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161. Firm Profits and Government Activity: An Empirical Investigation

Author:
Petar Jolakoski, Branimir Jovanovic, Joana Madjoska, Viktor Stojkoski, and Dragan Tevdovski
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
If firm profits rise to a level far above than what would have been earned in a competitive economy, this might give the firms market power, which might in turn influence the activity of the government. In this paper, we perform a detailed empirical study on the potential effects of firm profits and markups on government size and effectiveness. Using data on 30 European countries for a period of 17 years and an instrumental variables approach, we find that there exists a robust relationship between firm gains and the activity of the state, in the sense that higher firm profits reduce government size and effectiveness. Even in a group of developed countries, such as the European countries, firm power may affect state activity.
Topic:
Development, Economics, Government, International Political Economy, and Profit
Political Geography:
Europe and Global Focus

162. How Misaligned Incentives Hinder Foster Care Adoption

Author:
Isabella M. Pesavento
Publication Date:
01-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Adoption, particularly adoption out of foster care, has not been well studied within the field of economics. Researchers may avoid this topic because the adoption market greatly deviates from a typical market, and the system and data collection are highly fragmented, with relatively little federal coordination. Rubin et al. (2007) and Thornberry et al. (1999) show that instability in foster care placements produces negative welfare outcomes, and Hansen (2006), Barth et al. (2006), and Zill (2011) demonstrate that adoption out of foster care is socially and financially beneficial. Yet, children waiting to be adopted out of foster care are in excess supply, which has been exacerbated in recent years. I hypothesize that this is, in part, due to misaligned incentives of government officials and the contracted foster care agencies. I show that earnings are prioritized over ensuring permanent child placement, which hinders the potential for adoption, and government oversight fails to correct such iniquities because of career interests.
Topic:
Economics, Government, Markets, Children, Incentives, Foster Care, and Adoption
Political Geography:
North America and United States of America

163. A Reckoning Looms for America’s 50‐​Year Financial Surveillance System

Author:
Michael J. Casey
Publication Date:
06-2021
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
For all the upheaval of 2020, it’s perhaps not surprising that the 50‐​year anniversary of a major piece of financial legislation came and went with little fanfare. But the 1970 U.S. Bank Secrecy Act (BSA) deserves much scrutiny.1 In mandating that financial institutions maintain customer identity records and report illicit activity to government agencies, the BSA was a landmark statute by any measure. It paved the way to an ever‐​expanding system of international surveillance that’s a cornerstone of U.S. economic power.
Topic:
Economics, Government, Finance, and Surveillance
Political Geography:
North America and United States of America

164. Questioning Industrial Policy: Why Government Manufacturing Plans Are Ineffective and Unnecessary

Author:
Scott Lincicome and Huan Zhu
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
In the wake of the COVID-19 pandemic and rising U.S.-China tensions, American policymakers have again embraced “industrial policy.” Both President Biden and his predecessor, as well as legislators from both parties, have advocated a range of federal support for American manufacturers to fix perceived weaknesses in the U.S. economy and to counter China’s growing economic clout. These and other industrial policy advocates, however, routinely leave unanswered important questions about U.S. industrial policy’s efficacy and necessity: What is “Industrial Policy”? Advocates of “industrial policy” often fail to define the term, thus permitting them to ignore past failures and embrace false successes while preventing a legitimate assessment of industrial policies’ costs and benefits. Yet U.S. industrial policy’s history of debate and implementation establishes several requisite elements – elements that reveal most “industrial policy successes” not to be “industrial policy” at all. What are the common obstacles to effective U.S. industrial policy? Several obstacles have prevented U.S. industrial policies from generating better outcomes than the market. This includes legislators’ and bureaucrats’ inability to “pick winners” and efficiently allocate public resources (Hayek’s “Knowledge Problem”); factors inherent in the U.S. political system (Public Choice Theory); lack of discipline regarding scope, duration, and budgetary costs; interaction with other government policies that distort the market at issue; and substantial unseen costs. What “problem” will industrial policy solve? The most common problems purportedly solved by industrial policy proposals are less serious than advocates claim or unfixable via industrial policy. This includes allegations of widespread U.S. “deindustrialization” and a broader decline in American innovation; the disappearance of “good jobs”; the erosion of middle‐​class living standards; and the destruction of American communities. Do other countries’ industrial policies demand U.S. industrial policy? The experiences of other countries generally cannot justify U.S. industrial policy because countries have different economic and political systems. Regardless, industrial policy successes abroad – for example, in Japan, Korea and Taiwan – are exaggerated. Also, China’s economic growth and industrial policies do not justify similar U.S. policies, considering the market‐​based reasons for China’s rise, the Chinese policies’ immense costs, and the systemic challenges that could derail China’s future growth and geopolitical influence. These answers argue strongly against a new U.S. embrace of industrial policy. The United States undoubtedly faces economic and geopolitical challenges, including ones related to China, but the solution lies not in copying China’s top‐​down economic planning. Reality, in fact, argues much the opposite.
Topic:
Government, Industrial Policy, Manufacturing, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

