Tuesday, May 31, 2005

Disconnects in the EU

This morning's Wall Street Journal (Subscription Required) has a long article on the dynamics of the votes on the European consitution. Most interesting is a chart showing who voted oui and non. The chart, based on exit polling data, suggests that there was an relationship between income and a yes vote - the more income, the higher propensity to vote oui.

Two responses could be taken from that. The first, is certainly what many in Brussels would take, that there is a correlation between education/income and a yes vote. The second, which, IMHO, is a bit more reliable is a bit more complex.

When I first started working in Mexico I noticed two phenonema in public markets. First, the price of small leather coin purses tracked pretty closely to the value of the peso. As the value fluctuated the price also did. I noticed it because, even then with very limited Spanish, the price was close to a buck. Other commodities were not as responsive - at least as I could see in an informal look - but the street vendors seemed to be pretty saavy on this commodity. The second was even more amazing. In Oaxaca there is a large outdoor Sunday market called Tlacalaula (Click here for great pictures) in a period over a couple of years in the 1990s - as the value of the peso fluctuated pretty wildly, the vendors made an interesting change in their habits. At one point, when the peso was floating pretty dynamically the vendors would give a premium to Americans who flashed dollars. They actually changed their prices and offered a discount that amounted to something close to 20% for people who pulled dollars out. If the price was 100 pesos and a person pulled out dollars - it dropped to the equivalent of 80 pesos (the peso was in the range of 7-8 at the time). But a year later when the value of the peso had settled, the vendors exchanged the dollar for its common equivalent - less an arbitrage calculation. I watched both of these happening too often to think that this was a coordinated action.

The OUI voters in Sunday's referendum suffered from two disabilities. First, they may have gotten too much from the traditional media - they actually believed that a bureaucratically drafted document would be helpful (which is what a lot of the traditional media were saying). Second, they are more insulated from the day to day effects of the nannyism that is Brussels. The regulatory impediments of a several hundred page constitution could be substantial - look at the complexity of living with our short document. Length does not breed clarity.

There is a well established concern in our history for avoiding the Passions of the People(Federalist #10 but that concern does not mean that the people do not get things right in many instances. In this case the real importance of the vote on Sunday was a recognition that if the elites move too fast in trying to homogenize, the voters will say "non" - too bad the other voters did not have the chance to say "nein" or "αριθ."