Shomron Center for Economic Policy Research

In Search for an efficient Institutions

November 18, 2014
by Moshe
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Don’t touch private person and his property for 200 years

The best ever prescription of economic prosperity for Government: forget about discretionary arrests and property rights breaches for 200 years: How Democracy Could Cause Economic Growth: The Last 200 Years (November 6, 2014). Available at SSRN: http://ssrn.com/abstract=2519823

Political competition and independent court  («…But above all, that equal and impartial administration of justice which renders the rights of the meanest British subject respectable to the greatest, and which, by securing to every man the fruits of his own industry, gives the greatest and most effectual encouragement to every sort of industry») prevent Government from Private Persons rights and property breaches. Secured private property opens window of opportunities for long run economic growth.

So, the concept of property rights must include the protection of the individual in their focus on private property rights protection, alone, respected in various forms of government, are insufficient; what matters is the security of individuals from arbitrary arrest, regardless of type of regime. Discretionary rights of rulers or democratic governments to arrest citizens undermines the protection of private property rights and other attributes classically given to democratic foundations of economic growth, for example, free press, freedom of the exercise of religious belief.

 

November 17, 2014
by Moshe
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How Butter Beats the Guns

How citizen, which is fed by Governmental butter loses guns protection: “How Butter Beats the Guns?” (November 12, 2014) by Yanovskiy, Moshe, Syunyaev, Georgiy and Zatcovetsky, Ilia,. Available at SSRN: http://ssrn.com/abstract=2523605

The correlation of state spending on pure and mixed public goods reflects the making of fundamental choices about state functions. Are pure public good “defense” normal quality provision compatible in Long Run with heavy spending on social sector (i.e. compatible with mixed public goods provision)?

The main hypotheses tested: elected politicians and bureaucrats’ have strong incentives to choose wrong strategies in foreign and military policies if the state extends its responsibility far from the pure public goods provision limits. The case study (Protocol 1, June 8, 1977, to the Geneva Convention of 1949) shows, how “punishment for military success” strategy undermines incentives of army officers, making the military machine virtually inoperative. Artificially abridged Army capability provides the argument for the notion “war is no solution”. The set of the governments credibly ready to obey ratified Convention, are clearly segmented on two subsets. The 1st one includes the Governments bearing military responsibilities, military umbrella-givers, which abstained to impose all Protocol caused risks on the army officers (non-ratified – USA, Israel; or ratified with strong reservations – UK, France, Germany) and the rest democratic countries – which are military umbrella-takers, ratified the Protocol without significant reservations.

Statistical analysis of Great Powers military spending historical trends used to test the main hypothesis. For the bureaucrats and for Leftists  better to spend more money for butter to buy political support than “to waste” budget money for defense. Preliminary statistical analysis fails to reject it. We believe bureaucratic competition for staff /for budget share  and Universal suffrage (Lefts electoral successes) caused wrong incentives  and provide satisfactory explanation of this phenomena of intentionally wrong strategy choice in Security and Defense.

September 17, 2014
by Moshe
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How to measure Democracy and Economic Freedom?

How to measure Democracy? See Polity Indices! How to measure Economic Freedom – see EFW Indices.
How to measure Political institutions quality for better assessment of economic growth dependency on the Freedom and on Democracy? Try ours’ indices.

 

One, who searching for assessment of Democracy quality at Polity could be discouraged by some comparisons:

“Marker” Regimes     Regimes with the same rating         
The Kingdom of Denmark prior to 1834, Prussia during the same period, and many other European monarchies  (-10),[1]Russian Empire and Norway prior to 1905; during the same period (-7); US-, British-, and French-occupied zones of West Germany in 1945-58     (-6); the Netherlands of the first half of the 19th century (-6 – -7) The Chinese Empire of the early 19th century – 6; Stalinist USSR 1933-1952   -9;  Maoist PR of China 1948-1975 (-8-9);   Hitler’s Germany (-9)
“Democratic Cambodia” (Cambodia ruled by the “Khmer Rouge”) -7 – unique case of negative political competition: citizens competed for inclusion in the unique one million selected for survival (rather than the authorities or political parties competing for citizens’ support, or at least both citizens and politicians being “indifferent” to each other with zero-level competition, and so on).
The Russian Federation 1992 +5; 1993-99 +3 The Russian Federation 2000 – 2006 +6; 2007-2010 +4