165. China: Rise or Demise?

Author:
John Mueller
Publication Date:
05-2021
Content Type:
Commentary and Analysis
Institution:
The Cato Institute
Abstract:
China, even if it rises, does not present much of a security threat to the United States. Policymakers increasingly view China’s rapidly growing wealth as a threat. China currently ranks second, or perhaps even first, in the world in gross domestic product (although 78th in per capita GDP), and the fear is that China will acquire military prowess commensurate with its wealth and feel impelled to carry out undesirable military adventures. However, even if it continues to rise, China does not present much of a security threat to the United States. China does not harbor Hitler‐​style ambitions of extensive conquest, and the Chinese government depends on the world economy for development and the consequent acquiescence of the Chinese people. Armed conflict would be extremely—even overwhelmingly—costly to the country and, in particular, to the regime in charge. Indeed, there is a danger of making China into a threat by treating it as such and by engaging in so‐​called balancing efforts against it. Rather than rising to anything that could be conceived to be “dominance,” China could decline into substantial economic stagnation. It faces many problems, including endemic (and perhaps intractable) corruption, environmental devastation, slowing growth, a rapidly aging population, enormous overproduction, increasing debt, and restive minorities in its west and in Hong Kong. At a time when it should be liberalizing its economy, Xi Jinping’s China increasingly restricts speech and privileges control by the antiquated and kleptocratic Communist Party over economic growth. And entrenched elites are well placed to block reform. That said, China’s standard of living is now the highest in its history, and it’s very easy to envision conditions that are a great deal worse than life under a stable, if increasingly authoritarian, kleptocracy. As a result, the Chinese people may be willing to ride with, and ride out, economic stagnation should that come about—although this might be accompanied by increasing dismay and disgruntlement. In either case—rise or demise—there is little the United States or other countries can or should do to affect China’s economically foolish authoritarian drive except to issue declarations of disapproval and to deal more warily. As former ambassador Chas Freeman puts it, “There is no military answer to a grand strategy built on a non‐​violent expansion of commerce and navigation.” And Chinese leaders have plenty of problems to consume their attention. They scarcely need war or foreign military adventurism to enhance the mix. The problem is not so much that China is a threat but that it is deeply insecure. Policies of threat, balance, sanction, boycott, and critique are more likely to reinforce that condition than change it. The alternative is to wait, and to profit from China’s economic size to the degree possible, until someday China feels secure enough to reform itself.
Topic:
Government, GDP, Geopolitics, and Economic Growth
Political Geography:
China, Asia, and United States of America

