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Packenham model to predict policy changes

Page history last edited by PBworks 11 years, 11 months ago
 
 
 
 

 


 

Packenham Model: 

 

 

= looks at 4 factors = help predict whether govt can make reforms (reduce size of budget deficit…difficult because needed 3/5 majority to pass constitutional change)….

 

for political reforms / economic reforms (Nixon in China model).  This model helps predict likelihood of success of passing reforms.

1.        Political credentials of president – Nixon goes to china

2.       Political party system – fragmented (Brazil) vs. consolidated (arg.)

3.       Presidential leadership – charisma, politics (Kirchner in Arg. is very good). 

4.       Consensus in civil society

What about Chavez? Does this model apply? Yes, even if the government is not “pro-Washington”…it works for any democracy.

Obama is only one who wants to sit and talk with Iran…so he could never play “Nixon goes to china” role….so, it’s very hard to elect an effective agent of change…because they need to surprise you and more you against their expected way.  Women presidents:  Chile, Arg., Germany....maybe the USA next?

Consensus – do you have consensus is you win election by 60%? I think it does…if you ran on that platform….that gives you a mandate.  But, for most issues…the consensus is likely what the president will need to overcome with issues #1-3…people do what they might not want to do, but because you have credentials…they will follow.

 

 

 Brazil case study

 

Note:  Brazil's political party system if it’s fragmented…which means its more difficult to pass reforms….need 3/5 majority….where no party has more than 20%.  So, the packenham model really applies to Brazil, where coalitions must be formed to get reforms passed

 

 

Challenge in the 1990's

Cardoso faced a major challenge in the 1990s in Brazil

The other problem = was he going to be able to explain this to the people….Packenham says that if he comes from the “left”…it might be easier to sell reforms…because people wont be as suspicious….structural

Political credentials of president….if he is from the left…its easier to convince them with better credibility from the left (if he is trying to cut back social programs, size of government)….like Lula (?)

See slide “political assessment”….great summary = 4 factors = key

Cardoso – had political credentials…as former Marxist., and he had good leadership skills, but faced obstacles of low political consensus.  So, professor was predicting that he might succeed…and he did privatize Telebras, and Embraer, CVRD, and he made it possible to fire government workers….but did not make progress on social security….but

On the other hand, it often takes a crisis…hit the bottom for population to accept need for changes.

Unfortunately, just as he was making reforms…investors got spooked.  Problem was that dollar kept getting stronger, and was pulling up Real value…decreasing exports….and increasing current account deficit. 

Key = Itamar Franco (ex president) – defaulted on debt of Minas Gerais….and investors got nervous…if that guy can do it….then there is no was that Brazil would ever solve problems….and investors started selling (massive) govt bonds (and other assets).  Brazil used all billions of reserves (plus borrowed billions from IMF) to try and defend….but it was not enough….and had to give up…and let it float.

Professor predicted that it would work…but it did not

Problem ….states could default on their own debts and pass on debts on to federal government… really spooked investors….and when investors took money out….currency collapsed

 

 

Comparing Brazil and Argentina in the early 1990's (1990-1992) and the prospects for reform

 

Brazil's president:  Fernando Collor de Mello

Argentina's president:   Carlos Saul Menem

 

Question   (on Brazil and Argentina): In his article, “The Politics of Economic Liberalization in Comparative Perspective,” Robert Packenham develops four main hypotheses (pp. 9-19) to explain why some countries adopted market reforms more quickly than others. His first hypothesis (p. 9) is “The Structure of the Situation of the Elected President: Carlos Saul Menem as Richard Nixon.” According to Packenham, in what way was Menem like President Richard Nixon in the U.S.? Explain this in a sentence or two in your own words.
 

The fact that Menem was of the party that had created the strong state thus made him a credible candidate for dismantling the state which his party had created. As a contrast, Peckenham illustrates the example of the Brazilian President, Collor, who also set out to liberalize the economy, but was of the center-right party which was traditionally against the development of a large state. Because Menem from Argentina was of the party that helped to created, and was typically in favor of the larger state, he was more credible and trustworthy when he called for reducing the state involvement in the economy.

 
Packenham draws a parallel here with “Nixon in China” because President Nixon was traditionally known as a strong anti-communist, and so it is often said that only Nixon could have reached out to China the way he did, because his past anti-communist reputation gave him political cover within his own party and gave him credibility when he reached out to China (and paved the way for China-US relations for the next generation).  
 
