The Power and the Money

Observatorio argentino 48: the circular firing squad forms up!

This post was going to be about all the populist measures the Fernández administration has rolled out in the last few days, but instead it’s going to be about the circular firing squads forming up in the cabinet.

Short version: The Argentine administration is divided between moderate supporters of the President and more radical (and sometimes more corrupt) supporters of the Vice-President, Cristina Fernández de Kirchner (CFK), who also happens to be a former President.

After the election, CFK demanded that President Fernández (no relation) fire his moderate cabinet ministers — including the Economy Minister. And since everything in Argentine politics ultimately revolves around the economy, that would be a BFD.

The thinking is that the government needs to go more radical to win in November. The President said no. So CFK got her ministers to offer their resignations to the President. We’ll see if he accepts them ... but rumors are floating that the Speaker of the House, Sergio Massa, will resign if the President refuses.

The Frente can’t win without CFK’s support. But if he gives in then he will be seen as a puppet. Only if she goes to the mattresses then he loses an election … but she risks going to jail.

It’s a game of chicken.

And there’s an international component.  

The new regional manager of the IMF is very orthodox. Ilan Goldfajn was the former boss of the Banco de Brasil when Brazilian inflation was running well below target. He is not going to be an easy man for a heterodox Argentine government to talk to. So even if CFK wins, the administration could be dashed on the rocks of the people at 700 Nineteenth Street Northwest.

Anyway, this ongoing. Go find your favorite source of Argentine news and follow it. I recommend here. CFK supporters are heading into the Casa Rosada right now. Watch Moyano, the union leader, says Leticia Arroyo Abad. 

Federal regress

To repeat the obvious, Mexico is a big federal country. A gigantic federal country, in fact. Which does not make it an advertisement for federalism. Quite the opposite, actually. For while there are a few success stories about states and cities that have creatively taken on challenges, the general picture of Mexican subnational governments is ugly.

A long time ago, in the last century, I dated someone whose job was to audit the accounts of Mexican county governments and help them spend wisely. She soon adopted an attitude not unlike those you might find among E.R. doctors spending their time to limit the damage caused by human stupidity. Two decades later, the causes of her cynicism have not improved. 

Now, that is bad for Mexico, but it also helps explain why I am so sanguine about the arrival of the AMLO administration and the creation of a new national political machine. (Hat tip to Viridiana Ríos for the data, if not the interpretation.)

Consider first that between 2013 and 2017 the federal authorities reported that state governments “lost” about 4.5% of all federal transfers, coming to about $8.8 billion. Poof, lost, or in the words of the federal government, “unable to be accounted for or recovered.” Between you and me, that means stolen. 

Of course, not all states are created equal. Veracruz, Michoacán, and Chihuahua between them managed to steal lose more than 10% of the federal money handed to them in 2013-17, accounting for more than half the total theft losses. But it is a rotating field: in 2017 you had Coahuila, Tamaulipas, and Oaxaca leading the list.

One problem is that Mexican electoral law makes machine politics easy: you only need a plurality to win the governorship (or county executive) so a machine only needs to gather a minority of the vote.

But a bigger problem is that the feds only come after subnational governments if they are egregiously corrupt or  get into bed with the wrong “cartel,” (e.g., criminal syndicate). The voters may hate you but find it tough to dislodge you; the feds may be relatively honest but lack the resources to police local governments.

Now, the Mexican electorate is in a really anti-incumbent mood. Voters have become so anti-incumbent that even long-lasting bastions flipped to Morena. In Mexico State, for example, the voters abandoned the party en masse, including such bastions as Jilotepec and How much of a PRI bastion was Atlacomulco? Well, you can read the link to see how much the town benefited from its association with the party. Consider also that the faction controlling the state PRI is called the Grupo Atlacomulco. The Grupo Atlacomulco is controlled by members of the Del Mazo clan (which includes President Peña) which originally hails from Atlacomulco. Hell, members of the Del Mazo clan ran Atlacomulco during the Porfiriato. (See page 258, bottom right.) So if there was a town that was going to stick to the PRI, it was Atlacomulco. But it did not.

But does that mean that local machines are finished? Not so fast. Consider that Atlacomulco flipped in the 2018 federal election. In last year’s gubernatorial election the PRI hung on with a hair under 34% of the vote, installing (of course) Alfredo del Mazo as governor. 

In short, Mexico is dominated by corrupt machines, even excluding the places where criminal syndicates freely assassinate local officials. These machines are very hard to dislodge and cost the country greatly. They have no been able to lock up federal elections ... but federal elections have done little to reform these local machines. 

