Equality by lot

Susan C. Stokes, a professor of political science at Yale university, is the author of a book called Mandates and Democracy: Neoliberalism by Surprise in Latin America.

I find the following excerpts from a chapter called “Explaining policy switches” generally amusing and rather illuminating about the practice of political science (I introduced some light editing to improve readability of the excerpts):

[B]oth qualitative evidence from campaigns and statistical analysis of cross-sectional data offer evidence that fear of losing elections induced politicians to hide their policy intentions.

Yet evidence of this belief structure does not adjudicate between the representative and the rent-seeking model of policy switches. Both kinds of politicians are expected to hide their true intetions to win office. The critical question is, Did they dissimulate and switch because they thought efficiency policies were in the best interest of voters or because they found efficiency policies advantageous for themselves, whether or not they would be good for voters?

Argentina in 1989 offers strong evidence that policy switchers were sometimes motivated by the belief that the economy would perform much better under efficiency-oriented than under security-oriented policies, and that voters would eventually see the shift to liberalization as beneficial. This view, repeated to me by several Menem strategists, was most fully elaborated by Roberto Dromi:

Stokes: If Menem knew in the campaign that he would pursue austerity and liberal reforms once in power, why did he not say so in the 1989 campaign?

Dromi: In this country, 10% of the labor force were government employees. We knew that if we talked of privatizing Aerolineas Argentinas, we would have the airline workers on our backs, if we talked of privatization, we would have those workers on our backs. …

Stokes: But you believed these measures [privatization, fiscal adjustment] were needed to lower inflation. If you stated your intentions, you might have won the support of the 90% of Argentine workers who didn’t work for government and who suffered from inflation.

Dromi: … We know that Argentines would disapproved of the reforms we planned, but would come to see that they were good.

Dromi anticipated a shift in the beliefs of voters regarding policy. Ex ante, before the “firm experience” of pro-market reforms, their posture was one of skepticism. Yet ex post, when they have been instructed by firm experience, Menem and some of his strategists believed voters would come to support efficiency-oriented reforms and the government that had put them in place. [… P]olicy makers perceived efficiency policies as best given constraints by powerful market actors. But it was hard to convey this strategic situation to voters, who would be likely to believe that market elites, not they, would benefit from efficiency policies. Peronists […] believed, or persuaded themselves to believe, that voters also would acknowledge the neoliberal road as having been the right one[.]

Stokes mentions, and casts doubts upon, a conflicting account by Rodolfo Diaz, another advisor of Menem. According to Diaz, the fact that Menem’s policy did not match campaign rhetoric is explained by the changing economic conditions in Argentina immediately after the elections and during the early months of his administration.

She also adds the following note:

Argentina under Menem was rife with corruption scandals, some of which ended in courts finding officials guilty. Corruption occurred in the privatization of national airlines and telephone company. Several Menem insiders were implicated, including Roberto Dromi – ironically, the source who most eloquently laid out the case that the Argentine switch was in the interest of voters. Dromi, minister of public works at the beginning of the first Menem government, was forced out of office under accusations of venality in connection with privatizaitons.

Yet the fact that some officials extracted private financial benefit from policies is not proof that the anticipation of such benefits motivated the adoption of these policies. Is it plausible that these venal officials would not have found ways to enrich themselves had economic liberalization not occurred? But, most basically, it was the president himself in this and all other countries under consideration who initially decided on the neoliberal policy course, presidents who were embarrassed by the corruption of some of their associates but who seemed to be no more corrupt than their security-oriented counterparts elsewhere.

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