 


[1] As a rule, different forms of consultative estate representation were in evidence in these countries, from the local level to the state; freedom of exit, including the evidently more free countries, relative freedom of entrepreneurship and hire, relative protection for private life and property; absence of anything even remotely resembling mass repressions against potential opposition (USSR, China) or even persons potentially capable of doubting the rightness of actions undertaken by the authorities (Democratic Cambodia). In Norway (-7), a constitution thoroughly liberal by the standards of the time was in effect, and served as a model for the requirements for a liberal constitution in Denmark (Busk, Paulssen, 2007).

So, We developed simplest and better fit for comparative analysis indicators. See for details: http://ssrn.com/abstract=2495839

July 9, 2014
by Moshe
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New IDF operation in Gaza raises old questions

Israel Defense Forces (IDF) just started new operation “Protective Edge” against HAMAS terrorists in Gaza.
The most prominent right-wing leader in Israel – Knesset vice-speaker Moshe Feiglin loudly objected the operation (The Knesset security Commission seating in Sderot – discussion in Hebrew – last minute). He insists, until the Israel will be ready to drop the Oslo agreement –  no reason to waste time and resources for operations of this sort. It means, Israel should to resettle Gaza, to cover the region by full-fledged provision of law and order for unlimited long run period. It means, first to annex, then to enter Gaza – once and forever. The operation, on Feiglin’s opinion, could just defend failing “Peace Process” and to deliver to “dovish activists”  more pretexts to harass  IDF officers and soldiers for their well done job.
Latest situations’  development: HAMAS broadly uses alive shield already. The IDF officers’ problems with new-fashion military “justice” are coming soon.
Just for reference: Geneva Convention (IV) relative to the Protection of Civilian Persons in Time of War (original version) leaves all responsibility for “protected persons” (civilians’ lives) on the side which uses “alive shield”. USA and Israel never ratified Protocol 1, June 8, 1977 which reversed the situation (see for details http://ssrn.com/abstract=2236354). Leftist extremists both in US and in Israel try to press the Armies to behave as if our countries did ratified Protocol 1 and treaty on International criminal court. For some details and history of dynamics of military Justice and enforcement practices in Israel and motivation behind it see http://ssrn.com/abstract=2425418.

June 27, 2014
by Moshe
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Elections as a choice between terrorists’ gangs

The paper originally presented at Public Choice 2006 conference just updated and uploaded at SSRN: Democracy: a Conflict Extinguisher or a Fuel for Terror?

Cases of Arabian (“Palestine” Autonomy (Israel) and Chechen Republic (Russia). What kind of change one could anticipate as outcome of free elections if voter’s life and property costs almost nothing?  See our paper  at SSRN here.

Implications for Iraq, Egypt, Algeria, majority of Sub-Saharan countries look quite obvious.

It doesn’t means one shouldn’t build Democracy. It means, one should start to build it on the basis of old, well-known and well tested “technologies”, not to invent new and accelerated ones.

April 22, 2014
by Moshe
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The Evolving Priorities of the Israeli Left: From Social Justice to Security and Back

New paper has been uploaded at SSRN site.

