Compulsory Voting in Brazil

           Our class has discussed why voter turnout in democracies is so low and ways to increase voter turnout. One solution was to place fines on voters to encourage them to go out and vote but it seems wrong to force participation in one of our most important freedoms. As it turns out, there are 11 democracies around the world that enforce compulsory voting, with Brazil being the largest. Fines in Brazil have boosted voter turnout to around 80%, but it has led to some unintended results (*language around 0:25) regarding candidates. Some "joke candidates" for this year's election include Jesus, Satan, Osama Bin Laden, and my personal favorite, a man who flies around space shooting lasers out of his eyes. Every country has zany write-in candidates which pose little threat but in Brazil these candidates can actually win: a rhino was elected to city council of Sao Paulo in 1959. 
          Compulsory voting changes the Johnson equation to where B + [extra utility] = C + Fines. This leaves rational abstainers with two options to protest the election, pay a fine or vote for someone they don't care about. Clearly this is a problem where voters may become uninterested in elections and vote for the most recognizable candidate or a joke candidate. I can see many indifferent voters in Brazil just voting for the first name on the ballot to get the process over with and avoid paying the fine. This leaves the democratic system with an unavoidable flaw in the voting process. Countries that have the option to vote like the United States have extremely low turnout compared to the compulsory system under Brazil where voters make a mockery of the system by nominating joke candidates. I prefer the option to vote system because at least the voters are invested in the candidates they vote for but it seems like no perfect voting system exists.

Voter IDs: Preservation of Democracy or Just Another Hurdle for Folks to Vote?

   Elections are right around the corner. But, before Virginia voters head to the polls on November 4th, they must be sure to have the proper form of identification in tow. This will be the first election with the new voter identification law in place, and State Board of Elections reports 198,000 registered voters in Virginia do not own a driver's license. The debate surrounding the new law has mostly fallen along party lines, and the two competing arguments hinge on what factors citizens might consider when weighing the costs and benefits of going to the polls. Democrats argue that the voter identification law creates additional barriers to democratic participation, particularly for the elderly and minority individuals who are less likely to have a government issued forms of identification. While Republicans contend that voter identification is necessary to prevent voter fraud.
   The Democrats' perspective is in-keeping with Johnson's rational voter theory. It is unlikely that a voter's time will be measured at an infinitesimally low value or that the outcome differential will be very large. It is even more improbable that an individual will cast the deciding ballot. And so, for Democrats, it follows that any additional costs to voting might overwhelm the marginal benefit for its rational constituents. Even "misinformation...just a perception about what the law indicates" poses an additional cost for voters to learn what the law actually means. To minimize such costs, Democrats have been calling citizens and initiating direct voter contact to make sure that they understand student IDs from Virginia institutions and passports will also be considered valid forms of voter identification at the polls.  
   On the other hand, Republicans, such as Garren Shipley, argue that the minimal burden of identification is well worth "the certainty that comes with knowing that the person who shows up at the poll is who they say they are". Republicans believe that each act of voter fraud is a serious crime because it "disenfranchises someones vote that was cast legally". In the last election, 160 people voted in both Maryland and Virginia. In sheer numbers, voter fraud does not appear to threaten our representative democracy. However, the Republican argument takes into account the marginal benefits voters derive from simply being good citizens. These marginal benefits disappear if voters lose trust in the voting institution. The logic follows that voter identification is worth the additional cost to citizens because of the larger benefit that citizens derive from being able to trust in democratic institutions.

Water Must Cost More

A growing American population coupled with climate change has begun to constrain the water supply. The Rio Grande is running dry before it even reaches the Gulf, and cities and states throughout the West are experiencing droughts. This isn’t to say that there is a shortage of water and that all global citizens must reduce their consumption before we drink the Earth dry. We have plenty of water on Earth. It simply isn’t allocated very efficiently.

Market principles just haven’t applied to water. For too long we have thought of water as a purely public good but now we are realizing that water is excluded on a first-come first-served basis and, due to our very developed infrastructure, the only limit on consumption is it’s very, very low price.  

In order to more efficiently allocate our limited amount of water we must ensure that water is going to its most valuable uses. Normally, a Coasian solution could determine an efficient allocation. There are well-defined property rights with water municipal companies owning the right to water, but there are approximately 300 million bargainers (population of the US) and transaction costs won’t be cheap.

Alternatively, regulators may choose treat water like air pollution and enact a cap and trade policy to provide those who value it most a means to acquire it. However, right now “the allocation of water is certainly arbitrary” and implementing a new market takes time especially through bureaucracy. Therefore it may be simpler to employ a progressive price scheme on water usage as many municipals charge a flat or a regressive rate that encourages overuse.

What loopholes reveal

When we talked about Tiebout and his theory on local expenditures as a means of preference revelation, we were mainly referring to individuals and to small communities within one state or country. However, by broadening the scope of his argument, analyzing Ireland as part of the world community and firms as individuals, I will proceed to discuss Irish tax regulations.