The implication for AMLO is that Morena may be able to get the support of many of these local machines, peeling them away from the PRI. But that does not mean that Morena will get them to work any better or that controlling these local machines will help it remain in power at the federal level if things do not get better by 2024.

That is not to say that I am fully sanguine about Morena in power. I worry about populism: literally decisions driven by their short-term popularity. And oh boy does the new AMLO administration have a bunch of dumb-but-popular moves ready to go before Congress ...

¿Una maquina Morena o una maquina morena?

There is no doubt that AMLO intends to construct a new political machine. The question is whether doing so will degrade the quality of Mexican democracy or Mexican governance. (These are correlated but not the same.) In a couple of different posts, I am going to make the case that AMLO’s machine is unlikely to make either situation much worse — because both Mexico’s democracy and its governance are already highly degraded. Things can always get worse, but AMLO is unlikely to make it so.

For this post, I want to park questions about Mexican democracy under AMLO and consider what might happen to the quality of Mexico’s governance.

Let’s ask, what does a democratic political machine do? It doesn’t blatantly steal elections: that’s a dictatorship. But democratic machine politics is different in kind from regular interest group politics. Interest group politics works by promising veterans higher benefits or auto companies a higher tariff; conversely, it works by cutting veterans benefits or increasing taxes on gasoline. Machine politics works by offering Josefina the Welder a job or Ford Motor Company a special break; conversely, it works by stopping Josefina from getting a mortgage or launching audits against Ford executives.

Successful machine politics does not require stolen elections, but it makes opposition harder to organize, increases the autonomy of machine leaders and weakens democracy’s ability to hold officials accountable or translate public desires into public policies.

The PRI under President Peña used machine politics to implement energy reform in 2013. In order to pass and implement the reform, the Peña administration needed the support of the national oil workers’ union. At the time of the reform the oil industry provided 4% of all public revenue and supported much of the economy in the states Veracruz and Tabasco. A crippling oil strike could sink the party’s position in the midterms or next presidential election.

How to get union support? First, threaten the union leader. Carlos Romero Deschamps happened to be a sitting PRI senator and “enjoyed” second-place on the Forbes list of the ten most corrupt Mexicans. On a monthly salary of US$1,864, Deschamps managed to accumulate a $1.5m “cottage” in Cancún, a son who drove a $2m Ferrari, and a daughter who liked to post Facebook images of her jet-setting her three English bulldogs around the world. In other words, a serious corruption investigation would toss him and his children into jail.

President Peña made it clear to Deschamps that he had no choice but to go along with the reform in the most obvious way: in February 2013 he took the powerful leader of the teacher’s union, Elba Esther Gordillo — number 1 on the Forbes list and head of the New Alliance Party — and had her arrested on anticorruption charges. Gordillo was fortunate enough to be over 70 years old and therefore be eligible for house arrest instead of prison — she owned a rather nice apartment in Polanco, Mexico City’s equivalent of the Upper East Side — but the message was clear. Deschamps brought the union on board with reform.

Alternative facts are not an American monopoly: in a rather startling 2014 declaration, union leader Carlos Deschamps declared that energy reform would bring no lay­offs. Even more startlingly, Deschamps denied that mass firings were taking place even after they began. According to him, only oil workers employed in private companies lost their jobs.

Source: Abad and Maurer (2018).

Unfortunately, the reality was otherwise. Reform let Pemex lay off almost 30,000 employees in a three-year period. (See above.) Layoffs hit unionized and non-unionized workers alike; in fact, the share of union workers declined slightly during the mass layoffs of 2015. But the machine kept that from triggering strikes by (1) concentrating the layoffs in places that were already voting against the PRI—i.e., Tabasco and Veracruz—where workers did protest but the protests could be controlled; and (2) making sure that wages went up dramatically for those workers who kept their heads down, kept their jobs, and accepted the reforms. (See below.)

Source: Abad and Maurer (2018).

Of course, you would be right that this particular exercise of machine politics removed most of the putative fiscal gains from allowing the layoffs. The chart to the right shows payroll costs as a percent of Pemex revenue: they did not fall. 

But that’s how machine politics works. Rents are generated and distributed on one end; individuals and individual group leaders are punished on the other.

Absent the subversion of democracy, it’s hard to see how AMLO could build a machine more effective than the PRI, circa 2012-18. (To reiterate, the PRI circa 1929-1997 was an institutionalized dictatorship masquerading as a political machine, not a genuine democratic political machine.) There is no obvious source of rents that the PRI did not already tap. There are places that have improved — say, competition policy — but where it would be hard for Morena to loosen the rules without pushback. Elsewhere, things are not good, as this OECD report on electricity procurement shows. In that sense, things cannot really get worse.