166. Chinese-Australians in the Australian Public Service

Author:
Yang Jiang
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Lowy Institute for International Policy
Abstract:
Almost every governmental policy decision made today has a China angle, and building understanding of China has become more pressing for Australian policymaking than ever. Despite the urgent demand within the Australian public service for China expertise and language skills, the existing skills of many Chinese-Australians are being overlooked. Australia has a significant, diverse, and growing population of Chinese-Australians, but they are underrepresented and underutilised in the public service. A better harnessing of the skills and knowledge of this community — including via improved recruitment processes, better use of data, skills-matching, and reviewing and clarifying security clearance processes and requirements — would have substantial benefits for Australian policymaking in one of its most important bilateral relationships.
Topic:
Foreign Policy, Government, Bilateral Relations, and Public Service
Political Geography:
China, Asia, and Australia

167. Digital government services. Building for peak demand.

Author:
Tom Uren
Publication Date:
07-2021
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
Early in the Covid-19 pandemic, the myGov website was overwhelmed by a demand surge from citizens seeking to rapidly access digital services. In 2016, the online Census (eCensus) suffered a series of relatively small distributed denial-of-service (DDoS) attacks. While they didn’t overwhelm the platform, the attacks ultimately resulted in the eCensus being taken offline. What do these two examples have in common, and what lessons should we learn to ensure more robust digital government services? To answer those questions, this paper will examine five points: The nature of the DDoS attacks The CIA (confidentiality, integrity and availability) triad model for digital security How to predict demand How to respond to unpredictable demand The structure of reliable data systems
Topic:
Government, National Security, Science and Technology, Cybersecurity, and Digital Policy
Political Geography:
Global Focus

168. The cost of Defence ASPI defence budget brief 2021–2022

Author:
Marcus Hellyer
Publication Date:
05-2021
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
Once again, the Australian Government has delivered exactly the funding it promised in the 2016 Defence White Paper (DWP) and subsequent 2020 Defence Strategic Update (DSU). If the government was willing to recommit to the DWP’s funding line in the depths of the Covid-19 recession, it was very unlikely to walk away from it now that the economy is recovering faster than expected. This year, the consolidated defence funding line (including both the Department of Defence and the Australian Signals Directorate) is $44.6 billion, which is real growth of 4.1%. It’s the ninth straight year of real growth, and, according to the DSU’s funding model, that will continue until the end of the decade.
Topic:
Defense Policy, Government, National Security, and Military Spending
Political Geography:
Australia

169. Cracking the missile matrix

Author:
Marcus Hellyer
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Australian Strategic Policy Institute (ASPI)
Abstract:
Last year’s war between Azerbaijan and Armenia was short, sharp and decisive. By effectively employing precision guided weapons, the former rapidly forced the latter to capitulate and accede to its political demands. The conflict confirmed the centrality of guided weapons to modern war fighting and showed how small states can now master the technologies and techniques needed to use them. Last year also witnessed the onset of the Covid-19 pandemic and the supply-chain crisis it triggered. That provoked much soul-searching from governments and companies about how to manage the risks presented by modern just-in-time supply chains that span the globe. When we take those two events together, it’s clear that the ADF will not only need many kinds of guided weapons across the spectrum of conflict, but also need to guarantee their availability in times of crisis when supply chains will be under pressure and threat. That will be difficult, since Australia currently manufactures virtually no guided weapons. The Australian Government is also aware of both needs. Its 2020 Defence Strategic Update plans on investing tens of billions of dollars in guided weapons over the next two decades. It also directs Defence to explore the potential for new sovereign guided weapons production capability to mitigate supply risks. It appears that exploration has determined that the potential can be turned into reality: on 31 March, the government announced that it was ‘accelerating’ the development of a sovereign guided weapon manufacturing capability. This report examines two fundamental questions. First, would the manufacture of guided weapons in Australia enhance ADF capability and provide greater self-reliance? Second, is it viable to manufacture guided weapons in Australia? The answer to both questions is ‘yes’. The report also presents some key considerations about how the industry should be established.
Topic:
Security, Government, Weapons, Investment, Defense Industry, and Supply Chains
Political Geography:
Australia