The present article traces the dynamics of the priorities chosen by leading leftist parties in Israel vis-à-vis the functions of the state. During the period of the British Mandate they, like all leftist parties, maintained anti-militaristic views. Leaders of the Left more than once accused their rightist opponents of militarism and even fascism. Beginning in 1948, Israel’s Labor Party members become vividly pronounced “pro-defenders.” But during 1977-1982, their views begin to drift toward the original position typical of all leftists: the precedence of social spending and goals rather than defending the country and maintaining the security of its citizens.
A study of the motives for change in the leftist stance supports the hypothesis that the period of leftist “patriotic-defensive” priorities depended on perceiving the state as a party-“corporate” asset of the Left; the state needed to be defended in all ways, including defense from enemies from the without. The loss of leftist leadership in the elections was the undoing of this perception of the state, returning the Israeli Left to the classic leftist stance of “Guns or Butter” in favor of social spending. As historical data bear out, mixed public goods and unlimited opportunity for discretional rule are a priori more attractive for the Left and the majority of bureaucrats than is historically limited spending on the production of “pure public goods.”

Here is few stories and citations, illustrating the path of Israeli Leftist parties priorities’ changes.

Ever since the British Mandate period in Palestine, leftist Zionist Labor leaders have “perceived militaristic militant nationalism of the revisionists as fascist.” (Aronoff 1989, p. 20)    Ben Gurion called revisionists fascist, referred to his rival  Jabotinsky “Il Duce” (Mussolini’s title) and compared him to Hitler…” ibid., p. 20

 In economic terms, they “perceived,” or, more precisely, interpreted as “fascist” the idea that providing pure public goods (defense and security for the people) is a political leader’s highest priority and responsibility.

On December 23, 1954, Jordanian Arabs killed Shoshana Har-Zion and her friend Oded Wagmeister (both aged 18). Their bodies were discovered hidden under some rocks six weeks later. The brother of the murdered young woman, the well-known special ops unit fighter Meir Har-Zion (Unit 101) together with three friends infiltrated the area east of the 1949 truce line without authorization. There they attacked the men of the clan to which, as was supposed, the murderers belonged. They killed four men, returning safely. They were arrested, but thanks to Ben Gurion’s personal interference, they were not even tried in court. Ben Gurion invited Meir Har-Zion to join his party list during the 1965 elections as a candidate for the symbolic 101st slot.
The Sinai War broke out on October 29, 1956. Many of the residents of the village of Kfar Kassem (Qfar Kasim) did not manage to return home in time for the curfew, which had been made especially stringent just a short while previously. 48 violators were shot at a number of different checkpoints. The servicemen held responsible for the bloodshed were tried in court and sentenced (with prison terms ranging from 7 to 17 years). Within a year after beginning to serve their terms, all those sentenced were amnestied by President Yitzhak Ben-Zvi. The authorities had good reason to fear creating an undesirable impression on the army. First and foremost, measures of this kind (similar to the amnesty granted by President Nixon to Lieutenant William Calley) prevented the proliferation of fear among military officers and officers’ refusal to take charge in complex situations.

“You can’t go waving two banners at once, both of defense and of social reform,“ Defense Minister Moshe Dayan was fond of saying in 1971.

On July 6, 1976, in a speech made at the funeral of Yonatan Netanyahu, an outstanding fighter, military commander, and hero of Operation Entebbe, then Defense Minister Shimon Peres said, “This operation necessitated the taking of an enormous risk, but a risk that seemed to be more justifiable than the other one that was involved — the risk of surrender to terrorists and blackmailers, the risk that is inherent in submission and capitulation.”

in July 1982, Peres wrote in support of putting an end to the existence of the PLO: “Our argument with the PLO is not about the past, but rather about the future. I do not foresee any substantive Israeli mandate being given to anyone in its name, to [accept the PLO’s demands of returning to] pre-1967 borders, to divide Jerusalem and to establish a Palestinian state that will attempt to overthrow Israel at one moment, and to take over Jordan the next.” (Lord, 1998).

