Political Frictions Research Articles

In different states of indifference: movement, friction, and resistance

In different states of indifference: movement, friction, and resistance

The Effect of Political Frictions on the Pricing and Supply of Insurance

Abstract Political frictions significantly affect both pricing and supply in the long-term care insurance (LTCI) market. Comparing the same insurer’s requests submitted for the same policy at the same time to different state regulators, we find that they are 13% more likely to be approved and receive 4% more of the requested amount after an election year. Over time, regulatory pushback on premium increase requests leads to persistently lower cash reserves and increases the probability of company dropout. An insurer who receives one-standard-deviation less of their requested increase is 20% more likely to leave the market next year.

The distributional effects of a nitrogen tax: Evidence from Germany

The high level of nitrogen emissions over the last decades and their adverse impact on the natural environment and human health are a pressing environmental issue. A nitrogen tax can be a cost-efficient and effective policy instrument to reduce nitrogen emissions. However, adverse effects on low- and middle-income households might lead to societal and political frictions that could end up in resistance. In this paper we investigate how a hypothetical nitrogen tax covering the specific external costs of nitrogen could be implemented and estimate its short-term distributional effects on household income groups in Germany. The findings show that the proposed tax would be regressive. However, if the tax rate is set equal to the true cost of nitrogen, the monetary impacts would overall be small, ranging from 1.15% of income for the first income quintile to 0.66% for the fifth. Complementary policy measures to lower the burden on low-income households, farmers and the energy sector could preempt social resistance against the tax.

The Path of Friction

Abstract This article takes the twenty-five-year anniversary of C. Jacob Hale's “Suggested Rules for Non-transsexuals Writing about Transsexuals, Transsexuality, Transsexualism, and Trans___” (1997) to reflect on the nature of accountability to and within trans communities. Against the backdrop of interviews with Hale and his thought partners for the piece (e.g., Talia Bettcher, Jack Halberstam, and Naomi Scheman), Zurn draws out the historical context of the “Rules,” but also the affective, theoretical, and political frictions (and intimacies) that underlie them. Generated in the late 1990s scene of trans theory and activism, Hale's “Rules” were more than a corrective to cis-centric “positions” on trans people circulating at the time (esp. by Bernice Hausman); they were also a testament to friendship, as well as to the philosophical insights of María Lugones, Ludwig Wittgenstein, and Sandy Stone. Although written for non-trans writers, it was Hale's intention that the “Rules” also apply in trans-trans contexts. Indeed, in a world today where trans people are in fact leading trans studies, Hale's injunctions to humility in our approach to trans* peoples and to faith in the existing wisdom of trans life is prescient. So is his invitation to theorize on the rough ground of living and struggling together.

Analyzing the Mutual Geopolitical and Security Complementarity of Iran and Turkey: Border, Energy, and Water

ABSTRACT In recent decades, particularly since 2002, relations between Iran and Turkey have been on the rise and generally expanding. The aim of this paper is to analyse and clarify the reasons for the sustainability of the two countries’ relations while undergoing intermittent eruptions of disputes over the years. In other words, the main question is: why have Iran and Turkey, with their political frictions, routinely embraced rapprochement and collaboration in recent decades? Accordingly, the hypothesis proposed is that a key reason for the ongoing cooperation between Tehran and Ankara in different fields, is the rationale of geopolitical complementarity engendering their security needs in broad meaning, particularly energy security and natural gas. Whilst the logic also applies to water security, both states attach greater importance to border security and energy. In short, their common geopolitical destiny over-rides individual state preferences. To examine this hypothesis, Barry Buzan’s theory based on a broad definition of security as well as regional security complex has been deployed through descriptive analytics.

Analyzing the interaction of China-Japan economic, trade, and political relations in the 1990s

This paper takes the China-Japan relations in the 1990s as the object of study, and through analyzing the historical situation of the two countries in the 1990s, it explores the interplay between the economic factors and political relations between China and Japan. Based on the state of China-Japan economic and political relations in the 1990s, this study analyzes the differences between Japan and China in the 1990s based on data and historical facts, and from the perspective of the political and economic development of Japan and China in the 1990s. At the same time, this study analyzes specific instances of ODA loan freezes and extensions triggered by political frictions between China and Japan based on data and historical facts, etc., to clarify the link between the two countries’ economic and political aspects preliminarily. This study concludes that the economic and political relations between China and Japan are mutually influential and cannot be discussed only based on the influence of one side on the other, but should fully consider the combination of the two.