170. The Government Technology Silver Bullet: Hiring In-House Technical Talent

Author:
Mark Lerner
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
We have seen software failures across every layer of government over the course of this pandemic. State governments have had significant issues with their unemployment insurance websites. Local governments have had outages and troubles with vaccine distribution services. Software systems at the Federal level have experienced significant security breaches. Trust in government is at “near-record lows,” in no small part because modern public services continually fail to meet people’s needs. The past year has shown that our public services continue to fail in the traditional ways: they cost too much, take too long to deliver, have a subpar quality, and regularly face security breaches. We have not made significant enough progress in improving government technology to prevent these troubles, let alone to provide effective, modern digital tools and technologies. Government services have largely not kept up with the raised expectations of the digital era, leaving many people without access to critical services they need. And yet, there is incredible momentum growing in the government technology space. As I mentioned in a previous blog post, we are seeing a wave of technologists from the private sector expressing deep interest in working in the government, with many actually coming into government for the first time. Anecdotally, I’ve personally heard from all manner of technologists—from fresh graduates to high-level executives— looking to work in the public sector for the first time. Thousands of technologists are applying for jobs at the U.S. Digital Service, and thousands more are signing up to volunteer with the U.S. Digital Response. These people are deciding to work and make public services better after years of becoming more aware of the ways in which our public infrastructure is failing our neighbors in most need. The federal government is also allocating more money towards these problems, in recognition of their severity. The American Rescue Plan gave $200M to the U.S. Digital Service, and $1B to the Technology Modernization Fund. The Biden-Harris Administration’s FY2022 budget request calls for even more money for tech modernization programs. These massive investments show that Congress and the Administration take these challenges seriously, and are looking for ways to address this years-long problem. If we want to have a lasting impact on the way that our country serves its people, we need to make the most of this momentum to address the root causes beneath these repeated failures. We need to focus our efforts onto the long-term work of addressing the systemic problems that cause our most critical services to fail when they are most needed. I believe that hiring more in-house technical talent might be a silver bullet to addressing the federal government’s technology problems. In this report, I hope to convince you that we need to make hiring in-house technical talent our number one technology priority in building better digital services.
Topic:
Government, Science and Technology, COVID-19, and Information Technology
Political Geography:
Global Focus and United States of America

171. Economy First: Assigning Ayman Ben Abdel Rahman to form the new Algerian government

Author:
FARAS
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
Finance Minister Ayman Ben Abdel Rahman (60 years old) has been assigned to form the new Algerian government, as he is a technocrat who is not affiliated with any political or ideological currents. This is in addition to his economic and financial expertise, which will be critical in handling the internal challenges, particularly with respect to dealing with the Hirak movement, tackling economic crisis and facing security threats. On June 30, 2021, Algerian President Abdelmadjid Tebboune issued a decree appointing Ayman Ben Abdel Rahman as Prime Minister to succeed Djerad, who submitted his resignation on June 24, following the announcement of the final results of the latest parliamentary elections. Abdel Rahman was assigned to consult with the winning political parties to form a new government as soon as possible. Abdel Rahman was assigned as the country's Prime Minister, in accordance with the provisions of the 5th and 7th paragraphs of Article "91" of the Algerian constitution, which grants the Algerian president the authority to assign a person to form a national government to manage the country's affairs.
Topic:
Government, Finance, Economy, Ideology, and Hirak Movement
Political Geography:
Algeria and North Africa

172. The Second Government Benabderrahmane’s prospects for stabilizing Algeria

Author:
FARAS
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
The formation of the new Algerian government led by Ayman Benabderrahmane, former minister of finance, was announced on July 7, following his consultations with President Abdelmadjid Tebboune and the political parties which won the recent parliamentary elections. The new cabinet is made up of 34 ministers, including 17 new ministers, who joined those who retained their positions in the former government.
Topic:
Government, Elections, Political stability, Political Parties, and Muslim Brotherhood
Political Geography:
Algeria and North Africa

