River Plate's Loss as a Metaphor for the History of Argentina

On June 26th, the unthinkable happened: the Argentine football club River Plate got demoted to the B league. It's an event that provoked this kind of reaction throughout the country and the football-playing world:

For those of you who don't follow Argentine football, let me explain. The two strongest teams in Argentina have always been River Plate and Boca Juniors, and they have a rivalry that's practically unmatched anywhere else in the world. Every person in Argentina is a fan of either one or the other. When the two teams play, it's the sporting event of the year.

River (as it's known colloquially) has been one of the most successful Argentine clubs of all times. But lately they've been struggling, and losing, and losing. By June 26th it got to the point where River had to win the match in order to stay in the top ('A') league of Argentine football. It should have been a no contest; they were playing some no-name team from the interior.....and still they lost.

A dedicated River fan became so irate while watching that fateful game that this video of his tirade has made him the most well-known man in Argentina:



[As you'll soon tell, there aren't many different kinds of curses in Argentine Spanish. This man uses about three or four principal insults, with variations and combinations:

"la puta que te pario" = the whore that gave you birth
"pendejo / boludo / pelotudo" = stupid / asshole
"andate a la concha de tu madre / hermana / etc." = your mother / sister's /etc.'s pussy

At one point he cries out, in supplication, "¡No les pido que hagan 28 pases como el Barcelona, hagan dos seguidos, nada más!" ("I'm not asking you to make 28 passes like Barcelona, just two in a row, nothing more!")]

On the media circuit on which this poor man was later dragged, he sheepishly explained that he did go a little too far. But really, given the situation, who can blame him? Imagine being a fan, a devotee of River, learning from a young age to adore the River jersey, to be proud of a team with an international reputation and a long, glorious history; and to have that team that you so adore now be known as just "some other" team, with bygone glory days?! It's hard to comprehend how one copes with such a trauma.

But these kinds of falls from glory aren't new to Argentina. Rolando Hanglin, writing for the daily La Nacion, puts this story in its larger context, tapping into the essence of the Argentine psyche:

River ya no es la élite del fútbol mundial. Es sólo un equipo que fue próspero y señorial (de ahí el apodo de "Millonarios") con una escuela refinada, que se ha perdido. Además, está rodeado del entorno que corresponde a un país del Tercer Mundo. Un país que fue rico hace ciento veinte años, y que ya no lo es.

"River is no longer in the elite of world football. It's just another team that used to be successful and noble (from there came the nickname of "The Millionaires") with a refined school that has lost its way. In addition, it's surrouned by an environment that corresponds to a country in the Third World. A country that used to be rich one hundred twenty years ago, but no longer is."

What Mr. Hanglin is referring to is how Argentina (believe it or not) was contending with the United States as a world power in the New World around the end of the 19th century. Why not? Argentina had a vast resource endowment, skilled European immigrants, industry and trade. All signals pointed to success. But now all the books written on the history of Argentina have the subtitle, "What went wrong?" (how Argentine ended up "failing" is a subject that has so interested researchers that it has its own name: the so-called "Argentine Riddle").

For decades now, economists and sociologists from Latin America's dependencia school have been arguing that poorer countries have an inherent disadvantage when competing in the world economy. Something analogous seems to be true for football in the case of River: as D.S. over at The Economist notes,

The cruelest consequence of relegation, of course, is that the demotion itself makes it much harder for a club to work its way back up to the top:" River’s annual television revenues will fall from $6.8m to about $4m, and it will have to cut ticket prices. It will probably lose transfer income as well, since few European clubs search for talent in the second division.

For Argentines with pride in their people and their country, all this must be terribly frustrating. How do you prove you don't suck? If you're a batter in a slump, every hit you make seems fleeting; every strikeout just confirms and reemphasizes your worst fears. Similarly, every time the newspapers in Argentina report rising inflation, or the lack of respect their dignataries receive abroad, the more and more Argentines confirm their fears that they're stuck in the "Third World" (a category that they care a lot about, critical theory be damned) forever.

Argentines respond to this frustration in different ways. There are some (especially the rich) who stopped caring, and have simply shifted allegiances to America or Europe. They openly put down their country and go on and on about how glorious it is abroad. Then there are those who care about their country, but resigned at its fate. Many still harbor resentment against the world superpowers, especially Britain and America, for having cheated them out of a better position in the world pecking order. Throughout Latin America, Argentines are derided for their arrogance, and they have it, it's true; but when we see that arrogance through the lens of their history, it's much easier to sympathize and understand how they're feeling.