And a democratic machine, no matter how efficient, can’t stay in power if it really lets things go to hell. The PRI discovered that this year, losing even its heartland in the town of Atlacomulco, Mexico State. In other words, straight-up machine politics means more of the same in Mexico and is self-limiting if it delivers truly bad results — albeit less self-limiting than in democracies free of machine politics.

Morena will try to build a machine. But building a machine is hard and machines themselves do not guarantee that a bad government can remain in power.

The real worry, I think, is democratic backsliding. That is, machine politics plus institutional changes to make the vote less effective and hamstring the opposition. Without democratic backsliding, you might get a maquina Morena, but you won’t get a dark machine.

Thoughts?

The danger from AMLO

In comments, Andrei Gomberg writes that the biggest danger from the new AMLO government is the construction of an effective political machine and the slow subjugation of the independent parts of the Mexican state:

I think you miss the real source of additional congressional votes for the new government: the PRI. Admittedly, it will be a much smaller source this time — but it will be more important than the PRD or MC. The rump PRD (with well-known exceptions) already largely consists of those who hate him — why else were they not on board already?

On the other hand, big chunks of the PRI can be easily accommodated in the AMLO coalition. He is, really, an old priísta, and he has long shown to appeal to the PRI traditionalists (let´s call them “Bartletts”). Now that he is in power, he will have no problem attracting many of the rest of them.

One also does not need to look for any idées fixes to see what his primary objectives will be. We are dealing with the classic machine politician, who knows everything there is to know about building up power. His first and foremost task will be to rebuild the PRI machine of the olden days - but under himself. He is in position to rearm the old (and by now quite decayed) clientelistic networks — why else was he bringing old union leaders on board?

Of course, this time the machine will be rebuilt under the unitary leadership. There are few local caudillos within Morena, and AMLO has shown that he is very much willing to slap down the few there are (greetings, Sr. Monreal). It is hard to see where any independent force may grow within the governing coalition. Unlike old priísta presidents the new leader will be much less constrained from within the party. I mean, if anybody were to tell me 15 years ago that I might miss good old Fidel V. ....

Again, thinking along the lines of what you taught me about the way Mexican power functions. I would expect him to start as a good friend of “national” business. Any machinery needs oiling to run smoothly — he needs rents. Competition regulators will be an interesting area to look at.

The other area, of course, will be the electoral machinery. He does not trust it — and for a good reason: it is still independent. Unlike you I fully expect him to go for the 2021 “plebiscite”: it is his pre-electoral promise, and it is very much in character. What I expect him to do is to run it largely or fully outside the Instituto Nacional Electoral system (if he needs the excuse, it could be the lack of constitutional authority). The objective, of course, will be, precisely, to get the country used to the idea that the Instituto Nacional Electoral is not necessary for his version of “democracy.” Chances are, he would still be popular enough to get a resounding confirmation of that popularity in any properly organized vote — but he will not want that.

Once again, where I expect to see the most important changes is in gutting the strength of all sorts of independent institutions. That is where the things that will really change Mexico will happen. Everything else, at least in the first couple of years will be more of a show.

More thoughts to follow.

Outside the box #2 for Venezuela: An oil-for-food program?

Foreigners (including Venezuelans in el extranjero) want to find an international response to Venezuela’s descent into dictatorship that won’t kill children. We aren’t yet in a situation where inaction will lead to the deaths of even more children. Which means that a lot of people want to find something new. 

Julian Adams has such a suggestion: imposing an oil-for-food program on Venezuela. Under Oil-for-Food, created in 1995, the the U.N. permitted Iraqi oil exports under its control. Payments for Iraqi oil went to the U.N. and could only be spent on U.N.-approved imports. The idea was to prevent the Iraqi government from being able to finance its war machine without starving the Iraqi people. In the Venezuelan case, the idea would be to prevent the Venezuelan government from distributing oil largesse to its cronies without starving the Venezuelan people.

One problem is that the U.N. is not about to impose such sanctions. Adams points out that most Venezuelan exports go to the United States and India, but he is not quite right that there is no capacity to refine Venezuelan crude elsewhere. In point of fact, Venezuela could find alternative markets, albeit at a large discount. If the regime really believed that oil-for-food threatened its control, then it would find those markets.  

