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On the topic of US politics …

There’s a perennial question thrown around by Australian and British politics-watchers (and, no-doubt, by people in lots of other countries too, but I’ve only lived in Australia and Britain):  Why do American elections focus so much on the individual and so little on the proposed policies of the individual?  Why do the American people seem to choose a president on the basis of their leadership skills or their membership of some racial, sexual, social or economic group, while in other Western nations, although the parties are divided to varying degrees by class, the debate and the talking points picked up by the media are mostly matters of policy?

An easy response is to focus on the American executive/legislative divide, but that carries no water for me.  Americans seem to also pick their federal representatives and senators in the same way as they do their president.

The best that I can come up with is to look at differences in political engagement brought about by differences in scale and political integration.  The USA is much bigger (by population) and much less centralised than Australia or Britain.  As a result, the average US citizen is more removed from Washington D.C. than the average Briton is from Whitehall or the average Australian from Canberra.  The greater population hurts engagement by making the individual that much less significant on the national stage – a scaled-up equivalent of Dunbar’s number, if you will.  The decentralisation (greater federalism) serves to focus attention more on the lower levels of government.  The two effects, I believe, reinforce each other.

Americans are great lovers of democracy at levels that we in Australia and Britain might consider ludicrously minuscule and at that level there is real fire in the debates over specific policies.  Individual counties vote on whether to raise local sales tax by 1% in order to increase funding to local public schools.  Elections to school boards decide what gets taught in those schools.

That decentralisation is a deliberate feature of the US political system, explicitly enshrined in the tenth amendment to their constitution.  But when so many matters of policy are decided at the county or state level, all that is left at the federal level are matters of foreign policy and national identity.  It seems no surprise, then, that Americans see the ideal qualities of a president being strength and an ability to “unite the country.”

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Non-geographic constituencies

The Australian House of Representatives has 150 members for a resident population of 21,268,746 (10 April 2008), or almost 142,000 people per representative. The US House of Representatives has 435 members for a resident population of 303,817,103 (10 April 2008), or almost 670,000 people per representative. The UK House of Commons has 646 members for a resident population of 60,587,000 (mid-2006), or almost 94,000 people per representative. The Canadian House of Commons has 308 members for a resident population of 33,231,725 (10 April 2008), or almost 108,000 people per representative.

Traditionally, which is to say always, the constituency of each representative or member of parliament has been defined geographically. That’s simple enough, but now that communication and identification technology has advanced to where it is today, they no longer need to be.

Members of the various lower houses of parliament/congress are meant to be representatives of their constituents, speaking on their behalf and seeking to act in their best interest. Before anybody mentions it, the Edmund Burke argument, that members of parliament ought to focus on the well-being of the nation as a whole, carries more strength in a unicameral parliament than it does in the constitutional arrangements of Australia, Canada and the USA where an upper-house exists with members sitting for longer terms so as – in principal, at least – to focus more on the issues more than the politics. It also seems to me that within her role as a member of parliament thinking of the good of the nation, a representative has a duty to pass on to the parliament the democratically valid views of her constituents, even if she ultimately votes in another direction.

By having electoral districts be geographically defined, we remove from the people the right to self-organise and they instead become passive receivers of groupings that are set down upon them. Unless you have an independent body to determine electoral boundaries, you therefore run the risk of gerrymandering (although whether that necessary causes polarisation is apparently debatable). Even if gerrymandering does not cause polarisation, the relevance of a geographically-defined groups is becoming less relevant as communication and transportation technologies improve. In a more globalised world where the economic fortunes of people are less tied to those of their neighbours, the issues of concern that people share will be less likely to be spatially concentrated.

My question, then, is this: What if 150,000 Australians were to voluntarily opt out of their resident electoral districts and form a non-geographically defined constituency with their own seat in the House of Representatives?

  • Individuals would only be permitted to be a member of one electoral constituency.
  • Everyone would be a part of a geographic district by default, but could change to a non-geographic grouping if they chose.
  • Even then, people would retain a geographical link to the legislature through the Senate.
  • The election of representatives from non-geographic constituencies would proceed just like any other seat in a general election; all of the various political parties would be free to offer candidates and to campaign in whatever way they saw fit.
  • By coming together around a common topic of concern, constituents guarantee that candidates will need to address that concern in their campaigns and that the winner will truly be their representative in parliament.

The idea isn’t entirely novel. Several countries allow for an expatriate electoral role so that non-resident citizens can still vote. These are usually tied back to a geographic district within the home country, but there’s no reason they have to be.

At a first glance, this might seem like a finely grained version of proportional representation. I guess that to a point it is, but since each constituency would still have elections, all parties would be able to put forward candidates and the decision process within each constituency would still be the same as within geographic districts (preferential voting in Australia, first-past-the-post in the UK and USA), it’s not.

