# The Moorish Wanderer

## الأرقام و البلاط

Posted in Flash News, Moroccan ‘Current’ News, Morocco, Tiny bit of Politics by Zouhair ABH on November 20, 2012

## Across Partisan Lines: Redistricting in Morocco

I apologise in advance to the excessive level of abstract models used in this post, but there is only so much I can take in the current, mainstream political science discourse in Morocco. I mean, I am a great fan of Wijhat Nadar (the review) and writings of heavyweights like Abdellah Laroui, but it would be fun to explore other alternatives, possibly using teachings from game theory. Plus this is High School-level math, so no harm done.

A quick look at a relatively unearthed matter in Moroccan politics can always tell when a consensus crosses party lines, and in this case, it is about the number of seats allocated to each district. Traditionally each and every party vent their respective grievances as to the incumbent districting: smaller parties vehemently oppose high thresholds (PSU found an eloquent advocate against it back in 2007 in one of its prominent leaders, Mohamed Sassi) and larger parties tend to believe their strongholds are undervalued: back then it was USFP in Rabat or Casablanca, nowadays it is PJD in Tangier, Casablanca or Salé. Every election is the same, parties complain to the media, but cannot agree on anything.

In fairness, districting is always a zero-sum game, even if the number of seats in parliament is expanded: a large district benefits some type of parties, and harms others. Better still, some parties have contradicting interests on similar constituencies; for instance, the 2011 general elections pitted Istiqlal and USFP (in Fez), PJD and UC (Marrakesh) RNI and Istiqlal (Southern seats) among others. A slight change in the number of seats, or inter-province districting can tip the balance one way or the other. Political parties in Morocco do look (and act) disorganised and utterly incompetent, but this belies their inner rationality as to their political survival.

Consider a simple model to capture the perverse effect that compels political parties to defer to a benevolent actor e.g. the Interior Ministry. It is the rational course of action for every political party in Morocco: abdicate the possibility of a contentious (but ultimately more democratic) battle over the optimal number of allocated seats per district, for a more peaceful, consensual redistricting under the auspices of a mechanism-designer with endogenous preferences, ultimately the perpetual weakening of that very same political spectrum.

Consider a number of n political parties competing for a fixed (but undefined) number of seats. Each party i derives some utility from contesting elections and having members of parliament elected; three layers of benefits can be listed: first, merely electing a member of parliament, second, electing a caucus with at least 6% of nationwide popular votes, and finally, a benefit from coming on top, or very close. The utility function is thus:

$U(h_i) = \mathbf{1}_{v(h_{i,6})}\{\pi(h_i)+\phi h_i - \max\{h_{-i}\}\}+\frac{v(h_i)}{v(n)} -c_0$

As each party prepares to contest elections, they face a certain fixed cost (typically the deposit required from each and every party candidate/list) but on the other hand, there are benefits attached to large caucuses, either in form of increased monetary compensation, or some utility derived from participating in a government. A simple differentiation pinpoints exactly the conflict of interest:

$\dfrac{\partial U(h_i)}{\partial h_i}=\pi'(h_i)+\phi-\max{h_i}=0$

that is:

$\pi'(h_i)=\max{h_i}-\phi$

As one can see, the benefit from one additional seat for a particular party stems from the performance of other parties (a primary evidence of the zero-sum aspect of game elections) and most importantly, is negatively linked to this term $\phi$. In this particular setting, it refers to a ‘premium’ put on the seat(s) won by that particular party. As it shall be proven later, each and every party has a particular incentive at keeping that parameter exogenous – in this case, defer to a higher authority.

