Solace in hierarchies...

I found a passage in the Žižek and Gunjević book, God in pain, quite interesting. (I am not putting forth any solutions - it is just a curious passage that I wanted to share).The passage looks at hierarchal structures in society and specifically how to eliminate the "pain" associated with falling in an inferior class structure. I almost paraphrase the entire section (taken from p.66) - most of this is quoted from Jean-Pierre Dupuy in Petite métaphysique des tsunamis.

There are four procedures of hierarchy, whose function is to make the relationship of superiority non-humiliating to subordinates:

1.          Hierarchy itself: Experiencing one's lower status as independent of one's inherent value.

2.       Demystification: The relationship between superiority and inferiority is not based on meritocracy, but are the result of ideological and social struggles. I.e. One's status depends on social processes and not on merits. This helps us to avoid painful conclusions that the other's superiority is a result of merit and achievement.

3.       Contingency: One's position on a social scale depends on a natural and social lottery. I.e. lucky are the ones who were born with better dispositions and into rich families.

4.  Complexity: Superiority or inferiority depends on complex social processes independent of individuals' intentions or merits. E.g. despite me being smarter and working harder, my neighbour's success outweighs mine.

The pillars do not threaten hierarchy, but is supposed to make it palatable. Dupuy  -"what triggers the turmoil of envy is the idea that the other deserves his good luck and not the opposite idea which is the only one that can be openly expressed".

Dupuy further states that it is a mistake to think that a society that thinks it is just and proclaims that it is just will be free of resentment. And in these societies it is the people who occupy inferior positions that will burst out in violent resentment.

Žižek quotes Rousseau's example of perverted self-love: One cares more for the destruction of one's enemies (they serve as an obstacle to one's happiness) as opposed to one's own happiness.

What does this have to do with South Africa?

South Africa proclaims that it is a democracy. It claims that it is just and free. Yet, there seems to be social turmoil every day. There are clear class distinctions and those that fall in the inferior classes are supremely unhappy about it. High income inequality, affirmative action (i.e. exclusive rights for some and isolation for others) and corruption are just a few examples of how unjust the country really is. The consequence is violent uprisings undermining every economic and social activity (strikes, destruction of property, crime are a few examples). South Africans, and many others in the world, then surely make a great mistake (in context of Dupuy) in thinking that South Africa is just and proclaiming it is just.

The ideal of demolishing hierarchy stands in opposition to the idea of making hierarchy palatable. Are we really able to demolish hierarchy? In effect this would imply some form of communism. History is definitely not kind to the examples of communism we have seen - numerous people have lost their lives for this ideal and almost always the ideals were perverted by the leaders who exploited the general population. Is the alternative better? Is it better to accept that things are simply unfair and unequal? That no matter what skills or abilities a person has, that person is subject to factors outside his control, or in the very least try to make something from nothing in what we call capitalist societies (there is no promise that hard work and ability will be rewarded). Unfortunately accepting ones circumstances does nothing to help starving people, and a system that proclaims equality cannot truly promise equality and food portions of the same size for everyone. 

These are deep philosophical questions that touch all of us.

While the South African government has done a great deal to improve the lives of the poor since 1994, it never, or hardly, acknowledges its shortcomings (the opposition parties and newspapers do a reasonable job at highlighting inefficiencies). (We also don't know whether future governments will do any better). Perhaps this is what Dupuy wants - societies should acknowledge its mistakes and maybe people will find solace in that - it is sometimes the government and its policies that constrains me and not my merit or ability and on the other spectrum that this same government that constrains me helps another who might be more in need (not always Pareto optimal, and not always welfare enhancing) It does not make it fair, but it surely helps ease the psychological pain of being unfairly treated.

Is there anything new about South Africa's latest crime stats?

In September 2014 the South African Police Service released its latest crime statistics. In this post we will see whether crime rates have dropped and what provinces remain high crime zones.

I believe that crime breaks communities and unity if left unopposed. The recent South African crime statistics do not deliver any good news. Before looking at some of the numbers, we might try and understand what factors lead to crime. It is also important to distinguish between the types of crimes committed. South Africa seems to be plagued by violent crimes.

Here is what the literature says about the determinants of crime (some might seem intuitive):

·         Poverty causes crime, but also, crime can cause poverty (Anderson, xxx). For South Africa the impact of poverty is not that large, but still statistically significant. Anderson (xxx) finds that a R1000 increase in monthly expenditure increases the probability of a robbery by about 7%,

·         Robberies are higher in wealthier areas. For South Africa this can be up to 25% higher in wealthy areas compared to their not so wealthy neighbours (Demombynes and Ozler, 2005).

·         Crimes in South Africa could be a lot higher than reported (Newham, 2002). I don't think it is too much of a stretch to assume that a large number of crimes go unreported. Police corruption, misplacement of documents or the fear of a victim might explain some of this under-reporting.

·         In some cases it is believed that unemployment causes crime.

·         Cultural deviance or cultural conflict can also explain crime (Eide, 1999).

