A Rising Power in Decline?

On October 19th, China announced its weakest quarterly growth rate since the financial crisis: 6.9%. For the past few years, China’s economic slowdown has been making headlines and raising questions about what role China will play in the global economy when it shifts away from being an export economy. Will China still become the new “economic superpower?” If so, what does that even mean?

China’s “slowdown” is relative, and its growth rate is still consistently two to three times that of the United States. According to a Pew Research Center survey, most people worldwide believe that China either will replace or has already replaced the United States as the world’s economic superpower. Indeed, America and China are already roughly tied in terms of their shares of world GDP, the US is at 16.14% while China is at 16.32%. Estimates as to when China may surpass the US in terms of GDP vary and are frequently revised, but one need not look into the future to find examples of how China conducts itself like a superpower.

China’s steadily decreasing domestic demand for commodities has led to a global drop in commodity prices. Negative effects of this are exacerbated in regions like South America and Africa, where China has invested heavily for the opportunity to access cheap minerals and agricultural products. Critics say that Chinese investment has incentivized many developing nations to specialize in commodities so they can meet China’s demand, and some developing countries have done this at the expense of diversifying their economies to protect themselves from commodity price drops like this one.

China bankrolls massive infrastructure projects worldwide to enable it to cheaply transport commodities across continents, further influencing how developing economies are structured. Its downturn has not stopped this. This year, for example, construction began in South America on a transcontinental rail line across the Amazon and, as recently as October 16, production started on an $11B port in Tanzania that some expect will be East Africa’s largest. China’s push to generate support for its Asian Infrastructure Investment Bank has also not lost momentum as it builds ties abroad.

However, this summer’s flailing stock market and the Chinese government’s ham-handed interventions to try and control that market provide us with an example of how China may fall short as a traditional economic superpower. China’s reactions to fluctuations in the stock market ranged from banning selling, requiring buying, and devaluing the yuan to its lowest rate in years. Such economic tinkering is characteristic of the Chinese government, and does not amuse investors. For this reason, it is unlikely that the yuan will soon be as trustworthy a reserve currency as the dollar, regardless of the size of either economy.

One thing is clear; if (when) China’s economy outstrips the United States’, it will be a very different sort of economic superpower. If past behavior is any indication, it is likely that China will focus its diplomatic influence on trade advantage, and that it will micromanage its currency in a way that diminishes demand for it and empowers other currencies. Whether it will be able to achieve its goal of building a global import network as its growth declines will depend on how great this slowdown proves to be.

Gentrification and Concentrated Homelessness

If you look at downtown Los Angeles today, you wouldn’t imagine that there was a housing crash seven years ago. Luxury condominium development in downtown is bursting at the seams, as young professionals flood previously low-income districts in their efforts to minimize the crushing commute along the I-10 freeway. Many great writers have discussed the rising tide of gentrification and its impact on low income and minority communities. But its impact on homeless populations has been severe: cities like Los Angeles have begun to shift homeless encampments — horrifyingly, under the guise of municipal ‘trash cleanup’ laws.

Earlier this year, Los Angeles passed two city ordinances instructing police to remove and impound personal belongings of the city’s homeless, including but not limited to mattresses and tents. The laws also make it easier for police to give tickets to people who try to collect their possessions that haven’t been thrown away. Skid Row, the nation’s largest concentration of homeless, has been specifically targeted: in June, the city embarked on a $66,000 cleanup effort that scattered the homeless population, a test run of sorts for LA’s newly adopted policies. Compound this with LA’s affordable housing crisis, and the effect is obvious: the new policies sweep homeless populations east, away from police enforcement of the new ordinances.

It’s no coincidence that these thinly veiled homeless sweeps come on the heels of major commercial housing development in LA’s growing downtown area. Below is a map of LA’s gentrification by district; as we can see, Skid Row is right in the middle of major downtown gentrification efforts.

The racial overtones in LA’s homeless sweeps have become evident with the city’s new policies. 39% of Skid Row’s population is African-American, and 25% is Hispanic. In the last few years, neighborhoods surrounding downtown have seen an influx of young, white professionals, which has coincided with soaring real estate prices. For housing developers and owners alike, homeless encampments in plain sight of luxury high rise condos represent a negative externality that lowers housing prices.

The city of Los Angeles, in a bid to remove obstacles from local economic growth, has adopted a set of policies that are both institutionally racist and target the city’s worst-off populations. As we think about the pros and cons of gentrification on low-income minority communities, we must also consider policies like those adopted by the city of Los Angeles, which literally sweep homeless encampments out of the way under the guise of municipal trash cleanup ordinances.

On Ben Carson and Islamophobia

Ben Carson’s recent comments regarding the ineligibility of Muslim-Americans to run for the Presidency are quite troubling. At the very least, such a proposition is unconstitutional and unlikely to pass muster, namely because of the explicit provisions enumerated in Article VI and the First Amendment of the Constitution. Yet given Carson’s history of outlandish statements, one could argue this latest round of remarks is not entirely out of character.