Suppose the premium is set by the final outcome, i.e. suppose the present electoral result decides the next performance and the size of the district. This means:

$\pi'(h_i)=\max{h_i}-\phi$

becomes

$\pi'(h_i)=\max{h_i}-[\phi'(h_i) + \phi(i)]$

Now, there are a couple of cases where the last term might differ from the first case to the second. And there comes the Interior Ministry (the shiny knight cloaked in white, one might say) in providing an arbitrage that benefits individual parties, but ultimately harm their collective chances in getting large, stable government coalitions. In this setting, individual parties are better off when the premium is low, in fact when it is lower than the fixed, exogenous term $\phi$, that is:

$\phi'(h_i)+\phi(h_i)\geq\phi$

Because of the higher competition (captured by a competitive districting) between parties mean the overall benefit from seats won by a particular party is diminished, and coming on top is not worth much.

As the same reasoning is applied to the entire caucus carried by party i, we get:

$\int \phi'(h_i)+\phi(h_i)d h_i \geq \phi \int h_i d h_i$

and there is your proof: on average, a caucus is better off when the districting is exogenous: $\mathbb{E}(\phi(h_i))\geq\phi\mathbb{E}(h_i)$ this is possible because each district is treated the same; the intuition behind it is, preferential treatment for one district cannot be achieved because every other district will have to be treated similarly, and that takes us back to square one. The best response for each political party is thus to support uniform treatment, and as a result their respective caucuses are weakly better of with an exogenous districting.

Suppose we also look at the dispersion of caucuses as well: a larger expectation in caucus size does not mean both cases exhibit equal dispersion around it; in fact, since $h_i$ denotes dispersion around the mean, and since: $2 h_i \phi'(h_i)+ h_i^2\phi(h_i)\geq \phi'(h_i)+\phi(h_i)$ then $\mathbb{V}[\phi(h_i)]\geq\phi^2 \mathbb{V}(h_i)$

This is an important result, because individual party interest trumps the collective likelihood of having a strong parliamentary majority (due to competitive districting) and the benevolent designer can only minimise the volatility – if it is indeed in their interest.

A candid observer cannot but wonder how Makhzen and Nihilist parties seem to agree on  a status-quo that harms representative democracy: true, smaller parties (including PSU) are most likely to be wiped out of the political map if they do not merge or join larger parties, but on the other hand, larger parties also seem to know they are next in line, because the bulk of their seats can be lost if a competitive system were to be introduced, be it an alternative ballot system, or an unfavourable (but impartial) districting.

Authorities on the other hand seem to have some incentive in keeping volatility high enough, so as to deny any potentially rebellious party the possibility of commanding an absolute majority, and hence forming an independent-minded government. It seems political rationality in this setting trumps every possible narrative about ideology, or political history.

## Growth and Technological Change

Posted in Dismal Economics, Morocco, Read & Heard by Zouhair ABH on November 16, 2012

Capital accumulation exhibits significantly low levels of growth compared to output growth, and remarkably enough, TFP.

For all its simplistic setting, the 1957 Solow paper provides enough of a case to support the following claim: accumulation of physical capital per capita does not create growth. And as far as the domestic economy goes, this is what comes out:

   Y  |   H   |   K  | TFP
------+-------+------+-------
1.40% | 0.07% | 0.22% | 0.83%
| 5.12% | 15.68%| 59.38%

(Quarterly growth. Y: Output, H: Labour, K: Capital, TFP: Solow Residual)

Over the past half a century, capital accumulation accounted for only 15.7% of the average GDP growth in the Moroccan economy, three times as much as demographic growth (actually, growth in the labour force) but most of the observed growth (in real terms) comes from TFP, Total Factor Productivity, or commonly known as ‘The Solow Residual’.

TFP accounts for almost 60% of the long-run average GDP growth. It does a lot more than that: it is more aligned with GDP growth, more correlated, and most importantly, a 1% increase in the Solow residual accounts for .96% in output growth, even as 1% in Capital growth accounts for only .08% in output What can the policy-maker learn from this very simple yet robust model? First, that accelerated accumulation of capital is unlikely to get output to grow faster. In the universe of our government’s commitment to get the 5.5% growth over their legislature, they need to generate a mind-boggling 23% increase in gross capital formation – i.e. an annual additional investment of 9.42 Bn dirhams above the current trend.