Tabula rasa

In his analysis of the frontier genocides waged against the Aboriginal Tasmanians, the Yuki of California, and the Herero of Namibia, Benjamin Madley (2004) identified three phases. The first is initiated by colonial invasion: economic and political frictions develop as settlers and indigenous peoples struggle for limited resources and power. In Phase Two, indigenous peoples attack settlers to reclaim lost resources and land, and this prompts a genocidal military campaign. In Phase Three, the settlers’ government incarcerates the indigenous peoples in concentration camps, where it continues genocide by attrition (through malnutrition, inadequate medical care, overwork, unsanitary conditions, and violence). All three genocides began with the assertion that the land was empty or should be made empty. Here, I consider how far the concept tabula rasa (“a map scraped clean”) applies to contemporary “re-educated” Xinjiang on China’s northwest frontier.

A Microfounded Approach to Dollarization and Government Policy

I develop a microfounded dynamic dual-currency model subject to commitment and bargaining frictions featuring endogenous acceptance of alternative media of exchange (dollarization) as a function of jointly-determined fiscal and monetary policy. Steady-state government expenditures, public debt, distortionary labor taxation, and inflation are a function of political frictions, increasing in the extent to which governments engage in rent-seeking. Dollarization occurs as a result of high inflation differentials, underlining the relationship between the acceptance of alternative media of exchange, political frictions, and government policy. An institutional reform introducing central bank independence reduces domestic inflation, and thus the threat of dollarization, in the short-run, but fails to prevent currency substitution in the long-run.

China’s economic statecraft toward East Asia

Purpose Economic statecraft is a critical aspect of China’s foreign policy and has played a vital role in China’s relations with its Asian neighbors. The Chinese economic ties with Asia are significant not only because China is the second largest economy in today’s world but also because it has an important impact on regional economic co‐operation and international supply chains. Relentless growth in military buildup and more assertive foreign policy led many pundits to focus almost exclusively on political and military aspects of the Chinese grand strategy in Asia. The purpose of this study is to re‐examine this picture by studying China’s economic statecraft in the region. Design/methodology/approach This paper will address following research questions: How does the Chinese foreign economic policy serve its political aspirations in East Asia? Why has China increasingly relied on a combination of economic pressures and incentives to achieve its foreign policy objectives? How effective is China’s economic diplomacy as a strategic weapon? What are the limitations of such policy? What challenges does Beijing face in exercising its economic power in East Asia? Findings Beijing has a comprehensive, long-term grand strategy in Asia, and economic statecraft is a major component of it. Economic statecraft is a double-edged sword. It has given the People’s Republic of China more political influence but frictions and disputes between China and its trading partners are growing as well. Even with the slower growth of the Chinese economy, China will continue to be a game changer for the region. The economic diplomacy has long been part of the foreign policy toolkit used by the People’s Republic of China and will play more important role in the years to come. Research limitations/implications Thus far, China’s expanding economic ties with many countries in the world have not generated significant spillover effects. Although China is the dominant economic partner for every country in East Asia, its “soft power” remains to be weak. With the slower growth of the Chinese economy, another looming issue is whether China is going to be able to make a shift away from a trade- and export-led growth model that brought its dramatic economic success. All these could lead China’s economic statecraft less potent. Meanwhile, it should be noted that Asian economies that once relied on the USA are reaching a turning point as China comes to the fore, a trend that may challenge the existing international order. Should this momentum continue, it could alter the balance of power between Washington and Beijing in the region. Practical implications For Beijing, economic statecraft concerns both the economic dimension of foreign policy and the strategic dimension of economic policy. Although there is a growing literature on China’s soft power and military capabilities, the study of the economic dimensions of China’s foreign policy remains underdeveloped. With rising confidence and sophistication, Beijing has deployed economic resources to achieve geopolitical aims. Originality/value Needless to say, China’s economic statecraft has already triggered heated debate in the United States, Asia and elsewhere in the international community. However, the study of the Chinese economic diplomacy has received relatively little scholarly attention in the English-speaking world. This paper will fill a gap in the analysis and literature.

Political Cycles in Bank Lending to the Government

AbstractWe study how political party turnover after German state elections affects banks’ lending to the regional government. We find that between 1992 and 2018, party turnover at the state level leads to a sharp and substantial increase in lending by local savings banks to their home-state government. This effect is accompanied by an equivalent reduction in private lending. A statistical association between political party turnover and government lending is absent for comparable cooperative banks that exhibit a similar regional organization and business model. Our results suggest that political frictions may interfere with government-owned banks’ local development objectives.

The effects of barriers to technology adoption on japanese prewar and postwar economic growth

Following the start of modern economic growth around the end of the 19th century, Japan’s economy had substantially lagged behind leading economies before World War II, but achieved rapid catch-up – the growth miracle – after the war. To explain the patterns, we build a dynamic model and examine the role of barriers to technology adoption. We find that such barriers hampered catch-up in the prewar period and explain about one-third of the postwar miracle. Taking a historical perspective, we argue that factors that acted as the barriers include low capacity to absorb technology, economic and political frictions with the outside world, and a lack of sufficient competition.

