Archive for March, 2012

Rent-sharing in a strategy of divide and rule

March 26, 2012

The late Michael Wallerstein models the distributive consequences of affirmative action:

The motivation for redistribution along racial lines in the model is an inefficiency in the labor market creating rents for those holding good jobs, coupled with an exogenously (historically) given difference in the distributions of human capital across races. When racial divisions lead to demands for redistributive policies along racial lines via affirmative action, we show that legislative policy bargaining implies that the amount of redistribution along income lines is less on average than would exist were racial divisions absent. When affirmative action is on the agenda, redistribution along racial lines partly replaces redistribution along income lines and total redistribution, as measured by the change of the Gini coefficient, declines.

The paper shows how a ruling elite might use affirmative action to implement a divide-and-rule strategy. It notes the strategic aim behind Richard Nixon’s approval of the Philadelphia Plan and creation of the Office of Minority Business Enterprise: ‘Nixon’s strategy introduced a new policy dimension that split black workers and white union-members, establishing a Federal program of race-based hiring [and procurement] that has never been revoked.’

Wallerstein mentions the rent-sharing aspect of affirmative action, without elaborating much on this point. I want to do so in this post.

In the bargaining game of affirmative action, the parties (state on one side and interest group on the other) come to a rent-sharing arrangement to divide the surplus arising from some economic activity. Here the state represents a diverse coalition of the proprietary classes, which for strategic reasons (consolidating political stability and securing economic advantage, as Wallerstein shows) allows the other party (elite and professional middle-class members of some disadvantaged group) to capture a share of booty.

The rents may be created by monopoly privileges arising from government economic activity, or they may already exist due to segmented labour markets (e.g. in which, as Wallerstein points out for African Americans, members of one ethnic group are excluded from the labour market for secure, well-paid jobs with promotional ladders). They may also stem from artificially preserved shortages, such as professional guilds (e.g. medical associations) which allow members to earn scarcity premiums. Or rents may simply be generated by the ordinary competitive operations of private firms. An interest group, made up of elites driven by a broad sense of injustice alongside narrow careerist aspirations, uses ethnicity or sectarian identity to stake a claim to a share of these spoils.

The prize usually involves civil-service jobs and preferential admission to universities (which serve as passports to employment in the state bureaucracy, or to the professional salariat). It may also include business favours such as a dedicated share of government contracts, cheap loans, and allocation of licenses to operate exclusively in a particular market.

The US policy – giving what Nixon described as a ‘piece of the action’ to African Americans – has its equivalents elsewhere. In India, public-sector jobs are reserved and university quotas are granted to members of ‘backward castes.’ Malaysia’s New Economic Policy affords a varied set of privileges, including higher-education entry and bureaucratic positions as well as business permits and procurement contracts, to bumiputera (‘sons of the soil’). This privileging of Malay people and Malay-owned firms, at the expense of those with Chinese and South Asian ancestry, has an Indonesian equivalent in preferences for pribumi. Comparable Australian programs, granting discounted credit to businesses owned by people of Aboriginal or Torres Strait Islander ancestry, and seeking to win government contracts for Indigenous-owned businesses (‘supplier diversity… increases the opportunity for ethnic minority owned businesses to supply their goods and services to large public and private sector organisations’), are very much smaller.

On the other hand, Australia, like several other countries, has recognized a new form of property right based on the customary law of indigenous peoples. These vest communal title to land and water in corporate entities, enabling a small number of trustees or agents to exercise control rights over the assets. The previous post discussed a similar set of property rights in ‘ancestral land’ assigned to chiefs and heads of lineages (according to the ‘customary’ provisions of groups deemed to be indigenous) in various sub-Saharan African countries. Such institutional arrangements allow a few individuals to hold assets and exercise managerial powers (negotiation of land-use agreements and transactions with outside parties, investment, etc.) on behalf of beneficiaries to whom they are only weakly accountable. Usually these rights and obligations aren’t directly lucrative, as they don’t confer upon their bearer any entitlement to a share of the net income generated by the assets. Nonetheless they can be leveraged to obtain a stream of money and other benefits from consulting, directorships, government advisory panels, corporate liaison, etc.

These various group-specific privileges allow a tiny subset of the disadvantaged ethnic, linguistic or religious group to claim a portion of the social surplus extracted from other workers. Employment in a government agency usually involves incentive payments to motivate honesty: remuneration is set far above the incumbent’s reservation wage or salary, so that the cost of losing one’s job due to detected corruption is positive (i.e. exceeds the value of the public official’s next-best alternative). Even with mechanisms in place to discourage corruption, employment as a civil servant may be something of a sinecure, involving weak accountability and little public scrutiny. It thus presents opportunities to abuse public office to obtain private benefits through liaison and collusion with private actors. The government official may interact with business interests through the design and implementation of regulation, allocation of permits, subsidies and grants, dispensation of contracts for procurement, monitoring and inspection, etc. This allows bureaucrats to engage in rent-sharing, dividing with firms the spoils of patronage, graft and self-dealing, and establishing personal contacts that may allow a future stream of benefits. Even without explicit corruption, or the abuse of public office for private gain, a public monopoly generates rents which the government employee shares in. Public-sector jobs usually offer more job security and seniority benefits (guaranteed wage premiums and promotional ladders) than private-sector equivalents, privileges which may be especially important in countries without state-funded retirement income.

