Economics Archives

Why Don't People in the Developing World Wait in Line?

Filed under: Economics

Steven Levitt of Freakonomics fame writes on his blog about his recent trip to Poland, in which he cannot understand why people there continuously cut in line. He surmises that it must be some sort of economic incentive that drives such a force.

What surprised me most about the line cutting was that having lived under communism for so long, I would have thought that the Poles would have perfected standing in line. I would have predicted even greater courtesy than you find elsewhere. Perhaps, I just got the theory backwards. With so many years of shortages, the rewards for becoming an expert line cutter were much greater in Poland than in the U.S. So they did perfect standing in lines — perfection means being able to cut in front of people and feel no guilt.

I think there is a definite link between scarcity and line-cutting. When I was in Chile during the economic crisis of 1999, people would cut lines and hide stuff in their coats all the time. Blatantly being in line and having someone just jump in front of you can be incredibly annoying, and it's only exacerbated by the fact that they likely chose your line because you're a foreigner (you're less likely to do something about it). There is a notion that if you wait in line, you will never get what you need. It's every man for himself. Relying on yourself to get to the front is the best and most satisfying option.

This markedly changed by 2003. I never really saw anyone cutting in line once the depression was over.

Another factor that plays into this equation is socio-cultural. In the United States, since kindergarten, we are taught to line up in every situation. This may not be our natural instinct, though, as kids only form lines when the teacher tells them to; otherwise they just scatter around. It's an practiced instinct. As adults we do it unconsciously, and often feel the piercing eyes of others if we try to cut in line. Making lines is just a cultural norm in the United States, one that preserves order and fairness, especially in a country that so developed comparatively.

This kind of relates to Levitt's trip to Poland. When I was in Ukraine and Belarus last August, I could not for the life of me figure out why people kept cutting me in line. I don't speak any Russian so it isn't like I could ask. My friend Andy was able to explain it to me though. In Ukraine, people will form a line just about anywhere, but you can also be easily cut at just about any time. What you have to do, when entering a line, is ask the person in front of you if he is in the line. That will confirm that you, now, are in the line. Similarly, whoever gets behind you will ask you this same question. If you don't tell the person in front of you, though, there will be the dire consequence of people cutting you in line because you didn't confirm your own placement.

Perhaps it's the same way in Poland! Thoughts?

Social Bookmarking:

del.icio.us |

digg |

technorati |

stumble upon |

furl |

Free Trade In Peril

Filed under: Americas ~ Economics

Three U.S. free trade pacts are about to go down in flames.

Colombia, Peru and Panama, three friendly countries, are about to see the door slammed shut on them by a lunatic U.S. Congress, whose idiots extend to both sides of the aisles.

For Long Beach, whose Press-Telegram reported the story, billions of dollars of trade income is about to be thrown into the dumpster. They might as well take a few warehouses every day and burn them, because that illlustrates the kind of money they are going to throw away. As for the poor black kids in the Long Beach area who have nothing but drugs and gangs in front of them, and no longer any port job opportunities, well, too bad. Democrats (it's mostly them) have better things to do than provide jobs for them.

Like insult our friends.

And what good friends they are indeed. Colombia, Panama, and Peru are at the forefront of defying the leftist push of Venezuelan dictator Hugo Chavez. All three have stood up to him on multiple fronts. It's not just in public forums but in what they are doing. They are defying conventional wisdom about free markets in Latin America and engaging them. That, instead of crony porkbarrel handouts. They also have the highest pro-American sentiment in the region, which is otherwise full of anti-Americanism. Panama's is the highest in all Latin America.

What does this say about us that we would throw out our money and screw our allies? It is O-U-T-R-A-G-E-O-U-S!

And that's not the only outrage. In the absence of a free trade pact, these economies will not just sit there. They can go two ways. One is to move closer to Hugo Chavez, who is offering his 'ALBA' Latins-only free trade pact as an alternative to any trade with America. Won't that be nice to see them move to that circle instead of ours, because they cannot get free trade?