It might also seem like this would just be formalised lobbying. To that I can only say: “Yes. So?” People are entitled to their views and in a democracy those views ought to be granted equal rights to be heard. Lobbyists are treated with such scorn today because they seek to obtain political influence beyond their individual vote. They exist, in part, because people do not have any real connection to their representatives.

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Bear Stearns

Just after the loans to Bear Stearns from J.P. Morgan with the unlimited backing of the US Fed were announced, but before it became public that it was actually a buyout, my brother sent me a quick email:

This is [bad word removed]. Surely if the Fed bails out a large bank/ financial company they should receive some equity in return for their cash. Otherwise you just ensure the rich stay rich no matter what.  Please respond with a thoughtful rightwing diatribe.

Fed moves to bail out major US bank: http://www.abc.net.au/news/stories/2008/03/15/2190458.htm

I responded with:

*) Yes, it’s [bad word removed]. It should be allowed to collapse on its own. If the government does get involved, it should be to nationalise the thing outright, close its operations and then immediately sell the various arms off to the highest bidders on the market. The government should not attempt to keep it running as a going concern (as the UK is with Northern Rock).

——

*) No, it’s not [bad word removed]. It is commonly said (including by me) that central banks have two tasks: control inflation and minimise unemployment. The US Fed, unlike most central banks, (a) does not have real independence from the executive or legislature; and (b) is forced to consider unemployment at the same time as inflation. For the BoE, RBA and ECB, fighting inflation comes first and ONLY THEN, when it’s under control, do they look at unemployment.

This isn’t quite true, though. The US Fed actually has three roles:

a) As an independent institution, to control inflation, but not — as yet — with an explicit target like the BoE, RBA and ECB have;
b) As a semi-independent institution, to minimise unemployment; and
c) As simply one of a collection of government agencies working together, to ensure the ongoing stability of the financial system.

That third point, for the US, takes absolute priority over everything else. To be honest, it does in Britain, Australia and Europe as well. It’s important because if the entire financial system melts down, you end up with 3rd-world-style catastrophes and we know that those aren’t fun.

It was clearly on that third point that the US Fed offered its recent US$200 billion facility to the market at large and also on that third point that they declared Bear Stearns too big to fail. They are clearly worried that that the market is a long way from rational right now and that the collapse of even one investment bank would have domino effects that really would threaten the entire system.

——

Personally, I think the US$200 billion facility was reasonable but I think the Bear Stearns bail-out was not. I appreciate the domino risk, but so long as the Fed is acting to ensure that there is market liquidity, I don’t think there is too much cause for concern. To the extent that they prop Bear Stearns up at all, it should be under the explicit understanding that a) it is short term; b) Bear Stearns open their books to the world; c) Bear Stearns negotiate for someone else to buy them out; and d) if they fail to sell themselves within a month, they get nationalised and the Fed then sells it off in chunks.

Some people are likening the Fed’s reactions to those of the Bank of Japan in the 1990s: propping up banks and ought-to-be-bankrupt borrowers so their financial system never had to recognise the dodgy loans on their books. As far as I can tell, the two main differences are that a) the BoJ initially had much lower interest rates, so they had less room to manoeuvre in keeping the real economy out of recession; and b) the US banks are notionally required to “mark to market” when doing their accounts rather than their preferred “mark to model”, which means that so long as the market for sub-prime-mortgage-backed assets is illiquid, they’re obliged to mark those assets as having a value of zero. That is, they’re forced to recognise the bad loans upfront rather than hanging on to them for a decade or so.

And this morning I wake up to this:

In a shocking deal reached on Sunday to save Bear Stearns, JPMorgan Chase agreed to pay a mere $2 a share to buy all of Bear – less than one-tenth the firm’s market price on Friday.

Well, waddayaknow …

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The Archbishop of Canterbury: mischaracterised, but still off the rails

The Archbishop of Canterbury, Dr Rowan Williams, has drawn a storm of criticism ( BBC, Times, Guardian, Independent, Telegraph) by calling for a “plural jurisdiction” that allows for Islamic law to be recognised in Britain.

It seems unavoidable and, as a matter of fact, certain conditions of sharia are already recognised in our society and under our law, so it is not as if we are bringing in an alien and rival system. We already have in this country a number of situations in which the internal law of religious communities is recognised by the law of the land as justifying conscientious objections in certain circumstances.

There is a place for finding what would be a constructive accommodation with some aspects of Muslim law as we already do with aspects of other kinds of religious law.

That principle that there is only one law for everybody is an important pillar of our social identity as a Western democracy. But I think it is a misunderstanding to suppose that people don’t have other affiliations, other loyalties which shape and dictate how they behave in society and that the law needs to take some account of that.

