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The Public Choice of "Superior" Sanctions

Literature › Works

Zane A. Spindler (1995). The Public Choice of "Superior" Sanctions. Public Choice, Vol. 85, No. 3/4. Springer (Kluwer Academic Publishers).
Type journal article
Scope Comparative and methods
Method theoretical or conceptual
Period studied 1980–1993
Regions South Africa, Canada, United States, Haiti, Afghanistan/USSR
Themes sanctions divestment, comparative theory, politics ideology elections, business and state
Citation key spindler1995

Argument

Spindler argues that existing sanctions are essentially quantity constraints (Q-sanctions) that, like quotas, hand rents to special interests in the target and sending countries. Revenue sanctions (R-sanctions, i.e. tariff-like) could recapture those rents for the sender government and could compensate the sender's losers or the victims of the target's policies. They might therefore be 'superior' in terms of economic cost or 'target efficiency'. Extending the Kaempfer-Lowenberg public choice model of the demand and supply of sanctions, he argues that democracies will nonetheless choose Q-sanctions. Q-sanctions have a stronger moral and ideological appeal, are cheaper to monitor, and suit concentrated interest groups better than R-sanctions. South African sanctions (wine, arms, divestment) serve as illustrations. The author admits the argument is speculative.

Evidence and method

No empirical data. Partial-equilibrium welfare diagrams (Figs. 2-3), a general-equilibrium production-possibility sketch of apartheid and sanctions (Fig. 1), the Kaempfer-Lowenberg demand/supply-of-sanctions model (Fig. 4), and illustrative examples (South African wine, Armscor and the arms embargo, the disinvestment campaign, US grain embargo on the USSR, Haiti, Canadian trade statistics).

Findings

  • Q-sanctions are quota-like and R-sanctions tariff-like. R-sanctions have rarely been used, which is puzzling since they could fund compensation. (p. 3)

    However, the sanction analogue of tariffs - a revenue raising (or R-) sanction - has apparently, not been used extensively

  • Non-offsetting sanctions give Afrikaners no pecuniary incentive to abandon apartheid. They could still be better off with sanctions and apartheid than under free markets, or could relax apartheid selectively. (p. 7)

    Such sanctions provided no pecuniary incentive for Afrikaners to give up control or apartheid completely

  • Apartheid's restrictions were mainly quantity restrictions that could be violated at a price, so offsetting sanctions could not fully restore lost welfare. (p. 6)

    Most restrictions associated with apartheid were explicitly Q- Restrictions not R-restrictions (Williams, 1989).

  • Purely pecuniary demand and supply imply that the optimal level of sanctions is zero. Positive sanctions require non-pecuniary (ideological) benefits. (p. 16)

    Obviously, the optimum and equilibrium level of sanctions given only pecuniary demand and supply would be at zero.

  • Moral outrage translates naturally into Q-sanctions. Disinvestment campaigners demanded divestment rather than higher returns. (p. 16)

    demonstrators did not demand that institutional investors hold out for higher returns on South African securities and loans but rather maintained that it was immoral to hold such assets at all.

  • Arms Q-sanctions provoked reaction rather than compliance, as with the development of Armscor. (p. 16)

    the Q-sanctions on armaments to South Africa led to the development of Armscor which is now one of the top five arms exporters in the world.

  • Q-sanctions have lower transactions and enforcement costs than R-sanctions, which raises their representation proportion and makes sanctions more extensive. (p. 17)

    moral principles and actual compliance may be more easily observed, monitored and enforced for simple, explicit quantitative limits than for detailed, variable revenue requirements.

  • R-sanctions spread small gains over large groups and take large losses from small, organised trade groups, so special-interest politics favours retaining Q-sanctions. (p. 18)

    Competitive special- interest group politics here would favor the retention of the Q-sanction.

  • The apparent increase in Canada's trade with South Africa after tighter sanctions reflected prices of unsanctioned products, not quantities. This illustrates measurement confusion. (p. 22)

    the reports had focused on the value, not quantity, of trade which in turn had increased due to increases in prices on unsanctioned South African products.

  • Tutu's 1989 call for more specific targeting of sanctions found no influential backer, and the ANC risked its ideological purity by lobbying for a particular African group's pecuniary interest. (p. 22)

    this "trial balloon" apparently generated little interest on the part of any influential group or sanctioning nation