive realm where states constantly compete for advantage and where security is often precarious. But realists understand that being overly alarmist and aggressive can get states into just as much trouble as being excessively trusting or complacent. So realists keep a keen eye on the balance of power, but they oppose squandering blood or treasure on needless military buildups, ideological crusades, or foolish foreign wars. Realists cherish America's commitment to democracy and individual liberty, but they know that ideals alone are no basis for conducting foreign policy. They also understand that endless overseas adventures will inevitably provoke a hostile backlash abroad and eventually force us to compromise our freedoms here at home.Such views are hardly heretical, but there is not a single major columnist, TV commentator or radio pundit who consistently presents a realist perspective on world politics and American foreign policy. In America today, the mainstream media is a realism-free zone.The exclusion of realism is surprising for three reasons. First, realists enjoyed distinguished positions in the American foreign policy community in the past and remain a respected group today. Prominent statesmen whose views generally reflected a realist approach include the late George Kennan, Henry Kissinger, Zbigniew Brzezinski, Colin Powell, Richard Haass and Brent Scowcroft, as well as politicians like outgoing Sen. Chuck Hagel and current Secretary of Defense Robert Gates. To give a realist regular space on a major Op-Ed page is hardly like hiring a Maoist, a Scientologist or a die-hard World Federalist.Second, realists are an important constituency in the academic world. Realism is still the dominant paradigm in the academic study of international politics, and the writings of realist scholars like E.H. Carr, Hans J. Morgenthau and Kenneth Waltz have cast a long and lasting shadow over the academic landscape. One would think editors and publishers would be eager to hire someone whose views reflected that distinguished intellectual tradition.Third, realism's track record as a guide to foreign policy is quite impressive, especially when compared to the neocons' catalog of blunders. Morgenthau, Waltz and Kennan were among the first to recognize that the Vietnam War was a foolish diversion of American power, and Waltz was one of the few foreign policy experts who understood the Soviet Union was a Potemkin colossus with feet of clay. When assorted hawks were sounding frantic alarms about Soviet dominance in the late 1970s, Waltz was writing that the real issue was whether the Soviets could hope to keep up with the far wealthier and more powerful United States. The 1980s proved they couldn't, and that Waltz and his fellow realists had been essentially correct.Realism has done rather well since. Liberals and neoconservatives greeted the end of the Cold War by proclaiming the "end of history" and imagining a long era of peaceful American hegemony, but realists foresaw that the end of the Cold War would unleash new forms of security competition and produce new tensions within existing alliances. And when both hawks and doves foresaw a difficult and bloody battle in the 1990-91 Gulf War, realist scholars like Barry Posen of MIT and John Mearsheimer of the University of Chicago wrote articles that correctly predicted America's easy victory.Most important, realists were among the most visible opponents to America's more recent misadventure in Iraq. In September 2002, for example, 33 international security scholars paid for an ad in the New York Times declaring "War With Iraq Is Not in the U.S. National Interest." About half of the signatories were prominent realists, and several others wrote articles before the war explaining why it was unnecessary and unwise. By contrast, it was the neocons who conceived and promoted the Iraq war, while many prominent liberals endorsed it. Surely Americans deserve to hear from a perspective that has been an accurate guide to recent events, instead of relying on pundits who have been consistently wrong.A realist would provide readers with insights that have been largely absent from mainstream discussion for a decade or more. Realism emphasizes that states defend their interests vigorously and that successful diplomacy requires give-and-take; that advancing our own interests often requires us to do business with regimes whose values we find objectionable; that nationalism is a powerful force and most societies resist when outsiders try to tell them how to run their own affairs; that global institutions can be useful tools of statecraft but require great power support to work effectively; and that even well-intentioned democracies sometimes do foolish and cruel things. Most important of all, a realist would emphasize that military force is a blunt and costly instrument whose ultimate effects are unpredictable, and that it should be employed only when vital interests are at stake.In short, a realist would be a valuable antidote to the self-righteous hubris that pervades contemporary U.S. commentary on foreign affairs, an attitude that has encouraged many of the policies that have undermined America's image around the globe. A realist would also cast a skeptical eye on virtually all of the current presidential candidates, whose views on foreign policy do not stray far from the current neoconservative/liberal consensus. Realists aren't infallible and some readers will undoubtedly object to their views, but that's hardly the issue. The point is that Americans would be better informed if they regularly heard what realists had to say, and media institutions that are genuinely interested in presenting a diverse array of views should be signing up a few of them.