Similar benefits accrue from preferential access to university courses which allow entry to the liberal professions (i.e. in which graduates become certified academics, architects, lawyers, accountants and similar qualified practitioners). High training costs, or other barriers to entry, create a relative scarcity of these skills and enable their bearers to command a high income. Members of these professions generally work as independent contractors, often in small proprietorships or partnerships. As such they aren’t subject to the employment relationship (in which, in exchange for receipt of a wage or salary, the employee must submit to the authority, monitoring and direction of a manager, supervisor, or agent of the firm’s owners). Along with being residual claimants on the net income generated by their own activities, these professionals retain work autonomy and decison-making control of their production process, e.g. routines, effort, intensity, etc.

Thus the perceived over- or under-representation of Jews, Tamils, Igbo, diasporic Chinese, etc. in government jobs, among salaried professionals or in business interests becomes the stuff of tribalism and inter-group conflict. Do rent-sharing arrangements reduce envy and discontent and encourage ethnic (or linguistic, religious, gender, etc.) harmony?

In a bargaining framework, it’s easy to see that a ‘minority’-based interest group seeking to negotiate a rent-sharing agreement has an incentive to foment ethnic discord and encourage animosity. The bargaining power of each party, and thus the division of spoils resulting from negotiations, depends on the level of its reward (‘disagreement payoff‘) under alternative (non-cooperative) arrangements. A party advances its distributional claim (i.e. increases its bargaining power) if it can increase the costs or disadvantage inflicted on the other party that would result  from a breakdown in bargaining and an implementation of the noncooperative outcome (‘threat point’). Political discord that threatens the stability of the social order and the favourability of the investment climate reduces the state’s (and propertied classes’) fallback position, and thus decreases the latter’s bargaining power. As shown by several of the country examples above, the prospect of a disadvantaged group (especially one whose demographic weight, economic position or geographic distribution makes it crucial to social stability) becoming radicalized may allow elite members of that group to extract favours from the ruling authorities. This is one reason why so many careerists have flirted with socialism, or declared a commitment to left-wing radical politics (only to emerge, a few years later, as a trusted member of the establishment, having passed through a nationalist phase). In return for these benefits, the elite in these groups preserves the prevailing order by channeling frustration along ethnic lines.

A credible threat of secession is a way to signal an interest group’s possession of a good ‘outside option’ (the reservation payoff it would receive, not just from ceasing to bargain, but from terminating the interaction entirely). In some circumstances, creation of a new state or political entity, especially in a resource-rich region (e.g. Katanga), would reliably grant civil-service jobs and commercial opportunities to elite members of the disadvantaged separatist group. In such cases the potential secessionists will be likely to win concessions and privileges to forestall or discourage their withdrawal from the original state. Of course, interactions are usually asymmetric in a quite different way: in most cases the ruling elite has the better outside option, and can make take-it-or-leave-it offers of very paltry prizes which the rent-seekers have little choice but to accept.

Indeed, in several of our examples rent-sharing arises from non-cooperative interactions rather than through bargaining. What this means is that the behaviour of at least one of the parties isn’t subject to binding agreements. In particular, any pledge by elite members of the disadvantaged or backward community to support status-quo institutions can’t be enforced. In such cases rents may be conferred unilaterally by one party (i.e. by the state and propertied classes) on the other, as a kind of incentive device. This regularly involves the cultivation of suitable people over decades, the identification of ‘trustworthy’ or reliable representatives at a young age, and their recruitment into a kind of internal labour market with its own job ladders and career trajectory. Such ‘community representatives’ then serve as bulwarks for the existing institutional setup, as it reproduces the income disparities, ethnic divisions and group-specific poverty which they purport to struggle against.

Property rights, customary law and ethnic identity in middle Africa

March 20, 2012

Occasionally glimpsed in the lurid half-light of war reportage, or promoted in Economist prospectuses and encouraging brochures for the development industry, the societies and states of central Africa are rarely examined for their stable, enduring aspects of rule.

One feature of the local scene, common to several countries in the region, deserves particular note.


Mahmood Mamdani, a Ugandan political theorist at Columbia University and Makerere University in Kampala, has described how central and east African states have ‘legally enforced race and ethnicity as two salient political identities’.

Inheriting ‘distinctions crafted in colonial law’, post-independence Uganda, DRC/Zaire, Kenya, Tanzania and Rwanda have locked in ‘a mode of rule that accentuates difference’ based on ascriptive traits: ethnicity, religion, language, putative indigeneity, etc.

Their populations are divided, based on possession of such characteristics, into distinct institutional universes governing their economic entitlements, legal rights and political administration.

On one side sit those subject to customary law, which vests property rights and political authority in ‘traditional’ chiefs and elders, ‘stamped with an ethnic identity’. On the other stand members of those groups denied the rights of custom but granted, if lucky, the protection of civil law.

Around the African Great Lakes, writes René Lemarchand, ‘ranked societies’ have formed. A ‘two-tiered structure of ethnic domination tended to vest power and privilege’ in some identity groups. ‘Political exclusion’, in one form of another, is the fate for the rest.

At its worst, this ‘tiered’ citizenship brings ‘denial of political rights to specific ethnic or ethno-regional communities, most notably the right to vote, organize political parties, freely contest elections and thus become full participants in the political life of their country.’

The durability of these legal and political arrangements, following decolonization, seems to stem from a kind of institutional complementarity between them and the prevailing rules governing ownership of economic resources. Each contributes to the survival of the other.

Jean Ensminger has shown the existence, throughout sub-Saharan Africa, of a single broadly-defined set of property rights wherever there is subsistence farming supplemented by commercial cash crops. (Of course climate, terrain, resource endowments and population density vary widely over this continent-sized region, giving rise to diverse institutions and cultures. Nonetheless the common pattern is clearly observable.)