As I understand it, under English (and, I’m guessing, Australian) law, there is already the following arrangement:

In the event of a civil dispute, if both parties independently agree to it, that dispute can be heard in arbitration by somebody (or a group of people) separate from the courts and the decision of that arbitration will be binding under the law. There are nevertheless legal limits as to what the arbitration may declare.

As a first example, this practice is widely used in investment law, both domestic and international.

As a second example, it would be available if a tenant is complaining that their landlord hasn’t fixed the heating.

At present, there is a Jewish version of this set up in Britain. There is nothing to stop a Muslim equivalent being set up, if it hasn’t already.

The key point is that the arbitration can not proceed unless both parties agree beforehand to take part and abide by the ruling. If either one does not, then it goes before the regular courts.

Where the archbishop has gone off the rails, in my opinion, is that he seems to be calling for an entirely extra-judicial set-up; a competing system of justice that is parallel to (not a component of) the general law of the state.  That is simply wrong.

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The collapse of a monopoly

As I previously mentioned, I got an iPhone for christmas.  In the UK, like the USA, Apple arranged an exclusive deal with one mobile provider, in this case O2.  The cheapest plan that O2 offered was for £35/month, which included the remarkably low 200 minutes and 200 texts per month, but did also allow for unlimited internet usage when using the O2 network rather than a local 802.11 network.

Perhaps because of the increasing availability of iPhone substitutes, perhaps because of the increasing numbers of jail-broken iPhones that can be used on other networks or perhaps because they know that the new v1.1.3. of the iPhone firmware has already been jailbroken and that when combined with the upcoming release of the iPhone SDK, it’ll stay jailbroken, O2 has recently realised that their time of being a true monopolist has ended.   How do I know this?  Because this week I received the following text message from O2:

We’re really pleased to tell you that we are upgrading your £35 iPhone tariff in Feb so you will benefit by mid March at the latest.

The new tariff will take your minutes from 200 to 600 and your texts from 200 to 500.  Plus you’ll continue to receive the same unlimited UK data allowing you to surf the internet on your iPhone.

Better still, you don’t have to do a thing to get them.  We’ll text you to let you know when your new tariff is live.

Simply tap the link to find out more, including details on all our new iPhone tariffs and to see the new tariff terms & conditions.

http://iphone.o2.co.uk/35

Which, as a tariff, is much closer to their competitors without the iPhone.  For example, Vodafone’s £35/month plan charges £1 for the first 15MB of internet each day and £2 for each additional MB and includes your choice of:

  • 500 minutes of talk and unlimited texts
  • 750 minutes of talk and 100 texts, or
  • 500 minutes of talk and 500 texts with £52.50 knocked off the 18-month bill.

They’ve only dropped down to the usual category of monopolistic competition (they still have pricing power, which they use to implement second-degree price discrimination), but O2’s time of being a complete monopolist has come to an end.

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John Pilger versus “the great game”

John Pilger (biography on Wikipedia) has a new piece out in the New Statesman, “The ‘good war’ is a bad war.” This is the central part of his essay:

The truth about the “good war” is to be found in compelling evidence that the 2001 invasion, widely supported in the west as a justifiable response to the 11 September attacks, was actually planned two months prior to 9/11 and that the most pressing problem for Washington was not the Taliban’s links with Osama Bin Laden, but the prospect of the Taliban mullahs losing control of Afghanistan to less reliable mujahedin factions, led by warlords who had been funded and armed by the CIA to fight America’s proxy war against the Soviet occupiers in the 1980s. Known as the Northern Alliance, these mujahedin had been largely a creation of Washington, which believed the “jihadi card” could be used to bring down the Soviet Union. The Taliban were a product of this and, during the Clinton years, they were admired for their “discipline”. Or, as the Wall Street Journal put it, “[the Taliban] are the players most capable of achieving peace in Afghanistan at this moment in history”.

The “moment in history” was a secret memorandum of understanding the mullahs had signed with the Clinton administration on the pipeline deal. However, by the late 1990s, the Northern Alliance had encroached further and further on territory controlled by the Taliban, whom, as a result, were deemed in Washington to lack the “stability” required of such an important client. It was the consistency of this client relationship that had been a prerequisite of US support, regardless of the Taliban’s aversion to human rights. (Asked about this, a state department briefer had predicted that “the Taliban will develop like the Saudis did”, with a pro-American economy, no democracy and “lots of sharia law”, which meant the legalised persecution of women. “We can live with that,” he said.)

By early 2001, convinced it was the presence of Osama Bin Laden that was souring their relationship with Washington, the Taliban tried to get rid of him. Under a deal negotiated by the leaders of Pakistan’s two Islamic parties, Bin Laden was to be held under house arrest in Peshawar. A tribunal of clerics would then hear evidence against him and decide whether to try him or hand him over to the Americans. Whether or not this would have happened, Pakistan’s Pervez Musharraf vetoed the plan. According to the then Pakistani foreign minister, Niaz Naik, a senior US diplomat told him on 21 July 2001 that it had been decided to dispense with the Taliban “under a carpet of bombs”.

