Coase Solution to Endangered Golden Trout

California environmental groups seek to drive cattle ranchers off the Inyo National Forrest in the interest of protecting the golden trout, the California state fish, as is discussed in this article. Environmental groups want to completely eliminate cattle grazing in the area by law. Such an argument contradicts a “Coasian Solution” to an externality as discussed in class.

Ronald Coase would approve of the current agreement between that US Forest Service and ranchers in which “three local families… have permits to graze a total of 885 cows on the Kern Plateau. They pay $1.35 a month per cow…”. This solution follows Ronald Coase’s model of internalizing an externality problem through the market. The State owns the land, and cattle ranchers pay to compensate the state for the damages done to the land (in this case damages in loss of fish). According to Coase, the overgrazing issue is rooted in the fact that the “rate has not changed much in four decades”, and perhaps also that “the calves running alongside their mothers are not counted”. The fix, according to Coase, would be to raise the price of grazing enough to fully compensate the state, or possibly to count calves in addition to fully-grown cows. Alternatively, land rights could be transferred to the ranchers, and the state could compensate such ranchers by paying them to stay off designated forest lands, or use alternative fields. As long as the property rights are well defined, it doesn’t matter who is assigned the rights.

Environmentalists claim that government should prohibit grazing in the interest of protecting the golden trout. Coase would argue that an agreement can be reached between ranchers and the state to lead to the socially optimal amount of grazing as long as property rights are defined, and there is costless bargaining.

Bringing the Rent Downs

Back during the 2010 New York gubernatorial election, a candidate by the name of Jimmy McMillan garnered a surprising amount of support for The Rent is Too Damn High Party. Though his party didn’t truly have a platform apart from its stance supporting the expansion of government-sponsored social programs to provide free healthcare, free higher education, and rent subsidies, he was able to reel in more than 40,000 votes. That may only represent 0.9% of the popular vote, but it also means that The Rent is Too Damn High Party actually beat out several other party candidates, and was in fact on par with both the Libertarian Party and the Green Party.

Assuming that voters behave rationally at the poll box, it would seem irresponsible to simply assume that all 40,000 of those voters were willing to throw their vote away to the candidate with the funniest party name. Thus we must seek another explanation as to why McMillan’s ridiculous party was able to gather such an unexpected amount of support. Using Downs’s theories about the spatial location of parties along a political spectrum and the distribution of voter preferences, we should be able to shed some light on this enigma.

Its website claims that The Rent is Too Damn High Party consists of Democrats fed up with current policy decisions (see the party's policy statement here). The party is clearly liberal, and in fact more liberal than the Democratic Party on most fiscal issues. If we were to create a spatial diagram for fiscal policy with conservative fiscal legislation on the right and liberal fiscal legislation on the left, The Rent Is Too Damn High Party would lie to the left of the Democratic Party, and the voter preference distribution would have a median that lies left of center (based on the election’s results). Thus it seems that McMillan’s party may actually be catering to the interests of those voters whose fiscal policy preferences lie far left of center, and who may have been alienated by a Democratic Party whose fiscal stance was too close to center. Had The Rent is Too Damn High Party gained more support, it could have actually incentivized the Democratic Party to shift left on the fiscal political spectrum to regain the votes it had lost. Unfortunately, 40,000 votes is hardly enough to prompt that kind of shift. I suppose Jimmy McMillan and The Rent is Too Damn High Party will have to try their luck in the next gubernatorial election.

Straw Polls as alternative voting systems

A recent straw poll from Florida was won by long-shot businessman Herman Cain. The candidate had finished near the bottom of several other polls and was not expected to be a major factor in the race, so why the sudden shift? According to a Washington Post article, voters in the straw poll revealed that they had voted for Cain as a way to show their frustration with the performance of the current candidates, not because of their support for Cain. Recent poor performances from the candidates in the debates were the main cause of the frustration.