Frieden, Jeffry. 2008. “Globalization and Exchange Rate Policy.” In .Abstract
Exchange rates powerfully affect cross-border economic transactions. Trade, investment, finance, tourism, migration, and more are all profoundly influenced by international monetary policies. Many developing-country governments have searched for alternatives to the uncertainty that can prevail on international currency markets. Policy entrepreneurs have rushed to peddle currency nostrums, urging a turn toward dollarization, managed floating, nominal anchors, target bands, or other options.There are both theoretical and empirical reasons to expect globalization to heighten the importance of the exchange rate. Theoretically, open-economy macroeconomic principles imply that capital mobility profoundly affects exchange rate policy choices. As Robert Mundell showed more than forty years ago, the government of a financially integrated economy faces a choice between monetary policy autonomy and a fixed exchange rate (Mundell 1963). If the government opts for a fixed rate, capital mobility makes impossible a monetary stance different from that of the anchor currency; alternatively, if the government opts to sustain an independent monetary policy, it must allow the currency to move. These constraints mean that the economics and politics of monetary and exchange rate policy are likely to be very different in an economy that is financially open than in an economy that is not. By the same token, inasmuch as international economic integration involves increased exposure to international financial and commercial flows, it heightens the concerns of those involved in or exposed to international trade and finance. In a relatively closed economy, few economic actors care about currency movements. But as economies become “globalized” more firms, investors, and workers find their fortunes linked to the exchange rate, and to its impact on trade and financial flows. This concentrates attention on the exchange rate.
Culpepper, Pepper. 2008. “The Politics of Common Knowledge: Ideas and Institutional Change in Wage Bargaining”.Abstract
Domestic economic institutions change through processes of conflict and bargaining+ Why do the strongest groups in such conflicts ever change their minds about the acceptability of institutional arrangements they once opposed? Drawing on the cases of Ireland in 1986–87 and Italy in 1989–93, this article demonstrates how the process of common knowledge creation between employers and unions changed the course of negotiations over national wage bargaining institutions+ Common knowledge creation happens when existing institutions are in crisis+ The institutional experimentation that follows such crises, characterized by deep uncertainty, places a premium on persuasive argument+ The ideas most likely to serve as the basis for newly common knowledge will have analytical and distributive appeal to both unions and employers, and they must be ratified in public agreements, which I call common knowledge events. Common knowledge events establish new social facts, which can change the payoffs associated with different institutional outcomes. This can lead even powerful actors to accept institutions they had previously opposed.
Rodrik, Dani. 2008. “Normalizing Industrial Policy”.Abstract
The theoretical case for industrial policy is a strong one. The market failures that industrial policies target—in markets for credit, labor, products, and knowledge—have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three nonAsian settings—El Salvador, Uruguay, and South Africa—highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability.
Also published as a Commission on Growth and Development Working Paper No. 3, Washington, DC, 2008.Download PDF
Rodrik, Dani. 2008. One Economics, Many Recipes: Globalization, Institutions, and Economic Growth. Princeton University Press. Publisher's VersionAbstract
Poor countries become rich not by following in suit of their predecessors but rather by overcoming their own highly specific constraints. While economic globalization can be a boon for countries that are trying to dig themselves out of poverty, success usually requires following policies that are tailored to local economic and political realities rather than obeying the dictates of the international globalization establishment. One Economics, Many Recipes shows how successful countries craft their own unique growth strategies and what other countries can learn from them.