For any given resource, various property rights are ‘unbundled’ and assigned to distinct parties. None of these individuals or entities has the full bourgeois panoply of exclusive ownership.

Households or individual cultivators have disposition over the use of land and livestock; but inheritance of farm plots and security of tenure is controlled by chiefs and elders within a village or community, and may be allocated and transferred according to lineage or status. Income generated by the assets goes more-or-less undivided to the cultivator, though local notables may take rent and the state is entitled to a share through taxation.

In the more arid zones, with sparser populations, pastoralism or foraging holds sway. In these circumstances, land is a common-pool resource (e.g. involving water sharing and communal rights of way). Its use is governed by a mix of common property rights and open access.

Historically, within farming areas, the pre-existing ownership rights of chiefs and heads of lineages granted them the opportunity to extend their power and wealth under European ‘indirect rule’.

Their hereditary exercise of control rights over economic resources (granting legitimate decision-making authority over access, exclusion, transfer, etc.) allowed them to serve as delegated authorities for the colonial power. They were ideally placed to enforce tax payment. In return for this favour they often received a more complete set of private-property rights over land.

In 1900 the British colonial power struck the Buganda Agreement, in which local chiefs were granted large estates, converting their power to that of landholders over tenants. This involved sharecropping or fixed-rent payments:

At the head of each county shall be placed a chief who shall be selected by the Kabaka’s Government, but whose name shall be submitted for approval to Her Majesty’s representative. This chief, when approved by Her Majesty’s representative, shall be guaranteed from out of the revenue of Uganda a salary at the rate of E200 a year. To the chief of a county will be entrusted by Her Majesty’s Government, and by the Kabaka, the task of administering justice among the natives dwelling in his county, the assessment and collection of taxes, the upkeep of the main roads, and the general supervision of native affairs. On all questions but the assessment and collection of taxes the chief of the county will report direct to the King’s native ministers, from whom he will receive his instructions. When arrangements have been made by Her Majesty’s Government for the organization of a police force in the province of Uganda, a certain number of police will be placed at the disposal of each chief of a county to assist him in maintaining order. For the assessment and payment of taxes, the chief of a county shall be immediately responsible to Her Majesty’s representative, and should he fail in his duties in this respect, Her Majesty’s representative shall have the right to call upon the Kabaka to dismiss him from his duties and appoint another chief in his stead. In each county an estate, not exceeding an area of 8 square miles, shall be attributed to the chieftainship of a county, and its usufruct shall be enjoyed by the person occupying, for the time being, the position of chief of the county.

The Toro Agreement and Ankole Agreement (1901) followed as the British expanded their Ugandan protectorate and constructed the railroad.

For the same period, Kathryn Firmin-Sellers has described how chiefs in the colonial Gold Coast (now Ghana) sought political authority and gained privileged claims over economic assets by cynically invoking cultural ‘tradition’ to their favour:

Throughout Africa, customary land tenure laws evolved when land values appreciated at the turn of the century. Individuals and groups competed to appropriate the newly valuable resource by “reinventing tradition,” defining a version of customary land tenure favorable to themselves… British colonial authorities had neither the incentive nor the capacity to impose a new system of private property rights in the Gold Coast Colony… Officials of the colonial state announced that they would uphold customary land tenure and delegated enforcement powers to the Chiefs of the colony’s many traditional states.

Paramount chiefs thus avoided the dilution of their power that would have ensued from sale to immigrant farmers of freehold title to land suitable for the cocoa cash crop, or from concessions to Europeans seeking mineral and timber rights.

Thus, in seeking to subdue and extract income from African societies, rather than sending out their own civil servants to remake rural property relations entirely, European colonial states followed the advice of Machiavelli:

Whenever those states which have been acquired as stated have been accustomed to live under their own laws and in freedom, there are three courses for those who wish to hold them: the first is to ruin them, the next is to reside there in person, the third is to permit them to live under their own laws, drawing a tribute, and establishing within it an oligarchy which will keep it friendly to you. Because such a government, being created by the prince, knows that it cannot stand without his friendship and interest, and does its utmost to support him; and therefore he who would keep a city accustomed to freedom will hold it more easily by the means of its own citizens than in any other way

And in fracturing ‘native’ populations into different ethnicities, each ruled by its own customary authority, they also plainly followed the Florentine’s divide-and-rule prescription, as given in the Art of War:

A Captain ought, among all the other actions of his, endeavor with every art to divide the forces of the enemy, either by making him suspicious of his men in whom he trusted, or by giving him cause that he has to separate his forces, and, because of this, become weaker.

Yet the colonial era is long gone and, as Mamdani describes, post-independence elites continue to partition populations on the basis of group membership and ascriptive characteristics.

Citizenship rights may be allocated (as in Mobutu’s Zaire and its successor states) on the basis of ancestry rather than residence (so that the Banyarwanda of Kivu were defined as ‘foreigners’ because their forebears had arrived a mere century earlier).

Customary entitlements to ‘traditional’ land, and to political authority, may be granted to elite members of some groups, yet denied to those of other groups deemed ‘non-indigenous’. Assets held by members of such ethnic groups (e.g. south Asians in Uganda, Arabs in Zanzibar, Tutsis in Rwanda) may be expropriated and assigned to members of other (usually ‘indigenous’) groups.

Parochialism and in-group favouritism may determine:

  • the provision of infrastructure and delivery of public goods (irrigation, electricity, sanitation services, education);
  • beneficial granting of civil-service jobs and (through quotas) university entry;
  • patron-client relationships.