A straw poll is run by a private organization and doesn’t determine who becomes the primary candidate, but is a way of gauging interest and acts as a measuring stick. We can judge the straw poll through the three criteria for judging alternative voting systems: Condorcet efficiency, the use of ordering information and the minimization of opportunities for strategic behavior. The winner of the poll is whoever gets the highest majority of the votes, not the candidate that would beat all others in pairwise elections, so it is not necessarily Condorcet efficient. Herman Cain won the overall majority, but since the delegates admitted that they didn’t vote for him because they favored him it cannot be conclusively determined that Cain is the Condorcet winner. A way to properly determine the Condorcet winner would be to have each candidate face each other separately within the poll. The straw poll does not use ordering information because voters only get one vote, so there is no ranking or point system. The straw poll does not minimize opportunities for strategic behavior as evidenced by the article. Since the vote does not actually determine who wins the nomination there is an incentive to vote strategically. The delegates clearly voted in hopes of getting the best candidate in the long run, not in a way that showed their true preferences. Most primary straw polls are also closed within the party to prevent strategic voting from other party members who might select the weakest candidates in hopes of making it easier for their parties’ candidate to win. Straw polls should be taken with a large grain of salt because of the opportunities for strategic voting and the lack of Condorcet efficiency.

Why Vote?

Apparently their wasn't a good reason to do so in Brockton, Massachusetts as only 4.7% of voters decided to cast ballots in the city's preliminary races for mayor and school committee this past Tuesday. While preliminary elections tend to have lower voter turnouts than general elections, this year's percentage total was the lowest of the past two decades and was considerably lower than the voter turnouts in neighboring cities for comparative positions. The city spent $120,000 in order to provide a city wide election only to have 2,200 people turn up to vote. At $55 a ballot, it would seem that a preliminary race for mayor and school committee is not in the best interest of society (although that is another topic).

The article casts a negative light on the Brockton citizen as being undemocratic, providing voter apathy, "general satisfaction with the status quo," and lack of competition as reasons for a poor election turnout. However, the article fails to take into account the possibility that the Brockton non-voter might be simply being rational. The theory of rational abstention takes into account the physical costs of voting (driving, time, research, etc.), the probability of one’s vote actually being a deciding factor, and the differences between the candidates running. When the opportunity cost of a given action (voting) is greater than its perceived benefit, it is better to refrain – simple economics. Voters are not abstaining because they are apathetic, but simply because the value of their vote is not worth the time it takes to cast it. In the case of a preliminary election for city mayor, the costs almost always outweigh any perceived benefit.

Taking the theory of rational abstention a step further, one can see its possible damaging impact on democracy. If votes are democracy’s way of viewing individual preferences for the allocation of public goods, and yet in general it’s usually rational to abstain from voting because one’s vote is generally meaningless, what is the difference between living in a democracy and living in a dictatorship given certain rights and liberties are still in place? While this article doesn’t go as far as to say democracy has failed in Brockton, it does seem to articulate a lack of civic responsibility. However, voting isn’t mandatory and unless some incentive to vote (or penalty for not voting) is established, voters will continue to rationally abstain and turnout will remain low, especially in minor elections.

Foreshadowed Abstention in Florida?

Herman Cain’s surprise victory in Florida’s straw poll over the weekend has turned many heads. The victory of this outsider has been seen by some as a vote of “no-confidence” for the current GOP frontrunners (Perry and Romney). This lack of confidence mentioned by the article can be dissected in more detail by using the theory of the Median Voter Theorem and voter abstention.

One of the key assumptions of the Median Voter Theorem is that there are no voter abstentions. This is obviously broken in almost every election. In evaluating how this might affect the predictions of the theorem, it has been noted that voters may abstain if alienated. This would occur if the difference between their optimal set of policies and the actual set of policies of their party is greater than some unknown reservation value. For example, someone who is on the extreme wing of their party may not vote in an election if their difference from their candidate is too great. One motivation for doing this would be to send a message that the candidate must move away from the median position in future elections.