Kelman, Herbert C. 2008. “Evaluating the Contributions of Interactive Problem Solving to the Resolution of Ethnonational Conflicts.” Routledge. Routledge. Publisher's VersionAbstract
Interactive problem solving is a form of unofficial diplomacy, centering on problem-solving workshops and related activities with political elites in conflicting societies. Its dual purpose is producing changes in individual participants that are transferred to the policy process. The most relevant criterion for evaluating the effectiveness of interactive problem solving is its contribution to changes in the political cultures of the parties that would make them more receptive to negotiation. The article describes the difficulties in evaluating such changes in political culture, because of the inapplicability of the standard experimental model of evaluation and the ethical and methodological obstacles to the use of procedures that may interfere with the practice of conflict resolution. It then presents two models of evaluation research, based on gradual accumulation of evidence in support of the assumptions of interactive problem solving: the "links-in-the-chain" model, testing by appropriate means each of the steps in the logic of the approach; and the experimental model, using a variety of settings for empirical tests of the assumptions of the approach.
Mullainathan, Sendhil, and Abhijit Banerjee. 2008. “Limited Attention and Income Distribution.” In .Abstract
Economists have long been interested in the idea that there is a direct circular relation between poverty and low productivity, and not just one that is mediated by market failures, usually in asset markets. The nutrition-based e¢ ciency wage model (Partha Dasgupta and Debraj Ray, 1987) is the canonical example of models where this happens: However it has been variously suggested (see for example T. N. Srinivasan, 1994) that the link from nutrition to productivity and especially the link from productivity to nutrition is too weak to be any more than a small part of the story. Partha Dasgupta himself acknowledges this when he writes "nutrition-productivity construct provides a metaphor... for an economic environment harboring poverty traps."
Presented at the American Economic Association, January 4, 2008.Download PDF
Beckfield, Jason. 2008. “Regionalization and Retrenchment: The Impact of European Integration on the Welfare State”.Abstract
This paper demonstrates the utility of a sociology of regional integration by addressing two central questions that have sparked much debate over the welfare state. Is there evidence of long-anticipated retrenchment? Does globalization cause that retrenchment? I redirect these debates by showing that there is evidence of retrenchment in Europe, and that regional integration—not globalization – accounts for it. Regional integration is conceptualized as the construction of supranational political economy in negotiated and bounded regions through political institutionalization and market expansion. I develop the argument that regional political integration should constrain the welfare state through policy feedbacks, the politics of blame avoidance, and the diffusion of classical-liberal policy scripts, while regional economic integration should constrain the welfare state by expanding labor markets and undermining labor unions. I assess these arguments with time-series cross-section models and data from 13 European Union (EU) and non-EU states. The results show that (1) there is evidence of retrenchment, (2) regionalization is significantly associated with retrenchment, and (3) the effect of regional integration is dampened in the strongest welfare states. I draw the general conclusion that regional integration is a new and consequential part of the social context that should receive more attention from sociologists.
The larger project from which this paper was drawn was awarded the American Sociological Association Dissertation Award in 2006.Download PDF
Garip, Filiz. 2008. “Social Capital and Migration: How Do Similar Resources Lead to Divergent Outcomes?”.Abstract
A newer version of this paper was published on Demography, August 2008.This paper investigates how migrant social capital differentially influences individuals’ migration and cumulatively generates divergent outcomes for communities. To combine the fragmented findings in the literature, the paper proposes a framework that decomposes migrant social capital into resources (information about or assistance with migration), sources (prior migrants), and recipients (potential migrants). Analysis of multi-level and longitudinal data from 22 rural villages in Thailand shows that the probability of internal migration increases with the available resources, yet the magnitude of increase depends on recipients’ characteristics and the strength of their ties to sources. Specifically, individuals become more likely to migrate if migrant social capital resources are greater and more accessible. The diversity of resources by occupation increases the likelihood of migration, while diversity by destination inhibits it. Resources from weakly-tied sources, such as village members, have a higher effect on migration than resources from strongly-tied sources in the household. Finally, the importance of resources for migration declines with recipients’ own migration experience. These findings challenge the mainstream account of migrant social capital as a uniform resource that generates similar migration outcomes for different groups of individuals or in different settings. In Nang Rong villages, depending on the configuration of resources, sources and recipients, migrant social capital leads to differential migration outcomes for individuals and divergent cumulative migration patterns in communities.