***

During the last few decades, Israel’s government has been giving up one after the other all the elements of the strategy which had formerly yielded military achievement and established the high reputation enjoyed by the military and the special services of the state. The government avoids tried and proven effective decision making, from large-scale military action to private individual self-defense. This is due partly to that the security agenda has lost its priority status for the special interest and political coalitions (Labor-led leftists) traditionally preserving their control over the executive authority’s bureaucracy, activist court system, police, public media, and education (i.e., a collection of state non-elected means of control).
To clarify the machinery of security agenda deactualization we tested two hypotheses:
1. Labor’s long-term control over parliament and government, state bureaucracy, courts and police, public media and education created an encompassing interest and some incentives for providing pure public goods. The mixed public goods share in government spending surged since Labor Party (the leftist coalition’s) lost its control over parliament and government (while preserving its control over the unelected governmental positions) because the encompassing interest had been broken.
2. The national consensus concerning security collapsed at the time of the First Lebanon War. Labors clearly manifested their resolution to subordinate pure public goods provision to mixed public goods provision. Since that time the Left shifted to the most radical form of opposition to prioritizing pure public goods and even harms their quality. Leftists initiated and pushed the new military justice, causing the threat of punishment for “excessive use of force” etc. instead of victory’s reward. New institutions promoted by leftists, effectively prevent Army from decisive victory targeting

Once tested, both hypotheses should be considered more closely based on the availability of significant data and background facts.

The full text of the paper is acceptable ar SSRN web-site

March 30, 2014
by Moshe
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Selected notes on political economy of Intl Relations: US aid for Israel

We plan to start and promote a series of micro-projects on Political Economy of International Relations: Alliances and Sanctions.

First draft of very first paper already uploaded at SSRN.

Historical data on US aid to Israel illustrates incentives of political leaders and special interests, first and foremost in Israel. As on the early stages of Alliance Israel military capabilities could provide valuable services to USA, undermining USSR influence in the Middle East, the current relations are hard to explain by mutual national interests.
The paper focus on the political actors’ personal incentives, provides explanation for growing exploitation of US Aid by the special interests in Israel, while significance of the aid is approaching to insignificant level and contributes negatively to the country Defense capacity because of political conditionality imposed.
The data presented could support a new vision of US-Israel alliance: ceasing of the US Aid programs for Middle East could contribute both countries Defense needs.

The paper contains short review of factual data, official statistics prepared to show real significance of US Aid at every stage of mutual relations.

We paid special attention on incentives of the political actors’ causing alliances efficiency. We are recommending the reader to pay attention on comparative history of Czechoslovakia and Finland 1939-1940 for better understanding the factors of demand for military ally.

 

 

February 16, 2014
by Moshe
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New Papers for Public Choice Conference 2014

Moshe Yanovskiy and Sergey Zhavoronkov are going to attend coming (march 2014) annual conference of Public Choice Society.

Two papers would be presented March, 9.
Democracy of ‘Taxation-Redistribution’ and Peacetime Budget Deficit

The Limits of Governmental Intervention: Some Ways How Government Belongs in the Bedroom and Nursery

The papers are available at SSRN.com (use the links provided).

February 14, 2014
by Moshe
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Unequal partners: Your marriage is probably making inequality better

Matthew Yglesias –  the “Slate” Magazine’s business and economics correspondent published article headed “Unequal partners. Your marriage is probably making inequality worse“. Sure, Inequality caused by real differences is great thing. As that  the point of liberal (leftist) journalist is?

The Point is  – the greedy rich WASPs are less and less ready to marry poor Cinderella since 1960-ties. The liberal guy quite seriously advises to marry poor. Let marry to redistribute your wealth!

The problem is, as a result of liberal activities to marry poor turned to be more and more risky. One should get risk to lose his savings, house, children as a fee for mistaken choice.

So, our advice is pretty opposite to liberal one: marry, marry unequal (I mean, marry nice, kind, old-fashioned -conservatively minded girls) and read our papers: “The Gender Role of the Government: Some explanation of Family crisis” and “The Limits  of Governmental Intervention: Some Ways how Government belongs  in the Bedroom and Nursery

to get, how Liberals kill the Family and Marriage Institutions and why they so eager to do it.