The Importance of Institutions

This may be a bit of a surprise to many of you, but I am part Nicaraguan on my mother’s side.

What this means is that I try to be a bit more aware of what is going on in Latin America, specifically Nicaragua, than most Americans likely do.

One of my relatives had to flee the current government of Nicaragua for the unforgivable crime of pointing out inconvenient facts about COVID-19 that made the current leader, Daniel Ortega, look less than perfect.

As bad as things are in the United States, they are much worse in much of Latin America.

This piece will be about how important institutions are, how they determine so much, and why voters must pay closer attention to them.

Quick History

The main difference between Latin America and the rest of the Northern Hemisphere is who colonized what. South of the Rio Grande, the overwhelming majority of territory was colonized by the Spanish and Portuguese, though the United States did take quite a bit of territory north of the Rio Grande via war.

So for those of you living west of the Mississippi River, much of that territory was straight up stolen from Mexico.

Basically, the entire country of Brazil was a former colony of Portugal; hence, they mainly speak Portuguese.

Like much of Latin America, Nicaragua has a combination of wild swings in government from the far left to the far right and vice versa and a long history of systemic corruption.

For example, the Somoza family, who ruled the country from 1937 to 1979, was notoriously corrupt. Under its rule, the family and its circle of friends got quite wealthy while the country suffered from high rates of poverty, illiteracy, and crime. The people who did the Somoza family’s dirty work, the National Guard, were complicit in not only committing crimes against humanity but drug trafficking and extortion.

The people who overthrew the Somoza regime (it got overthrown because the last leader had the bright idea to steal and embezzle from his own allies after a devastating earthquake in 1972) proved no better. Today, under Daniel Ortega, the country is one of the poorest in Latin America. The current situation has gotten so bad that one of my relatives considers Honduras to be a safer place to live, one of the countries with the highest rate of homicide per capita in the world.

American intervention to protect commercial interests and to fight communism has often made this problem far worse. Turning again to Nicaragua, the Somoza family stayed in power for so long in part because the United States kept it supplied with weapons and money to fight communism and protect commercial interests.

Needless to say, both objectives failed in Nicaragua after the fall of the Somoza regime. I recommend the Book On the Fall of Somoza for more information.

Sadly, this story has played out all over the world.

A Local Case Study

The problems in Nicaragua are not confined to the Central American country itself. Systemic corruption and incompetence has severe consequences in the United States at every level.

Exhibit A of this is the comparison of the Minneapolis and Saint Paul police departments’ responses to the unrest after George Floyd’s murder.

The Minneapolis Police Department made a bad situation worse by responding with too much force against an initially peaceful crowd. The situation spread out of their control, and bad actors took advantage of the situation to loot, burn, and cause serious destruction. When Minneapolis Mayor Frey ordered people to stay home, people openly disobeyed his orders. This communicated that institutional authority at all levels inside Minneapolis had broken down—to the point where Minnesota Governor Tim Walz had to bail him out with the National Guard.

By contrast, when Saint Paul Mayor Melvin Carter ordered people to stay home, for the most part, in Saint Paul, people obeyed orders. While there was substantial damage to the Midway area, it was largely kept under control. In addition, the Saint Paul Police Department performed much better at controlling the chaos, although being better than the MPD in that regard is not a high bar to clear.

Let’s be clear: the SPPD has serious problems regarding racial profiling and how it treats people of color, not to mention issues around excessive force.

That being said, the SPPD is far better at actually holding violent criminals accountable, as shown by its much higher clearance rate in homicide investigations (not to mention being much more competent overall). In addition, the Saint Paul city government functions a lot better on a daily basis than its counterparts across the Mississippi River.

This example of the Twin Cities demonstrates the importance of institutions on a local level. Under intense stress, one set of institutions failed, and another bent but ultimately held.

If you need an example at the state level, just look at outcomes in Minnesota and Wisconsin.

I will start with the caveat that Minnesota has some big problems, but it is doing better in those departments than is Wisconsin. Minnesota and Wisconsin have roughly the same demographics, and the two states’ economies/populations are close to matched. But in most quality-of-life measurements, Minnesota leads Wisconsin by a large margin (with the notable exception of NFL teams).

The main reason is that Minnesota has better institutions than Wisconsin has at the state level.

While raw GDP metrics have their problems, it is worth noting that blue states tend to have much higher GDP and GDP per capita than most red states. In other quality-of-life metrics, blue states outperform their red state counterparts.

The main area where blue states must improve is housing availability. Thanks in large part to NIMBY and sky-high demand for housing, homelessness has become a big problem in many blue states, in particular on the West Coast.

Going Forward

Institutions are vitally important, and yet voters pay little attention to them.

Problems inside institutions often take years, if not decades, of hard, often thankless work to fix. Obviously, this is beyond the attention span of most voters.

The scariest thing about the last seven years is that American institutions have taken a massive beating in both quality and trust. When people trust institutions less, they are less likely to give them the needed support they need to function. However, the less support they receive, the worse these institutions perform, and the worse they perform, the less people trust them.

You can see examples of this happening all over the world and in the United States. The COVID-19 pandemic has only made this problem worse.

This is perhaps the biggest reason experts at all levels are so important. They make sure that our world runs smoothly. Conversely, this is why the disregard for expertise scares me so much.

So for Democratic primaries and general elections, make sure to support candidates with the right administrative skills and appropriate experience. It is vitally important.

Stay frosty, everyone.