Gopinath, Gita, Mark Aguiar, and Manuel Amador. 2008. “Investment Cycles and Sovereign Debt Overhang”.Abstract
We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy, seeks to insure a risk averse domestic constituency, and is more impatient than the market. Optimal policy generates long-run cycles in both sovereign debt and foreign direct investment in an environment in which the first best capital stock is a constant. The expected tax on capital endogenously varies with the state of the economy and investment is distorted by more in recessions than in booms amplifying the effect of shocks. The government’s lack of commitment induces a negative correlation between investment and the stock of government debt, a "debt overhang" effect. Debt relief is never Pareto improving and cannot affect the long-run level of investment. Further, restricting the government to a balanced budget can eliminate the cyclical distortion of investment.
Acharya, Amitav, and Alastair Iain Johnston. 2008. Crafting Cooperation: Regional International Institutions in Comparative Perspective. Cambridge University Press. Publisher's VersionAbstract
Regional institutions are an increasingly prominent feature of world politics. Their characteristics and performance vary widely: some are highly legalistic and bureaucratic, while others are informal and flexible. They also differ in terms of inclusiveness, decision-making rules and commitment to the non-interference principle. This is the first book to offer a conceptual framework for comparing the design and effectiveness of regional international institutions, including the EU, NATO, ASEAN, OAS, AU and the Arab League. The case studies, by a group of leading scholars of regional institutions, offer a rigorous, historically informed analysis of the differences and similarities in institutions across Europe, Latin America, Asia, Middle East and Africa. The chapters provide a more theoretically and empirically diverse analysis of the design and efficacy of regional institutions than heretofore available.
Cooper, Richard N. 2008. “Economic Aspects of the Cold War, 1962-1975”.Abstract
US objectives during the Cold War were to prevent Soviet attacks on the United States and its allies and to prevent the spread of communism as a political and economic system to other countries, whether by force or by threat, subversion, persuasion, or bribery. The principal instrument to prevent attack was an extensive build-up of defensive and retaliatory military forces, combined with political and military alliances that extended US protection to other countries in exchange for their engagement and support. The principal instruments for preventing the spread of communism by non-military means involved building an international economic system conducive to economic prosperity; engaging in persuasion, providing incentives, and occasionally imposing economic sanctions; and, not least, promoting a robust US economy that could serve as a stimulant to others and as a beacon for the benefits of a free, enterprise-based, market-oriented economy.