173. Ousting Ennahda: Will Kais Saied's decisions help solve the crisis in Tunisia?

Author:
FARAS
Publication Date:
07-2021
Content Type:
Policy Brief
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
On the Tunisia’s 64th Republic Day -Sunday, July 25, 2021- the so-called 25 July Movement called for massive protests all over the country. Consequently, many responded and started protesting in Bardo Square, near the parliament, in the capital Tunis. The protests soon spread across other governorates, such as Sousse, the coastal governorate, Sfax (in the south), and El-Kef (in the northwest). In response, President Kais Saied announced, on July 26, 2021, the dismissal of Prime Minister Hichem Mechichi and his cabinet, which consisted of 25 ministries. Saied decided to take charge of executive power until he chooses another politician to form a new government. He further suspended the current parliament and lifted the parliamentary immunity of all its members. Besides, he decided to rule by issuing decrees instead of the laws, which the parliament was supposed to pass. These decisions were announced after the emergency meeting that was chaired by president Saied, and attended by military leaders and security officials on the day the protests and rallies broke out. The protesters demanded reforming the economy, combatting corruption and terrorism, dismissing the Mechichi cabinet, and dissolving the parliament.
Topic:
Economics, Government, Reform, Crisis Management, and Ennahda Party
Political Geography:
North Africa and Tunisia

174. Variant Requirements: Discovering the recent policies of the MENA countries regarding nationality and citizenship

Author:
FARAS
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
The political and technical dimensions of granting or revoking nationality have recently escalated in several countries of the region. This is associated with a number of motives relevant to enhancing the state’s global position, as reflected in the UAE granting nationality to competent scientists, doctors, intellectuals, specialists and talented individuals, to encourage the flow of investment into the country. The Jordanian government adopted the same approach to improve the internal economic conditions. The Algerian government justified this course to confront terrorist operations and irregular migration that caused tensions in the relations with the EU countries. Furthermore, the Sudanese transitional government withdrew the Sudanese nationality by naturalization, especially from Syrians, as some were obtained through illegal procedures. Israel also passed the Law of Return this March in an attempt to enhance the demographic structure of the country.
Topic:
Government, European Union, Citizenship, and Nationality
Political Geography:
Sudan, Middle East, Israel, Algeria, North Africa, Syria, Jordan, and United Arab Emirates

175. The Aftermath of Demonstrations: The reasons behind the conflict about Tunisian cabinet reshuffle

Author:
Karam Saeed
Publication Date:
02-2021
Content Type:
Commentary and Analysis
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
On January 27, 2021, the political climate in Tunisia was charged up, following the parliament’s approval on a cabinet reshuffle on January 26, supported by 144 parliamentarians. This included new ministers joining the government of ‘Hichem Mechichi’, which had been formed on August 24, 2020. The proposed amendments intensified the political crisis in the country, against the backdrop of President Kais Saied’s announcement of his rejection of the cabinet reshuffle under the claims of the potential corruption of some ministers. Yet, Mechici resorted to the parliamentary majority led by Al-Nahda movement to gain the confidence of the parliament. Despite the lapse of a week since the new reshuffle won the confidence of the Parliament, the President rejected summoning the new ministers to take the constitutional oath, which paves the way for more complications in the Tunisian scene. Furthermore, the Parliament's approval of the amendments may fuel a constitutional struggle between the Prime Minister and the President.
Topic:
Government, Conflict, and Demonstrations
Political Geography:
North Africa and Tunisia

176. Governing Parameters: Will the New Governments in Israel and Iran Affect the Ongoing Tensions Between Them?

Author:
Rania Makram
Publication Date:
06-2021
Content Type:
Commentary and Analysis
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
Israel and Iran are witnessing significant political changes that affected the ruling elites. The developments came in the wake of early legislative elections held in Israel in March leading to the formation of a new coalition government headed by Naftali Benett, leader of the right-wing party Yamina. In Iran, presidential elections held on June 18, were won by hardline chief justice Ebrahim Raisi. The internal political dynamics in Tel Aviv and Tehran cast a shadow on the whole political landscape in both countries, and are projected to have an impact on the trajectory of the non-traditional conflict between the two sides, which escalated over the past few months.
Topic:
Conflict Prevention, International Relations, Government, and Politics
Political Geography:
Iran, Middle East, and Israel

