Transcript

How Governments Subvert Public Interest | Mark Zupan | TEDxPittsfordMendonHighSchool

URL: https://www.youtube.com/watch?v=SW1fs4tA9Bc
Video ID: SW1fs4tA9Bc
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this topic certainly uh very topical uh trust in u.s government has been an all-time low the last several years the pew research center has been recording annually surveying americans to what extent do we trust our government the survey started in 1958 it was at its high point in the early 60s when as many as 77 percent of americans fold said we trust our government most of the time if not all the time and probably reflective of the time government have gotten us through world war ii had gotten us out of the great depression the us was on top of the economic world nowadays only 24 of americans say we trust government all or some of the time it was as low as 18 percent uh just in 2017 so it's picked up a little bit but not by much and again probably reflected the time we've been through since the late 60s the vietnam war watergate scandals seemingly government outcomes that were not satisfactory and i think it explains why we've seen political candidates on both sides of the sides of the aisle like trump and sanders topic deals with why nations succeed or fail whether it's autocracies which were the norm through the 1800s to democracies which are nowadays the norm economists think of the world as operating uh through markets and individuals being motivated by their interests whether they're altruistic or pocketbook interests and when we look at the political sphere what we think of on the the good that's being created and sought is wealth transfers individuals and the interest groups they mobilize in are interested in favorable wealth transfers the people that supply him or the people within government whether it's the monarchs whether it's the democratically elected leaders whether it's the bureaucrats they're behind the supply curve and the good that's uh the price of producing these 12 transfers what motivates politicians is political support whether it's direct contributions or indirect sources of political support and usually when we think of why markets break down and this has been the norm maybe for the last 50 years since this model has emerged in the economic world is we think of capture from the demand side economists notably from the university of chicago that said look more than likely it'll be the producers that'll capture they're more easily mobilized and so they'll end up being the ones driving favorable legislation and in a fascinating way these right-wing economists were very much aligned with karl marx of 100 years ago who believed it was the capitals that would capture the political process at the expense of the proletariats as the models deepened in recent years it's allowed for other interest groups to capture the process from the demand side labor unions consumer advocates as examples emerged where it was seemingly these interest groups that held sway on a particular piece of legislation economic elites one percenters what's been largely neglected though is the supply side and to the extent that they can co-opt the system and it's interesting because have we been analyzing politics 200 years ago when autocracies were the norm we'd think look it's the supply side that's it why politician why the political sphere breaks down it's because people within power have co-opted to their benefit people like louise the 14th in france and the bourbons who could say like to say what the state is me i basically run the show i own it whenever investigators look who might have committed the crime they look for motive means and opportunity people on the supply side have all three and again the role is much more obvious than autocracies but they're also there they're human beings that are on the supply side of politics in democracies and this isn't to argue that people on the supply side can't do very noble things they're human beings like the rest of us they have interests that can sometimes advance the public interest but they also have foibles like the rest of us [Music] in there's a famous political scientist harold blaswell who said politics does the study of who gets what why how when and where who is on the supply side it varies whether it's an autocracy or democracy but it's the rulers it's the elected officials the public employees the military the supply side employs when we think of the system being co-opted from the inside you can think of a simple equation where what's there to be gained the profit potentially depends on the potential gains how much slack how much ability people have on the supply side to co-opt the system and their extent to which they're interested are they motivated to exploit that slack or not what motivates them and what and how do they pull it off we can certainly point to cases of kleptocracy and those are more the norms of cases where governments go bad and get reported on for example the marcos family and to what extent they were able to co-opt the system in the philippines vladimir putin's rumored to have personal wealth of 200 billion dollars in russia and navalny recently exposed the this major palace that's being built for him on the on the black sea and the expense that's been employed other examples like trio trujillo in the dominican republic whose wealth was over 100 percent the gdp of his his country mir osman during british rule in indian days his wealth was 2 of us gdp at the time pension in the case of china in 1800 bc who still reviled as one of the ultimate co-opters from the inside in that country but more important than pecuniary motives would argue that ideological motives and these have really created the train wrecks these also motivate individuals for ill or for good when we think of what happened with leaders such as hitler such as mao such as stalin the fatalities the suffering ideological motives and uh there's a friedrich holderland a german romantic poet for the 18th from the 18th century has a famous quote where he said what has always made the state hell on