Impulse response graph to a 1%, one-period increase in productivity. Capital (k) decreases 4.43% the first period, and recovers only 60% of its initial return 5 years after the shock. Investment (x) on the other hand, increases substantially, even if it does not exhibit comparable strong persistence.

The findings are easy to sum up: what drives most of economic growth is not physical capital accumulation, but rather those things policy makers in Morocco care little about: research & development, labour and capital efficiency (a sad story I can recall from a lecturer in my Alma Mater, about a project of diesel-powered desalt water plant in Laayun, a wasteful process the Moroccan officials were reportedly proud of) and most important of all, institutional changes. These of course do not refer exclusively to political reforms, it encompasses labour market regulation and rigidities, rule of law and enforcement of contracts.

What is the real effect of this ‘technological change?’ first, a 1% sustained increase in innovation (such as it is) over 4 periods (or one year) results in boosting investment productivity 4.24%, with spillover effects going up to 3.2% on average over a 5-year period. Just think of it: this is sustained investment over just the first year in office. In budget terms, this means a relatively low investment of 50 Million dirhams in efficiency programs can increase investment efficiency by 4.24%, hence contributing an additional 12.5 Bn dirhams a year, a net contribution to growth by 360 basis points in one year – that is, an additional 3 Bn in added value, jobs and economic activity.

In fact, the accrued effect of  a one-year investment produce a marginal effect of almost one percentage point of GDP growth. And it is only right GDP grows thanks to technological change – because these resources when allocated to capital accumulation have a much lower return (one observes in the second graph capital accumulation declines by similar amounts (4.43% the first period). I argue this provides good evidence that accumulated investment for its own sake (which is about anything when it comes to some of the ongoing Grand Design workshops)

One last thing; since the mid-1970s, a particular component I have not described here accounted for the remaining 20% in real growth: even the impact of foreign trade (or perhaps just foreign productivity spillover effects) generates more growth than capital accumulation.

Technical note:

See Cooley & Prescott for the model used to generate the IRF graphs. Steady-state values have been used to calibrate the deep parameters.

## 16 – 12… Why Not 7?

Posted in Flash News, Intikhabates-Elections, Moroccan ‘Current’ News, Morocco, Read & Heard by Zouhair ABH on November 15, 2012

503 days since our new (in)glorious constitution has been voted overwhelmingly, and no word as yet as to the dozen of bills essential to make it work have been presented before parliament. Our elected representatives have not the foggiest about what perhaps may be the most important pieces of legislation since 1997 (Bill n° 47-96).

It is sad that for two major decisions, the first in January 2010, and the second in another speech in July 2011, the legislative process did not follow suit. Regionalization is just as important as the constitution itself. Either Morocco chooses to devolve as much power as possible to local and regional bodies, or the same old mistrust and latent hostility will prevail between the citizens and their elected representatives, local or national, all of which is at the expense of democracy, and only encourages Moroccans to seek other sources of unelected, crypto-autocratic power.

The Regionalization commission set up after the Royal speech three years ago came up with a rather peculiar proposal for 12 regions – since I am no expert in all the aspects involved in their offer for that particular proposal, I should refrain from commenting on it; Although, I must point out regional GDP is likely to be more dispersed and more unequal – in fact, save for Casablanca-Settat and Rabat-Salé-Kenitra, a 1% increase in regional density per capita in the new setting actually decreases regional GDP per Capita by 3% (the newly redrawn Southern regions are actually worse off) a pure economic analysis means these redrawn regions will only increase dispersion in population density and wealth per capita – even as provincial output is relatively well distributed – most provinces add up 116.5 Million dirhams to their GDP when their local population increases 1%. But this is only possible if the aggregate regions even growth out, instead of concentrating high-growth sources and leave hinterlands to fend for themselves.