The Effect of Political Frictions on Long Term Care Insurance

We document that political frictions significantly affect both pricing and supply in the long-term care insurance (LTCI) market. Comparing insurers' requests for premium increases submitted in the same year and for the same policy to different state regulators, we find that they are 7.7% more likely to be approved and receive 4.4% more of the requested amount after an election year. Over time, regulatory pushback on premium increase requests can dampen cash flows and increase the probability of company dropout. Insurers who receive one standard deviation less of their requested increase are 7.8% more likely to leave the market.

An Analysis of Price vs. Revenue Protection: Government Subsidies in the Agriculture Industry

The agriculture industry plays a critical role in the U.S. economy, and various industry sectors depend on the output of farms. To protect and raise farmers’ income, the U.S. government offers two subsidy programs to farmers: the Price Loss Coverage (PLC) program, which pays farmers a subsidy when the market price falls below a reference price, and the Agriculture Risk Coverage (ARC) program, which is triggered when farmers’ revenue is below a threshold. Given the unique features of PLC and ARC, we develop models to analyze their impacts on consumers, farmers, and the government. Our analysis generates several insights. First, while PLC always motivates farmers to plant more acres compared to the no-subsidy case, farmers may plant fewer acres under ARC, leading to a lower crop supply. Second, despite the prevailing intuition that ARC generally dominates PLC, we show that both farmers and consumers may be better off under PLC for a large range of parameter values, even when the reference price represents the historical average market price. Third, the subsidy that increases consumer surplus results in higher government expenditure. Finally, we calibrate our model with U.S. Department of Agriculture (USDA) data and provide insights about the effects of crop and market characteristics on the relative performance of PLC and ARC. We provide guidelines to farmers for enrolling crops in the subsidy programs, and show that our guidelines are supported by farmers’ enrollment statistics. We also show that if the economic and political frictions caused by running the subsidy programs is significant, the subsidy that benefits both consumers and farmers may actually result in lower social welfare.The online appendix is available at https://doi.org/10.1287/mnsc.2017.2927 .This paper was accepted by Serguei Netessine, operations management.

Gravity and scaling laws of city to city migration.

Models of human migration provide powerful tools to forecast the flow of migrants, measure the impact of a policy, determine the cost of physical and political frictions and more. Here, we analyse the migration of individuals from and to cities in the US, finding that city to city migration follows scaling laws, so that the city size is a significant factor in determining whether, or not, an individual decides to migrate and the city size of both the origin and destination play key roles in the selection of the destination. We observe that individuals from small cities tend to migrate more frequently, tending to move to similar-sized cities, whereas individuals from large cities do not migrate so often, but when they do, they tend to move to other large cities. Building upon these findings we develop a scaling model which describes internal migration as a two-step decision process, demonstrating that it can partially explain migration fluxes based solely on city size. We then consider the impact of distance and construct a gravity-scaling model by combining the observed scaling patterns with the gravity law of migration. Results show that the scaling laws are a significant feature of human migration and that the inclusion of scaling can overcome the limits of the gravity and the radiation models of human migration.

Public Policy Against Political Frictions

Recent research has demonstrated that political distortions can increase macroeconomic volatility. The aim of this paper is to analyze a fiscal policy institution capable of reducing the influence of such distortions on politically-driven fluctuations. We introduce the distinction between mandatory and discretionary public spending in the political model of optimal fiscal policy. We show that the different legislative nature of these components of government spending leads to a divergent impact of mandatory and discretionary spending on macroeconomic volatility. Increasing the fraction of mandatory spending in total government spending reduces the politically-driven volatility of income taxes, total government spending, consumption, labor, and output. Increasing the fraction of discretionary spending has the opposite effect. Our findings are supported by empirical evidence.

Mandatory Spending, Political Polarization, and Macroeconomic Volatility

Political polarization combined with political turnover have been shown to amplify economic fluctuations (Azzimonti and Talbert, 2014). This paper analyzes a fiscal policy institution capable of reducing the volatility caused by these political frictions. We introduce the distinction between mandatory and discretionary public spending in a political model of optimal fiscal policy. We show that different legislative nature of these components of government spending leads to a divergent impact of mandatory and discretionary spending on politically-driven macroeconomic volatility. Increasing the fraction of mandatory spending in total government spending reduces the volatility; increasing the fraction of discretionary spending has the opposite effect. The presence of the legislative requirements behind the changes in mandatory public spending can explain simultaneous rise in political polarization and decline in the U.S output volatility after the 1980s.

