The Jackson chronicles: It’s not ‘Gangnam Style,’ it’s just a gang

24 Nov

Here’s today’s COMMENT FROM AN OLD FART: Successive waves of immigrants have come to America. As these new immigrants try to find a place at the American table, they start an evolution of overcoming inequality and the stigmatization of being outsiders based upon metrics of race, religion, class, and culture. Daron Acemoglu writes in the Economist article, Economic power begets political power:

Economic power tends to beget political power even in democratic and pluralistic societies. In the United States, this tends to work through campaign contributions and access to politicians that wealth and money tend to buy. This political channel implies another, potentially more powerful and distortionary link between inequality and a non-level playing field. It may also create pathways from inequality to instability, because both the economic and political implications of inequality can create various backlashes.

The structure of inequality is not only a deeply political issue because of inequality’s impact on politics but also because the extent of inequality is shaped in part by politics. The recent changes in wage and income inequality in the United States illustrate this. The substantial increase in inequality in the US labour market since the late 1970s undoubtedly has many economic causes, including the slowdown in the supply of skills and the increase in the demand for skills driven by new technologies and globalisation…

A case can be made that top inequality has been soaring in part because of politics. Piketty and Saez document that the very rich today are different than those several decades ago, most importantly because they are not rentiers enjoying returns on their or their parents’ capital, but W-2 earners, enjoying very, very high salaries…. The deregulation of finance, despite the presence of implicit and explicit government guarantees to financial institutions which would have ordinarily necessitated significant regulation, appears to have been partly won by the financial industry as a result of lobbying, campaign contributions and the access to politicians that the industry enjoys (though this is not to argue that some of this deregulation did not have a compelling economic logic nor that free-market ideology played no role).

Ethnic groups realizing that they are not part of the economic paradigm, take a different route to political power. They hope that political power will lead to economic power for the group. In reality, the political power benefits specific individuals from the ethnic group who reap the economic rewards. The resulting corruption hamstrings the development of the ethnic group and results in geographic areas like Detroit and Gary.

Abhijit V. Banerjee and Rohini Pande wrote the fascinating MIT Paper about Indian politics, Parochial Politics: Ethnic Preferences and Politician Corruption:

Our empirical results strongly support the hypothesis that voter ethnicization creates sub-stantial opportunities for corrupt politicians: The average change in corruption between 1980 and 1996 is dwarfed by the increases in the corruption of winners from the favored parties in high bias jurisdictions. Moreover, these eff ects are absent in jurisdictions with no to very low levels of bias. In other words, it is jurisdictions with a more biased caste distribution which show substantial increases in corruption. The results also demonstrate that voters recognize corruption as something undesirable: Non-low caste candidates had to show themselves as remarkably uncorrupt in order to have a chance of winning in jurisdictions dominated by low castes, and vice versa. Equally, the data provide no support for the view that corrupt politicians are good at pork-barrel politics.

The sharp trade-o between ethnic loyalties and quality reects the absence of enough good candidates who are credible representatives of their ethnic group. This could change over time as more good candidates invest in also being seen as a representative of a specfi c ethnic group and as competition among them drives out the corrupt candidates.

While our theory does not directly rely on the reason why voters favor ethnic parties, it does a ect the interpretation, especially in welfare terms. At one extreme, if the support for ethnic parties comes from their ability to redistribute e ffectively, then their presence provides real value to some voters, and our valuation of ethnic politics depends on how we weigh the preferences of the bene ficiary groups relative to the losers. On the other hand, if all voters get from an ethnic party is the assurance that they would be protected from its rapacity, which would be directed towards other ethnic groups (Myerson, 1993; Miquel, 2007), then we would expect the electoral victory of a more honest politician, who does

not extract resources for his personal bene t, to improve welfare. Yet another possibility is that politicians do very little for their supporters, either because they are too busy doing things for themselves or because they cannot really target very eff ectively. A voter might still favor his own ethnic party for historical, social, or symbolic reasons, but we would not expect changes in the politician’s identity to substantially alter redistribution among groups.

Finally, while our empirical evidence is for a large Indian state, the phenomenon of voter ethnicization has been noted in many democracies. Our results serve as a warning against investing excessive hope in the power of democracy to discipline politicians, especially in ethnically divided societies, and in extreme cases, might argue in favor of restricting government ability to target specifi c ethnic groups.

See, Political Corruption in America by Amanda E. Maxwell and Richard F. Winters of Dartmouth College

This is the final installment of the Jackson chronicles. The other installments are:

Jesse Jackson, Jr.: Why one-party anything leads to corruption                                       

Rev. Jesse and Rev. Al, parachute preachers, What is the real spiritual duty of a leader?                   

Given the continued growth of ethnic based politics, there is little reason to believe that there will be less corruption. The Jackson baton will just be passed to the next pol willing to whisper “sweet nothings” in the ears of a populace starved for attention and hopeful that this just might be “the one.”

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