Net Neutrality and Donald Trump

Over the past years, debate about net neutrality, which Google defines as "the principle that Internet service providers should enable access to all content... regardless of the source... without favoring or blocking particular products or websites" has presented a contentious issue.  Typically, Democrats and the current presidency have advocated for net neutrality, while Republicans have been more opposed.
Currently, net neutrality is required by law.  However, Donald Trump may pose a threat to net neutrality, and this has greatly concerned large internet companies such as Google.  Google has long been a supporter of the Obama administration, and has supported regulation requiring net neutrality.  Without net neutrality, Google would lose money to internet providers like Comcast. Stigler would categorize Google's lobbying as rent seeking, as Google is seeking regulation about
a. how internet providers interact with complimentary goods (i.e. Google), and
b. how internet service is priced.
Since this issue is so important to Google, Olson would categorize Google as part of a privileged group- Google would be a benefactor because they would be incentivized to lobby for net neutrality by themselves. But, since Google donated much more to Hilary Clinton than Donald Trump, it may end up not getting its if regulations change.
Interestingly, Google shares have dropped since the election, while Comcast shares have increased by 7.7%.

A Powerful Vote

Ecuador’s journalism and media have been experiencing limitations for the last couple of years. The government has imposed certain communication laws, which have limited freedom of speech for reporters and journalists. There are testimonies from well-known press figures that demonstrate how people cannot express their opinion freely. The restrains for the Ecuadorian press started to be more critical during the presidential elections of 2009. Why? Because there were concerns from the government about the influence the press could have on voters, in favor of their opposition. Therefore, some reporters’ votes were a threat for being decisive or influential in the elections.

Carlos Vera, has been one of the most popular television journalists in Ecuador, and he has always been open towards politics by expressing his opinions. However, during the presidential elections of 2009, he was asked to leave his news show, because he had expressed some thoughts against the President Rafael Correa. This happened three weeks before the election.

After learning about how one vote in an election can be more valuable because of the impact it may have, I can better understand why Vera was denied his freedom of speech. There were worries from the government of the influence he will have on the population, and their voting decision. His vote itself was very unlikely to be decisive. However the influence of his choice and opinions on the thousands of people who listen to his broadcast nationally, increased the possibility of these votes collectively to be decisive. The expressive value of his vote was very high. Therefore it seems that his vote was considered very valuable by the government as they went through many actions in order for him to stop broadcasting his opinions. Thus, in order to avoid potential influences, and future conflicts, the news channel fired him.

Wal-Mart: Say NO to OUR App!

OUR, Wal-Mart’s labor group founded with the help of the United Food and Commercial Workers International (UFCW), recently designed a new application called WorkIt that allows the company’s employees to chat about workplace policies and employee rights. However, Wal-Mart instructed its store managers to advise their employees not to download the app because it was just a scheme to get personal and private information from its workers. Given Wal-Mart’s long history of fighting union activities and organizations in its stores, it is only normal that employees feel skeptical about following this advice. However, OUR might not have enough influence to convince employees to use the app either.

OUR (Organization United for Respect) isn’t like other workers’ unions; its members don’t have collective bargaining rights and have been shut down by Wal-Mart many times for alleged illegal protests, which is in turn illegal according to Federal Law. Moreover, organizing a worker’s union for a company like Wal-Mart hasn’t been easy. In 2005, there was an attempt to build a group named Wake Up Walmart, a precursor to OUR, but the effort went nowhere. The UFCW also attempted and failed for many years, before OUR decided to separate from it last year, to organize workers at all Wal-Mart’s US stores.

Olson would not be surprised by this; indeed, this is exactly what he would expect according to his taxonomy of groups. With 1.4 million employees, just in the US, Wal-Mart’s OUR is clearly a “sleeping giant”, or how Olson formally describes it: a latent group. There are many members, thus the free-rider problem is intense and contributing is irrational. Also, it isn’t a closed shot group since workers are not required to participate. But, what has really doomed OUR are its weak selective incentives. The list of selective incentives isn’t and hasn’t been strong enough to overcome the free-rider problem. OUR has failed to prove that joining the group has potential great benefits for them. With unions moving their focus to social media, OUR is hoping that the new app will have a positive impact and convince its members that unity makes strength. Nonetheless, waking up this sleeping giant might take a lot more effort than that. 

