Urban Bias on Steroids: The Case of Thailand

This is from the Economist:

The National Village Community Fund, which has allocated 500,000 baht each to almost 80,000 villages for rural projects, is now administered by the ministry of interior. The state’s Special Financial Institutions, which provide rural credit, are now regulated by the central bank, having previously been the playthings of provincial politicians. These days, if you wait for money from Bangkok, “you’ll wait forever,” says Mr Suradech.

His complaint is confirmed by a startling calculation. The World Bank reckons that over 70% of Thailand’s public expenditure in 2010 benefited Greater Bangkok, home to 17% of the country’s population. In no other economy with a comparable level of income is government spending as skewed, say the bank’s economists.

Rather than lift the shopping power of the rural masses, the junta has aimed to boost spending by tourists and urbanites. It has cut taxes markedly for the relatively few businesses and people that pay them. It has also succeeded in doubling the number of visitors from China to 10m a year.

Remember the red shirts and yellow shirts and how they managed to cripple Bangkok?

H/T Tyler Cowen.

Tyler Cowen on the Contours of Partisanship in American Politics

Tyler Cowen has an interesting post on the contours of partisan politics in America. In the post he argues that at the state-level Republican politics and governance is superior to the Democratic variety:

This superior performance stems from at least two factors.  First, Republican delusions often matter less at the state and local level, and furthermore what the core Republican status groups want from state and local government is actually pretty conducive to decent outcomes.  The Democrats in contrast keep on doling out favors and goodies to their multitude of interest groups, and that often harms outcomes.  The Democrats find it harder to “get tough,” even when that is what is called for, and they have less of a values program to cohere around, for better or worse.

Second, the states with a lot of Democrats are probably on average harder to govern well (with some notable Southern exceptions).  That may excuse the quality of Democratic leadership to some degree, but it is not an entirely favorable truth for the broader Democratic ethos. Republicans, of course, recognize this reality.  Even a lot of independent voters realize they might prefer local Republican governance, and so in the current equilibrium a strong majority of governors, state legislatures, and the like are Republican.

Thomas Pepinsky looked under the hood of this argument and found this:

Those high functioning states (he cites this report) are North Dakota, Wyoming, Nebraska, Utah, and Iowa.

It is not obvious to me why Republicans would not look to the entire map of places that the GOP controls state government.

Maybe one clue is that those five states are among the whitest states in the country.

As an exercise, let’s ponder what “They think the rest of America should be much more like those places” means.

Cowen also has an interesting theory of why expats foreigners tend to lean Democratic:

It is easier for intelligent foreigners to buy more heavily into the Democratic stories. They feel more comfortable with the associated status relations, and furthermore foreigners are less likely to be connected to American state and local government, so they don’t have much sense of how the Republicans actually are more sensible in many circumstances.any circumstances.

I don’t know what to make of this. I’ve never lived in a fully Republican controlled state. All I know is that Republican governors and legislatures have a knack for cutting taxes at the expense of essential public goods — like schools in Kansas or drinkable water in Michigan; or refusing to accept federal dollars to finance healthcare for their poor voters in the name of ideological purity. I also know that for all their talk of ideological purity when it comes to social spending, Republicans’ preference for the size of the social safety net is conditional on the proportion of the population that is of European descent.

This is not to say that Republican elites are evil or anything. They are simply self-interested. Instead, it speaks to the awkwardness of the Republican coalition.

In Cowen’s language, in the current historical moment I see Democrats as a coalition that peddles status and some goodies to boot. Republican elites, on the other hand, traffic almost exclusively in status, while opting for lower taxes and fewer regulations for elites. This may work during boom times. But in tough economic times a shared status (codified by say, race) might not be enough to convince the working poor that they are natural political allies with either anti-tax business owners or the editors of the National Review.

And if we are honest, it doesn’t help that we’ve just had 7+ years under a president from a historically low status group in the American context.

Enter Donald John Trump.

Introducing the Marginal Revolution University

Alex Tabarrok and Tyler Cowen, of Marginal Revolution, have teamed up to produce MRUniversity, an online university that will be offering courses to the general public.

[youtube.com/watch?feature=player_embedded&v=qlBnXNAfWUE]

 

Their first course on development economics is already live. You can access it here.