Second,  Iraq managed to collect illegal surcharges on the export of its oil. These surcharges were not that large: Yujin Jeong (American) and Robert Weiner (GWU) found that they came to about 0.8% of the total value of oil exports. Iraq had to discount its oil by 11%, so the surcharges did not match the losses, but they earned Saddam Hussein an additional $91 million per year in 2000-02. The equivalent number for Venezuela would be about $135 million per year.*

But the real problem is that the Venezuelan state would continue to control the internal distribution of food and medicine. That would provide a massive source of largess to distribute. Imports could be given to middlemen and sold on the black market. That might be slightly less efficient that the current way the government redistributes its export income, but when was the Bolivarian Republic ever about efficiency?

It is a very neat idea, but I do not see how it could work. Is there something I am missing?

Observatorio argentino 26: How long has Argentina been in decline?

Randy McDonald brought this article to my attention. The title captures the argument quite well: “Argentina: The Myth of a Century of Decline.” The author is contesting an Economist article that dated the country’s decline to 1914.

Here is the key argument:

Below I will try to show that instead of a “century decline,” what characterizes Argentina’s economic evolution as compared to other countries is that it suffered a deep economic collapse from the mid 1970s to the end of the 1980s (in what follows, data is from the Maddison Project. http://www.ggdc.net/maddison/maddison-project/data.htm).

This structural break in the evolution of the GDP per capita (GDPpc) in Argentina can indeed be attributed to internal conditions in that country. But other than that, there is not much difference in the evolution of Argentina, when compared to, for instance, Australia, or Uruguay, two countries mentioned by The Economist as either not having suffered the “hundred year decline” and/or to have followed better economic and institutional policies than Argentina. It is true that other countries such as Korea or Spain, which had far lower GDPpc than Argentina during great part of the 20th Century overtook Argentina by a large margin since the 1970s. But it is also true that if Argentina had avoided the sharp drop in the 1970s and maintained the share of the US GDPpc that prevailed before that structural break, the country would have had now an income per capita above all countries in LAC and many European countries such as Portugal, the Czech Republic, Hungary, and Poland. And if it had maintained the lineal trend growth from the 1960s to the mid 1970s it would be now at about the level of New Zealand or Spain, according to the data of the Maddison Project. In other words, if Argentina had avoided the real tragedy that started in the mid 1970s, the country would be now a developed country.

I’m not sure I fully understand the argument. It hinges on a rhetorical definition of “decline” and a debate over the correct counterfactual. Contemporary Argentine opinion leaders thought their country was one of the richest in the world in 1914. Now, the author is correct that compared to Australia it was already running significantly behind (66% of per capita income) ... but Argentina had achieved a rather respectable 82% of Canada’s per capita income. 

Still, 82% is less than 100%, even accounting for the difficulty in measuring these things. And there are other indicators that Argentina was in fact already behind in 1914 despite its elevated income figures. Filipe Campante and Ed Glaeser have a good comparison of Buenos Aires and Chicago around 1914. The differences?

1. Much higher education levels in Chicago. This was not in fact a result of Chicago’s public schools, although those schools were better and more prevalent than in Buenos Aires. Rather, it was a product of Chicago getting rural Americans and German immigrants, who were better educated than the Spaniards and Italians pouring into B.A.

2. Chicago was more industrialized, despite competition from the old industrial centers in the American northeast. In fact, businesses in general were more mechanized: Chicago had 2.4 times as much capital per worker as B.A.

3. Finally, Argentina didn’t have universal male suffrage until 1912 ... which led to riots and revolts that could and did topple national governments. Chicago had riots and political machines, but the government remained stable.

Thing is, the Economist piece makes a big deal of the Campante and Glaeser article. Why is Díaz-Bonilla different?

Díaz-Bonilla points out Argentina did not start to lose further ground against Europe until WW2 ... and he notes that fate also befell Australia. The problem is that much of Australian economic history is dedicated to explaining the country’s relative failure after WW2. Comparisons with Argentina were rife at the time as both countries slid down the league tables. I am not sure what the Australian experience proves for Argentina.

Finally, he shows that the wheels come of the slowing Argentine bus with the spectacularly incompetent military governments of the 1970s.

I understand what the author is trying to argue, but it’s not as effective as it might sound. “Argentina was poorer than people think in 1914, fell further behind (along with Australia and Uruguay) after 1940, and then collapsed in the 1970s” is less catchy than “one hundred years of decline,” but it doesn’t sound categorically different.

I think the author is trying to push the argument too far. 

That said, the author makes two good points. First, the Argentine juntas really were that bad. Second, the relative decline after 1914 cut across the entire southern cone, including southern Brazil. The whole region was relatively richer in 1900 than it is today. Brazilians in particular seem to forget this point, but it is an important one to remember, especially when diagnosing Argentina’s modern economic problems.

Somewhat more effective suffrage, some re-election?

The title of this post is lifted directly from Mexfiles, which has a post on the reform that you should all go read. It goes into some depth about the possible effect of allowing limited re-election and the federalization of election regulation.

