One Year Later - Hurricane Sandy Destruction

It has now been about one year since Hurricane Sandy hit the East Coast, yet restoration in some beachfront cities is still underway. This article published by News 13 discusses a $40 million restoration project that will begin at the start of November. Although the hurricane stayed off of Florida's coast, the wind and severe weather pushed back on the beaches and caused significant erosion, leaving the waterfront properties very vulnerable and exposed should another round of severe storms come.

The project is being funded partially by the state and the Brevard County Tourism Development Commission, but the Army Corps of Engineers is footing the majority of the cost with $29.6 million. This project is an example of a public good as we discussed at the beginning of the semester because it is both non-excludable and non-rivalrous. Also, this specific project undoubtedly brings up the Free Rider Problem. The individuals who are living on the beachfront will receive the direct benefits of the restored beaches but have not paid at all or if so, only minimally through some sort of state taxation. However, the Tourism Commission and the state believes that the benefits of investing in this restoration project exceed the costs and therefore are going ahead with the project and will begin pumping sand onto the beaches next month.

The cost of rent-seeking for abortion legislation

After learning about the inefficiency of rent-seeking activities in class, I decided to see just how much money American lobbyist groups out towards an issue they are fighting for. I looked at a topic of much debate: pro-choice vs. pro-life. On a site about Abortion Policy Lobbyists, I found lobbyist groups for and against abortion spent over 1 million dollars in 2013 alone.  And it's not even a major election year. 

For all the money the two lobbyist groups contribute to political campaigns to get them to support their cause, the candidate will only chose to support one group.  In addition, abortion rights are such a controversial issue, it will be nearly impossible for one group to get their policies (for either pro-life pro-choice) passed completely.   So, is all of this money spent on lobbying rational? Is it efficient?  Or is it even democratic to try to buy up support for policies?

This rent-seeking looks use resources (lobbyist money)  to increase one's share of wealth (or in this case, political support) rather than creating their own.  As a result, it is inefficient because it decreases net wealth (using up resources without creating anymore).  In my opinion, I do not think it is ratioaln to keep spending more and more money lobbying becasue the opposing group will keep spending more also, as we saw in class.  In addition, spending the most money does not guarantee your policies will pass, so the probability of the contributions making a difference are low.  Lastly, I don't think lobbying is very democratic.  It is scary that big lobbyists dollars can have a bigger impact on political decisions than citizens opinions.  

Americans Want Third Party After Shutdown

A recent Gallup poll revealed that 60% of Americans believe a third major political party is necessary, with only 26% saying that the current two are adequate. This survey was conducted during the recent government shutdown and was an attempt to gauge the effect the shutdown was having on public opinion of congress. I think it also reflects an implicit understanding on the part of the American people of the importance of having a correct threshold for action.

In the case of the government shutdown, we're actually talking about a threshold for inaction. As we discussed in class recently, the greater the perceived importance of an issue the higher we'll think the threshold for action should be. In the case of the shutdown, the action in question was allowing the government to be shutdown which only required a simple majority to fail to vote "yes" on a spending bill. The Republican controlled house refused to vote for liberal bills, and the Democrat controlled senate refused to pass conservative ones. If a third prominent political party emerged that shared some beliefs of both democrats and republicans, then it would be easier to gain the majority needed to pass measures in the house and senate. While not explicitly raising the threshold for inaction, it effectively makes it harder to shutdown the government. I think that the shutdown, seen by many as the epitome of incompetence, has caused many Americans to reevaluate the importance of the decision of whether or not to shutdown the government, and to conclude that the threshold should be higher.

Rent Seeking, Sugar Reform, and Sen. Menendez

      Last year, while running for re-election, Senator Bob Menendez was embroiled in what soon became a twisted political scandal.  With rumors swirling of under-aged prostitution, illegal campaign contributions, and improper intervention on behalf of donors, no one knew what to believe or what would come out next.  Then, seemingly out of nowhere, sugar became part of the picture. Our class discussions and readings have shown us the lengths firms will go to seek rent but I don't think many people would expect a situation like this.

     Over the last decade or so a coalition of policy makers has begun to emerge advocating sugar reform and the end of the subsidies we talked about in class today.  Sen. Menendez introduced a bill that would attack these subsidies and apparently big sugar wanted to send a message to congress that these subsidies should not be touched.  As the story goes, the Fanjul brothers, owner's of Domino Sugar -likely the sugar you put in your coffee this morning - in an attempt to bring down Sen. Menendez, paid a couple of Dominican prostitutes to say that Sen. Menendez was a client of theirs.  Additionally it emerged that he had flown to the Dominican on a private jet, owned by a wealthy donor after he had intervened on port negotiations on this donor's behalf. 