Like Argentina, which has been struggling to find its identity for the past century, River too will have to reorient itself in the world of football. Most Argentines haven't handled their country's fall from grace well, and remain bitter at the world. Let's hope River fares better.

Musharraf's Talking Points

Yesterday I attended a talk by the former President of Pakistan, General Musharraf, who spoke at the Baker Institute at Rice University. Here are the talking points that I imagine he would have outlined for himself, had he been perfectly objective about the content of his talk. You can view his full talk here.

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[Stylized] Talking Points for His Excellency General Pervez Musharraf

• Intro: The deterioration in relations between the US and Pakistan is unfortunate. In my time, I had great relations with President Bush [...mostly because he was glad I was cooperating and I was glad he wasn't invading us.]
• Thesis: Pakistan is the sufferer, the victim, and not the perpretrator, of terrorism. [Any actual violence supported by the state—say, in Kashmir—is actually freedom fighting, stemming from overwhelming public support for the cause].
• Pakistan faces four main challenges: terrorism, extremism, terrorism, and extremism
• Some FAQs:
• What accounts for the "antipathy" of Pakistanis towards America?
• America betrayed Pakistan in 1989. With the Cold War over, America left an anarchical Afghanistan that Pakistan wasn't able to handle; this in spite of Pakistan helping during the war effort against the Soviets.
• What accounts for the current extremist problem in Pakistan?
• The Betrayal of 1989
• What accounts for the strength of the Taliban and Al-Qaeda?
• The Betrayal of 1989
• US failure in Afghanistan
• Let's not get too distracted by Afghanistan, though. The real threat to regional stability is India. India is the clear enemy.
• India is setting up an anti-Pakistan Afghanistan. For instance, Afghanistan sends its forces to train in India, but not once have they come to Pakistan.
• India is not resolving the Kashmir dispute, which spurs attacks [not that we discourage that].
• It's not fair that India gets special treatment and we don't. The world is, for some reason, hostile to our nuclear weapons. But our nuclear weapons are the pride of our people, even down to the most illiterate man, a symbol of our acheievement [even if they had to 'eat dust' for it, right?].
• The stump speech: There is currently no strong candidate for election next year, so I'm "offering myself as a third alternative."
• Be selfless: "I'm not doing this for myself. I'm comfortable already, I make good money, I could live anywhere in the world. But the people of Pakistan need a leader like me."
• (Since I have to): We did not, did not, did not know about Osama bin Laden. We did not. [Delivered somewhat like this].

Note to self: Be respectful. Make sure to address audience as "ladies and gentlemen." The more, the better.

A Princess's Plea

Last Wednesday, I saw a real, live princess. Her Royal Highness Princess Haya Al Hussein of Dubai came to the Baker Institute here at Rice University to speak on "The Politics of Hunger," as part of her larger efforts, through her non-profit Tkiyet Um Ali, to end world hunger.

The talk began at 6pm. As I approached the Institute I saw a number of black sedans parked in front, and men in impeccable suits. In the lobby sat a pretty, smiling receptionist, checking the roster for names (the day before I had to fill out a detailed online RSVP form and register as a Rice student to get in). A police officer was watching from the corner as she checked me in.

I walked inside, with my jeans and T-shirt (covered in chalk from class), and immediately felt out of place. Most of the attendees were clearly important people; donors, public officials, distinguished members of the community. They were dressed up, had white hair, and clearly knew each other. It was a group as close to aristocracy as we get in America.

We were kept waiting a little bit. In the meantime I flipped through the program, and people-watched the aristocrats, who were greeting each other with the familiarity and affection of fellow parishioners. Every now and then I would hear the loud tak-tak of high heels as someone from the Institute went in the back to check on something. After a while, people started trickling from the back; at first a couple men in suits, then some women, who would later walk back to check on something; they would return; some more important-looking people; and then finally, the princess herself, surrounded by a whole delegation of people, including the former Secretary of State James Baker, with whom she was finishing up a conversation. As I watched this scene, it struck me how the extended wait and the scurrying back and forth of the Baker Institute staff represented an integral part of the very spectacle of power and status that we were there to see. By the time the princess did come out, I already felt distant from her, blocked by layers upon layers of guards, staffers, and officials who guarded her access; a common man, glimpsing a world to which I wasn't privy. An aura befitting a princess, I guess.

Her Royal Highness shook hands with some people sitting in the front row, and then took her seat.