A view favoured and promoted by USAID and the World Bank suggests that complete, secure, well-defined property rights increase agricultural yields: transfer rights will allow land to be held by its most productive and efficient users, security of tenure will allow land to be offered as collateral for loans used to fund improvements, and a farmer who can capture all the rewards generated by his work has more incentive to expend effort.

Bolstered by such arguments, various central African states have sought, especially in the past three decades, to convert customary tenure to freehold title, through land registration and titling projects. The Ugandan Ministry of Land has put the case for a transition in property rights in its latest version of a national land policy.

The result [of lingering customary tenure] is legal dualism in the property system, a multiplicity of tenure regimes, multiple rights and interests overlapping in the same piece of land, and a heritage of evictions, arbitrary dispossession, land disputes and conflicts. The phenomenon of land disputes and conflicts have broken across national boundaries, spread to tribal and ethnic groupings, and merged with contemporary phenomena such as the discovery of extensive deposits of mineral wealth to generate overwhelming uncertainties in land rights resulting in tenure insecurity. In addition, land rights of vulnerable groups and land resource-dependent communities are either inadequately protected or poorly enforced… In the current era, Uganda has to face the challenges of a rapidly growing population by devising means to relieve pressure and competition over scarce land resources.

Attempts to establish private ownership in land have often proceeded in two stages, with an initial period when property is vested in the state. (This may be an attempt to avoid the enforcement problems which sometimes occur if land is simply re-allocated between private parties. Rearrangement of property rights by fiat is conferred with popular legitimacy if it is done in the cause of a putative ‘socialism’ or ‘national strength’.)

It regularly involves the kind of land dispossession that occurs during armed conflict and political violence. It was suggested during the past decade that the Museveni government’s forced internment of Acholi people in northern Uganda had as an objective (whether primary or auxiliary) the separation of farmers from their plots.

As Kampala’s land policy states, the push to define and enforce formal property rights in land and water comes with the growing scarcity and value of these inputs.

Commercial farming of cash crops is slowly filling the vast space between Kenya and the Ivory Coast. Perhaps more important are the quickly increasing number of exploration and production projects in minerals and energy which now run from Angola, up past the Gulf of Guinea to Sudan.

Labour has become a relatively plentiful and cheap input to production and land relatively scarce, and consequently more valuable. In such circumstances, it has become increasingly important to delineate for the owner, rather than the diffuse future benefits due the holder of customary title, precise contractually-specified terms concerning who is entitled to what (and who is obliged to do or contribute what) and under which circumstances:

The recent discovery of oil and petroleum deposits in the Albertine Graben has generated excitement in Uganda regarding the promise the resource may yield and the probable economic windfall in the energy sub-sector, its contribution to national economy and social well-being… As anticipated, the rush to secure land in these oil-rich areas is threatening communal lands which are neither demarcated/surveyed nor titled… In the event of oil companies and/or Government acquiring the land for production or processing of petroleum, the owners of land need to have ascertainable interests in land to benefit from the market value of the land.

Let’s quickly look at why an elite coalition of propertyholders and politicians might now expect to benefit from such a property-rights transition, just as many once did from the enforcement of ‘traditional rights’ under colonialism.

Compared to the full bundle of private ownership rights, customary property with fixed-rent tenancy confers a kind of insurance on the chief/landlord. (This is because, in the latter case, residual claimancy – the right to net cash inflows generated by an asset after all promised payments have been made – is assigned to the cultivator. Residual income is frequently negative in farming, thanks to weather-related fluctuations in output). Customary property thus reduces exposure to risk (in the form of income variation), yet at the price of a lower expected income.

But this hedge against uncertainty becomes less attractive as land values appreciate and the potential reward from full private ownership grows. Risk aversion is known to decrease as the level of wealth increases.

This isn’t to say that there’s a cohesive elite project in support of a transition to full private property rights, or that the latter are on the march across sub-Saharan Africa.

Elite bargaining over such a change, between chiefs, heads of lineages, local political authorities, military officers and bureaucrats, takes the form of an assurance game, in which an individual’s payoff to adopting a particular strategy is increasing in the number of others who follow the same strategy.

Each individual would willingly convert his land or water holdings to full private ownership because their potential rewards are highest in that state. But support for such an institutional transition is conditional on knowing that others will commit to do their part. Each party must be assured that a centralized coercive authority (the state) will uphold property rights against the threat of seizure or confiscation, and that other private actors will recognize (either voluntarily or through compulsion) the incumbent individual’s title as legitimate, ‘fair’ and acceptable.

If, instead, the fixed costs of enforcement would fall on private owners themselves, formal property rights may be a relatively unappealing option.

Moreover, where the scale of economic activity isn’t large (e.g. in small agrarian villages with low yields to tilling), the lowest-cost means of enforcing contracts may not be through formal ownership upheld by legal-judicial instruments.

The chief or clan leaders’s authority is based partly on informal or personalized arrangements whereby the landlord or local notable controls his own coercive apparatus, or through the social sanctions and reputational incentives enabled by small communities. Tenants and their families may be tied to a landlord for generations.

This mix of rights and durable obligations is difficult to re-create, at low cost, through formal rules and contracts. Low-productivity agriculture affords no economies of scale. The resulting absence of barriers or costs to entry would allow, under ‘ordinary’ economic conditions, a proliferation of small landowners. On the other hand, under ‘customary’ law, the accumulated power and social status of the chief or lineage head does form a barrier to entry by competitors.