It is also an awesome title. When Porfirio Díaz first assumed the presidency, in 1876, his slogan was “Sufragio efectivo, no reelección.” (“Effective suffrage, no re-election.”) Díaz duly stepped down in 1880. He then ran again and won in 1884. And 1888. And 1892. And 1896, 1900, 1904, and 1910.

The joke was that Díaz had simply misplaced a comma the first time around. Instead of ¡Sufragio efectivo, no reelección!, he had meant to write, Sufragio efectivo no, ¡reelección!

(A useful chronology of the Porfiriato can be found here.)

Anyway, at Mexfiles they are pointing out that the new reform is pretty limited. State elections (which are relatively clean now) will become slightly cleaner. (One of the bigger changes is that INE will be now be able to overturn elections in which the parties exceed their spending limits.) Meanwhile, deputies and senators will become very slightly freer from party control. (Very slightly.) Good mayors will be able to win re-election, but not enough to let them create political machines. In all, a sort of halfway house.

I agree with Federico. The reform seems important only because the PAN made it the price of energy reform. What I do not understand is why the PAN cares. After all, it is a little weird to say, “Give us something unimportant [political reform] in exchange for something that we really really care about [energy reform]!”

The whole thing strikes me as political kabuki, a way for the PAN to pretend that it isn’t just automatically approving whatever President Peña sets out.

Observatorio argentino 21: The Supreme Court keeps Argentina from importing a strange American idea

The United States has given a lot of good ideas to the world. We have also given a lot of bad ideas to the world. One of those good ideas is judicial review. One of those bad ideas is the Senate.

Argentina has both judicial review and a senate.

By a 6-1 vote, the Argentine Supreme Court just stopped President Fernández from adopting another one of our ideas: elected judges.

To be fair, she wanted indirect election: judges would still have been appointed but the body that selected them would be elected. Under Article 99 of the Argentine constitution, the President selects federal judges from a list presented by the “Council of the Magistracy.” According to the (not very good but) official English translation of the Argentine constitution, the Council is selected as follows:

The Council shall be periodically constituted so as to achieve the balance among the representation of the political bodies arising from popular election, of the judges of all instances, and of the lawyers with federal registration. It shall likewise be composed of such other scholars and scientists as indicated by law in number and form.

Meaning: Congress can write laws to choose the Magistracy Council however it likes, but it has to make sure that the resulting body represents all political parties, sitting judges, and the federal bar association.

Election for the Magistracy Council, held the Supreme Court, would not insure that all those groups would be represented. It would also, they held, violate the separation of powers and threaten judicial independence.

This has some resemblance to how New York State picks judges for the Court of Appeals. New York is not alone: you can find data on how U.S. states choose judges here; a summary can be found here. Of the 39 states with intermediate appellate courts, 21 do not hold elections. Of all 50 states, only 11 have no judicial elections; an additional seven have uncontested elections when judges are reappointed. The rest hold elections. Some even hold partisan elections.

It is pretty clear that the reason for the President’s desire to elect the Magistracy Council is that she is sick of court decisions going against her. The recent decisions against Chevron (which put the expansion of oil production in the Vaca Muerta at risk) doubtlessly play a part. She seems to be calculating that her political machine can win the resulting elections.

But are elected judges really a bad idea? Good political scientists have made the argument that judges make political decisions using unclear criteria anyway, and so we should elect them.

On balance, I think that the decision is a good one for Argentina. Argentina enjoys an independent judiciary. That is not only a recent accomplishment; it is something for which we can credit President Fernández’s husband, former president Néstor Kirchner. Elections would seem to weaken that accomplishment.

But the political scientists (arguing in the American context) make good arguments.

Should I change my mind?

Hacienda Luisita

 One group went to Hacienda Luisita, which I blogged about earlier as owned by a clan connected to Aquino and embroiled in the violent killing of striking workers.

Interestingly, a bunch of voting machines all coincidentally failed at about 12:58pm, and were still not working as of 3:45 pm. The Hacienda is 6,000 hectares and encompasses multiple barangays, but, interestingly, this economic power did not translate into an overwhelming vote for Aquino. Some labor union leaders were told “If Noynoy wins, you better watch out.” The union recognized that if Aquino won, any hope of legal redress or land reform of this hacienda would go out the window. It seems that it was strong enough to convince its members to vote against Aquino in numbers large enough to swamp the mysteriously failing voting machines. 

We have been told that the source of the 2004 labor conflict was an attempt by the Luisita management to rezone the area in order to escape the land reform law. They bundled shares in the Hacienda with their labor contract, so that their employees were actually counted as owners. Therefore, they were not eligible for land reform under the Comprehensive Agrarian Reform Program. Genius!

