Tiago writes the following in response to a similar comment made on Overcoming Bias:
That is a common hypothesis, which is why studies usually include legal origins as a control. Others do not need to do it, because they used a fixed effects approach such that any invariant characteristic such as colonizer will be automatically controlled for. But endogeneity might always be an issue, which is why the book also deals with theory, and auxiliary evidence from companies and municipalities. I think you would like it!
As Tiago notes, the evidence goes beyond just national governments; the first chapter of his book has sections on national governments, corporations, and local government, and the latter two are not subject to this confounder. And as Hanson writes in his review of the book, one may argue that the evidence from cities (i.e. local governance) is most convincing:
Finally, and to me most persuasive, there is evidence on U.S. cities …
As usual, the studies of variation across nations have a small N problem; if you try to include too many controls, you run out of data. In contrast, for firms N is huge, but one worries that their problems are too different, as boards of directors are rarely elected directly by shareholders. But the problem of city [governance] seems close enough to nations, and there N is large. For example, in this study N = 12,238.
In addition to Magnus’ points, I don’t think the cultural argument does it. It is much less well specified. Some people take issue that I define parliamentarism in the book as “executive subordination to the legislature” as too vague (I think it is clear enough, naturally). But if that is risking being too vague, culture is far more. In a sense, culture has globalized dramatically around the world—language, art, form of dress, food, family size, etc. You will probably argue that those are not the aspects that matter, but then shouldn’t it be the claim that culture is what matters to specify what aspects matter?
Some would say that the aspects that matter are issues like trust, low corruption, respect of property rights, etc. But are there any cultures which do not value those things, which claim they are outright undesirable? I don’t think there are. Instead, all cultures value those goods and would like to achieve them. If all do value those traits at least in abstract, does it make sense to call them cultural?
Unfortunately, their achievement of those traits is not conditional only on their desire to do so, but on the underlying incentives in the society. If you live in an “extractive society”, behaving like the most trusting Scandinavian person might not make you advance a lot.
A good parallel might be price controls (which are, incidentally, much more prevalent in presiential countries). In countries which do not implement price controls, prices achieve their equilibrium and business is trusted. But where countries do implement price controls, parallel markets are created, businesses are accused of cheating and of being excessively greed, trust is undermined. Many lament that the problem is that businesses are more greedy in the latter type of country than in the former. But the incentives are doing the real work.
Lastly, I would note that studies do control for long-term cultural aspects when they control for the region/country. One could argue that it is the shifting culture that promotes both parliamentarism and good outcomes, but the hypothesis seems to rely on increasingly ad hoc explanations, with the problem of being not very well specified already. When we add the evidence from e.g., American cities which have by and large the same culture, I find it hard to accept the hypothesis. At the very least, I think the burden should lie on the cultural hypothesis instead of parliamentarism.
Thanks for your reply. Helps make a case that parliaments do something above and beyond the culture/tradition in which they are situated.
That said, I do want to respond to one thing you said:
Some would say that the aspects that matter are issues like trust, low corruption, respect of property rights, etc. But are there any cultures which do not value those things, which claim they are outright undesirable? I don’t think there are.
Up until 2 days ago I likely would have shared this sentiment, but I was talking with someone who grew up in Romania and as he put it some of these are not so obvious. For example, although corruption was rampant, no one thought of it that way. Instead it was framed as a gifting custom and seen as normal to provide gifts to those providing services to you (doctors, teachers, government officials, etc.) because you want to show your respect and ensure good service. No one thought of this as bribery, so it seemed like they were already low corruption. And it’s easy to imagine folks balking at the idea that it is corruption; how dare, they might say, you come in and disturb our local gift giving tradition!
That makes it quite easy for me to imagine similar stories for things like trust, property rights, etc.: a local equilibrium can become justified and then no one will think a thing is undesirable, or even necessarily realize that something undesirable is going on (in fact, locally it seems quite desirable!).
Thanks. Yes, you are right that there are some differences like you said, and they can have some importance my point should have been more nuanced. To paraphrase/quote from memory author Huey Li (who wrote a great book related to this theme, “Dividing the Rulers”), constitutions can affect cultures in years, cultures will affect constitutions in centuries.