‘Customary’ transactions thus involve personalized patron-client relationships, marked by reciprocity and mutual help. As Firmin-Sellers describes, full capitalist-type property rights promise to dissolve such personal, informal ties between chiefs and subjects. The prestige and status due, as a matter of convention, to lineage heads and chiefs would be ‘now measured in terms of monetary wealth’ and would have ‘little to do with his subjects’ success.’ This may disrupt the norms of reciprocity that (together with the chief’s coercive power) previously ensured compliance with chiefly authority and respect for his ownership. (This may be why the development of market-based economic activity, and creation of private ownership, is often accompanied by the reinvention of ‘traditional’ authority, and the invocation of old rituals and superstitious practices as a guide to current behaviour, and as a means to adjudicate disputes over boundaries, etc. See the spread of witchcraft cults in the colonial Gold Coast following the development of cocoa as a cash crop). This then may lead to quarrels and contests over claims to property. In contemporary Ghana, there is a ‘constant stream of litigation over land and chieftaincy.’

Thus, in the absence of credible guarantees that private property rights will be secure and not too costly, the risk-dominant strategy for each individual is to retain ‘ancestral’ (informal) control rights over land, along with the political authority, and the claim to a portion of the surplus product, that may flow from them.

Ensminger describes how even in Kenya – where privatization has been a consistent policy goal of colonial and post-colonial authorities since at least 1956 – customary tenure on farming land predominates. On the other hand, she notes, it’s been far easier to transfer the commons (e.g. the large parcels of open-access or common-property lands and water used by pastoralists and foragers in northern Kenya) to private ownership.

The post-colonial proprietary classes of central and east Africa (together with those instances mentioned from west Africa) thus find themselves with a similar mix of institutions governing their appropriation of economic resources to those that existed at independence. It’s no surprise that, as Mamdani writes, their legal, military and political apparatuses (which exist above all to pursue or prevent unilateral transfers of property ownership) are similarly unchanged. The ‘decentralized despotism’ of customary authority remains, with populations ‘legally fractured into so many different ethnic minorities’:

The consequence is to divide the population ethnically, empowering those considered indigenous and disempowering others considered nonindigenous… [Ethnic] clashes are more and more about rights, particularly the right to land and to a native authority that can empower those identified with it as ethnically indigenous… leading to a proliferation of armed militia in the context of ethnically driven clashes around land and other rights.

As a result, those societies have been trapped in negative-sum rent-seeking. The potential prizes over which rival elites contend are frequently eliminated by bouts of mutual distrust, antagonism, civil strife, state breakdown, ethnic cleansing, resource destruction and plunder; the costs paid by all parties thus surpass the benefits accruing to the successful party.

The results, it goes without saying, are both inefficient and unjust, implementing a vastly unequal division of the social product. They convey no clear advantage over other feasible arrangements. How then to account for their stability over decades? Throughout the past 50 years, the countries of central Africa have undergone a succession of deliberate attempts to reorganize society along markedly different lines: decolonization, coups, civil wars, etc. Despite these shocks, the assignment of rights and duties to people based on group membership, the devolution of coercive authority to ethnic-based administrative units, and customary law all have survived intact. How to explain this perplexing institutional durability and robustness?

It’s possible to identify one reason.

Note that, because property rights to land are often assigned according to ethnicity or similar group membership, between-group inequality often exceeds inequality within groups.

Consider what this means for the vast majority of the population of these countries: poor farmers and herders, urban petty proprietors and wage workers. Members of these groups hope to secure their livelihood, and that of their families, by getting and keeping access to land, water, tools, farm equipment, shelter, employment, public goods (education, healthcare, sanitation) as well as religious freedom and citizen rights. Under present conditions, such people will find it sensible to agitate for an ethnic ‘homeland’, complete with customary laws and their own administrative authority. If the social rules governing access to livelihood and entitlement to citizen rights are such that each individual’s best response (in current circumstances) is to parochially support the ambitions of elites from his own lineage, clan or ethnic group (and if each expects most of the others to behave parochially for the same reason) then parochialism will persist.

Members of the non-propertied classes will form political alliances on the basis of identity rather than class membership, instead of casting their lot with similarly placed people from other clans or ethnic groups.

Hence, by preventing the multicultural solidarity necessary for the assetless classes to mobilize and act in political concert, the conventions that ‘enforce race and ethnicity as salient political identities’ preserve the power and privileges of the wealthy. The prerogatives of ownership – though informal and ill-defined – survive.

I’ll end by returning to Machiavelli’s famous dictum, quoted above: division is functional for maintaining status-quo institutions. That this is especially true for rule by a propertied elite over a large asset-poor majority – political hierarchy and economic inequality – was later argued by James Madison in The Federalist Papers, has recently been taken up by Eric Posner and Adrian Vermeule, and is demonstrated by the reservation system in post-independence India. I’ll write more about this in the following post.

Rewarding and pleasurable

March 4, 2012

Where ‘moral panic’ is invoked to deter criticism of some aspect of the existing state of affairs, deeply apologetic attitudes can often be found lurking.

Behind the critical pose — reproachful of popular risk perceptions, derisive of the quackery and hysteria promoted by commercial TV, talk radio and tabloid press — lies a Panglossianism based on special-group interests or career ambition.

Three of the figures quoted in a previous post — Steven Pinker, Christopher J. Ferguson and Robert Corn-Revere — lent their credentials as amici curiae on the side of the Entertainment Merchants Association during the US Supreme Court case which decided the fate of a Californian law restricting sale of violent video games to minors.

Ferguson’s generally complacent, uncritical attitude towards the providers of media entertainment goods is evident throughout his many publications. Most attack the supposed ‘exaggerations’ of psychologists and pediatricians who use media-effects theory and social-learning theory to suggest that watching TV or playing video games may lead to behaviour modification.

This includes taking the shallowest industry PR at face value.

