Scottish independence: a good idea or a bad idea?

Today the people residing in Scotland can decide whether they want to see an independent Scotland or to have Scotland remain in the UK. The betting markets concur with the opinion polls and favour the status quo: the markets give roughly 20% chance that the ‘yes’ vote will win and that Scotland will become independent.

The majority of economists talking about the referendum have focused on whether or not the Scots would be financially better off with their own country, debating things like North Sea oil revenues and currency unions. I think that is a distraction: looking at small and large countries in Europe, you would have to say there is no noticeable advantage or disadvantage to being a small country and that the Scots are hence unlikely to be materially affected in the long run by independence.
Independence is more about self-image and identity than it is about money. Even though the push for independence might well come from politicians and bureaucracies that gain prestige and income if they ruled an independent country, the population deciding on the vote will probably vote on emotional grounds, not economic. Young male Scots appear overwhelmingly in favour of independence; females and old people prefer to keep things the way they are. The latter groups are bigger and are expected to sway the day.

Personally, I have two related reasons to oppose the breaking up of larger countries in Europe into smaller ethnically defined states, not just Scotland, but also Catalonia, the Basque region, the Frisian province, Bavaria, and all the other regions of Europe:

  1. These independence movements are ethnic and hence by definition exclusionary. This is a big concern: large nation states have slowly moved away from the story that they exist for people of the ‘right’ bloodlines and with ancestors who lived in the ‘right’ place. The UK, the US, France, Australia, and even Germany and Spain have moved towards an identity based on stories about what it means to be British, American, French, Australian, etc., rather than a ‘blood and earth’ ethnic nation state story. Speaking tongue-in-cheek, the Brits have an upper lip story, the Americans have an exceptionalism story, the French have been convinced they like reading Proust, the new Australians are told in their citizenship exams that they believe in a fair go, etc. These stories contain treasured national stereotypes, complete with imagined histories. The key thing is that are inclusive, ie any newcomer from another place can participate in such stories. The Australian national anthem is a beautiful example of this super-inclusive attitude as it, almost uniquely, mentions neither ethnicity nor religion as a basis for being Australian. The ethnic stories of the independence movements are, in contrast, exclusionary and hence harmful to the self-image of any migrant. It is a move to a past that we have little reason to be proud of, as it marginalises current and future migrants. The story surrounding Scottish independence is thus not that the Scots are people who like to wear kilts and enjoy haggis, but that they make up the people who have suffered 700 years of oppression by the English. What is a recent newcomer from, say, Poland to do with such a self-image but conclude that they do not really belong there? Continue reading

Unveiling of a portrait

Just a note to let people know of the unveiling of a magnificent portrait of my father, discovered some years after he died. It’s in Canberra on Tuesday afternoon.

Here’s the invitation. Perhaps I’ll see you there.

Professor Rabee Tourky
Professor Bruce Chapman
Emeritus Professor Bob Gregory

request the pleasure of your company on behalf of the
Research School of Economics and Crawford School of Public Policy

at the portrait unveiling ceremony of the late
Professor Fred H Gruen

to celebrate and recognise his significant contribution to
Economics and Australian Public Policy at The Australian National University

Launch talk by Dr Martin Parkinson, Secretary to the Treasury

5.30pm – 7.30pm Tuesday 6 May 2014

Venue

Ground Floor Foyer
ANU College of Business and Economics Building 26C
Kingsley Street, Acton

http://campusmap.anu.edu.au/displaybldg.asp?no=26c

Refreshments will be provided

 

1954: The no-spin zone

This doco is worth watching for its own sake. (Why are media organisations so dumb and unprepared to allow embedding of their videos – given that the vids themselves come with ads that are hard to avoid – but I digress …) What struck me is how different it would be today.

The film is for the Board of Works, which would have paid for its production and it functions as an ad for an elaborate process of city planning they’d been going through. In fact I think we do the actual planning a lot better today, with the involvement of the community handled much better. I could be wrong about this, but the impression created by the doco is that it was a very technocratic and top down process with people’s input being had via surveys etc. Today we hold lots more meetings, and get lots more people involved and so lots more energy in the process.

So, if that’s all good, what’s all bad is that today the corresponding bit of PR would be a product of the PR profession, which would ensure that the whole thing sounded like a smarmy pack of lies. It would be full of PR speak, hollowman speak. It would be obsessed with a feelgood factor and with staying “on message”. There’s none of that, rather lots of information, much of it just by the way, and then a strong call to action at the end – get involved and (please) get behind our plan. With a genuine call for civic mindedness and intergenerational generosity.

Postscript: graph supplied by John Walker below. 

Happy little optimisers we

Maslow's hierarchy Not

I know I took the notion of optimising to heart as I learned it – implicitly – from my economist Dad. And there are those who might argue that the idea in economics came from the society around economists as the discipline came into being.

But now it seems optimising as the heart of life seems to have become ubiquitous. I just ran into a tweet which proudly displays the graphic to the left.

I also know that the advice, such as it is, embodied in the accompanying graphic is fair enough. A bit of prudence about life. One could do a lot worse. (Then again, is it not pretty obvious? Graphics induce a kind of ‘fake’ aha I’ve found – something I confess to exploiting in my own rhetorical tricks during presentations) But at the level of advice there’s also something strangely anodyne and sad about it as an embodiment of aspiration.