Bureaucracy in Action- Wastebook

While browsing around the internet looking for inspiration for this blog post, I stumbled across this article in 2011 that introduced me to the waste book. Orginally created by retired Senator Tom Coburn (R-OK), this book is published every year by a senator holding a seat in Congress highlighting the 100 federal government projects that are the most "outrageous ways government wastes your money." My next logical step was to find 2015's edition.  It turns out that the project was continued by Senator Jeff Flake (R-AZ) and the most up-to-date edition even spoofs one of the most popular movies of last year.  The 2015 version came out last December calling itself Wastebook-The Farce Awakens. In the introduction, Flake writes that "Proving once again that no matter how mired in gridlock Washington appears, there is always one area of agreement-spending more. Washington equates caring with the amount of dollars spent" (Wastebook, 6).

This is where Flake connects to Niskanen's traditional model of governmental bureaucracy.  Flake emphasizes the first and third reasons for why governments produce inefficient output.  In these two sentences, he explains that it is difficult to gauge efficiency when the only data is found in measuring the inputs or "spending more".  Similarly, a larger budget typically leads to a bigger bureau to manage, more power, and higher wages for the Senior Bureaucrat in change of the department.  Similarly, "Spending more" is often equated with caring more for the American people, or so it seems.  Furthermore, the waste book reflects Niskanen by showing the desire for bureaus to produce above the sponsor's optimal level where MPB=MPC, pushing out farther along the marginal public cost curve. In this way, there are incentives to grow as large as possible and to approve as many projects as possible.  While humorous to read the ridiculous proposals approved by a myriad of government departments, the Wastebook becomes a strong example for the traditional approach to bureaucracy focusing on the Senior bureaucrat and highlighting the inefficiencies found in the federal government.

If you have time, leaf through the projects approved by the federal government documented in the 286 pages. I found them very funny in a dark, "every fiber of my being thinks this is wrong" sort of way.  

Where Health Groups Oppose a Cigarette Tax Increase, Big Tobacco Champions It

On November 2, 2016, NPR published an article about Missouri's Constitutional Amendment 3 which calls for an increase in the state's cigarette tax. Three key interest groups have rallied support and opposition for the amendment. Big tobacco companies hope the cigarette tax will pass, and health groups and small tobacco firms want the electorate to vote against it.

The three interest groups' positions seem unusual, but upon deeper analysis, their position corresponds with their goals. Health groups, like the American Lung Association, argue that the proposed tax increase of $0.60 per pack is not high enough to deter smokers. On the other hand, big tobacco companies like R.J. Reynolds have spent millions to support Amendment 3 because it will harm their small tobacco competitors. As the result of a national settlement in the late '90s, big tobacco companies currently pay a special fee that their smaller competitors don't face. This fee allows smaller tobacco companies to undercut large tobacco companies' cigarette prices because they don't have to pay the fee. Small tobacco hopes to continue undercutting their prices which is why these companies have spent millions to oppose Amendment 3.


Olson would predict that the small tobacco companies and small health interest groups will successfully block Amendment 3's passage because they face less of a freerider problem than bigger groups like big tobacco companies. Although votes are still coming in, the results have been called at 2.7M votes to turn down the cigarette tax increase. It seems that Olson's hypothesis has proven correct in this case.

AIPAC: Political Powerhouse

AIPAC is the American Israeli Public Affairs Committee, a pro-Israel lobbying firm. In 2015 alone, out of the $4,189,000 dedicated to Pro-Israel lobbying, "AIPAC accounted for $3,388,700 of that" (Geier) (over 80%!). This article concerns the political "juice" the lobbying firm. The firm, with an estimated 500 employees, lobbies in advocacy for support of Israel and Israeli- American public relations.