·         The probability of being caught and the type of punishment are also determinants of crime. Criminals weigh the costs and benefits of committing a crime and then act on those calculations. This assumes that many criminals behave rationally and that crime is not always sporadic but often well planned. Other factors that criminals might take account of in committing a crime include tastes (perhaps the criminals are bloodthirsty, perhaps they have an affinity for stealing only small items such as jewels), ability (this includes intellectual and physical) and punishment (the severity of punishment if caught) (see Eide, 1994).

·         The Law commission in 1997 and 1998 tracked over 15,000 and found that only 6% of serious violent crime tracked followed a conviction over this period.

·         Age is an important variable. In a country like South Africa where a large proportion of the youth are unemployed and uneducated one ought to expect high crime rates.

·         Blackmore (2003) show that a higher income per capita, drug related use, urbanisation and the unemployment rate are all important factors that determine crime in South Africa. I am not necessarily a fan of using per capita income as this could be correlated simply with inequality increases.

Some stats

To make the comparison easy across provinces I indexed the various crimes so that crime per 100000 people in 2005 equals 100. This allows us to compare crime rates in 2014 relative to 2005. Obviously we would want all related crime to be below 100 - i.e. this represents a drop in crime.

As an example the map plot illustrates sexual offences in three periods. In 2005 all the provinces have the same colour (remember that we indexed 2005=100). We can then compare 2009 and 2014 (these are fiscal years, i.e. 2014=2013/14). If a province has a darker colour then it implies that it has less crime compared to the other provinces. It is also important to read the colours from the scale provided. For sexual offences the Western Cape had the lowest crime rate while the Eastern Cape and Limpopo had the highest in 2014

When we look at murder rates we see that Gauteng, Mpumalanga and KZN improved the most. 

The Northern Cape improved the most in terms of reducing aggravated robbery in 2014.

Finally I wonder whether overall crime has dropped significantly. The figures show marginal improvements for some provinces, but also a worsening of crime in other provinces. The national figure hardly shows any improvement.

It would be interesting to do a counter-factual analysis of what crime would have been without the security precautions that some households have (armed response, dogs, electric fencing, etc.) vs. a counter-factual of what crime would have been like when holding police service employment constant at 2005 levels. This would also help us make more informed decisions whether employing more police officials and raising their salaries would make a dent in crime.

Finally, do you feel safer? This mental conflict causes psychological problems and an irrational fear. This is one of the sad side-effects of a country with high crime rates. 

UPDATE 24 October 2014:
I recently saw that StatsSA publishes a survey on crime perceptions. This survey shows that there is indeed under-reporting. People also do not feel safe (no surprises there). Thought this was interesting though. 

References

Anderson, M.D. (). The effect of poverty on crime in South Africa: A GMM and IV approach.

Blackmore, F.L.E. (2003). A panel data analysis of crime in South Africa. South African Journal of Economic Management Science, 6(2003): 439-458.

Demombynes, G and Ozler, B. (2005). Crime and local inequality in South Africa. Journal of development economics, 76: 265-92.

Eide, E. (1994). Economics of crime. Stavanger, Rogaland Mediesenter, 158 p.

Eide, E. (1999). Economics of criminal behaviour.

Newham, G. (2002). Tackling police corruption in South Africa. Centre for the study of violence and reconciliation.

South African Law Commission, Conviction rates and other outcomes of crimes reported in eight South African police areas. Research Paper 18, Project 82 (sentencing)

Just how bad is a country's debt for growth

Yes I know that I have a previous entry on the effects of public debt on economic growth. That, however, only focused on South Africa.

Once again public finances bother me. I can't quite wrap my head around why some countries are able to sustain such large amounts of debt and not be in any danger (according to rating agencies) of default while other countries with comparably smaller debt are at risk of defaulting. The common marcro reasons cited for this are long-term growth rates, low interest on bonds, little debt denominated in foreign currency, the maturity of debt and stable and low inflation. Political factors are also important. These include weeding out corruption, have proper expenditure plans in place and don't have domestic strife (investors seem to hate this).

I wish I had time to do a counter-factual and determine how better or worse a country would have been without increasing its sovereign debt. For now we will have to settle with a (hopefully) interesting figure just to get us interested. The scatterplot illustrates the relationship between debt and economic growth for advanced and emerging economies (five year averages from the IMF). A striking feature of the figure is that there is a negative relationship between economic growth and low debt. There is a positive relationship between debt and economic growth for advanced economies between 25%-50% of debt to GDP. Higher values of debt/GDP >50% seems to have a negative effect on economic growth. For EM countries the positive relationship between debt and GDP occur between 35%-100% of debt/GDP. This is indeed a very big range.

What this figure tells us is that aggregating numbers like this tells us very little about the real effects of debt. To really understand the consequences of accumulating debt one has to look at a lot of micro factors (the reasons for accumulating debt, the maturity of debt, etc.). This would be difficult to accomplish since many countries hardly report these variables necessary to do any useful analysis. There is also no reason to believe that debt thresholds are static. The evolution of fiscal policy and the macroeconomic landscape change frequently. We should expect that these thresholds would also change.