Fungible Resources Research Articles

African Militaries and Rebellion: The Political Economy of Threat and Combat Effectiveness

War in Africa has recently attracted significant attention because the continent seems more prone to conflict than others and because any disruption in security is especially threatening to populations, like those in most of Africa, where people are already living at the margins. A growing and productive literature has emerged focussing on the motivations of rebels during these wars. Important econometric work has attempted to explain the economic and political motivations of rebels; there have been case studies of different guerilla movements; and cross-national analysis of the organization of rebellion. However, there has been no corresponding literature on, quite literally, the other side: the political economy of how and why national militaries perform during civil war. This article will examine the geographic, political, and economic determinants of how African militaries face the threat of rebellion and of differential levels of effectiveness in combating insurgents. The size of the country appears to be an important determinant of the initial course of an insurrection: in small countries there is often a battle for the capital that can end fairly quickly, but in big countries different armies can occupy important pieces of territory far from each other and avoid having to fight an immediate battle to the death. Once conflicts have begun, it appears that the nature of the rebel threat - especially whether it is internal or external - and the degree of fungible resources provided by the international community are both important determinants of how well African armies are able to mobilize to fight. The article concludes that the international community must consider how to help African countries strengthen militaries as well as police and intelligence agencies, so that it is possible for governments to respond quickly to rebel threats.

Defining deadlock with fungible resources

In a previous paper we discussed resource deadlock within a classification of all dead states. We differentiated between the different types of anomalies that are called deadlock in the computer science literature. Our primary aim was to correct inconsistencies that are currently being taught in operating systems' textbooks. We introduced a model that allowed us to precisely define deadlock, but we only provided a partial definition of resource deadlock, which, as we noted, was limited to deadlocks with uniquely identifiable resource units. In response to readers of OSR, we now distinguish between different types of resource deadlock and provide a comprehensive definition. We also suggest that it may be desirable to maintain separate definitions.

Social sharing and risk reduction: Exploring a computational algorithm for the psychology of windfall gains

Sharing important resources widely beyond direct kin group members is one of the core features characterizing human societies. Moreover, generalized exchange involving many community members (e.g., meat sharing in bands) seems to be a uniquely human practice. This paper explores a computational algorithm for the psychology of social sharing that may underlie such practices, based on the risk-reduction hypothesis in food sharing of Kaplan and Hill [Curr. Anthropol. 26 (1985) 223]. We predicted that, independent of the amount of effort actually invested, uncertainty involved in resource acquisition is a key factor that triggers the psychology of social sharing for both acquirers and nonacquirers of a resource. It was also predicted that the “windfall effect” is independent of individual preferences as to modern distributive ideologies. Four multisample/multimethod studies, using Japanese and American participants, and laboratory as well as vignette experiments, supported these predictions: although the identical fungible resource (money) was under consideration, different psychological processes were triggered, depending on the degree of uncertainty involved in the money acquisition. Implications of the windfall effect for egalitarianism in resource sharing, observed not only in hunter–gatherer bands but also in highly industrialized societies, are discussed.

The tyranny of inequality

When parties are very unequally endowed, agreement may be very difficult to reach, even if the specific transaction is easy to contract on, and fungible resources can be transferred to compensate the losing party. The very fungibility of the resource transferred makes it hard to restrict its use, changing the amount the parties involved spend in trying to grab future rents. This spill-over effect can inhibit otherwise valuable transactions, as well as enable otherwise inefficient transactions. Agreement typically breaks down when the required transfer is large and the proposed recipient of the transfer is relatively unproductive or poorly endowed. We examine the implications of this model for a theory of the optimal allocation of property rights.

The Tyranny of Inequality

This paper focuses on the externality that a contractual transfer of fungible resources can have on future interactions. The very fungibility of the resource transferred make it hard to restrict its use, changing the amount the parties involved spend in trying to grab future rents. This spill-over effect can inhibit otherwise valuable transactions, as well as enable otherwise ineffcient transactions. Agreement typically breaks down when the required transfer is large and the proposed recipient of the transfer is relatively unproductive or poorly endowed. We examine the implications of this model for a theory of the optimal allocation of property rights.