Mr. Baker introduced the princess. He spoke fondly of the work he did with her father, the King of Jordan, and the honor of having her to visit. He gave the air of a man proud to see his friend's daughter all grown up.

Then Princess Haya took the podium. She was just as I imagined a princess should be. She had a British accent (being educated at Oxford), and spoke only as loud as she needed to be heard, lending her voice an ethereal and other-wordly quality. If it weren't for the Bose speakers, I would have to strain my ears to hear her:



The main theme of her talk was that America needed to take moral leadership in the fight against world hunger. Global hunger "has to become a priority," she said. Without food security, "there can be no political security, and no peace."

What most struck me about her talk was the latent frustration that bubbled behind her serene front. She admitted to feeling powerless at times, despite her high station; and she explained her annoyance for endless rounds of policy debates, which she saw as an excuse for not meeting our responsibilities. Most of all, she couldn't understand why policymakers weren't sincere about fighting global hunger. Why do countries spend so much on weapons and so little on aid? Why do we permit hunger to continue? Where is the outrage?

This plea was so earnest and sincere that I felt guilty for also thinking it was futile. There is, I think, a natural progression of thought when one works for moral causes like this: first comes outrage, and zeal, and disbelief; but eventually, sometimes soon but often much later, there settles in a kind of serenity that comes with wisdom and understanding. Yes, fight on for the causes that are important, but there are reasons for why things happen. (In this particular case, I would say, Princess, that it is possible for all the people in the world to have good intentions and still find ourselves in miserable situations.)

But I know well enough not to become cynical. Exhorting important people to spend more money on food aid may not be the most effective way of ending world hunger, but God knows the world could always use more of the princess's sincerity.

Welfare as Poverty Insurance

Most of the arguments I've heard in favor of "the welfare state" (i.e. a government guarantee of a basic standard of living, a.k.a the social safety net) appeal to compassion, or justice. This works for people who are already sympathetic to such appeals (such as myself), but it really does no good for those who don't put much stock in loose and subjective ideas like justice and compassion to begin with. Fortunately, this paragraph from University of Arizona Professor Lane Kenworthy's blog suggests an alternate—and, I think, fruitful—approach:

As people get richer, they tend to be willing to buy more insurance and more services. We observe this both among individuals and among countries. Some insurance and services are provided at good quality and price by private markets. Others less so. That’s the underlying reason why nations have tended to expand social policy as they grow wealthier.

Once we start thinking of welfare as insurance rather than charity, it opens a whole new series of possibilities. Most importantly, it gives us a way of addressing opponents of welfare programs (mostly conservative economists and their students), on their own terms, by providing an account of welfare programs that appeals not to any sense of morality or altruism, but rather rational choice, fully consistent with the idea of individuals maximizing their well-being.

Even though I myself don't fully believe in the conception of rational choice as self-interested utility maximization (for the same reasons that Amartya Sen doesn't either), I'll make an attempt here to defend the welfare state on this premise. This short post, of course, cannot hope to cover all the relevant issues. But I'll try to make a good sketch of what such an argument might look like.The exposition of the argument (below) makes four claims that collectively show how government-provisioning of poverty insurance is both consistent with rational choice and certain principles of liberty.

Claim #1: It is sensible to think of welfare policies as poverty insurance.

Birth is a kind of lottery. By random luck, and through no fault of our own, we end up either in a poor household, or a well-off household. Every one of us, when we are born, stands an equal chance of landing in a poor household. Therefore, we all stand to gain from a welfare program that would make the poverty that we would potentially face less dire.

Even after we are born, we face a non-trivial chance of becoming poor in the future. Upward income mobility is a blessing for poor people, but downward income mobility is a significant risk for the non-poor:

Most policy-makers view poverty as akin to a stagnant pool which may be slowly drained as each individual or family trapped there is helped to climb out. What this imagery and the policies it suggests disregard, however, is the fact that of those who are poor in any particular year, most were not poor in the preceding year. In other words, at any given time, many of the poor are newly poor. According to the University of Michigan‘s Survey Research Center study, Five Thousand American Families, the “persistently poor” (defined as those who were poor during all five years studied) amount to only 9 percent of the total poverty population. [link]

If it's not us that falls into poverty, then it is perhaps our children who will. Most often sons do not end up in the same income bracket that their fathers belonged to:

This table (source) shows intergenerational mobility between income quintiles in the U.S. Class 1 falls is the bottom quintile (the 0 to 20th percentile) and Class 5 is the top (the 80 to 100th percentile). So even if you're born into the top of the distribution, you have a 9.5% chance of ending up at the bottom. That's probably much higher than many of the other risks that we insure against. (Lest one underestimate what it means to land in the bottom quintile: according to this U.S. Census Bureau report, people in the percentile made $17,984 in 2003.)