Two is that they will move closer to Red China. They won't be able to sell anything here and they won't be able to buy any American goods, so what's left is China's goods. They'll buy from China and move into China's orbit, their interests fully aligned and set in that direction.

Meanwhile, instead of being able to buy from our choice of Peruvian, Panamanian, Colombian, or Chinese goods, and pick the best prices, we will be stuck buying just from China, Made In China, that's all we'll get.

In both cases, China makes out like a bandit.

And our good and noble friends in Panama, Peru and Colombia, will be stuck on the outside, forever looking in.

This is insanity.

Social Bookmarking:

del.icio.us |

digg |

technorati |

stumble upon |

furl |

Is Dictatorship Economically Excusable?

Filed under: Economics

Tyler Cowen at Marginal Revolution answers an email from one of his readers, which asks: "Is authoritarianism excusable or permissible - for any length of time - if it is justified by a need for economic growth/reform?" Here's the meat of his response: (followed by my own, of course)

More democratic versions of those regimes would have been better. That said, I don't think absolute majoritarian democracy in Singapore, from day one, would have been better than the reign of Lee. It would have led to ethnic voting and the quick end of democracy, in destabilizing fashion. Yet now Singapore, a successful and well-established country, can and should become more democratic. When it comes to Pinochet, we should condemn part of the regime and praise some of the parts concerning economic policy. Viewing Pinochet purely as an individual moral agent, he was quite wrong to act the way he did. If you ask "would I be willing to endanger the good economic reforms by eschewing torture to enforce the rule of the regime," the answer is yes I would want to immediately end the torture and take that risk.

To start, democratization research fully shows that dictatorships are no better at creating economic growth than democracies with even the most highly bickering political classes. In fact, the latter have shown to do just a tad better. There is absolutely not reason to believe, in general, that a dictatorship can allocate resources in the most efficient way to grow the economy.

There are exceptions, though, and that's undeniable. Chile, South Korea, Japan, and other one party states or outright dictatorships experienced great economic growth because they were being led by a political elite with the desire to boom the economy. Within these supposedly one-party states are many different groups, mostly elites, who agree about the economic future of the country. Human rights issues aside, the macro view is that this kind of dictatorship will do very well.

The military regime can go either way. It can be like Pinochet's, where economic growth occurred and people got thrown out of planes, or they can just totally screw things up all around. In fact, there is also the honorable military regime, such as in Mauritania, that truly commits itself to a short timetable of existence and uses that time to build the political civil society necessary for a functioning democracy.

Looking away from just economic reasons alone, dictatorships can have attributes that are desirable in the short-term. Absolute control can suppress ethnic bloodletting or socialist revolution as reforms go into effect. And while economic growth itself has been shown not to lead to democracy, a mid-range GDP per capita somewhere above $6000 is the point at which no democracy has ever collapsed. So if one of these particular dictatorships can be benevolent enough while preventing terrible atrocities, people will eventually be economically well off enough that they won't try to kill each other anymore.

The very definition of dictatorships, in its absoluteness, makes it very hard to trust that the regimes will act in this benevolent manner. So democracy in the general sense is almost always preferred to dictatorship. If there is a very special reason why a transitional dictatorship is necessary, however, there better be some very good way to know that it won't be just as bad.

What one has to keep in mind is that everyday people of most traditional societies are not so concerned with vast economic development and so would not be particularly concerned with it, especially if it means so much torture and death. They have tended to retain more of their humanity in this cultural sense. And if we look at a place like Rwanda, where an entire ethnic group was nearly wiped out, it is mostly at the behest of the elites who command the campaign of violence and propaganda. In some cases, there is a huge economic benefit to these elites if instability and even genocide occurs. This is why, in the end, I'm going to agree with Cowen that in general dictatorship cannot be economically excused. In fact, it should be generally distrusted.

« Close It

Social Bookmarking:

del.icio.us |

digg |

technorati |

stumble upon |

furl |