This straw poll shows that many voters in Florida still have large differences between themselves and the candidates that have been leading nationally. If these differences remain large enough, they may lead Florida voters to abstain from voting out of alienation.

In spite of this, the article ends on a note that is more hopeful for the GOP. It quotes David Keene, the president of the NRA, saying that President Obama is “the greatest uniter in the history of American politics.” By this he means that he believes the GOP will unite around whatever candidate is eventually picked because President Obama is so much further to the left, something more in line with the Median Voter Theorem. It remains to be seen if voter alienation will play any role in the upcoming election or whether voters will vote for whoever is closest to them, regardless of how central they are. Either way, the story of voter abstention because of alienation is helpful in understanding the discontent referred to in the article.

Herman Cain for the win?

As Republican presidential candidates have been on the campaign trail in pursuit of the Republican presidential nomination, Texas Governor Rick Perry and businessman and former Governor of Massachusetts Mitt Romney have emerged as front-runners in quite a few polls and have lately been battling for the lead position.  In an unlikely turn of events, Herman Cain won a GOP straw poll yesterday in Florida with a convincing 37% of the 2,657 votes cast.  In his WSJ Online article today, Patrick O'Connor discussed some of the reasons why Cain may have come out ahead of his opponents who have been gaining more support and tend to be relatively more moderate than the former corporate executive (though Perry has led a considerably more conservative campaign than Romney).

The straw poll immediately followed a Thursday night GOP debate, in which Perry stood by "a Texas law he had signed making illegal immigrants eligible for in-state university tuition," which disappointed many conservatives and alienated some voters.  This is typical of the dilemma faced by candidates of having to appeal to two different audiences while trying to win a single-party primary but also taking into consideration appealing to the median voter in the general election later on.  In a two-party election, Perry's policy would still have alienated some conservatives, but it also likely would have won him some moderate votes by moving him closer ideologically to the Democratic candidate.  The primary is a balancing act where the candidates must determine how conservative (or liberal, as the case may be) they must be to win primary votes without going past the point of no return where they cannot come back close enough to the middle to compete for Downs' decisive median voter in the general election against a candidate of the other party.  Therefore, although either Perry or Romney would likely be ultimately more electable than Cain in the general election, he was able to surpass both candidates for a win this Saturday.

Political Spectrum

This CNN article - hyperlink in the title - discusses Charles Percy, a "liberal conservative" from the 1960s, 70s, and 80s. Percy, a "Republican from the Rockefeller wing of the party who had made his name promoting affordable housing and combating urban poverty," represented the moderate-Republican population. The author contrasts Percy with the current, further right, presidential hopeful Rick Perry of Texas, and shows how Percy's loss of political power represents the "Republican Party's mutation from a vibrant and diverse coalition to the dogmatic cult of conservative ideology that it has become today."

In class we are examining voting systems and the interaction of party ideologies. We said that one of the main criterion for judging alternative voting systems is minimizing opportunities for strategic behavior, or minimizing incentives for a voter to vote contrary to their true preferences in order to affect the outcome. In the mid-1970s when Percy wanted to make a run at the presidency, the New Right party, a group of extreme conservatives, formed in an attempt to move the Republican population vote further to the extreme right side of the spectrum. New Right politicians, who turned out to be insignificant in the long run, began eliminating politicians like Percy by "defeating them in primaries or fatally weakening them in general elections." In 1984, the New Rights failed to take out Percy in a primary election, and proceeded to eliminate Percy by endorsing Percy's Democratic opponent. This is an example of the type of flaw we discussed in class; the New Rights, motivated by the desire to eliminate moderates like Percy, supported a Democratic candidate, against their true preferences, to influence the outcome. Although they were successful in keeping Republican control of the Senate, and still eliminating Percy, their actions exemplify the strategic behavior we said is the opposite of what we want in terms of a pure voting alternative.