FUNGIBILITY OF MATCHING CONDITIONAL GRANTS TO LOCAL GOVERNMENTS

Abstract. This article finds that about 31 cents of every dollar of matching conditional grants to upper‐tier municipalities in Ontario, Canada were converted into fungible resources during the period 1977–1992. As a result these grants did not stimulate local economic activities, as desired by the donor. In particular, the expenditure response to these grants is reduced by almost 25 percent due to fungibility. The implied fungibility ratio is also found to vary across municipalities and service categories. Fungibility of grants is 15 percent higher in the transportation sector than in the health sector and in both sectors the estimated ratio is lower than the corresponding ratio based on U.S. data. It is further found that a municipality, with a regional structure, larger size, and lower proportion of statutory expenditure, tends to convert larger amounts of grants into fungible resources than others.

The Tyranny of the Inefficient: An Enquiry into the Adverse Consequences of Power Struggles

There are many instances where two closely related parties do not agree to mutually advantageous transactions even when there are simple enforceable contracts, and side transfers of fungible resources, that would implement them. Peace treaties are not signed, inefficient regulations are not altered, and possibilities for investment are frittered away. One reason, which has been extensively analyzed in the literature, is the presence of informational asymmetries. In this paper we focus on another potential explanation: the externality generated by the transfer of fungible resources. Unlike in a one-off transaction among unrelated parties, related parties will interact in the future. The very fungibility of the resources that are transferred to facilitate the immediate transaction can make it hard to restrict their use. As a result, if future interactions are influenced by the distribution of current resources, an externality can endogenously arise from the current transaction. Under some circumstances, even transactions that considerably enhance value can be inhibited by the endogenous externality. Agreement typically breaks down when the required transfer is large and the proposed recipient of the transfer is relatively unproductive or poor. The paper examines the implications for a theory of property rights, and for competitive strategy.

The Danner Thesis and Public Choice Theory: A Review Essay

Peter Danner's Getting and Spending (1944) is intended as textbook for courses in economics/ethics. However, in the process of providing instruction for undergraduates, Danner expounds deep level, original thesis concerning the nature and significance of economic activity and the moral legitimacy of market economy. The purpose of this essay is, first, to provide concise restatement of the Danner thesis and then to show how his justification for market institutions compares with that produced by public choice theory as the latter is set forth by Victor Vanberg (1994). To begin with Danner to bring his readers to the realization that there is unique, foundational cognitive/causal force at work elusively but effectively in the mundane affairs to daily economic life. When you buy loaf of bread, so he seeks to show, fundamental, primal intuition stirs toward articulation in the depths of the human soul. An economic transaction allows the human person to and with reflection to acknowledge unique dimension of the relationship with his Creator. Danner's core thesis has to do with understanding the ground and implication of this unique dimension. The key decision making economic agent is identified as the human person. Each the unique creation of loving God (p. 4), distinguished from the rest of nature by the capacity for self judgement, the human person encounters in the depth of his being primal urge toward the transcendent - toward truth to be known, good to be done, beauty to be created. For such creature, freedom - the ability to move one's self toward perfection by way of knowledge and choice - is understood as the means required ... for human beings to realize their good and achieve their purposes (p. 7). Within community of such free persons economic activity originates not in the pleasure-maximizing efforts of confirmed egotists (as in neoclassical economics) but rather in much deeper primal cognitive event Danner refers to as the Value experience (p. 84). Such an registers in human consciousness the realization, the immediate that potential action is Good, deserving of execution. Such perception triggers the interaction of knowledge and desire. However, for embodied human persons - angels don't have the problem - the espousal of cultural and moral values requires the use of scarce material resources. To fuel the thrust toward transcendence food is required for the body, stone and brass for the sculpture, wealth for the practice of liberality. Success in this grand communal endeavor requires not only that material resources be used in accord with the connection between cause and effect discerned by instrumental reason. To achieve the cosmic purpose of economic activity it is also necessary - and here is the core of the Danner thesis - that multiple purpose, fungible resources be used efficiently - so as to maximize the ratio of useful output to scarce input. The ineluctable fact of resource scarcity, so he affirms in summary statement, imposes a mandate ... on every individual, family business, government agency and non-profit institution to strive for (p. 212). Danner thus has lesson for the social economist. In the preoccupation with efficiency in resource use neoclassical welfare economics is right, but in its reliance on utilitarianism and assumptions of egoism, for the wrong reasons. As an economic agent the human person is bound by special ethical imperative - the moral obligation to avoid waste, to contribute to communal efficiency in the use of resources. The significance of the efficiency imperative is reinforced as Danner invokes line of psychological/moral analysis that recalls Aristotle on ethics, Aquinas on natural law. In determined rejection of all forms of ethical relativism, he stoutly insists that the human value - the realization that there is good out there to be affirmed by human free choice - mirrors but does not establish the object's Goodness. …