So everyone, by the lottery of birth, faces a risk of facing poverty. Above this, people who are born into non-poor families face the risk of falling into poverty; or those born into poverty who manage to exit it face a non-trivial risk of falling back into poverty. The more severe the poverty, the more anxious people are to mitigate these risks; hence the need for insurance.

Claim #2: Government can provide poverty insurance more effectively than the private sector.

In a private poverty insurance market, I imagine that parents would buy policies that would cover themselves and their children. The premiums would probably be determined by a number of factors, such as general macroeconomic conditions, and also the policy holder's likelihood of falling into poverty. Rival plans would compete on, perhaps, how many generations they cover, or how generous the benefits are.

Now, why couldn't such a market work? In short, for many of the same reasons that completely private health insurance doesn't work (or more accurately, unpalatable). Prof. Kenneth Arrow already showed in the 1960s why the market for medical care has certain characteristics that make for "the laissez-faire solution for medicine [to be] intolerable." A market for poverty insurance would suffer from many of the same defects. Specifically:

1. Moral Hazard. As Arrow notes, "What is desired in the case of insurance is that the event against which insurance is taken be out of the control of the individual." But this is clearly not the case with poverty insurance. An individual who takes a poverty insurance policy can afford to be less careful about staying out of poverty, perhaps to the point of abuse. Insurance companies, of course, will write contracts that stipulate that they can deny coverage in the case of recklessness, but it's very difficult for the insurance company to make a reliable decision about the degree of culpability for someone who has fallen into poverty. As with health insurance, the lack of reliable procedures in a poverty insurance business will lead to mistakes: some people deserving of insurance will be denied, and some who should be denied will receive the benefits.

2. Adverse Selection. The people who are most likely to get covered are the ones who need it least. In the same way health insurance companies screen out people with unhealthy lifestyles, or with a predisposition for disease, poverty insurance companies will likely vet out people who seem likely to fall into poverty (being an artist will be the new preexisting condition).

3. Other-regarding preferences. Just as we are concerned about the health of others, we also care about their living standards. People prefer a healthier society to a less healthy one, and a less poor society to a more poor one. In economics, we say that health and poverty are externalities: that is, an individual's private good health or good fortune is not just a benefit to himself, but also seen by others as a benefit to themselves. In the face of positive externalities, the market will provide a level of insurance below the optimal amount (and significantly so, since our preferences for the well-being of others are generally quite strong).

Of course, showing that a certain market has defects does not necessarily imply a need for government provisioning. The electronics market, for example, also contains asymmetry of information, a market defect, but there's no one is calling for government intervention there.

The key difference is the severity of the consequences. In the electronics market, the worst that could happen is to leave the store dissatisfied. Severe poverty, however, can lead to death—or, at the least, it inhibits an individual's ability to receive the nutrition and education necessary to reach her potential, which results in a loss not just to herself but to all of society. That is why failings in the poverty insurance market would take on a certain moral urgency, and would be much more harshly criticized than failings in other markets.

Government, unlike private companies, is in a position to address most of the problems caused by the three aforementioned defects of a poverty insurance market. By offering automatic universal coverage, for example, the government can circumvent the adverse selection problem altogether. Universal coverage would also provide a level of welfare provisioning more consistent with our other-regarding preferences.

Admittedly, universal coverage does not solve all problems. Specifically, universal coverage by itself does not change the moral hazard of insuring another person for risks he has some control over. This is part of a major source of the frustration over welfare that lead to the overhaul of welfare in the U.S. in 1994. Welfare reform was meant to address the perception that welfare made people lazy, or went to undeserving candidates (such as so-called "welfare queens"). These are legitimate concerns, and they require that the government, like any private insurance company, craft its policy carefully. But then we enter the debate of what kind of poverty insurance we should have, and we're no longer discussing whether or not we should have it in the first place.

Claim #3: The majority of people in a sufficiently affluent society will rationally choose to vote for some level of poverty insurance.