In Downs' article "The Statics and Dynamics of Party Ideologies," he discusses the same situation, where an extremist group forms a party with the main priority of pulling the modal center of the party back towards the extreme. Downs claims "when one of the parties in a two-party system has drifted away from the extreme nearest it toward the moderate center, its extremist supporters may form a new party to pull the policies of the old one back towards them." He says even if the party knows it cannot possibly win, the party is satisfied with simply taking votes away from the moderate party, or moving the party back to the extreme wing. This is precisely the goal of the New Rights in combating Rick Percy - they knew the outcome would either be moving Percy farther right (which was unlikely because of party immobility, as Downs illustrates), or allow a more conservative-Republican to win.

Public goods, can they be provided privately?

The article in "El Pais" (link to original article in Spanish as enclosure and link to translated article in the tittle) talks about the lack of security in the Pacific Coast of Colombia. Small boats who take passengers to the islands surround the bay of Buenaventura are constantly being assaulted by armed groups who take people's money and belongings and sometimes hurt or kill passengers. Boat owners and drivers are asking the local government to provide security for the bay in order for them to be able to navigate safely.

The security of the bay of Buenaventura is a public good; it is non-rival in consumption and it is non-excludable. If the state were to provide security, all the boats would be able to navigate safely and if one boat navigates it does not take a different boat's safety away. According to Samuelson and the traditional theory of public goods, if the state does not provide security security for the harbor will not be provided privately due to the free rider problem.

However, in the case of the bay of Buenaventura the state is not providing security. According to Buchanan, the boat owners and drivers will enter into a voluntary exchange and reach an agreement to pay for security at the bay. The people in this community cannot count on a central government in order to reach the best solution. People have different interests (some might have boats for tourism, others might fish, or others might take goods to sell at the different islands) and these interests will lead them to reach the best solution: privately provide security for the harbor.

Another way to view this dilemma of public goods is through Tiebout. One possibility is that consumer-voters have revealed their preferences (they want security) and the government needs to adjust (supported by Samuelson). In this case this is clearly not happening. Thus, the alternative, as proposed by Tiebout, is that each locality provides a different revenue-expenditure pattern and consumer-voters adapt to this. Boat owners and drivers and chose to move to the Atlantic Coast where security is provided by the state.

So, consumer-voters can either move and thus chose their preferred revenue expenditure pattern or they can get into a voluntary exchange to agree to provide security privately.

The Median Voter Theory and Passing Policy

This blog entry claims that partisanship will be the theme of the 2012 election. Both parties are claiming that they will hold strong to their principles rather than compromise with their opponents. Stevenson claims that the ideal election would be “an election in which differences are sharpened rather than blurred, where voters have the opportunity to sort out the mixed messages from the last several cycles.” At this stage in the game, candidates take strong stances on policies so that voters can distinguish between them. In addition, Stevenson points out that, “Americans tend to prefer divided government, on the assumption that it will curb the excesses of either side and force compromise.” These two assertions relate to the Median Voter Theory in the sense that voters choose candidates closest to them on the voter preference distribution, but that the median voter’s preference is the result of a diverse distribution.

Stevenson concludes the article by arguing that governments that promote extreme policy stances will fail to effectively tackle complicated policy issues. This claim extends upon the Median Voter Theory by declaring that temperate positions on policy allow for a well-functioning government. The question that remains after the Median Voter Theory has been applied to Stevenson’s argument is whether or not elected officials can pass policy based on their moderate position on the political preference distribution.

Although Stevenson’s claims relate to the Median Voter Theory, some aspects are contradictory. The Median Voter Theory states, “In two-party systems, each party will try to resemble its opponent as closely as possible.” At this stage in the game, neither campaign is obeying this claim. The polarity of the two campaigns could converge as the election draws near, but as of right now, neither the Democrats nor the Republicans want to resemble their rival.

If Down’s theory holds true, the two parties will converge on the voter preference distribution in order to gain the support of more voters. If Stevenson’s claims are legitimate, the moderate result of voter preferences will lead to compromise between the two parties in order to pass policy.