The fungibility of US assistance to developing countries and the impact on recipient expanditures: a case study of Pakistan

Development assistance continues to be an important source of funds to developing nations. Donor countries prefer to provide categorical (or project) aid since it is believed that the typing of aid to a specific project will help to ensure that the funds are used in accordance with the designated objectives. Development literature indicates, however, that the ability to tie aid may be illusory. Specifically, recipient nations can cut the ties associated with categorical aid and effectively transform it into purely income-augmenting funds, i.e., purely fungible resources. The funds legally designated for specific developmental purposes may finance projects whose purposes are not in line with the developmental objective. The fungibility of development assistance has received little empirical attention. This paper is an effort to fill that gap. We formulate an econometric model that explains the response of Pakistan's spending for defense, public nondefense, and private consumption to US assistance within the “fungibility” framework. Our results suggest that US assistance to Pakistan, whether military or nonmilitary, is fully transformed into fungible resources with impact on public spending less significant than expected.

Resource Fungibility, the Flypaper Effect, and the Expenditure Impact of Grants-in-Aid

The typical assumption that intergovernmental grants-in-aid alter a recipient's budget constraint according to the legal provisions of grant programs was first challenged by McGuire (1975, 1978) in a model where local officials are able to convert some fraction of conditional aid into pure fungible resources. This paper develops a model of local government expenditure decisions based on McGuire's original work and applies it to data for large U.S. city governments. The results lend strong support to the fungibility hypothesis. Additionally, and importantly, the results provide very little evidence in support of the so-called flypaper effect of unconditional grants. This is due to a more appropriate specification of the unconditional aid variable.

Using Positive Sanctions to End International Conflicts: Iran and the Arab Gulf Countries

Efforts by the Gulf Co-operation Council to persuade Iran to end its war with Iraq in exchange for access to a large amount of capital during the late spring of 1982 were not only ignored by the Iranian government but also met with greatly increased demands for reparations on the part of Iranian leaders. This event raises at least two important questions regarding the use of positive sanctions as a way of ending inter national conflicts: under what conditions an offer of positive sanctions will be made and under what conditions such an offer will be accepted or refused. These questions can be addressed from at least two very different perspectives. In domestic political terms, small principalities such as those on the Arab side of the Arab/Persian Gulf have a variety of incentives to use rewards in their dealings with more powerful neighbors, particularly if they have a reservoir of fungible resources from which to draw. In structural terms, when the distribution of capabilities in a region such as the Gulf is changing from a bipolar to a multipolar one, countries whose situation is improving will have several incentives to try to bring regional conflicts to an end using positive sanctions. Thus there is little basis for choosing between these two perspectives as a better explanation for why rewards were offered to Iran to end its war with Iraq during June 1982. But structural features of the Gulf region provide a considerably better explanation for why this offer was rejected than domestic political factors do. Domestic-level arguments explaining the rejection of rewards contradict the logic according to which their having been offered in the first place is explained. Structural aspects of the situation in the Gulf in early 1982 not only predict that smaller countries should have tried to use rewards to settle conflict in the area but also suggest why larger combatants will not accept such an offer. This finding indirectly supports Kenneth Waltz's argument that conflicts in a multipolar world will be both more likely to occur and more difficult to solve.