In an article that considers whether depiction of violence or sex in TV advertisements ‘may produce deleterious effects on adult and child viewers’, Ferguson and his co-authors offer the following:

A theoretical framework for understanding the effectiveness of television advertised [sic] is worth discussion. This paper endorses a model of understanding advertising and marketing in which their influence is more informative than behavior changing per se. In other words, advertising’s power is not in making people buy things they do not already have an inclination to buy, but rather in  directing people toward  specific brands. The American Marketing Association (AMA) defines marketing as

‘‘Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large’’ (AMA, 2007).

For example, a person is unlikely to buy cola unless they have tasted it or something similar in the past and enjoyed it. Advertising makes that cola enjoying person more inclined to choose a brand they identify with such as Coke or Pepsi, and eschew lesser known, potentially cheaper brands. Advertising, then, does not create massive behavior change, or shape people’s core personality or beliefs. It does nudge people in the direction of particular product brands the result of which can be windfall profits for those brands (see Kotler & Keller, 2009). Even relatively new products must appeal largely to existing consumer needs or wants.

Elsewhere he has sought to absolve media images of extremely thin women of their hypothesized causal role, via the internalization of impossible ideals and promotion of body dissatisfaction, in the etiology of eating disorders. Instead he has pointed the finger at sexual selection and between-peer female competition for mates: ‘body dissatisfaction is conceived as an often functional response to a woman’s perceived bodily shortcomings.’

Ferguson also has used evolution of the Pleistocene brain in the ancestral environment, etc. to explain the popularity of hyper-violent video games.

This leads him, like Pinker, to pronounce on the violent proclivities of people living before (or without) the domestication of plants and animals, and to sneer at the lily-livered weaklings who have renounced their ancestral birthright:

Much of the discussion of aggression in the social sciences began with an assumption that aggression is an inherently bad thing, both for the individual as well as for society as large… However, aggressiveness may also have positive benefits and indeed be evolutionarily adaptive, particularly in moderate amounts. Moderate aggressiveness may aid us in defending ourselves and our family, standing up for our beliefs, seeking high-status positions in society, developing leadership, excelling in sports and many careers, enduring hardships, etc. These are behaviors that increase social status and reproductive success. Indeed, some scholars have recognized that aggressiveness, particularly when allowed to be defined broadly, may have more positive qualities than negative…

The observation that aggression is an evolutionary adaptation which provides a selective advantage to those individuals who possess a moderate level of the trait is at odds with much of the lingo and dogma of social science across the latter 20th century. Historically it had been assumed that aggression and violence were learned behaviors, shaped largely by environmental influences including family and peers, but also media effects. Increasingly, evidence has demonstrated that this tabula rasa (i.e. blank slate) view of aggression has been mistaken and that there are strong genetic roots to aggressive and violent behaviour…

Humans, perhaps like many other creatures, find violent acts to be intrinsically rewarding and pleasurable. There are exceptions to this, of course (and perhaps those exceptions go on to become social scientists wedded to tabula rasa views of aggression), however there is little argument that violent media, and violent video games are overwhelmingly popular.

With this, the mocking of anti-violence thinkers as moral-panicking girlie men, we have something a little worse than mere business advocacy or industry shilling. Ferguson is helping, advertently or not, to encourage a contemporary shift in social norms. In the new equilibrium, a taste for extreme violence (and its enjoyment for entertainment purposes) isn’t to be met (as it was in the old) with ostracism, sanction, shunning or disapproval. It isn’t maladaptive: we are ‘natural born killers.’

Increasingly, individuals with a preference for violence are to be tolerated and lauded.

It’s unclear whether this shift in norms is an accident or a project. Perhaps, as the economist James T. Hamilton has suggested, the oversupply of media violence is a ‘blind’ aggregate effect of individual firms acting singly in pursuit of their own ends. Or maybe there is coordinated collective action under way, with some people acting jointly in pursuit of definite political goals (deliberately fostering a remaking of preferences to support greater tolerance for violence).

If this sounds implausible or absurd, we should consider the motives behind what Australian historian Marilyn Lake recently described as the ‘relentless militarisation of Australian history’, with federal and state governments ‘actively fostering’ pro-war attitudes. As Lake describes, this effort includes a ‘mass education program’ including the ‘systematic distribution’ of curriculum materials to all primary and secondary school students.

The great fear

March 3, 2012

The previous post showed how a public speech-chilling campaign, aimed at deterring criticism (and litigation, regulation or prohibition) of some product or industry, can work by deriding the critical alarm as ‘moral panic’.

This project is, naturally, often entrusted to a lawyer.

One legal scholar has also done much to develop and popularize a theoretical model of so-called moral panics and belief transmission.

Cass Sunstein lends fashionable respectability and intellectual heft with his research on ‘populist firestorms’, ‘intuitive toxicology’, ‘belief contagion’, ‘mass delusions’, ‘herding’, ‘availability cascades’ and the generation of collective false beliefs.

Sunstein has been a professor at University of Chicago and Harvard law schools. He now is the chief official in the Obama administration’s Office of Information and Regulatory Affairs.

Power, Obama and Sunstein

In books like Risk and Reason (2002), The Laws of Fear: Beyond the Precautionary Principle (2005) and Worst-Case Scenarios (2007), Sunstein has critically discussed the emergence of ‘mass demand for regulation’ of putatively dangerous goods and services (e.g. faulty products or those to which exposure might be hazardous).

He has described how ‘public panic, based on an intense emotional reaction to a low-probability risk’, can lead to fear and hysteria about catastrophic rare occurrences such as aviation disasters, arsenic in the water supply and terrorist attacks, or dangers arising from toxic waste dumps, CJD-carrying beef, silicon gel breast implants, airborne particulate matter, GM food and nuclear power plants.