Firms and companies establish their location according to the laws of each city or community. They seek for the set of laws that best satisfy their business model in terms of regulations, free market, and most importantly, taxes. This is the case of companies in Ireland. For many years, Ireland has had the biggest tax loophole called the “Double Irish”, in which firms can transfer royalty payments for intellectual property to a country with no corporate-income tax. Because of the flexible tax system, many foreign firms such as Google, Apple and Facebook had had set Irish subsidiaries to help them shelter Irish profits from foreign subsidiaries, which revealed their preference for a tax-avoidance. But the rules of the game have recently changed:

In an effort to eliminate the Double Irish, the government established that all Irish companies are required to have tax domicile somewhere. For companies already registered in Ireland, this will be done with a transitional period of six years, giving them a chance to accommodate their business model to new tax regulations. This policy can have two consequences: either it enhances the pressure on neighboring tax-friendly countries to enforce more strict tax policies, as the article suggests; or it will cause foreign firms to find another country where the loophole can still be made. Because the government is interested in maintaining Ireland as an attractive location for investment, they have also developed a new tax break for intellectual property capital, hoping companies like Apple will choose to remain interested in the country. If companies decide to move out of Ireland, it will strengthen Tiebout’s argument claiming that local expenditures will better reveal the preferences of an individual. The elimination of the Double Irish will reveal if companies that were originally established in Ireland did so because of tax laws, or because they were attracted to Ireland’s market. Google has chosen to stay in Ireland; the eyes are now on Apple and other tech companies as to which decision they will make.

Fighting Ebola is an Underprovided Public Good

The Ebola Crisis has caused over 4,400 deaths. The World Health Organization believes there could be up to 10,000 new cases each week within two months, unless efforts to prevent the spread of Ebola are greatly magnified. Although most of the victims of Ebola are located in West Africa, the virus is spreading around the world.

Foreign aid in Sierra Leone, Liberia, and Guinea is essential to mitigating the damage caused by this potential world pandemic. This aid would help the residents of highly impacted nations as well as other nations around the globe. This aid can be classified as a public good. Noone can be excluded from the benefits of lower risk of infection. Furthermore, one person's consumption of being protected from Ebola does not decrease another person's protection from Ebola.

The question is, who will provide the necessary aid to fight Ebola? I believe that the free rider problem is resulting in less foreign aid to countries affected the most. Further international cooperation through the United Nations may be necessary to solve this issue. This is because the benefits of preventing a worldwide pandemic likely exceed the cost of sending aid. Preventative measures, even in everyday healthcare, are often underprovided due to the free rider problem.

The "Victor's Dilemma"

In the original Hunger Games movie, 24 contestants are chosen to compete against each other in the annual inter-district competition known as the “Hunger Games” created by the capital to prevent rebellion from the districts. In this “game,” each player is placed into an artificial world created by the game makers in which they fight to survive, faced by constant challenges, obstacles, and attempts against their lives, both from the other players, and from plot twists and tools creates by the game makers. The rules to the game are such that there can only be one “victor” that goes home, and this winner is the last person left alive.

This clip from the movie shows the suspenseful moments of the final scene in which the game makers once again create one of their plot twists. Katnis and Peeta, the 2 final contestants, are from the same district, and have been acting as allies the entire game. Neither is willing to live while the other dies. In a previous scene, they had been told that the rules had changed, and that there may in fact be two winners. After being lured to their location in this clip at the cornucopia, the rules are once again changed back to the original game, in which there may only be one winner, implying that one of them must kill the other for the game to end and for there to be a victor. In retaliation, Katnis and Peeta create a plot in which they plan to both eat the poisonous berries and both dies, leaving the game makers with no victor, rather than allow one to die.

This clip can be related to our discussion of the prisoner’s dilemma in class, set up as such:

	Live	Die
Live	(1) Katnis/Peeta	(2) Katnis/Peeta
Die	(3) Katnis/Peeta	(4) Katnis/Peeta

There are two players, Katnis and Peeta, and one “government” (the game maker). Additionally, there are two choices, to die, or to live. The pareto optimal choice that would make both players the best off they can be is for both to live (box 1). However, the rules of the game are currently preventing them from reaching this position. They are also not willing to go to either box 2 or box free because they will not let the other die. Therefore, they have instead chosen to both die (box 4) making this their dominant strategy equilibrium, one that is not a pareto efficient outcome). This choice is also detrimental to society- both the districts and the capital. It is bad for the districts because they lose their members and children. It is bad for the capitol because it is a sign of rebellion, and ruins the outcome of their game. Therefore, intervention becomes necessary by the game markers (mirroring intervention by the government). Since allowing private control of the outcome by the contestants hurts them, the game makers decide to end the game and allow both players to win. This moves us to the pareto optimal outcome in the set-up (however we will learn that this is not in fact “optimal” for the capitol in the long-run, but that is another story for the next movie...)