Whether or not people would freely contribute to a poverty insurance program is not the relevant kind of rational choice in this case. After all, the main risk of poverty comes from the lottery of birth, so it doesn't make sense to collect payment for insurance after the main risk event has already happened. A welfare program needs the money of rich people in order to work, but since the rich have avoided the main risk (that of being born poor), they would significantly undervalue the benefit of poverty insurance, and hence underpay its true value.

In order for people to truly gauge the full risks of poverty, we would need to ask them how much they would be willing to contribute before their position in the income distribution is decided. This pre-birth state is similar to Rawls's idea of the "original position," except in this case I allow information about the structure of the society, such as the income distribution, the degree of income mobility, and the like. From there, then, just as in Rawls's original position, people in this pre-birth state would try to advance their own best interest, but in good-faith, knowing full well that whatever position that is adopted there would be binding once they find out their place in the income distribution.

What stance towards welfare would participants in this pre-birth position adopt? Unlike Rawls, I don't think that there will be unanimous consent, at the very least because people face varying levels of aversion towards risk. Since we don't have unanimity, it makes sense then to take a vote. The result of the vote will fall according to the preferences of the median voter.

Of course the choice of the median voter will depend on the factors specific to the country: the level of income mobility and the severity of the poverty, as noted above, but also the national income the degree to which the culture values equality.

In the developed world, I believe that the median voter will almost certainly opt for a level of poverty insurance greater than zero, for the very reasons that Prof. Kenworthy pointed out at the beginning of the discussion: as people grow richer, they become more willing to spend their money on insurance (that is, they would be willing to forgo a higher GDP in exchange for a welfare program, or they would be willing to pay the taxes necessary to fund the program if they were wealthy). In fact, it is probably even rational to do so: since individuals face diminishing returns to wealth and income, they would likely face a higher expected utility, given the right conditions, from shoring up their income in the event they end up poor rather than betting on making even more money if they end up rich.

Claim #4: Collective decision making does not violate the liberty of dissenters.

There will likely be some participants in the pre-birth position who will opt for no poverty insurance. But since the majority carries, and the majority will most likely opt for some non-zero amount, these dissenters will be forced to contribute to a program that they do not want. How is their liberty not violated? (Note that dissenting to contribute in the pre-birth position is radically different then dissenting to contribute in real life.)

This question is similar to a problem that Ronald Dworkin has posed in his article "The Majoritarian Premise and Constitutionalism" (In Philosophy and Democracy: An Anthology, edited by Thomas Christiano, pgs. 241-257): In a democracy we like to think of ourselves as a self-governing people. But how can that make any sense if you're on the losing side of the vote? That is, how can one reasonably think of himself as self-governing if he has to follow the majority will, which may not be his own?

The answer, Dworkin says, is that it depends on what view of collective action you take.

Now, government is required because there is a need for collective action. But Dworkin notes that there are two views of collective action: one, which he calls statistical, is where the group action is just some agglomeration of individual action with no sense of acting as a group. The example he gives is the stock market; when the "stock market" falls 20 points, there's no concerted effort behind it. The second kind of collective action is communal, where the group action cannot be understood as anything but as a group. We cannot make sense of a member of an orchestra, for example, except by considering her role in terms of the whole piece.

Dworkin thinks this distinction is very important. The only way for a person on the losing side of a vote to still think of himself as self-governing is if he adopts a communal view of the collective action of voting. He needs to think of himself as a genuine member of the political community, such that collective act of the group is also my act as well, in the same way that the victory or defeat of a sports team is the victory or defeat of each player, even if their individual contribution did not make a difference one way or another.

Now, to be a genuine member of a democracy, what Dworkin calls a "moral member," certain conditions must be satisfied. People need to be a part of the decision-making process (i.e. they should have a vote, a say); they need to have a stake in the decision (i.e. they need to consider themselves as a respected part of the group, and other people should also see them as a respected part of the group); and they need to be morally independent of the decision (i.e. they should be allowed certain private space to make personal decisions). Dworkin explains these concepts in more detail in the article. The upshot, though, is that once one is a moral member, one is then, in fact, self-governing. There is no meaningful loss of liberty when a moral member ends up on the losing side of a fair and inclusive vote on a problem that requires collective action (and poverty insurance is one of those problems).

The pre-birth position described in section three is a position of perfect equality, set up in such a way that it already establishes all the conditions necessary to make all parties a moral members of the political body. Therefore, even though some individuals in the pre-birth position would perhaps vote for zero poverty insurance, when the majority passes a non-zero level of insurance, they cannot claim that they were unjustly or unfairly treated.