Sunstein has criticized use of the precautionary principle (associated with Dick Cheney’s notorious one-percent doctrine) to address such risks:

[Social] fears, of the sort I am emphasizing here, often amount to moral panics; and a principle of precaution often operations when a moral panic is occurring.

In an influential article written with Timur Kuran, Sunstein has described how ‘mass demand for regulation’ can emerge suddenly ‘whenever some people’s alarmist reactions instil fear in others, whose own reactions then sow fears in still more individuals.’

People facing incomplete or insufficient private information (e.g. due to the impossibility of direct observation or study of every single product they use) commonly adopt the beliefs of peers and neigbours as cues to what they should think themselves.

Decisions about risk assessment are made sequentially in populations organized into epistemic ‘neighbourhoods’. Individual cognitive bias (which for a single person may have been a small random or directional error) thus easily snowball.

Sunstein propagation false beliefs

This, worries Sunstein, can lead to calls for ‘swift, extensive, and costly government action’ such as the banning of some good or service. He frets that a legislature is especially vulnerable to influence, ‘partly because its members feel compelled to respond to mass demands for legislation simply to keep their seats’.

As such he hopes to ‘provide regulators with better insulation against sudden and intense mass calls for immediate action’.

This can be done by equipping public institutions with ‘circuit breakers’ that achieve the ‘desired filtering’ and prevent ‘mechanical reaction to citizen preferences’ i.e. reliable transmission of majority opinion into regulation or statute.

One such useful means of avoiding ‘cramped federal regulatory policy’ is product disparagement laws.

Sunstein Risk and Reason

This research on information cascades and moral panic has seeped into the worldview of liberal Hollywood, as shown by Steven Soderbergh’s recent film Contagion.

There the greatest threat to humanity is not transmitted by pathogens. The chief problem is dumb ideas, originating from ‘availability entrepreneurs’ in the blogosphere and circulating throughout the population, leading to mob violence and a breakdown in social order.

Note the resemblance to anti-democratic, late-nineteenth-century ideas about crowd psychology.

This grande peur (the fear of the alarmed mob, whipped into frenzy, resistant to wise counsel, disdainful of the old citizen-state relationship, and immune to the suasion of the priestly castes) motivates much academic and journalistic thinking on fear and panic.

In Sunstein’s version, Madisonian principles of elite governance (erection of buffers between polity and government to provide the ‘requisite stability’ for property rights) mingle with technocracy:

A principal point of the original Constitution was to ensure that representatives “refine and enlarge” popular sentiment, rather than automatically translate it into law. The key institutions of the American system of government were designed to promote the desired filtering. The second and more modem theme is that policy choices should rest on sound knowledge of relevant evidence. In the context of risk regulation, this objective requires a measure of deference to the purely factual judgments of scientific experts.

Paul Slovic, a psychologist whose research on risk assessment is cited heavily in various Sunstein papers, has described the lawyer’s policy program – subordinating the ‘uneducated opinions of ordinary citizens… to the reasoned judgments of politically insulated risk experts’ – as ‘Fear of Democracy.’

Yet Slovic’s work, and that of others investigating decision-making under uncertainty, does support Sunstein’s claim that ‘predictable features of human cognition’ lead ordinary people to ‘deal poorly with the topic of risk’. The errors observed in popular judgements about fatality risks and the relative frequency of lethal events reveal, among other things, our shoddy epistemic standards and unsound inferential habits. Such errors are introduced, in part, by the mental shortcuts, rules of thumb and heuristics used to economize on scarce cognitive resources.

Sunstein goes on to suggest that ‘the persistent split between experts and ordinary people’ in matters of risk assessment comes down to the characteristic information-processing techniques practiced by members of the two groups. Here he invokes the two-process model of thinking explored, most influentially, by Daniel Kahneman (Thinking, Fast and Slow). According to Sunstein, ordinary people, more often than not, use System 1: quick and intuitive (‘affect-based’) thinking. Experts tend to use System 2: analytic (logical, evidence-based) thinking.

Then, with his next step, Sunstein leaves behind the evidentiary wires of experimental psychology. He leans on a concept borrowed from Howard Margolis, for whom laypeople can be distinguished from experts by the former’s neglect of ‘fungibility’. Sunstein:

A reasonable conjecture, then, is that when ordinary people diverge from experts, it is because ordinary people see the risks but not the benefits, whereas experts see both… It is unusual for people to think that a product with a high risk also has a high benefit. This finding strongly suggests that when ordinary people are more fearful than experts, it is often because ordinary people are not looking at the benefits that accompany the product at issue… [Many] of the disagreements between experts and ordinary people stem from the fact that experts have more information, and are also prepared to look at the benefits as well as the risks associated with controversial products and activities.

This ought to make clear the nature of Sunstein’s opposition, and that of others like him, to ‘junk science’-inspired moral panics.

Despite his pretensions, he isn’t engaged in quantitative risk analysis or investigations of dose-response relationships. He is setting regulatory policy and creating the ideological climate in which such policy is set.

What distinguishes him and his friends from the so-called moral panickers isn’t so much a different set of factual claims about the risks posed to consumers by various products and activities. Rather, it’s the evaluations made of those facts and the prescriptions that flow from them.

The matter in dispute isn’t the magnitude of expected harm arising from some activity but the appropriate weight to be attached when that harm is traded off against the flow of benefits.

