Democracy for Efficiency

Mudslide blocking a road in Cayey, Puerto Rico, on Sunday. Photo by AP via Wisconsin Public Radio.

Really interesting radio thing, on a study from 2018

Akey, Pat and Dobridge, Christine and Heimer, Rawley and Lewellen, Stefan, Pushing Boundaries: Political Redistricting and Consumer Credit (March 2018). Available at SSRN: https://ssrn.com/abstract=3031604 or http://dx.doi.org/10.2139/ssrn.3031604

in which researchers found that abusive partisan redistricting—gerrymandering—has economic effects, and pernicious ones: it makes it harder for people in the gerrymandered district to access credit.

Really, you ask? Yes, really; not across the board, those who are well off can always get a loan, but for those around the margin, without much of a credit history, there's a real empirical difference in whether your legislators are in safe, gerrymandered seats or competitive ones where they have a good chance of losing the next election. That's likely to be the reason:

there’s been a strong association [, Heimer explains,]  between politics and the credit provision overall. And so we do see that electoral cycles are really important for the provision of credit because lenders are responsive to this. And so just overall, what would explain this? Elected officials, they have the ear of local businesses, including lenders, and so lenders, therefore, have incentive to make decisions that benefit those politicians, including by increasing credit supply. So when a politician is insulated from political competition because of redistricting, lenders have less motivation to prioritize services to constituents.

A nice example of how democracy is really related to good governance—the desire for votes inducing your representatives not just to fill potholes and restore the old post office but also to lean on the local bankers and, possibly, relieve some systemic discrimination. 

While Gym Jordan, ahead of his opponent by 59% to 41% in Ohio's 4th District (known as the "Duck District" because of its gerrymandered shape, one of the districts that was declared unconstitutional in 2019 but was left alone when the Supreme Court ruled, 5-4, that "federal courts cannot review such allegations, as they present nonjusticiable political questions outside the remit of these courts", and remains unchanged this year after legislators decided to ignore three separate rulings by the Ohio Supreme Court, in a kind of preview of how the independent state legislature theory is going to work), can afford to spend all his time as a Twitter insult comic.

A much wider example that also came up on the radio this morning is that of Puerto Rico, devastated and struggling after Hurricane Fiona ("only" a Category 1 storm but extremely wet), with power and running water out everywhere, five years to the day after Hurricane Maria and Trump's terrible paper-towel response. A big reason why it's so bad this time is that the island still hasn't recovered from Maria, and a big reason for that is the lack of a responsive politics, starting with Trump, who refused to release the $10 billion appropriated to repair the electrical grid until September 2020, three years later, and more importantly two months before the election, trying to rustle up votes in Florida in particular, not in Puerto Rico, where you don't get to vote in a presidential election.

There was a serious repair plan, Hunter College professor Yarimar Bonilla told NPR, but it was never really implemented, largely because FEMA was so unwilling to disperse the money to individuals, treating them all like potential criminals and putting them through all kinds of hoops:

FEMA funds, she says, were "overly policed."

"They're always slow, but they were [even more so] when it came to Puerto Rico," she says. "They were held back, they were extremely vetted."

"And so we know that there were still people under blue tarps or people who were never able to really fully repair their homes," Bonilla says.

(Even though, as she also pointed out, the only fraud ever discovered in the Maria repair work was by FEMA officials and their contractors.)

It's not just racism, though it's no doubt that too, but Puerto Rico's status as a "commonwealth" colony that makes this stuff happen. If they had independence, with a democratic government of their own, their politicians would be compelled to deal with it themselves and able to take responsibility for the results; they'd be poor, perhaps, but they'd be rewarded for being resourceful. If they had full participation in the US government, with representation in Congress, they could get their representatives to lean on FEMA, and on other members interested in horsetrading over issues of their own, and on the president. But the nowhere realm between the two leaves them dependent on charity, capricious, unreliable, and when it comes from a US government in which it's not represented, stingy. Democracy is what you need.