As mentioned in class, the firm offers selective benefits for membership. Clear to set the bar high, their lowest tier of membership, with a $1,800 entrance fee is the washington club, which offers special events featuring "some of America and Israel's most important policymakers" and exclusive "monthly conference calls" and briefings. The highest membership is Minyan, which offers meetings with the Israeli Prime Minister, Bill Clinton, Condoleezza Rice, and more for a price of $100,000. More information can be found here.

Additionally, while the lobby group does advocate for Israeli relations, it was unintended byproducts of its lobbying.  Every year AIPAC holds a policy conference, of which almost every influential political figure is in attendance. If a policymaker chooses to not attend, AIPAC can use their influence to donate, or strategically not donate to those policymakers. I would classify the group as a latent group, who uses selective benefits to influence membership and thus influence policy decisions and candidate endorsements.

Puerto Rico, Becker, and Olson

As the Puerto Rican debt crisis has escalated, groups with vested interests into the future of that economic situation has helped to illustrate one of the most important elements of Becker's model. Because Puerto Rico is a U.S. territory, lobby groups have been called upon in order to influence the outcome of the economic crisis. On one side, the Puerto Rico government is attempting to change legislation by supporting a bill allowing the territory to file for Chapter 9 bankruptcy.  They are doing so by hiring the services of SKD Knickerbocker and Podesta Group. These two lobby groups hope to alter financial policy and give Puerto Rico breathing room from creditors. On the other side, six investment management firms have hired lobbyists Venable and Gibson Dunn to protect the price of the Puerto Rican Electric Power Authority (PREPA) bonds as well as their investors.  Also opposing the bill is the 60 Plus Association, "a seniors advocacy group that casts itself as a conservative alternative to the AARP...backed by a donor network organized by Charles and David Koch." They are attempting to protect "investors who put their trust in Puerto Rico-backed investment."

The question that needs to be addressed is who wins this fight? A perfect example of Becker's model, the equations found could give us some insight into the eventual winner of this lobbying battle. Using the information found in the article, it appears that as far as lobby groups are concerned, their effects will cancel each other out.  If both sides of the argument have hired two large lobbying groups with similar numbers of supporters and opponents with arguably the same budgets, Becker's statement is correct and advocacy groups on opposite sides will negate each other's effects.  That being said, Olson still has a reason to stay up at night. The presence of the 60 Plus Association allows for a latent group to enter the equation with large numbers and less free riders.  If there is no other equally powerful latent group to negate or reduce the effects of this group, it would appear that Olson's fears are realized in this situation and the opposition can quell this bill using the power of the By-Product theory.

Results: On further investigation, it appears that the bill examined above was blocked, but Obama signed another bill to aid Puerto Rico and set up a board to organize debt payments. The opposition was successful in preventing bankruptcy in Puerto Rico. Instead, the Senate and Obama passed a bill that set up an "oversight board" which was mentioned in the first article as an acceptable alternative by those opposing the bill. It appears that Olson and Becker's models were successful in predicting the fate of this bill.

Clinton, Trump, and the Median Voter Theorem

Since Donald Trump defeated Hillary Clinton in last Tuesday's presidential election many have wondered how the polls failed to predict a Republican win. On Tuesday FiveThirtyEight.com gave Clinton a 71% chance of victory, the New York Times gave her an 85% chance of victory, and the Huffington Post gave her a 98% chance of victory. I think that the Median Voter Theorem provides an answer to questions of how most major polls overestimated Clinton's chances of winning.

According to MVT, the median voter is decisive, and parties therefore seek to win the median vote. In this election major media outlets may have misunderstood distribution of American voters and therefore misjudged the location of the median voter. Polls may have assumed that American voters had a relatively normal distribution (as in the graph below), or even assumed that the voter distribution skewed to the left. The graph below shows how, in an assumed normal distribution, Clinton's policy's put her slightly left of center, while Trump's policies put him far to the right, approaching the right tail of the distribution. By this model she would have won the vast majority of votes to the left of the median and encroached quite far into the right side of the distribution. Trump would then be left with only the votes to his right (in the relatively insignificant tail of the distribution), and a portion of the votes to his left that does not reach the median. In this scenario it makes sense to think that Clinton was on track for a comfortable victory. But the results did not play out as expected, and the median voter is likely not where anyone thought was.