Miller, Manjari. 2008. “Call for the Vote.” Huffington Post. Publisher's VersionAbstract
Along with the rest of America, I've been breathlessly following the caucuses. I cringed when Huckabee won Iowa, shrugged when Obama did, sniffed sympathetically with Hillary Clinton, cheered for McCain in New Hampshire and sorted out my mixed feelings over Romney's Michigan win. And no, I'm not an independent. In fact, I have no voice in the American presidential election at all. I'm not a US citizen. And yet, like millions of other non-Americans, most of whom do not even reside in this country, I care deeply and passionately about who the next commander-in-chief is going to be. This is, therefore, my formal request for the extension of universal adult franchise in the presidential elections of the self-titled global champion of democracy, to every non-American. In this age of American empire (albeit an empire in denial as Niall Ferguson famously put it), it is a call to separate US citizenship from the right to vote. Admittedly, my dissatisfaction with my disenfranchised state was fostered on more petty grounds. I married an American citizen and promptly lost the benefits of a nifty Indo-US tax treaty which allowed me to save most of my graduate student fellowship. Thereafter, like clockwork every April, my husband and I engage in a battle of the taxes. Rebelliously muttering "no taxation without representation", I tout the advantages of tax evasion and just as strongly (and unreasonably), he insists on filing the entire details of our meagre income. But the domestic and foreign policies of the Bush administration post-9/11, the war in Afghanistan and Iraq, Guantanamo, have not only polarized Americans, they have starkly highlighted the incredible reach and the consequences of American power for a global audience. Suddenly, pax americana seems more real than just the tentacles of Hollywood culture, the evils of multinational (mostly American) companies and the general nuisance of having a sole busybody superpower around. Growing up in India, Kenya and the UK, I was familiar with anti-US exasperation (and its paradoxical companion, anti-US envy), which is very different from today's discussions of anti-US hatred. The US always stuck its nose in where it didn't belong—this was a well-known fact. But you got over it—presidents like Bill Clinton for example, a thorn in India's side during his presidency, acquired the status of a superstar after his term. But it all changed post-9/11. The "with us or against us" slogan lent a menacing edge to that interference. Clearly, in the wrong hands, the hegemon unleashed could be terrifying. Sovereignty and individual rights now seemed violable—Iraq today, your country tomorrow. And the disquiet has only grown. This explains why the other day I found myself in deep discussion with a friend about the candidates over lunch—he's not American either but is just as deeply concerned. An Israeli, he worries about the Middle East and the commitment of the candidates. And this is evident in the Christmas email that my husband's distant German cousin, living in a remote part of Germany, sent to my mother-in-law (outraging some of her more conservative relatives in the process): "we all look forward to 2008 when you will elect a new President. Will it be Hillary or Obama? Anyway it can't be worse than now. This President did so much damage in Europe and all over the world, and that takes time to heal." And it explains why newspapers and magazines all over the world are scrutinizing the US primaries down to the last detail. In the last elections, The Economist, a British magazine, declared it a choice between "the incompetent and the incoherent" and plaintively urged Americans to elect Kerry. The sense of outraged helplessness was and still is, palpable. So here's a way to advertise America's benign intentions, floor the detractors and truly spread democracy around the globe. It's simple and it's brilliant. Give us non-Americans the vote. Keep every other benefit of citizenship. Every empire has held out lures to those it's governed. Under pax romana, citizenship was a reward to be doled out to individuals who met the criteria. Pax britannica held out the theoretical option of non-Britishers joining the powerful civil service. Pax americana has its coveted citizenship of course, but the country is constantly divided on the issue of immigration. Separate the vote as a tool of diplomacy, however, and in one stroke, you spread your core values, enhance your image and appease critics without stoking domestic fears of a huge influx of foreigners. And it would go a long way towards bringing back the days of happy exasperation. In the meanwhile, I will continue obsessing over elections news and attempting to swing my long-suffering and apolitical husband's vote in the right direction.
