Corruption as a source of state failure

Rent seeking behaviors by bureaucrats and ruling parties not only serve to enrich those groups but also decompose the institutions designed to protect the interests of citizens. This paper seeks to explore the mechanisms of corrupt state extraction and its effects on governance and stability. This has proven to be particularly problematic in Asia, as the difficulties of corporate relocation to these areas have demonstrated. While many states have made efforts to encourage trade liberalization, they have also often continued to intervene haphazardly to capture the benefits of that liberalization. This process directly effects long-term state stability in the region. The example of  Wukan village in China demonstrates the tension between state control, often preserved via undemocratic means, and the viability of that control as an enduring strategy.

Past Imperfect

I have a problem with narrative non-fiction about “serious” events. While they’re obviously important to personalize weighty and often complex situations, they also distract from the very significance of what they seek to emphasize. Loung Ung’s book, First They Killed My Father, is no exception. This is a particularly difficult problem given the age of Ung as narrator; she spends the vast majority of the work as a pre-pubescent girl with little macro-level understanding of the horrifying circumstances she and her family are trapped in. Her father functions in some meager way to fill in the gaps, but as the title gives away he is rather quickly eliminated, and the rest of the book she wanders on through a series of poorly-noticed and articulated atrocities. This isn’t to say that there is no documentation of the ongoing genocide – of course, there is. But the attempt to maintain the sincerity and purity of a child’s narrative voice means this is contextualized in the form of a few sporadic killings motivated by unfamiliar concepts and executed by shadowy, one-dimensional villains as the narrator wanders somewhat ambiguously. The end result is less The Diary of a Young Girl and more particularly disquieting adventure novel.

Even the bursts of introversion are seemingly shallow, surprising given how much of the time Ung had no ability to safely communicate with others about anything even vaguely personal. The natural result of this should likely have been a wealth of self-evaluation and an advanced understanding of Ung’s positioning in the moral space of the genocide. Instead, we’re left with throw-away concessions about her guilt over stealing food from her sister, or blasé confusion regarding the political teachings of her supervisors.

I’ll readily concede to being desensitized to the types of slaughter described by Ung, and those perpetuated during the Cambodian genocide more broadly. That is probably the expected starting point for a modern reader, though; the genre of personal narratives exploring atrocities is relevant precisely because it evades or undermines the reader’s defense mechanisms regarding violence to distant, unknown parties. First fails to accomplish that goal. The scene where the groups of refugees deliberate over a captured member of the Khmer Rouge and eventually execute him in rather graphic fashion should have elucidated the moral ambiguity of the rights of victims for revenge, and the monstrosity of what the victims have become: not just detached from place, community, or family, but also from their values. Instead, it read more like exhibition than exploration.

This is perhaps an unfair complaint, however; I can visualize a world in which the author expects the reader to install this dialogue himself, and as a result present Loung as a complicit, largely depthless vehicle for the audience’s moral examination. This conveniently preserves the child-Loung as a truthful narrator with incomplete perspective, which no doubt is attractive for its honesty. But I feel this type of work, perhaps more than any other genre, deserves a different, more important kind of honesty. It exists as a rare opportunity to take a first-hand account and layer upon it a sophisticated decision regarding the ethical and even political evolution of the process. Ung would have been better served narrating primarily in the past tense – in that case, she could have differentiated between her contemporary understanding and her past experience.

Too much of the book reads as a broken adult trying to occupy the emotions of a child she does not fully remember: a girl who misses her mother, loves her sisters. Instead it seem almost robotic, a process that dilutes the attempts at sincerity. Child-Loung, at least in the beginning, had not gone through the process of desensitization and should be represented as an invested emotional vessel. Disappointingly we have a girl who seems to be going through the motions, which borders on the implausible at times and distracts the reader. Perhaps the only relationship which seems honestly preserved from infancy to adulthood (or more properly, authorship) is Loung’s bond with her father. Given his rather premature disappearance/murder, the narrative seems to actively seek replacement relationships, none of which are especially compelling.

No person opening the book with awareness of the subject needs an education on the basic components. We are all aware that genocide, murder, starvation, rape, slavery, dislocation and generic unhappiness are bad. Identifying specific instances of bad things is not particularly helpful.  What the reader needs instead is a new or at least upgraded framework for ordering and understanding these horrors. First They Killed My Father is a solid, even important work, but it is not a finished one. Imposing our own nuance over the experiences of Ung is unfair to both her suffering and our comprehension, a frustrating failure of the book. What should have produced empathy instead creates detachment and dispassion. Ung and her family deserve better.

All eyes on Europe

“China has no appetite or ability to buy up Europe or control Europe as some European commentators have said,” wrote Feng Zhongping, director of the Institute of European Studies at the China Institute of Contemporary International Relations. “China has from the beginning strongly supported the EU and the euro, in clear contrast to the talking down of Europe in the international community,” Feng wrote in the piece, carried in the papers overseas edition. China has promised not to link helping Europe in the debt crisis with issues such as the EU recognizing China as a market economy or the EUs arms embargo on China, Feng added. “This is the best example of Chinas proactive stance on the EU,” he wrote. Any Chinese economic assistance to resolve the debt problem, whether via the International Monetary Fund or the EUs own systems, would be a purely economic decision, Feng said.

via China paper says country does not want to buy up Europe | Reuters.

 

China increasingly has to worry about flagging demand in critical export markets like the United States and the Eurozone, especially as their fiscal expansion has mostly expired. The latter problem is currently working itself out via the PRC encouraging banks to rollover the debts of local or provincial governments, which should at least reduce the size of the domestic contraction. The former, however, is more troubling.