earth has been precisely that people have tried to make it their heaven so these ideological motives that are behind individuals and that are important to all of us and capture from the supply side's often symbiotic with demand side interests let me give you a case in point the best analogy i can think of is dna when there's a cancer on the body politic the dna the double helix is composed of four amino acids and these four bond together in a particular way cytosine bonds with guanine thymine with adenine if one of the nucleic acids is out of whack then the nucleic acid on the other side is also likely to be out of whack so if there's something wrong on the demand side where the system can be co-opted it also creates this lock-in affect on the supply side let me give you the first reason why we can't count on the invisible hand to ensure efficiency in political markets and that is economic stakes do not translate into political clout if there was a one-to-one translation we wouldn't have to worry about there being a market in politics but because of this non-one-for-one translation we do have to worry classic case and point sugar quotas we shoot ourselves in the foot each year in this u.s by about 4.5 billion dollars consumers as a group we lose about five billion dollars because we limit how much sugar can come into this country from overseas producers in this country gain about 500 million dollars a year so the net loss to the country is 4.5 billion why don't we get rid of these policies well it's because we each as a family of four average about a fifty dollar loss a year we have no motivation to show up in washington to contact our congressional rep and say get rid of this crazy limit on how much sugar can come into this country but producers are much more concentrated in places like louisiana and hawaii they have a lot at stake they show up in washington to lobby their congressional representatives now how this creates a symbiotic capture that gets even more locked in so when you have higher sugar prices in the us because not enough sugar can come in people start looking for substitutes like high fructose corn syrup that's produced by companies like archer daniels midland headquartered in illinois and keeping sugar import quotas in place are also the producers of high fructose corn syrup they benefit because demand for their product is stoked up when we limit imports of sugar so you'll often see the senator for hawaii lobbying or voting with the senator from illinois to keep these sugar imports in place and there's a very famous uh quote by milton friedman there's nothing so permanent as a temporary government program these quotas have been in place for decades even though year over year we're losing 4.5 billion dollars there are plenty of examples where capture from the inside has occurred the ming dynasty for example in china if you look back at 1500 china and the ottoman empire were on top of the world you would have predicted that nowadays they would be holding sway they would be the dominant influences they basically shot themselves in foot the ming dynasty in china canal systems gun powder monetary systems they were much more populist much wealthier than europe but they went through several rulers bad emperors that essentially started to look unkindly trade at not allowing merchant ships to be built the treasure fleet was that had been the pride of the chinese at the ming dynasty was laid up on dry docks you couldn't build a ship beyond a certain size populations were moved inland became a very anti-trade oriented culture similar thing with the ottoman empire it shot themselves in the foot from being on top of the world they became the sick person of europe and a lot of that when you looked they banned printing for close to 250 years starting around 1578 the ottoman empire the sultan for a variety of reasons fear of uprisings but also because of all the public scribes on the payroll threatened to lose their jobs if you allowed easier ways to print products and then also a lock-in from and sometimes this also shows how institutions and their usefulness can change in a society what made the ottoman empire strong was something called the emissaries it was the fierce fighting force that allowed the empire to grow they essentially conscripted young men from territories they would raid largely christian young men who were then sent back kidnapped and sent back to constantinople trained in the regime you weren't allowed you were a one generation servant of the regime your sons couldn't become the anaseries but they over time required a lot of power they were the fist for the sultan and slowly the rules began to change as they acquired more influence now your sons could could become a yanisari if your father was against her they became such a force that limited change uh the two sultans that tried to limit their power were murdered by the anti-series they contributed to the sickness that ended up limiting the growth of the ottoman empire in 1800 the ottoman empire had a literacy rate of two to three percent versus places in western europe like germany and england that was 50 venetian republics another great example where they venice sat on a crucial crossroads the old wealth relied on the new wealth to conduct trade with china with places on the silk road but the new wealth began to acquire political power late 1200s there was a famous serata decree a closing to the new wealth of the political power in venice and to that serata legislation modern political scientists attribute to venice declining as an empire that now makes its living largely on being a tourist destination but nowhere near the hub of economic fatality it used to be they're modern examples we read about the paper all the time north korea russia iran venezuela venezuela used to be a democracy under chavez and maduro it's turned into an autocracy india the largest democracy in the world recent elections in 2014 one study documented that a third of the elected politicians were under criminal indictment argentina was on top of the world had a economic welfare wealth level rivaling