Paarlberg, Robert L. 2008. “Africa's Organic Farms”. Publisher's VersionAbstract
Approach any serious-looking college student in the Boston area, where I teach, and ask them what kind of food and farming system they would like to see. Most will say they don't want food from factory farms with a large carbon footprint. They want foods locally grown on small family farms. They don't want crops grown using synthetic chemical fertilizers or pesticides; they want crops grown "organically." They want farm animals to be able to range freely. They want "slow" food rather than fast food. And they don't want "Frankenfoods"—crops developed through genetic engineering.What might such an idealized food system actually look like? Take a trip to Africa. The small farmers who populate the continent's impoverished countryside are living out something close to this post-materialist fantasy. Two-thirds of all Africans depend on farming or animal grazing for their food and income, and nearly all of their operations are small-scale.Eighty percent of the labor on these farms is done by women and children, in part because it provides so little income for working-age men. There is no power machinery (only two tractors for every thousand agricultural workers) and only 4 percent of crops are irrigated. More than two thirds of all cropland is still planted with traditional crop varieties rather than with scientifically improved varieties. The animals—mostly cattle and goats—for age for their own food.Agribusiness firms are nowhere to be seen, and chemical fertilizer applications per hectare are less than one-tenth the industrial world average. Insecticides and herbicides are not affordable, so crops suffer pest damage, and the weeding is done by children who would be better off in school. Nobody grows genetically engineered crops because governments in Africa—following Europe's lead—have not approved such crops for use.Nearly all of Africa's farms are thus de facto "organic." Poor and non-productive, but organic.Africa's traditional rural food systems are definitely "slow." To serve maize meal (called nsima) to her family, an African woman must first spend a season planting, weeding, harvesting and storing her corn, then she must strip it, winnow it, soak it, lay it out to dry, carry it to a grinder or pound it by hand, dry it again, and finally—after walking to gather enough fuel wood—cook it over a fire.Cereal crop yields in Africa are only one-third as high as in developing Asia, and only one-tenth as high as the United States. Average income from this kind of farming amounts to only a dollar a day, which is why nearly 80 percent of all those officially classified as poor in Africa are farmers, and why one third of all farmers are chronically malnourished.Without modern agricultural science, food production in Africa has fallen ominously behind population growth. Total agricultural production per capita today has fallen 19 percent below the level of 1970. Increasingly, Africans must depend on imported food aid.Africa's urgent need for agricultural modernization is being rudely ignored. When elite urbanites in rich countries began turning away from science-based farming in the 1980s, external assistance for agriculture in poor countries was cut sharply. As late as 1980 the U.S. Agency for International Development was still devoting 25 percent of its official development assistance to the modernization of farming, but today it is just 1 percent. Nearly 30 percent of World Bank lending once went to agricultural modernization, but now it is just 8 percent.In Europe, meanwhile, some official donors and nongovernmental agencies are working to block farm modernization in Africa. Despite Africa's worsening soil nutrient deficits, European donors like to promote costly organic farming techniques as the alternative to chemical fertilizer use. This is not how European farmers escaped poverty. Only 4 percent of cropland in Europe is currently being farmed organically (and less than 1 percent in America), but European NGOs such as Friends of the Earth and Greenpeace tell Africa's poor this is the path they should follow.European governments and NGOs also promote regulatory systems that block the use of genetically engineered crops, including crops capable of resisting insects without pesticide sprays. Europe's own science academies have found no new risks to human health or the environment from any of the genetically engineered crops placed on the market so far, but since overfed Europe can do without this technology, underfed Africa is told to do the same.In this fashion, and perhaps without realizing it, wealthy countries are imposing the richest of tastes on the poorest of people. The rich are, in effect, telling Africa's farmers they should just as well remain poor.Robert Paarlberg is a professor of political science at Wellesley College in Massachusetts and the author of "Starved for Science: How Biotechnology is Being Kept Out of Africa" (Harvard University Press, March 2008).
