Skip to main content

Why do centre right parties win elections?

The labour party is seemingly about to appoint a leader, Jeremy Corbyn, who almost everyone considers unelectable as prime minister. The apparent 'problem' with Mr Corbyn is that he is too left wing. But, according to simple political choice theory this should be an asset rather than a problem. So, where is the catch?
      Let us look first at the basic theory. To win an election a candidate (or party) needs majority support. Now, we all know that wealth is highly asymmetrically distributed - the top 1% own most of our wealth, the top 10% own even more, and so on. The flip side of this asymmetry is that the poorest 50% are a relatively homogeneous bunch that should, in principle, easily be able to gang up on the rich. To be a more specific, they could vote for redistribution of wealth from the rich to the poor and the rich would be powerless to do anything about it.
       In some countries the theory seems to work pretty well. Both Vladimir Putin, in Russia, and Cristina Fernandez de Kirchner, in Argentina, have, for example, done a pretty good job of ruining their respective economies - inflation is rampant, growth low, international relations shattered, markets far from open, and so on. Yet both Putin and Fernandez de Kirchner are hugely popular. There popularity comes from keeping enough poor people, like pensioners, happy.
        Overall, though, the theory that left is best seems woefully wide of the mark. Centre right parties dominate in Europe and most Western countries. (And the Democrats in the US are surely centre right relative to the norm elsewhere.) So, where does the theory go wrong?
      We can all agree that being poor is undesirable. But what is the fix for that? One option is to redistribute from rich to the poor and essentially equalise things by making the rich poorer. Another option is to give opportunities for the poor to become rich. In most countries the second option seems more appealing. So, the fact that 50% of people are poor does not stand for much because those same people aspire (or aspired) to be rich. They want a party that will back them in their quest to move up in the world, not one that will give them more cash now. 
        Social mobility, therefore, makes it as if 50% of the population are rich because at least 50% of the population are voting as if they were rich. This turns the tables in favour of centre right parties. But, only if enough people believe in social mobility. In Russia and Argentina they presumably don't, and who came blame them. In the UK there is a much stronger belief that anyone can succeed if they try hard enough. Which is why the Labour party would be shouting themselves in the foot big-time by appointing Jeremy Corbyn.   

Comments

Post a Comment

Popular posts from this blog

Revealed preference, WARP, SARP and GARP

The basic idea behind revealed preference is incredibly simple: we try to infer something useful about a person's preferences by observing the choices they make. The topic, however, confuses many a student and academic alike, particularly when we get on to WARP, SARP and GARP. So, let us see if we can make some sense of it all.           In trying to explain revealed preference I want to draw on a  study  by James Andreoni and John Miller published in Econometrica . They look at people's willingness to share money with another person. Specifically subjects were given questions like:  Q1. Divide 60 tokens: Hold _____ at $1 each and Pass _____ at $1 each.  In this case there were 60 tokens to split and each token was worth $1. So, for example, if they held 40 tokens and passed 20 then they would get $40 and the other person $20. Consider another question: Q2. Divide 40 tokens: Hold _____ at $1 each and Pass ______ at $3 each. In this case each token given to th
Post a Comment
Read more

Nash bargaining solution

Following the tragic death of John Nash in May I thought it would be good to explain some of his main contributions to game theory. Where better to start than the Nash bargaining solution. This is surely one of the most beautiful results in game theory and was completely unprecedented. All the more remarkable that Nash came up with the idea at the start of his graduate studies!          The Nash solution is a 'solution' to a two-person bargaining problem . To illustrate, suppose we have Adam and Beth bargaining over how to split some surplus. If they fail to reach agreement they get payoffs €a and €b respectively. The pair (a, b) is called the disagreement point . If they agree then they can achieve any pair of payoffs within some set F of feasible payoff points . I'll give some examples later. For the problem to be interesting we need there to be some point (A, B) in F such that A > a and B > b. In other words Adam and Beth should be able to gain from agreeing.
Post a Comment
Read more

Some estimates of price elasticity of demand

In the  textbook on Microeconomics and Behaviour with Bob Frank we have some tables giving examples of price, income and cross-price elasticities of demand. Given that most of the references are from the 70's I'm working on an update for the forthcoming 3rd edition. So, here is a brief overview of where the numbers come from for the table on price elasticity of demand. Suggestions for other good sources much appreciated. Before we get into the numbers - the disclaimer. Price elasticities are tricky things to tie down. Suppose you want the price elasticity of demand for cars. This elasticity is likely to be different for rich or poor people, people living in the city or the countryside, people in France or Germany etc.etc. You then have to think if you want the elasticity for buying a car or using a car (which includes petrol, insurance and so on). So, there is no such thing as the price elasticity of demand for cars. Moreover, the estimated price elasticity will depend o
Post a Comment
Read more