Thursday, September 10, 2020

Are Venezuelans "Voting with Their Feet" by Fleeing?

Following class discussion of the Tiebout model, I searched online for real-world examples of "voting with your feet." In this 2019 articleThe Economist discusses present-day Venezuela and explores migration through the lens of accelerating reform in nations like South Africa and India. In recent years, under the regime of brutal dictator Nicolás Maduro, Venezuela has lost a seventh of its population; millions fled the country due to overwhelming inflation, violence, and corruption. Some who had the means, such as the grandmother of a high school classmate, crossed the Colombian border for years whenever they needed groceries, because stacks of Venezuelan currency (Bolivars) could not purchase even basic essentials at home.

This morning's criticism of Tiebout's model pointed out the impossibility of unencumbered mobility among consumer-voters. While The Economist acknowledges that opportunities to "vote with your feet" are limited, the magazine raises a separate concern: if all dissidents flee Venezuela, for instance, who will oust Maduro? On the other hand, the piece states that "if taxpayers can move, governments must govern better to avoid losing them." With millions seeking refuge in Colombia and the eyes of the international community upon him, Maduro could be forced toward change. He might be famous for rigging his elections, but he has not been able to stop widespread "foot-voting." Tiebout might suggest that Venezuelans read "A Pure Theory of Local Expenditures," in which policy implications include promoting residential mobility and an increase in common knowledge about government spending.

(I'm not sure that Maduro would approve; most authoritarian dictators aren't keen on transparency).    

Monday, September 07, 2020

Campfires: the $24 billion question

 For Labor Day weekend, I went camping in Southwestern Virginia through a couple state parks and National Forests with three friends. Given that it was a holiday weekend and we had stumbled upon a beautiful meadow full of wild ponies that had a perfect view of both the sunset and the sunrise, there were at least 100 people camping there. I'd guess that most of these people were not experienced backpackers, and one group of people had packed up and left their unattended campfire behind. The benefit to them might've been that they saved 10 minutes and 2 bottles of water, and the cost to them to walk away was 0. The risk to others was the potential for a wildfire that could kill animals, destroy public and private property, and cause the forest service to ban campfires for others who would, in the future, wish to enjoy some smores or a hot meal. The cost to the US to put out wildfires is well over $24 billion annually, and 90% of those fires are started by humans. Obviously, there is a dramatic imbalance in costs here, which results in a negative production externality in unattended campfires.

Given that the demand for unattended campfires is 0, I started thinking about why people create such negative externalities and ideas about how to fix them. I googled what's already being done to reduce wildfires using economics, and the results were disappointing, focusing more on funding the forest service and research on fires than on stopping them from beginning at an individual level. Given that humans start many wildfires without much thought, it seems important to address individuals in fighting this problem. As we've discussed in class, some solutions to this externality could be to regulate campfires, have some corrective taxation or subsidy, or have individuals work things out amongst themselves. Given that we were on public lands, the last solution cannot work. There are already strict regulations on campfires with many consequences which did not stop these bad citizens due to the low probability of being caught. That leaves the price approach: either individuals could pay the government a per-unit fee to leave their unattended fires, or it can subsidize people who put out campfires until enough people scour the woods looking to put out unattended fires that it reduces the problem. Unfortunately, these options are dramatic and unrealistic. Thus, wildfires rage on and the problem remains unsolved (although I put out the particular campfire I found out of love for the AT and the wilderness).