Interconnectivity has been the driving force of Chinese growth for much of the last two decades, and it has paid off handsomely for them. Now, that return is much less certain. Consumer credit in the US has been surprisingly easy to divest, and Americans have remained reluctant to make the plunge again in uncertain times. European consumer spending is also trending downward, placing the Chinese in an awkward position in terms of sourcing future growth. Developing markets are, well, not quite developed enough to prove reliable customers for Chinese goods, and China’s two main trading blocs are proving unreliable.

So while Feng indicates China has no “appetite” for European domination, the “ability” question might be more relevant. Put simply, China can borrow again to finance European solvency, thereby (hopefully) stimulating demand for Chinese goods, or they can take an immediate hit in terms of reduced domestic growth – a particularly frightening prospect for the CCP, which fears widespread social upheaval if unemployment rises too much. The former strategy just kicks the can down the road, however, as current rollovers are demonstrating: at some point, that debt will come due, and who knows what fiscal condition China will be in then?

The choice between alarming demographic pressures now or aggressive bond vigilantes later is not a facile one. The most likely outcome is that the PRC decides the risks of financial market failure are globally dispersed, while social failure is far more concentrated. Moral hazard, indeed.

Whither China, Redux

Ambrose Evans-Pritchard has a great post about the recent sluggishness in Chinese consumption. Imports from certain countries are down, internal freight is declining, with property values and energy usage also slipping.

 

 

There is a widespread misunderstanding that China’s households can easily come to the rescue by cranking up spending because they have the world’s highest savings rate, and consumption is just 36pc of GDP.

Prof Michael Pettis from Beijing University puts that one to rest. The Chinese do not have a much higher personal savings rate than other East Asians. The reason why consumption is so low is that wages are low, the worker share of GDP is low, and the whole economy is massively deformed and tilted towards excess investment.

This is deeply structural. It cannot be changed with a flick of the fingers, and contains the seeds of its own destruction.

China is a marvellous country. I wish them the best. But they have not found the secret formula for perpetual uber-growth.

No such formula exists.

via China’s very mysterious data – Telegraph Blogs.

 

There’s been a lot of talk in the last year or two about the potential for a slowdown in the Chinese real estate sector, and implications for the broader economy. Part of the problem, as Evans-Pritchard points out, is that the data that China releases regarding internal events is often spotty or contradictory. Given that constraint, and the fact that the end result of an investment glut might be worse than a “normal” contraction, how confident do you feel that an expansionary fiscal policy in 2008-2009 resolved intrinsic risks?

 

The problem with a “too small” stimulus is that you get an initial economic boost, but when the stimulus expires the economy slumps back down, as indeed happened in mid 2011.  Ideally a stimulus employs some idle labor, stops it from depreciating, and tides those workers over until they can look for other jobs in fundamentally better economic conditions.  Those last few words are important.  If conditions are not improving soon, the ability of the stimulus to “buy time” for those workers isn’t worth much.  The workers get laid off from the government projects and their reemployment prospects are no better than to begin with.  We end up having spent a lot of money to postpone our adjustment problems, rather than achieving takeoff.

via The size of fiscal stimulus vs. the length of fiscal stimulus — Marginal Revolution.

 

While China is obviously not the US, especially in terms of political constraints or moderately-liquid assets needed to attempt additional stimulus as a response, the answer to the question should probably be “not very.”

 

Incentives matter, terrorism edition

JIEDDO is doing some really cool stuff with anti-IED technology, but it seems more often than not it’s just a rather expensive, low-effectiveness R&D program.

“We’re not going to solve the IED problem inside Afghanistan,” a senior U.S. military official told ABC News last week. “If we don’t go after the supply, we’re playing defense.”

That’s exactly what JIEDDO’s looking to do. The agency’s new call for research, first spotted by InsideDefense.com, asks for “additives and methods to disrupt or discourage [bomb] manufacturing from fertilizer.”

via Pentagon Looks to Sabotage Pakistan’s Bomb Supply | Danger Room | Wired.com.

That being said, this is probably closer to an ideal strategy; I’m reminded of this paper exploring costs of suicide bombers. We think a lot about the intent or motivations of terrorists, but not as much about what rationality means for them. There are costs born by organizations or individuals, and if we can devise some method of increasing that cost, we’re better off. So far, JIEDDO has been a very pricey game of Whack-a-Mole, but if the focus shifts to an offensive strategy that might change.

One data point is not a narrative

Or at least, not a terribly compelling one:

I’ve mentioned before my beef with the so-called puzzle that “[insert African nation here] and [insert Asian nation here] had the same income per person in 1950, and yet look at the difference now.”

Income levels in 1950 were not, it seems, the best guide to why some countries became rich and why some stayed poor. The understudied field of development history has much to teach us.

via The historical roots of East Asia’s growth miracle | Chris Blattman.

I think a lot about the problems of descriptive versus predictive data, and this comparison exemplifies that tension. Michael Spence’s The Next Convergence relies on a well-meaning optimism, indicating frequently that Asian growth is a test case for African development. This is probably an imperfect analogue; institutions matter, history matters, geography matters. There are a lot of factors that aren’t captured in GDP or per capita income.

Maybe Asian nations which have exhibited rigorous growth have better transportation networks, or closer trading partners, or superior soil types, or a more educated labor pool than their equivalent-GDP cohort in 1950. Saying Singapore started in the same position as Equatorial Guinea ignores the successes of one and the problems of the other.