the united states in the 1920s has become a basket case largely because of co-opting from inside and even the world's largest autocracy nowadays as well as the democracies has to worry about these issues under president xi and china whether we look at what's happening with the cougars or in hong kong nowadays of the 1200 wealthiest chinese a seventh of them are in the political party so it's going to be very hard for them to give up power in the u.s would argue this is something we have to worry about too for example when you look at senators and congressional reps a study done over 1985 to 2001 the average senator over that period their personal stock portfolio outperformed the market by 12.3 percent a year congressional reps and republican democrats their portfolios outperformed the market 6.3 so either we've been electing incredibly wise people to go to washington or it helps to be inside government this is what motivated our former congressional representative louise slaughter to pass the stock act the stop trading on congressional knowledge but people are still finding ways to get around that if we look at the recent for example senator from georgia and the inside knowledge she and her husband both benefited from or chris collins who went to prison right next door from buffalo and the inside information his family was benefiting from public sector unions while private sector unions have been declining public sector unions are on the rise in the united states they've had flip-flopped relationships private sector has gone from 37 percent unionized to 6 it's been the nearer opposite for public sector and this matters in spheres like education it matters in fear in spheres like law enforcement would argue for example that a key reason why we have issues with police accountability is it's really hard to fire nowadays a misperforming police officer i'm with a private university i would hope that somebody was 17 or 24 depending on whose accounts you read instances of malfeasance such as derrick chauvin the officer in the george floyd case would no longer be with our organization it is really hard uh nowadays applied immune implied immunity to get rid of the police officer the same is true of our educators if you've watched for example the movie waiting for superman it is really hard to have to fire a miss a public school teacher that is not performing well and it's something we're going to have to come to terms with raj shetty who's a leading economist at harvard university has recently done a study your generation that's now in high school if you could fire the 10 worst performing public school teachers and replace them with mid middle level strength teachers the impact over life lifetime earnings would improve by 117 trillion dollars our current gdp in the us is 20 trillion so a huge impact if we could reward better productivity in the public sphere so but that's something we'll argue would have to come to terms with and then the last reason we'll give why political markets break down power is the currency of the realm in politics you get to produce the wealth transfers because you have the political power you get to capture the system because you have access to that power it is really dicey to be bought out and to be able to still preserve those gains or your life in the corporate world if you're screwing up people can buy shares in your company give you a golden parachute and you're gone and then the company and its stockholders can try a new strategy buyouts are very hard in politics for example in north korea kim jong-un you can't it's hard to import goods from overseas he was a student in switzerland he still loves apparently m cheese he's one of the world's largest buyers of edmontol or cheese it's hard to imagine that there is a buyout big enough to say look kim jong-un will pay you go to this island let your country prosper because he'd probably be afraid of all the people whose lives he's ruined hunting him down and neither killing him uh so it's hard to write an iron-clad contract once you can get out of political power you'd think if you were screwing up and this what happens if the company's not performing well people as consumers will go to another business shareholders will boot out management in the political sphere the exact opposite happens and what i did is a study of two years ago comparing autocracies and democracies and the first column is just the average duration of the leaders of those countries the second column is their average government's transparency there's a group out of germany called transparency international that each year rates a country on a 0-100 scale zero you're completely untransparent you're opaque 100 you've got a perfectly clean government and this perverse result that in countries and autocracies that on average are less transparent or more corrupt the rulers stay in power in order of magnitude longer they cling to power to the detriment of their citizenry so our founders of this country were right people aren't angels we need to set in motion safeguards and safeguards in general work you have cleaner forms of government but the average democracy is still very far away from a perfect score of 100 when it comes to transparent forms of government so we'll close with this democracies uh people that have studied this definitely outperform autocracies but they're far from optimal we still have a lot of work to do and especially incumbent on your generation you're wearing the red slippers like dorothy was integrity's been improving over time especially in democracies but integrity doesn't mean that we trust our government like in the united states we may have a cleaner form of government but we still may not like the outcomes that that emanate from the public sphere and just because we have a competitive system doesn't mean we have integrity or trust the government of mexico for example turns over every six years italy's been a revolving door and yet fairly when people are surveyed about their level of trust or integrity in those in those democracies those democracies score generate pretty low scores