Notes on poll watching

 I still haven’t seen the news. (I’m out in the sticks without internet; Noel is getting these posts third hand, in a process involving scrawled missives, motorcycles, and carrier pigeons.) But here are some observations on the poll watching and interviews around Santa Cruz.

Long lines. One booth had a voting machine breakdown for 3 hours, others were just plain backed up. But people were waiting up to 5 hours to vote. The election has the flavor of a festival, with people hanging around long after they’ve voted to meet extended family.  So people just take whatever time they need to complete this most important of political rituals. I.e., I don’t think turnout was much deterred by the long lines.

Lots of flagrant rule breaking. Like party workers (called poll watchers) in the voting area, helping people fill out their ballots and enforcing the 3-kg of rice/100 pesos-per-vote contracts that are a guilty secret for many people here. The local police vests had a candidate’s name “Dockie” printed on it, who also happens to be the vest supplier. Also, many people missing from the rolls, finding that they had “already voted” or unable to find their name (and finding the names of long dead relatives) on the voting lists.

Nonetheless, overall impressions of the election were optimistic. This turned to frustration over the course of the day as the lines and crowded rooms took their toll. At the end of the day, two out of five machines in my precinct failed to electronically transmit their votes; the chips were sent to the municipal canvassing office. 

While our small group, by the nature of our task, is hyper sensitive and paranoid about possible electoral chicanery, I think this is as good as it gets in rural underdeveloped countries. The bubblesheets were certainly an improvement over the old Senate ballots, which involved writing in the names (or nicknames) of the preferred twelve candidates, with all the room for fraud that implies. The local canvasser told another group member that this was the best election he’s seen in 35 years.  

Great debate attempt #4: There may be hooptie politics in the U.S. of A., but functioning machines there are not

  Some time ago, I took issue with the use of the word “machine” by two commentators on this blog. Short version: They talked about the role of machines in the election.  I said, “There are no more machines.” They said:  “You’re wrong. Patronage politics lives.”

I now believe that it is time to reassert my contention. There is no more Chicago machine. There may, in fact, be no more political machines in America.

What’s a machine, you ask? Simple. Machine politics happens when politicians make promises and levy punishments on voters at an individual level, and not merely as members of an ascribed group. It isn’t machine politics to support EFCA in return for a union endorsement or union contributions. It is machine politics to tell Joe the Union Leader if he gets his local gets out a certain number of votes, he’s gonna get federal contracts steered his way. 

Obviously, the boundaries are grey. They usually are. (C’mon. This blog has an “empire” tag.) But you can make a strong case that machine politics is dead unless you choose to draw the line so broadly as to make everything into machine politics. 

Consider the Board of Revision of Taxes, in Philadelphia, where I write this. 

In theory, its an independent organization, appointed by elected judges and funded by the school district. In practice, Republican and Democratic Party leaders give jobs away to people who work hard on election day. Machine politics!  Except … uh …. the BRT was originally part of a Republican machine. (Hard as it is to imagine, many northeastern cities, like Philly and Jersey City, were once controlled by left-leaning GOP machines.) As the city became more Democratic, Democrats got control of more of the posts. A real machine shouldn’t let that happen — why would its constituents have an incentive to switch? But the Republican Party has managed to retain control over 20 of the 78 seats on the BRT and give them to the people who get out its votes despite a complete collapse in the ability of the Philadelphia GOP to, you know, get votes out. If one machine replaced another, that shouldn’t happen either. What’s going on in Philadelphia seems more like straight-up corruption rather than machine politics, conventionally conceived.
 
Or consider what a real machine did back in 1972, and try to imagine it happening today. 

In 1972, Richard Daley the Elder could already see the writing on the wall: the days of the classic machine were coming to an end. Royko’s Boss came out in ’71. Michael Shakman began his famous suit arguing that patronage politics violated the 14th Amendment. Ralph Metcalfe defected from the machine with the wonderful quote, “It’s never too late to be black,” and managed to stay in office. His candidate for governor lost. So when a bunch of goo-goos challenged his control over the selection of candidates to the Democratic National Convention, he showed what a real machine does. They attacked the churches where the reformers organized and destroyed their records. Attacked, as in mobs and beatings. The Partido Nacional Revolucionario would have called that a porra. Richard Daley the Younger, I should add, led the porra that assaulted a Catholic Church in the 5th District. They then disrupted the election of the at-large delegates from Cook County. 