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Research Round-up: Recidivism

Academics, policymakers, and the general public have paid an increasing attention to criminal justice reform. In July, President Obama made the first ever Presidential visit to a federal penitentiary, underscoring criminal justice as a critical policy focus. While generally there exists a shared agreement on the need for reforms, agreement on policy specifics and initiatives is harder to find. Bridging the gap between disparate perspectives on criminal justice reform requires, in part, better information and data concerning the underlying factors contributing to criminal behavior. Continue reading

Quick Reaction: Boehner’s Resignation

With the recent announcement this past Friday that Speaker of the House John Boehner will resign from his position effective the end of October, many lawmakers, pundits, analysts, and spectators on both sides of the aisle wonder what implications his departure will have on what is widely considered one of the most polarized Congresses ever.

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Interview with Professor Tana Johnson

Several of our posts this year have covered talks by visiting academic and practitioners, but Sanford has impressive thinkers within our own community too! I recently sat down with Professor Tana Johnson to discuss her new book Organizational Progeny: Why Governments are Losing Control over the Proliferating Structures of Global Governance.

Professor Johnson’s motivation for Organizational Progeny arose from an interest in the concept of delegation, which is at the center of not only politics but also what we do in life. Delegation’s role in politics is obvious – for example, individual citizens cannot possibly be informed and involved in every policy decision. In the U.S. for example, citizens send representatives to DC to make choices on their behalf. In a similar way, the U.S. government often delegates policy decisions to the UN or other international intergovernmental organizations (IGOs). We know from our own relationships with family members and co-workers that sometimes the delegation process breaks down and dividing responsibility does not work effectively. And yet we often seem to be surprised when the same problems arise with government officials and international organizations.

When Professor Johnson started researching delegation in graduate school, she thought that a principal-agent model might hold the key for solving delegation problems.  That model suggests that principals (e.g., countries) would create and delegate to agents (e.g., IGOs) that have been incentivized to do what the principal wants. Unfortunately, the world is really complicated (as many of us have learned as policy students), and models don’t always capture the whole picture we need for effective policymaking. Exactly how do we design institutions so that incentives are aligned – and what happens if we don’t?

As she delved farther, Professor Johnson realized that principal-agent models aren’t very good at capturing something that’s been going on in international politics for decades.  Right after World War II, governments created and delegated to the United Nations and several other big IGOs. But since then, these IGOs have been creating and delegating to offshoots, or “progeny,” of their own. For example, the Intergovernmental Panel on Climate Change (IPCC) is an offshoot of the United Nations Environment Program (UNEP), which is an offshoot of the UN. The international bureaucracy has become a complex family tree, with interactions among multiple generations. The newer generations, which aren’t created by governments alone, also are less likely to be designed with features (such as vetoes or control over funding) that governments traditionally have used to manage delegation relationships.

In other words, governments have a hard time controlling the international bureaucracy, for at least two reasons. First, the number of IGOs keeps increasing, so governments have to divide their time and oversight over many more organizations. Second, organizations that are progeny of other IGOs have been designed differently, without some of the most conventional mechanisms that governments like to use to exert control.  With case studies and an original dataset, Organizational Progeny gives a sense of the prevalence of IGO offshoots and the differences in how those offshoots look and operate.  Professor Johnson’s research indicates that progeny are about 65% of the total IGO population, and progeny can be found in nearly every policy area.

I asked Professor Johnson whether there was an optimal level of autonomy for IGOs. She explained that having some autonomy is useful for enabling agencies to make their own decisions, provide honest recommendations, and develop expertise. However, having a lot of autonomy can strain the relationship between countries and IGOs, sometimes even reducing the organization’s effectiveness. That’s one of the reasons why governments often want to have “ex post” controls, such as approval over organizational budgets. That way, an IGO could have some autonomy to try various things, but if governments don’t like the results they can punish and rein in the organization, for instance by withholding funding.

Professor Johnson also said the “best” level of autonomy can also vary by policy area. Very scientific areas often require deeper levels of expertise and can benefit from a more hands-off approach from governments. The IPCC, for example, is an organization that defies what some of the most powerful states would want. Its autonomy is important because it works closely with the scientific community, which does not want to be or to appear co-opted by government interests. Because the IPCC has a lot of expertise but little authority to create or implement policies, one of its most important roles is sharing information with citizens. In this way, the organization can shape policy by building consensus around the science of climate change.

At the end of our discussion, Professor Johnson offered some research tips for students. First, she encouraged us to consider using both quantitative analyses and case studies.  In Organizational Progeny, these two methods work together to illustrate the full picture. Quantitative analyses were useful for demonstrating that a pattern existed across many organizations, and case studies were useful for showing the history of specific important organizations. Second, even though she put together an original dataset for the book, she warned that this is a difficult and time-consuming process. Before following a similar path, grad students should do a lot of legwork to see whether any existing datasets would suffice. It’s good to know that sometimes if you email individual researchers and ask nicely, they might let you use data that they haven’t made publicly available yet.  Third, Professor Johnson advised that if you do end up collecting your own data, first focus on a sample instead of immediately trying to tackle the overall population. For example, if you use random sampling, then you can feel reassured that the sample is representative of the overall population, even if time or resource constraints prevent you from coding every piece of the overall population. And if those constraints never become a problem, random sampling is still a good idea: you just keep expanding the sample until it eventually captures the entire population.

To learn more about the ideas in Organizational Progeny or read sample chapters, visit the book’s website at http://www.organizationalprogeny.com/.