Also, I’m not sure I would attach that much weight to that story for a general sense of how unsatisfied the Romanians are with the level of corruption in their country. And with respect to property rights, trust, I think we can imagine how people might in abstract argue that they “prefer” societies with less of it, but in reality I do find it hard to imagine people preferring to live in societies where they have no security that their stuff will be with them tomorrow, or whether they can trust others to do what they said they would.
Tiago writes the following in response to a similar comment made on Overcoming Bias:
As Tiago notes, the evidence goes beyond just national governments; the first chapter of his book has sections on national governments, corporations, and local government, and the latter two are not subject to this confounder. And as Hanson writes in his review of the book, one may argue that the evidence from cities (i.e. local governance) is most convincing:
See e.g. the studies on local governance cited above: Carr, 2015; Nelson & Afonso, 2019.
In addition to Magnus’ points, I don’t think the cultural argument does it. It is much less well specified. Some people take issue that I define parliamentarism in the book as “executive subordination to the legislature” as too vague (I think it is clear enough, naturally). But if that is risking being too vague, culture is far more. In a sense, culture has globalized dramatically around the world—language, art, form of dress, food, family size, etc. You will probably argue that those are not the aspects that matter, but then shouldn’t it be the claim that culture is what matters to specify what aspects matter?
Some would say that the aspects that matter are issues like trust, low corruption, respect of property rights, etc. But are there any cultures which do not value those things, which claim they are outright undesirable? I don’t think there are. Instead, all cultures value those goods and would like to achieve them. If all do value those traits at least in abstract, does it make sense to call them cultural?
Unfortunately, their achievement of those traits is not conditional only on their desire to do so, but on the underlying incentives in the society. If you live in an “extractive society”, behaving like the most trusting Scandinavian person might not make you advance a lot.
A good parallel might be price controls (which are, incidentally, much more prevalent in presiential countries). In countries which do not implement price controls, prices achieve their equilibrium and business is trusted. But where countries do implement price controls, parallel markets are created, businesses are accused of cheating and of being excessively greed, trust is undermined. Many lament that the problem is that businesses are more greedy in the latter type of country than in the former. But the incentives are doing the real work.
Lastly, I would note that studies do control for long-term cultural aspects when they control for the region/country. One could argue that it is the shifting culture that promotes both parliamentarism and good outcomes, but the hypothesis seems to rely on increasingly ad hoc explanations, with the problem of being not very well specified already. When we add the evidence from e.g., American cities which have by and large the same culture, I find it hard to accept the hypothesis. At the very least, I think the burden should lie on the cultural hypothesis instead of parliamentarism.
Thanks for your reply. Helps make a case that parliaments do something above and beyond the culture/tradition in which they are situated.
That said, I do want to respond to one thing you said:
Up until 2 days ago I likely would have shared this sentiment, but I was talking with someone who grew up in Romania and as he put it some of these are not so obvious. For example, although corruption was rampant, no one thought of it that way. Instead it was framed as a gifting custom and seen as normal to provide gifts to those providing services to you (doctors, teachers, government officials, etc.) because you want to show your respect and ensure good service. No one thought of this as bribery, so it seemed like they were already low corruption. And it’s easy to imagine folks balking at the idea that it is corruption; how dare, they might say, you come in and disturb our local gift giving tradition!
That makes it quite easy for me to imagine similar stories for things like trust, property rights, etc.: a local equilibrium can become justified and then no one will think a thing is undesirable, or even necessarily realize that something undesirable is going on (in fact, locally it seems quite desirable!).
Thanks. Yes, you are right that there are some differences like you said, and they can have some importance my point should have been more nuanced. To paraphrase/quote from memory author Huey Li (who wrote a great book related to this theme, “Dividing the Rulers”), constitutions can affect cultures in years, cultures will affect constitutions in centuries.
Also, I’m not sure I would attach that much weight to that story for a general sense of how unsatisfied the Romanians are with the level of corruption in their country. And with respect to property rights, trust, I think we can imagine how people might in abstract argue that they “prefer” societies with less of it, but in reality I do find it hard to imagine people preferring to live in societies where they have no security that their stuff will be with them tomorrow, or whether they can trust others to do what they said they would.