Allison, Graham T., Jr.. 2008. “Reading the Tea Leaves in Pakistan”. Publisher's VersionAbstract
Presdent Pervez Musharraf's stunning defeat in Monday's elections in Pakistan represents a decisive rejection of what his opponents called his policies of "subservience" to the United States. An American press that has been virtually unanimous in opposing Musharraf will now predictably call for his resignation in favor of "genuine democracy." Since this outcome is a possibility, it is essential to ask where a government that accurately reflects the views of Pakistani citizens would stand on issues that matter most to America.Would such a government follow Musharraf's lead as a grudging shot-gun ally? Recall that after the Sept. 11, 2001, attacks, as Musharraf tells the story, the United States gave him the choice of becoming an ally or being "bombed back to the Stone Age."How vigorously would a new democratic government support the US-led war on terrorism in which Pakistan's army is now fighting Al Qaeda and its affiliates headquartered in Pakistan's ungoverned Northwest Territories? Would such a government be more likely to cooperate with the United States and NATO in the ongoing but faltering war against the Taliban in Afghanistan? Recall again that the rise of the Taliban took place during the term of Musharraf's civilian predecessors, including Nawaz Sharif, the leader of one of the parties that won in Monday's election.The answer to each of these questions is as unambiguous as it is uncomfortable. A Pakistani government whose actions align with its citizens' views on these issues would be at loggerheads with the United States. Over the past year, polls have highlighted the sharp decline in Musharraf's popularity, with his approval ratings dropping to 15 percent in December. Several recent polls, including ones from the Pew Global Attitudes Project, the International Republican Institute, and Terror Free Tomorrow echo those sentiments, with one showing that 70 percent of Pakistanis "want Musharraf to immediately resign."But what most American commentators have missed is that however much Pakistanis dislike Musharraf, they are more hostile toward the United States. When asked to name the "single greatest threat" to their country, 64 percent of Pakistanis named the United States. Historic archrival India, with whom Pakistan has fought five bloody wars, was second, well behind America.Eighty-nine percent of Pakistanis said they disapprove of the US war on terrorism. Eight in 10 Pakistanis oppose allowing the United States to pursue Al Qaeda terrorists in their country. A similar percentage rejects US pursuit of Taliban forces into Pakistan. In opposing Musharraf, opposition parties called him "Busharraf" and accused him of being a "lackey" of the United States in the "so-called war on terrorism," which they say is a US-led war on Islam.The US military presence in Afghanistan, where earlier Pakistani governments were the primary sponsors of the Taliban, is opposed by 83 percent of Pakistanis. Critics of Musharraf's limited cooperation with the US-NATO campaign should recognize that a government that more closely followed the wishes of its people would be less cooperative in combating the Taliban.The United States has two vital national interests in Pakistan: first, to prevent any of Pakistan's nuclear arsenal and bomb-making materials from being stolen, sold or transferred to terrorists; second, to destroy Al Qaeda's leadership, sanctuary, and training camps. Neither interest will be advanced by a transition from the devil we know to the new democratic Pakistani government.Fortunately, Pakistan's nuclear weapons are secured by its army, the country's most effective national institution. Unless the army were destabilized or became substantially disaffected because of extended political instability, it will fulfill its custodial responsibilities. In contrast, a government that truly reflects the current views of the Pakistani people is more likely to be an unspoken opponent than an ambiguous ally in the US war against Al Qaeda and other terrorists in the region.Hard as it is to believe, Osama bin Laden is four times as popular among Pakistanis as President Bush, whose approval rating is 7.7 percent.That leading US opinion pages generally critical of Bush's democracy crusade in Iraq should now so uncritically promote democratic shock-therapy as a panacea for Pakistan's problems is puzzling. The inconvenient, painful truth is that a truly democratic Pakistan would be, at least in the foreseeable future, less inclined to act in ways that advance urgent American interests.Advocates of instant democracy should be careful what they wish for.Graham Allison Faculty Associate; Douglas Dillon Professor of Government and Director, Belfer Center for Science and International Affairs, John F. Kennedy School of Government, Harvard University
Ferguson, Niall. 2008. “Earning from History: Financial Markets and the Approach of World Wars”.Abstract
We are living through a paradox—or so it seems. Since September 11, 2001, according to a number of neo-conservative commentators, America has been fighting World War III (or IV, if you like to give the Cold War a number). For more than six years, these commentators have repeatedly drawn parallels between the "War on Terror" that is said to have begun in September 2001 and World War II. Immediately after 9/11, Al Qaeda and other radical Islamist groups were branded "Islamofascists". Their attack on the World Trade Center was said to be our generation’s Pearl Harbor. In addition to coveting weapons of mass destruction and covertly sponsoring terrorism, Saddam Hussein was denounced as an Arab Hitler. The fall of Baghdad was supposed to be like the liberation of Paris. Anyone who opposed the policy of pre-emption was an appeaser. And so on. Yet throughout this period of heightened terrorist threats and overseas military interventions, financial markets have displayed a remarkable insouciance.
Also part of Brooking Papers on Economic Activity.Download PDF