Seeking ontological security through the rise of China: New Zealand as a small trading nation

ABSTRACTMaintaining global peace as China rises is a key strategic goal of Western liberal democracies. Compared to other western liberal democracies, New Zealand's response to the ‘rise of China’ is notable for its absence of security and political frictions and for the achievement of a series of diplomatic ‘firsts’. Can this be explained only by material concern over the national economic interest as China's role in the global economy increases or do ideational factors also underlay how New Zealand engages China? This paper employs the ontological security framework to demonstrate how New Zealand identity as a ‘small trading nation’ and ‘good international citizen’ has shaped its turn to Asia and response to the ‘rise of China'. It first analyses the origins of New Zealand's outward facing identity and resultant foreign policy positions long before China became an important aspect of New Zealand trade policy. It then shows how New Zealand seeks ontological security as a ‘small trading nation’ and ‘good international citizen’ in its relations with China and how China has responded to this type of engagement. The paper illustrates the importance of ideational factors in Western liberal democracies’ responses to the ‘rise of China’.

Konfl ik Internasional Abad ke-21? Benturan Antarnegara Demokrasi dan Masa Depan Politik Dunia

‘The clash of civilizations’ of Samuel Huntington and ‘the end of history’ of Francis Fukuyama are two grandtheories that have been widely accepted as the most dominant narratives in post- Cold War internationalrelations. Unfortunately, there have been litt le theoretical developments in today’s world to predict thefuture of international confl ict. The theory assumed that the future international confl ict will not occurbetween democracies and non-democracies as Democratic Peace Theory proposed, but between establisheddemocracies and emerging democracies. The established democracies reluctant to share their power with theemerging democracies on how to manage global order. This reluctancy will lead to political frictions andconfl icts among them. In spite of its theoretical breakthrough, this theory suff ers of logical inconsistencysince it does not distinguish between emerging democracies and emerging powers. Instead of confl ictamong democracies, this article argues that international confl icts in the 21st century will be dominatedby asimetrical confl ict between nation-states and radical movements, confl icts due to information openess,and confl ict over natural resources.

Political frictions and public policy outcomes

We study the role of political frictions in public policy outcomes. We propose a simple model of fiscal policy that combines a lack of commitment by the government, political turnover, and another political friction that can be interpreted either as political polarization or as public rent-seeking. We show that political turnover increases public debt levels, while political polarization or public rent-seeking leads to higher public spending. We evaluate the importance of different political frictions for fiscal policy outcomes using a sample of twenty developed countries. We find that the data on political instability combined with the data on public rent-seeking explain 25% of the variation in public debt levels.

Singapore. Indians in Singapore, 1819–1945: Diaspora in the colonial port city By Rajesh Rai New Delhi: Oxford University Press. Pp. xxix + 325. Tables, Glossary, Bibliography, Index.

Indians in Singapore, 1819-1945: Diaspora in the colonial port city By RAJESH RAI New Delhi: Oxford University Press. Pp. xxix + 325. Tables, Glossary, Bibliography, Index. The Indians of Singapore constitute a small but uniquely situated part of the larger mosaic of what once used to be called 'overseas Indian communities' but now come under the rubric of 'Indian diaspora'. Their history of migration and settlement goes back to the early years of the nineteenth century, but it was for the most part seen as a segment of the Indian community in the Malay Peninsula rather than as a separate and distinct component of it. Moreover, the political and social concerns of this small community settled in a port-city in Southeast Asia did not quite resonate with the interests and concerns of Indian communities elsewhere, preoccupied as they were with issues of citizenship and political representation in colonial legislatures. The Indians of Singapore and Southeast Asia more generally were thus separated from Indian communities elsewhere by both geography as well as history (and historiography). Rajesh Rai's latest book goes a long way towards bridging this gap. He has now given us the historical evolution of the Indian community in Singapore in great detail with sober and authoritative research, and his book will remain the standard text on the subject for the foreseeable future. It is an important contribution to the literature on the Indian diaspora. The British settlement of Singapore goes back to 1819, but Indian merchants and traders had been arriving in the region long before then, and joined later by sepoys and lascars. Convicts and political prisoners arrived after the middle of the nineteenth century along with workers who came under an unregulated system of indentured labour. With time, the community diversified as its numbers increased, factions developed and social and educational institutions emerged. In a chapter titled 'Diasporic formations in the inter-war years', Rai describes the social and cultural evolution of the Indian community (religion, vernacular language education, regional and subregional movements), and the impact on the Singapore Indians of political and religious tensions and frictions on the Indian subcontinent, though not to the extent of having a 'monopolistic hold on diasporic political loyalties' (p. 195). Nonetheless, in contrast to other areas where Indian immigrants settled, the Indian influence on social and political developments in Singapore was far greater. Given the physical proximity of Singapore to India, it could not have been otherwise. The persistence of caste politics and prejudices among Singaporean Indians and the presence of the sectional, South Indian 'Dravidian Movement' among them are illustrations of this. These developments and others like them had no resonance in the more remote sugar colonies across the globe. …