We can never know the exact location of the median voter, but Trump's victory suggests that it is likely much farther to the right than most pundits realized. This would mean that the distribution skews to the right (it may also be bi- or multimodal, but in either case it skews right). Under MVT even in a skewed distribution the median voter will be decisive. If we assume that candidates and parties are flexible in their policies and want above all to win votes, then I think it is fair to predict that we will see a shift in the policies of both parties over the next four to eight years. The Republican Party will adjust to appeal to the voters that are right of its traditional establishment, but I expect the Democratic Party to take efforts to win these votes as well. Whether through electing a more populist candidate in the future (someone like Bernie Sanders), or moving policies to the right, I think we can expect these election results to reshape the core stances of both parties.

How has Ecuador increased their voting turnout?

In the US, there is a big percentage of the population that does not vote. As we have seen in class, it is rational to abstain from voting because the costs of voting are most likely higher than the benefits. This rational behavior was shown during the recent elections, since even though there were multiple campaigns that tried to incentivize Americans to vote, the voter turnout remained low at around 56.9%.

In Ecuador, the voter turnout from the last election held in 2013 was 81.03%, a lot higher. Why are these numbers so different? Primarily, because Ecuadorians want to avoid the consequences that arise if one does not vote. Voting is a right and a decision,  however in Ecuador when you vote you receive an ID card, like a sticker that says you voted. This sticker is very valuable, because it is required to acquire certain goods and services, both private and public. For instance, in order to open a bank account, you need to provide a copy of your card that confirms you have participated in the last elections. This document is needed to get a passport, enroll in utilities and even needed to enroll in college. For example, I was not able to vote in the last elections, because I was not in the country. In order to open my first bank account, I had to go to a government agency and justify why I did not vote in order to get this ID. This process was time consuming, and required some paper work, which would have been something I could have avoided if I voted. 

Thus, we can see how in Ecuador, the utility gained from voting, for many, is higher than the costs, because of all the additional benefits that voting brings. A citizen will still obtain value from voting in spite of having the decisive vote (PB). The utility gained is D, from our formula PB+D > C, so the left hand side is greater than the costs for many people. Therefore, given that not voting will restrain you from multiple goods and services, the costs of not doing so are high, so it could be argued that in order to minimize voter's costs, and have a marginal benefit greater than costs, it is rational to vote for many Ecuadoreans. Therefore, this would explain the high voter turn out statistics of the country.

Olson and the NRA

The National Rifle Association (NRA) is regarded as one of the most powerful interest groups and lobbying organizations when it comes to promoting gun rights. In 2013, an article in Business Insider expanded upon the NRA's success at advancing legislation that reinforces the rights of gun owners and pushing for representatives who advocate for gun rights as opposed to gun control. Specifically, from 2003-2013, the NRA "has had at least 230 full legislative victories on the state level." The NRA is not only powerful in terms of promoting legislation favorable toward gun-owners, but is also has a considerable number of members. Although disputed by the Washington Post, it is believed that the NRA has about 4 million members - thus making it both a powerful and populated interest group.

The NRA stands in contrast to Olson's argument in Chapter 1 of The Logic of Collective Action. Olson argues that in large groups, members have a harder time organizing, benefits are dispersed across more people, and the free rider problem increases, all in comparison to smaller groups. Olson writes that the "larger a group is, the farther it will fall short of obtaining an optimal supply of any collective good, and the less likely that it will act to obtain even a minimal amount of such a good. In short, the larger the group, the less it will further its common interests" (33). According to Olson, smaller interest groups tend to be more effective than larger ones. Although the NRA has experienced legislative success, perhaps NRA's members are catching on that the large group size is less effective. After all, in 2014, the NRA's revenue from member dues declined by over $47 million from the previous year.