Daley lost anyway, save for the at-large. He sued, and when the U.S. Supreme Court punted, he got a machine judge to seat his hand-picked slate over the elected delegates. Except that the judge couldn’t do anything, because, well, the Supreme Court had kicked the problem back into the hands of the Democratic National Committee. Daley’s case wasn’t helped by the fact that in a massive failure of vision his slate contained only one Italian last name and three Polish ones. That’d be like, well, uh … you know, lots of Irish political machines shot themselves in the head over this sort of oversight, be it Chicago’s failure to integrate Italian and Poles and African-Americans, or Boss Flynn of the Bronx trying to pretend for a stupidly long time that all these Jews and Puerto Ricans would just go away. (The Jews did. The Puerto Ricans are. But the machine went away first.) 

Wrap your head around that happening in the 2012 . You can’t. It wouldn’t. Not even in places like San Antonio, where machine-like organizations still exist in a way that they’ve faded in Chicago and Philadelphia. Those cities have a problem with corruption, but I’m just not seeing the machines. (Michael Nutter is many things, including a plausible future President of the United States, but a machine politician is not one of them.) Boston, well, Boston kinda sort has a machine, sorta, but it’s weak, and survived because the Irish were smart enough to turn things over to the Italians. Cambridge has one that survives only out of apathy and indirect elections.

New York City could have replicated machine politics. It had an ethnic base and plenty corruption, while Jews and Italians were replaced by Puerto Ricans and African Americans, who were in turn displaced by West Indians, Dominicans, and Chinese. 

Yeah, I know, hugely diverse immigration stream and all that. But a political entrepreneur could have built a machine on a simple West Indian-Dominican-Chinese tripod … heck, they could have built on West Indians alone.

Only they didn’t. And if you tell me that’s because West Indians don’t make good American politicians or don’t become citizens or otherwise lack the necessary chops I will be unable to contain my laughter. It’s because, I think, American institutions and political culture currently make machine politics impossible. The combination of law, free elections, and prosperity has destroyed the great American political machine. 

In fact, the same combination — or at least two of the three — has also wounded the great Mexican political machine. They hang on in parts of Mexico, but generally the country’s politics resemble U.S.-style interest group politics, not the machine politics of yore. “Porras” cause riots after university soccer games; they don’t assault polling places and beat up opposition politicians. They’re also weakened in Panama. I’m not sure that I’m particularly happy about Martinelli’s victory, but it isn’t a victory for machine politics. 

Now, machine politics isn’t dead in Latin America, despite some bruising. Consider “Daleyismo” in Venezuela. ¡Viva la maquina! The Nestor-Cristina team in Argentina is very good at this sort of thing. Danny Ortega is less good at it, as his need to resort to vote-stealing shows, but even the great Daley had to do that on occasion. Correa and Morales, in different ways, are trying to build machines. Dominican politics is dominated by machines, albeit not hegemonic ones … and I think you could say that Mr. Uribe’s conservatives have built there own odd sui generis electoral machine. 

So machine politics lives on in América, but in America it is almost impossible for me to imagine the kind of tactics used by the Socialists-Peronists-Sandinistas-MAS-Conservatives achieving anything other than a wave of negative news stories followed by indictments.

I know less about the Old Continent. There are some machine-like things in Italy these days, although I think a new word is needed for Berlusconi’s very 21st-century political strategy. But to repeat myself, electoral machines no longer seem to exist in America.

Am I wrong? As always, I’m happy to change my mind. And just to be sure that we’re on the same wavelength, a “machine” doesn’t need to be as powerful as the Cook County Democratic Party under Richard Daley to qualify. It just needs to be able to win elections on the basis of personalistic relationship and individual patronage. 

Daleyismo en Venezuela

I argued that President Chávez is building a political machine in Venezuela, not unlike the machines that used to riddle American politics.  Since Venezuela is obviously not a communist country, or even heading that way, I called it “Daleyism.” 

Anonymous responded:  “This is an absolutely retarded phrase. There is not a shred of evidence that this is happening in Venezuela. I’ve lived here for over three years, and know all kinds of families that do not belong to the PSUV, that absolutely hate Chavez, and have voted against him repeatedly, and they still have full access to ALL the benefits of the government, including state health care, education, subsidized food, pensions, etc. etc.” 

Anonymous, however, is wrong. 

How do I know that?  Simply put, because the Venezuelan government provided us with the data we need to see Daleyism in action.  In 2003, the opposition collected 3.5 million signatures calling for a recall election under the 1999 constitution.  In 2004, the government put all 3.5 million names on the web, including birthdates and addresses.  Chang-Tai Hsieh, Ted Miguel, Daniel Ortega (not this one, another Daniel Ortega), and Francisco Rodríguez realized that they could take the government’s list and check it against the Venezuelan household and industrial surveys.  The surveys follow 150,000 people twice a year, and include birthdates, gender, and residence, enough to match 87,100 of them against the list.  The industrial surveys track firms, but the identity of the firms’ board members is public.  Access to this data, then, let them see what, if anything, happened to the incomes and employment of signers versus non-signers. 