That is fascinating stuff. I am glad that people like Pilger exist as journalists because he really does push to uncover the truth. Any lie by any government is shameful. Nevertheless, while I am happy to accept the facts that Pilger presents as true, it’s difficult to read this article and to know what he actually wants other than to continue his vociferous criticism of Western foreign policy and that of the United States in particular.

On the one hand, he highlights above some of the awful aspects of an Afghanistan ruled (let’s not say governed) by the Taliban: no democracy, no freedom of religion, little (if any) freedom of speech, the utter subjugation of women, an economy based on the extraction and capture of wealth. On the other hand, he later speaks of the …

… historic ban on opium production that the Taliban regime had achieved. A UN official in Kabul described the ban to me as “a modern miracle”. The miracle was quickly rescinded. As a reward for supporting the Karzai “democracy”, the Americans allowed Northern Alliance warlords to replant the country’s entire opium crop in 2002. Twenty-eight out of the 32 provinces instantly went under cultivation.

But he doesn’t bother noting that the Taliban were only able to enforce their ban by killing anyone who violated it. I’m pretty sure that Pilger opposes the death penalty. I’m absolutely certain that he opposes it when it’s instigated without any recourse to defence in a fair trial.

I agree entirely with Pilger that the main priorities of the U.S. in looking at other countries have been political stability and economic liberalism, with the rule of law being a distant third and anything else almost entirely off the radar. I likewise agree that this is principally because these represent minimum conditions for the inevitably large U.S. companies to do business in those countries. I say “inevitably” because small U.S. companies are not in a position to invest internationally. Pilger views this as a modern form of imperialism. It’s a tempting position, but I tend to think of it more as the U.S. looking out for it’s own and leaving other countries to sort out their own particular rights and values. It is not non-interventionism, but a sort of ideally-minimal-but-occasionally-dramatic-interventionism.

I would understand if Pilger thought that the West ought to promote the good things it has aspired to itself: women’s rights, religious freedom, the welfare state and so forth. But Pilger is apparantly against humanitarian intervention, which he describes as the work of the ascendant, “narcissistic, war-loving wing” of liberalism, so I am again left confused as to what he wants the West to actually do. Does he want complete isolation?

Let me put it this way: Zimbabwe is in a terrible state. From once being described as the “bread-basket of Africa,” it is now the basket-case of the continent. It’s inflation is so high as to become unmeasurable. A third of it’s population has fled the country. It has no democracy. The opposition, when they attempt to rally, is beaten. For it’s part, the West has imposed sanctions, but China has happily handed truckloads of cash to Mugabe’s regime in exchange for Zimbabwe’s natural resources. What does John Pilger think the foreign policy of the U.S.A., the U.K. and the rest of the West ought to be towards Zimbabwe?

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The benefits and perceived costs of immigration

This article discussing migration to Britain, the benefits it brings and British reaction to it, was recently on the front page of the FT. Some key points:

Britain’s willingness to absorb migrants … have brought “undoubted economic benefits”, John Reid, home secretary, said last year. By helping to fill skills shortages and keeping a lid on wage inflation, immigrants have helped produce stronger economic growth.

[However,] 47 per cent of Britons believe migration by workers within the EU has been negative for the economy and only 19 per cent think it has been good. Asked whether there should be stricter controls to prevent workers from central and eastern Europe entering the country, 76 per cent of Britons agreed.

A friend of mine questioned whether these two sentences from the article were contradictory:

The Bank of England believes that the large influx of migrant workers has contributed to lower inflation by helping to contain wage growth. David Blanchflower, a member of the Bank’s monetary policy committee, said last month there was little evidence that immigrants from eastern Europe had depressed the wages or employment chances of British workers.

They’re not – they’re saying that migrants have caused wage growth to fall (first sentence) but it has remained positive (second sentence), meaning that wages themselves are not falling – but it does raise a key point in understanding why people feel economically cheated in an environment of high immigration.

Suppose that Price Inflation tomorrow is equal to Wage Growth today minus a bit related to “real” growth in the economy (which is plausible), but when considering their Wage Growth today, workers compare it to Price Inflation today. Then we might have (all figures are percentages):

Inflation today: 2

Without immigrants
Wage Growth today: 3
Perceived benefit: 3-2 = 1
Inflation tomorrow: (3-n)
Actual benefit: 3 – (3-n) = n

With immigrants
Wage Growth today: 1
Perceived benefit: 1-2 = -1 (!)
Inflation tomorrow: (1-n*)
Actual benefit: 1 – (1-n*) = n*

If you also suppose, as the BoE clearly believes, that the ‘n’ actually increases with immigration (n* > n), then people are unambiguously better off with immigrants coming in, but believe that they are worse off.