In this accounting exercise, Sunstein has made clear where his sympathies lie:

[Dollar] figures should not be taken as meaningless abstractions or as reflecting lower profits for ‘companies.’ If the cost of regulation is high, it is likely to be translated into higher prices, lower wages, fewer jobs, greater poverty, or some combination of these things.

Unfortunately, says Sunstein, the man in the street tends to hold a ‘tradeoff taboo’, being reluctant to exchange an increment in human mortality for any monetary prize:

[When] people disapprove of trading of trading money for risks, they are generalizing from a set of moral principles that are generally sound, and even useful, but that work poorly in some cases… People disapprove, above all, of companies that cause death knowingly. The problem here is that it is not always unacceptable to cause death knowingly, at least if the deaths are relatively few and an unintended byproduct of generally desirable activity… Much of what is done, by industry and government, is likely to result in one or more deaths… The question is whether the stastistical risk is worthwhile.

Sunstein’s research on moral panics and risk regulation thus exhibits the kind of pro-business views needed to run a federal executive agency.

He has denounced ‘1970s-style regulation’ (e.g. the Clean Air Act and Nixon’s Environmental Protection Agency) for its ‘command-and-control regulation’, its promotion of the ‘widespread view that companies should be required to do “whatever they can” to reduce risks to safety and health’, its tendency to express ‘moral indignation against the behaviour of those who created pollution and other risks to safety and health’, and its indifference to, or lack of focus on, ‘the costs of achieving regulatory goals.’

The field of research into regulatory policy and product safety isn’t densely populated with disinterested scholars and benevolent maximizers of social welfare.

It’s filled instead by lobbyists with links to rent-seeking special-interest groups, captured bureaucrats and colluding lawyers chasing private benefits, and others with career ambition, partisan affiliations and ideological axes to grind.

This ecosystem nurtures a déformation professionelle favourable to contrarianism.

A representative example is the notorious paper on cigarette smoking published by Kip Viscusi, a Harvard professor of law and economics whom Sunstein regularly cites. Viscusi acknowledged that smoking was hazardous to health, yet argued against the imposition of a ‘sin tax’ to discourage the behaviour:

Detailed calculations of the financial externalities of smoking indicate that the financial savings from premature mortality in terms of lower nursing home costs and retirement pensions exceed the higher medical care and life insurance costs generated… In effect, smokers are already paying their own way in the sense that there is a net externality cost savings to society from their smoking because of the cost savings arising from their premature deaths.

In creating a model of belief transmission and risk perception grounded in the behavioural sciences, Sunstein’s theoretical work has encouraged many more people (i.e. not just students of media or sociology) to consider ‘moral panics’ as a plausible causal account of how various unfortunate aspects of contemporary society are generated.

Yet the theory has many drawbacks and rests on dubious foundations. Why then has it met with such favourable reception?

For at least a partial answer, observe an application of the theory to a slightly different domain: not hazardous products but terrorism.

In ‘Fear and Liberty‘, Sunstein described how, following terrible events such as the World Trade Center attacks of 2001, ‘public fear might well produce excessive reactions’ from political representatives, including state intrusions on civil liberties. President Bush’s advocacy of military tribunals for alleged terrorists provided, said Sunstein, ‘an illustration of the extent to which fear, and the thirst for vengeance, can lead to unjustified infringements of civil liberties.’

Sunstein hurriedly assurred readers that he did not support ‘flat bans on government action’ or ‘an aggressive judicial role in the protection of civil liberties, even when national security is threatened’:

Courts are not, to say the least, in a good position to know whether restrictions on civil liberty are defensible. They lack the fact-finding competence that would enable them to make accurate assessments of the dangers. They are hardly experts in the question whether the release of a dozen prisoners at Guantánamo would create a nontrivial risk of a terrorist attack. It is quite possible that an aggressive judicial posture in the protection of civil liberties, amid war, would make things far worse rather than better.

Nonetheless Sunstein suggested that ‘inadequately considered restrictions’ on civil liberties (without conceding that any such ‘error’ had actually occurred) might be ‘produced’ by a fearful citizenry, hysterical about terrorism.

Thus he implied that President Bush, driven mad by grief and worry, egged on by a petrified crowd, had (maybe overzealously?) lashed out.

This is how the term ‘moral panic’ works, and why it has found such an appreciative audience among members of the chattering classes. It allows them to practice a kind of sociodicy. When some feature of the prevailing order is evaluated and found to be deficient, its emergence (or its inadequacy) is attributed to the workings of (presumably transient) popular hysteria rather than to anything durably rotten in the institutional foundations of society.

Criticism of the status quo is displaced, and harmlessly absorbed, by criticism of popular ideas and voters’ preferences.

This is more sinister than it may look at first.

The emergence of ‘moral panic’ as a rhetorical item comes at an epochal moment when centuries-old procedural and institutional checks on executive power are being steadily removed. I have suggested before that ‘progressives’ habitually ascribe all the reactionary paraphernalia of this post-liberal age (arbitrary assassination and indefinite detention, wars of aggression, etc.) to the ‘pandering’ of politicians to the (seemingly exogenous) electoral preferences of a racist, backward, uncouth public.

The notion of moral panic supports this reflexive ‘progressive’ argument.

It thus allows professional ‘critics’ (I’m thinking of people like David Marr) to maintain, in good conscience, their image as subversives without calling into question their basic faith in the existing institutional setup or their solidarity with a portion of the state elite.

And, by suggesting that the ‘problem’ is public opinion, it gives another spur to the process itself: why not insulate benevolent decisionmakers from those who would only divert them from the right course?

Thus, as polyarchy slides into monarchy, the liberal-left’s remedy is to call for more of the same: state institutions should be fenced off from popular pressure.