People who signed the recall petition saw a 4% drop in their incomes relative to non-signers.  Why?  Easy:  there is a big relative drop in public-sector employment of signers (4.3%), and signers who lost their jobs were more likely to have to move into the informal (and badly-paid) sector.  Now, Venezuela is a politicized society:  government supporters (ID’d as the signers of a counterpetition) saw an even bigger relative drop in their private-sector employment (5.9%), but they didn’t see a drop in their income, because they moved into the public sector.

Richard Joseph Daley would be impressed.

But Hugo Chávez is better than Richard Daley; no, he’s almost as good as Richard Nixon.  Remember my last post about Venezuela?  How Chávez has improved tax collection?  Well, as any American who remembers the Nixon administration knows quite well, a politicized and effective tax authority can be a very useful part of a machine.  Turns out that companies whose board members signed anti-government petitions saw a 33% relative increase in their assessed taxes.  (US$305,360 versus US$229,020.)  That’s the “ugly” part of Venezuela’s better tax administration.

They also received 51% less subsidized foreign exchange.  In a country where the government rations foreign exchange at subsidized prices, that’s one hella competitive disadvantage.

Brilliant machine politics!  Part of me can’t help but be impressed, although I suspect, given my general humorlessness about legal corruption here at home, that feeling would go away right quick were I in fact Venezuelan. 

More later on the misiones and PDVSA’s social spending.  But right now, back over to you, Anonymous.

Building a machine

Chávez is building a very sophisticated political machine.  And I do mean machine.  The idea is to make key aspects of everyday life dependent on support for the United Socialist Party of Venezuela (PSUV).  It's not Communism; rather, it's Daleyism, put in charge of a country.  Do it right, and there will be no need for secret police or election stealing.  Do it wrong, and your government will eventually (if you're unlucky) start breaking heads or (if you're lucky) become like Mexico.

(Photo courtesy of oilwars.blogspot.com.)

The least machine-like part of the emerging PSUV machine involves the Mercal stores.  The Bolivarian Republic imports food and other basic products (or purchases them from approved suppliers) at market prices, and then resells them to the public through the Mercales.  I visited several; except for the one in a high-priced part of Chacao, there were always lines.  This should not be unexpected, of course.  If the idea is to get basic products into people's hands at subsidized prices, then lines are what should result, if the prices really are subsidized.

The problems?  Well, the first general issue is that it's never clear whether blanket subsidies are an effective poverty-fighting program.  It's also even unclear whether they are an effective vote-getting policy.  After all, Mexico's elected governments (see Chapter Six) have switched to targeted programs, as have Brazil's ... and politicos in both countries are very good at fighting for votes.  Mexico's IMSS and ISSSTE tiendas are no longer subsidized, or crowded, and the Conasupo stores are long gone. 

The second, Venezuela-specific issue is below.   

Subsidies are expensive.  I haven't been able to find any information on how much Venezuela spends on Mercal subsidies.  That doesn't mean that it's out there; that just means that it's hard to find.  This IESA case on the stores, published in 2008, has no data past 2005.  So it's hard to tell whether the government is actually stimulating "food security" or just subsidizing imports, which is probably the last thing it needs to be doing in the middle of an export boom.

In addition, the stores give the government a political hedge against inflation.  For a brief period last year, the government tried to fight rising inflation via price controls.  That led to problems.  (Venezuela reminds me of Mexico back in the 1980s and early 1990s.  Boy, do I have price control stories from back in the day.)  Now, though, the government can let inflation rip while protecting some of its constituents from the worst effects, albeit at a growing fiscal cost. 

Finally, the Mercal stores provide the infrastructure for creating a machine.  It wouldn't be hard to add ration cards or other ID requirements to the stores; accelerating inflation would provide a rationale.  Of course, other income subsidizing programs could also be politicized:  vigorous multi-party politics and a vigilant press is the reason that doesn't happen in Mexico and Brazil, but it has elsewhere.  My instinct, though, is that it would be much easier to politicize access to subsidized stores than access to an income-supplementing program.

Would the PSUV use machine tactics?  Ah, that's the subject for another post, but the answer is yes, and the way that was shown shows social science at its best.  Stay tuned.

But meanwhile, any thoughts on political machines or the Bolivarian Republic?