This comparison of Menem with Nixon is interesting because it illustrates how a leader can be more effective as a change-agent if he comes from a structural situation in which he has credibility (as having been traditionally against such change). In Menem’s case, the people that would typically oppose a reduction in the state role in the economy were more inclined to follow the lead of a man who came from their party, than one that had traditionally opposed the larger state role (as was the case with Collor in Brazil).
 
 
 
 

Brazil's moderate success at reforms under Cardoso and Lula

 
 
Fiscal Responsibility Law, 2000
Floating exchange rate;
•Inflation targeting, rather than price controls to fight inflation (as Argentina is doing in 2008)
Programa de Aceleração de Crescimento (PAC)
 
 

some progress with:

 
Social Security Reform
Labor Reform
Tax Reform
 
 
 
 

 

Brazil today

 

Political Party System: fragmented
* Legacy of military regime.  Result: Lula’s Partido dos Trabalhadores (PT)  has fewer than 1/5 of seats Chamber of Deputies  * Alliances necessary
Political Credentials of President: good
Leadership Skills of President: good
Political Consensus: low

 

Brazil issues to tackel in the future

(where the Packenham model should be used to predict likely hood of reforms passing)

 

list reforms: 

 

  1. Social security reform
    labor reform
    tax reform

 

note:  the IMF has already been paid in full, so there will be little external pressure to make these reforms.   Also, in 2008, Lula is unlikely to push for future refors as he looks forward to life after the presidency (perhaps as a senator in Pernambuco), which makes it less likely that he would burn political capital, and popularity necessary to push through politically challenging reforms

 

 

 

 

 

Mexico - using Packenham to evaluate Mexico in 2008

 

Calderon in Mexico…Harvard / right wing

Mexico case – 1 party “dictatorship” – 70 years PRI.  “nice situation”…hidden agreement….government gives us liberty….enough to feel free..but no wars like in Arg & Chile.

With PRI…cant say they are “leftist or rightist”…alternate.  Always very pragmatic…

Mexico was always very close with Cuba…closest of any in Latin America….to get balance with relationship with USA.

Now, PRI is nationalistic, and in the center

PAN – right wing, (founded in 1939…but first governor in 1989)….president in 2007 (?)…first time

PRI – institutionalize the revolution – center – 1929…right after revolution.

PRD – leftist (unfortunately, not as modern as leftist in terms of Spain, France...in Mexico is not pragmatic)

So, real democracy is very , very new, even though parties are old…they never had a chance to win….administrate

Last election PAN vs PRD…PRD lost…claimed there was fraud

Business people supported PAN…. But might have used “fear” to make support for PAN

In the US – private funding of political parties…not the case in Mexico

 

 

 

Packenham model for Mexico  - assuming that Mexico is trying to make free market reforms. – labor reforms…or if Obrador would have pushed for privatization of Pemex, he would have been more credible than Calderon….because Calderon is “free-market” guy….but Obrador is “Nixon goes to china”  if he proposes labor reforms, or privatizations.  Labor reforms are not popular….similar problem as Brazil or Argentina… fear of structural reforms that are needed to fix national budget problems…that MX will have if not for Pemex.  Example…NAFTA was huge reform…but back then, there was only one party PRI…and he was a skillful leader, and civil society was not concerned “president was god”… that’s why NAFTA was easy back then…but if you tried to do it now…it would be a nightmare.  It would never pass.

1.        Credentials – Calderon- credentials - not good – from Harvard (other guy Obrador was like Lula)….so

2.       Political party - ?

3.       Presidential leadership-  attacked drug dealers…got popular support, and military support.  During oath in tough environment…symbolism.  Also, found ally in army…who has traditionally been neutral….Calderon…increased salaries, budget, and now…usese army for fighting drug dealers…looking for more sympathy from political actors

4.       Consensus in civil society -

Mexico – state governors….when one party rule…governors could be removed by president …easily

Nowadays, PRI is not powerful for president…but is possible for states….

Governors have political power….but are not independent of federal

Mexico is very centralized…you can not do business in Mexico without going to Mexico city…unlike US….you don’t need to go to Washington to get permission to do business in US.   Mexico City stones from pyramids were used to build cathedral…tactic

Extremely centralized….huge part of budget goes to Mexico City (not industrialized city)…used to be years ago.  Because Mexico City is huge, without industry….PRD is leader of Mexico city….major candidate for president in 2012….

Mexico city has huge budget, needs money to pay for mass of people, and institutions, education, etc.

In north…most parties are PAN (right) and PRI….where industry is.

 

 

 

PRI lost presidency in 2000 (when Fox)

 

 

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