177. Ethiopian Perspective: Elections in Strained Dynamics

Author:
Anwar Ibrahim
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
The election, which was held in Ethiopia on Monday, June 21, 2021, was the most complicated election that the country has witnessed in more than three decades, or, more accurately, since the 1994 constitution was approved. The reason is that this election was held amid lots of internal challenges, not to mention the strong criticism of its legitimacy (both domestically and internationally) even before it was held. Ethiopians are warily looking forward to the results, which are supposed to be announced within a few days, despite that it is not unlikely that these results will escalate the tensions in an already unrest-ridden country.
Topic:
Government, Elections, Conflict, and Political Parties
Political Geography:
Africa, Ethiopia, and Tigray

178. A Choice in Distress Will the "National Dialogue" Offer a Resolution for Tunisia’s Political Crisis?

Author:
Ahmed Nazif
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
The political crisis in Tunisia has been spiraling over the past months with no solution in sight. The reason, in part, is that the country’s constitution, approved in 2014, features complex intertwined interests of the governmental institutions. This situation eventually led to the current conflict between the president, on one side, and the parliament and the government, on the other. In an attempt to resolve the current gridlock, President Kais Saied, on several occasions, called for a radical change of the current political system, while the Islamist Ennahda Movement and its allies fear that they might lose the electoral privileges they have gained thanks to the power-sharing system and the current voting system. The last of Saeid’s calls came up more detailed and within a clearer framework to be shaped by “national dialogue.”
Topic:
Government, Constitution, Political Crisis, and Dialogue
Political Geography:
North Africa and Tunisia

179. Unfulfilled Hopes: Strategic Implications of Re-opening Libya’s Coastal Highway

Author:
Mustafa Gamal Omar
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
While many Libyans look forward to implement the outcome of the Berlin II Conference on Libya and achieve stability across their country, others believe that the first steps towards such stability should be through breaking the deadlock on unresolved issues. Such issues require urgent but decisive action, and the most prominent of which is the reopening of the coastal road between Sirte and Misrata. The announcement on June 20, 2021, by head of the National Unity Government, Prime Minister Abdelhamid Dbeibah, that the main coastal highway will be re-opened, following months of talks on a ceasefire, has revived Libyan hopes. The move is projected to yield significant political, security and economic benefits for the country. However, according to media reports circulated in late June, the 5+5 committee, formally named the 5+5 Libyan Joint Military Commission, decided to put off the re-opening of the vital highway, claiming that only damages will be repaired, which made the situation murky once again. The 5+5 committee, on July 2, dispelled the confusion by announcing that the highway linking Sirte to Misrata will be re-opened over the next week upon the completion of maintenance work. Member of the committee, Major General Faraj Al-Sousaa, confirmed that arrangements were underway for the re-opening.
Topic:
Government, Armed Forces, Conflict, and Ceasefire
Political Geography:
Libya and North Africa

180. The Likely Scenario: Possible trajectories after Tunisia’s President exceptional decisions

Author:
Ahmed Nazif
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Future for Advanced Research and Studies (FARAS)
Abstract:
On the 64th anniversary of the Republic, President Kais Saied chose to declare ‘state of imminent danger’, invoking the constitution shaped by the Islamist Ennahda movement. On July 25, Saied took exceptional decisions ousting the government led by Prime Minister Hichem Mechichi, freezing the activities of parliament, and stripping parliament members of legal immunity. He considers the measures necessary for saving the state. The political forces took different stands depending on their position in the political hierarchy as well as their closeness to President Saeid.
Topic:
Corruption, Government, Politics, and Governance
Political Geography:
North Africa and Tunisia