Traditional notions of how one might decide on one’s path in life or one’s career – at least since the rise of modern times and the idea of the self as a self-creation, it’s been pretty de rigueur to at least pay some lip service to following one’s heart or more recently, and more crassly, one’s dream. More dourly, Protestant ethics teach a kind of surrender to one’s ‘calling’. Each of these has the texture of life as an adventure and a story in which basic values are the foundation – one build’s on the rock to invoke Christian imagery – including bearing the burden of suffering in pursuit of one’s goal.

Even Maslow’s hierarchy suggests that, though one pays most attention to ‘the basics’, truth to oneself involves working up to ‘higher’ things. (I’ve always thought it wide of the mark by the way as things at the top of the hierarchy seem to turn up very early in human history and in many ways were more powerful influences in civilisations in which the vast bulk of people were pretty much at subsistence – but I digress).

In any event today alongside the hashtags “#Brand” and “#You” the tweet which brandished this insight into life, we lean in and regard our ultimate task as having it all. Even in the anodyne graphic, I’d have liked to see doing what one loves as being more important than being paid well, but there you go, though I’m all for it being important.

 

Predictions versus outcomes in 2013?

In the last 5 years, I have made a point of giving clear predictions on complex socio-economic issues. I give predictions partially to improve my own understanding of humanity: nothing sharpens the thoughts as much as having to actually predict something. Another reason is as a means of helping my countries (Australia/the Netherlands) understand the world: predicting socio-economic events is what social scientists should do, even if they will often be wrong.

Time to have a look at my predictive successes and failures over the last few years, as well as the outstanding predictions yet to be decided. Let us start with what I consider my main failure.

                 Failed predictions

The main area I feel I haven’t read quite right is the conflict in Syria, as part of the general change in the whole Middle East. I am still happy with my long-run predictions for that region, where I have predicted that urbanisation, more education, reduced fertility rates, and a running out of fossil fuels will lead to a normalisation of politics in a few decades time. But at the end of 2012 I was too quick in thinking the Syria conflict was done and dusted. To be fair, I was mainly following the ‘intrade political betting markets’ which was 90% certain Assad would no longer be president by the end of this year, but the prophesised take-over of the country by the Sunni majority has not quite happened. The place has become another Lebanon, with lots of armed groups defending their own turf and making war on the turf of others. The regime no longer controls the whole country, but is still the biggest militia around.

What did I fail to see? I mainly over-estimated the degree to which the West would become involved. Continue reading

Rich countries and happiness: the story of a bet.

Do countries that are already rich become even happier when they become yet richer? This was the essential question on which I entered a gentleman’s bet in 2004 with Andrew Leigh and which just recently got settled.

The reason for the bet was a famous hypothesis in happiness research called the Easterlin hypothesis which held that happiness did not increase when rich countries became even richer. In my ‘Fred Gruen’ presentation on this matter in 2004 I used the following graph to illustrate the happiness income relation across countries:

gruen 2004 image

This graph shows you the relation between average income (GDP in purchasing power terms) and average happiness on a 0-10 scales for many countries. As one can see, the relation between income and happiness is upward sloping for low levels of income, but becomes somewhat flat after 15,000 dollars per person. I championed the idea that this was not just true if you looked across countries, but that this would also hold true over time.

Andrew Leigh’s thinking was influenced by other data, particularly a paper by Stevenson and Wolfers which – he thinks debunks the Easterlin hypothesis. Here’s one of their graphs: Continue reading

The unbearable automaticity of being

This piece is inspired by Paul Frijters’ post titled The Benefits of Being Dumb in Politics.  I don’t actually think it is possible meaningfully/reliably to distinguish between politicians who are “really smart and great actors as well, who thus have no problems with telling outright lies and with backstabbing” and those autistic egomaniacs who “are sincere because they truly do not see the inconsistencies and selfishness in their own actions and those of others”.

11. KP: In fact political discourse (and indeed human discourse in general) is a complex, interwoven continuum of truth, lies and self-deception. I suspect that the most common mix in the political arena is that the politician calculatedly oversimplifies her own position and skates over its deficiencies, while equally deliberately demonising and exaggerating the shortcomings of her opponent. Nevertheless, she fundamentally and sincerely believes (rightly or wrongly) that her own position is markedly superior to that of her opponent. She accepts that effective communication with a mass audience of largely disengaged voters inhibits the conveying of nuance and complexity. []Paul’s own attempted assignment of various particular politicians to each category appears to me to be at best arbitrary.  How could one possibly reliably distinguish between the two categories without being able to read the politician’s mind? After three hours of interviews with Kerry O’Brien I still can’t really tell where Paul Keating is engaging in calculated bullshit and where he is deluding himself.

Nevertheless, the musings of both Pauls give rise to some important points. Not even the most intelligent and well-educated of us is as reliably reflective, analytical and rational as we like to  imagine. All of us unavoidably make frequent use of heuristics in decision-making; all of us frequently exhibit cognitive phenomena like confirmation bias; and all of us mostly make moral judgements by a process that clinical psychologist Jonathan Haidt christened social intuitionism.

Moreover, there is cogent evidence that Paul Frijters’ somewhat uncharitable labelling of autistic egomaniac politicians actually identifies a widespread and perhaps even universal cognitive phenomenon, certainly one that is not confined to politicians. As far as I know, the phenomenon was first labelled as a politico-literary trope by George Orwell in Animal Farm 1984. He called it doublethink:

Continue reading