(one small digression perhaps: I was looking at a pre-1870 Germany map to illustrate my point; the present Bundeslaenders vs the fractured old Holy Roman Empire.Quite an illustrative example as to how historical particularism can be dealt with in devolution schemes)

a 7-regions scheme makes it actually easier to determine the regional weightings for the subsequent electoral reforms

Here is a proposal for a much more reduced-form (and arguably, fairer) regional breakdown that would perhaps serve local democracy, and representation at the federal (or national) level. 7 Regions, with relatively homogeneous cultural and historical roots, not to mention some measure of economic fairness – the proposed scheme reduces regional GDP dispersion by 31% compared to the scheme put forward by the Royal Commission. It also serves as a spring-board for another project many have lost interest in: Electoral reform for strong parliamentary majorities – and thus, stronger elected government.

## Predictions for the 2016 Elections, Part.3

Posted in Flash News, Intikhabates-Elections, Moroccan ‘Current’ News, Morocco, Read & Heard by Zouhair ABH on November 10, 2012

Marginal seats per large party turned out to be quite a fascinating subject: each party has its strongholds – even marginals. It also shows that out of the 83 marginal seats, only 36 are actually in play. So here’s my first set of predictions as to the 2016 configuration for parliamentary caucuses:

1/ Barring exceptional surge in favourable turnout, PJD cannot hope to achieve anything near 153 seats on local ballot, for two basic reasons: first, its electoral distribution does not allow systematic strong probabilities to carry at least 2 seats per large district, and second, other parties have stronger probabilities to hold districts quite important for PJD to reach 153. Its best case scenario is that of an increased plurality to 121 – that is, a surge of additional 394,000 voters, either pinched from the competitors in these seats, or new electors.

PJD can expect some pick ups next election, but needs to take a close look at some endangered seats they could lose by less than 2% of the votes.

Either way, PJD cannot perform 30% more in very competitive districts when they find it difficult to deliver a 7.3% nationwide swing. So ix-nay on the Absolute Majority, Morocco carries on with a PJD-dominated coalition government on 2016. This is simple arithmetic: an absolute majority in parliament means 198 seats, or 153 on the local ballot. In order to achieve it, there is the need for each contender party so secure a plurality of votes from the 92 districts. It so happens the present system requires the winner, in order to govern by themselves, to carry at least 47 of the 92 districts to have a chance to get 153 seats on local ballot, on the basis of past electoral performance in turnout (hence controlled for party ‘leadership’) some districts are an absolute winner – because they have a lot of seats, or because registered population and turnout is high enough to make them essential to the ‘winning district coalition’. Alternatively, First Past the Post provides more favourable conditions for strong parliamentary majorities – but then again, this would shake up a consensus across partisan and political lines (Makhzen and many of its dissidents oppose it vigorously)

The methodology is simple enough: start by listing districts with decreasing highest turnout, and sum their corresponding seats until 153 is reached (by the current number of seats, the absolute majority is 155, but that’s close enough) then look at the last district to make up for the absolute majority: Essaouira. Bad news for PJD or PI – the most likely (albeit a small one) to have a certain electoral distribution able to deliver a super-majority.each of these essential districts is controlled by strong majorities of different parties. A simple look at the map opposite shows it: it is even worse news for PJD because some of its regional strongholds (like Tangier) does not account much in the path to 153. This is why I predict, on the basis of its past electoral performance, it cannot acquire the required 65 additional seats.

Essaouira is the last district needed to get the super-majority. A truly stable party government would value its district as much as anything else.

2/ There is a considerable chance PJD, PI and RNI might lose more seats than gain some, because most of their marginals are very competitive – i.e. challengers are close enough to change the electoral outcome in 2016 with only a dozen of votes per district. On the other hand, PAM, UC and to a lesser extent, USFP and MP could gain moderately; Overall, and bearing in mind the initial assumption of a stable turnout, the 2016 parliament ins unlikely to change much, other than transfer 25 seats one way or the other.