     This story touches on a number of topics we have talked about in this class.  First, the general principles of rent-seeking and its incentives are an important part of this story.  The Fanjul brothers must   have placed an incredible amount of weight on these subsidies because they staked their credibility and power on bringing down Sen. Menendez.   Their tactic did not pay off and it is likely they lost massive support through their bold, bare-knuckled, open, intimidation tactics. Second, it touches on the collective action problems we worked with earlier in the year and that we reintroduced in Mueller 15.4.2.  When you think of sugar, you likely think of Domino Sugar.  They control an incredible percentage of the market making sugar a highly concentrated industry. Therefore, they have huge incentives to ensure that these subsidies continue.  Two brothers will have very little trouble organizing their efforts to pressure congress and likely do not have to overcome the free-rider problem.  Because the lobbying effort has been largely carried out the Fanjul brothers, it will be interesting to see how long these subsidies continue in light of their recent exposure.  

     This topic also touches on an interesting point in 15.4.3.  That is, "The Duesenberry effect" that shows people become accustomed to subsidies and lobby "much more vigorously against its removal than they do for its introduction."  Regardless of the subsidy's history and whether the Fanjul brothers had anything to do with its introduction, they have incorporated it into their business model and have tremendous incentives to see its continuation.   

Rent Seeking in the Farm Industry

 
  In this recent Washington Post article, Brad Plumer discusses the recent farm bill passed by House Republicans this past week. As indicated by the article's title, it seems surprising that these sort of bills pass, considering how few farmers remain in the United States, and especially considering the espoused fiscal conservatism of the Republican Party in particular. Though the author ultimately concludes that voting habits and pressure at the voting booth are responsible for the passage of these bills, a dubious conclusion considering how this graphic shows that the majority of subsidies go to the wealthiest minority recipients, an alternate explanation mentioned in the paper was that, "wealthy agribusinesses are somehow paying off Republicans to vote their way". While it is unlikely that Republican Congressman are literally being paid off (although who knows), agribusiness like Monsanto and Archer Daniels Midland, among the top recipients of the subsidies, do spend an extraordinary amount of time, energy and money lobbying in Washington for these subsidy prizes, as this article outlines. It mentions how the, "The agribusiness industry plowed more than $80 million into lobbying last year, according to the nonprofit Center for Responsive Politics". This all resulted in a $955 billion bill proposed recently by the House, more than making up the impressive expense racked up by agribusiness interest. This incredible waste has spurred efforts from anti-farm subsidy lobby groups, however, rent seeking theory tells us that the agribusiness industry would be willing to pay substantially more to secure the subsidy rents, meaning that it is unlikely that we will see legitimate reform.

A Divided Congress is not Ideal for Decision-Making

During class last Thursday, we discussed a "non-question" on the exam that would show why the default decision-making process is a simple majority vote. The argument for simple majority, and why it most often minimized the sum of external and decision-making costs, was that if less than a majority can pass a law, we would see instances of Law A and Law ~A (which merely reverses or nullifies Law A) both being passed and nothing getting done.

This made me think of the House vs. Senate stand-off before the government shutdown a few weeks ago, mentioned in this WSJ article. The main issue was that the budget passed in the Republican-controlled House would eliminate funding for Obamacare, kept being rejected by the Democrat-controlled Senate in favor of a bill that kept Obamacare fully funded, and vice versa. Although both the House and Senate use simple majority to pass their bills, unanimity is required between the two chambers. This means that if either one of the two bodies is controlled by a minority, bills can be passed with less than a simple majority, if we assume the decision-making body as a whole to be both the House and Senate combined. Thus, we can place the Obamacare funding/no-funding fight perfectly into the framework of a "Law A and Law ~A" situation that constantly pass and cancel each other out.

This leads me to believe that based on Chapter 6 in the Calculus of Consent, Buchanan and Tullock would not consider a Congress with the House and Senate being controlled by different parties to be an efficient decision-making system at all. The budget fight and resulting government shutdown provides a lot of evidence to support this.

Collective action without conformity: the ACA and the "Death Spiral"

The Affordable Care Act has accurately been described as a wealth transfer from the young and healthy to the older and less healthy population. However, this cross-subsidy in turn relies on conformity of the younger population to participate in the exchanges. According to this article, the regulation needs 2.7 million young, healthy participants out of the total 7 million expected in order to sustain the program. If this does not happen, insurers will lose money, be forced to increase premiums in compliance with other new coverage regulations, and this could exacerbate the problem.

An issue that's been widely covered the past couple of weeks is the failure of the new ACA website to enroll people in the exchanges. It is a very complicated system, and many people have attempted and failed to enroll on the website multiple times due to bugs and data extraction problems. Performing all the steps required to enroll in the exchanges takes a lot of time, especially given the issues with the website. Some economists and commentators worry that this could lead to an adverse selection problem. The people earning the subsidies (those who are elderly and sick) will be more likely to work through the issues with the website and costly application process, while the young and healthy will be less likely to bear the transaction costs associated with the exchanges, opting to take the $95 (or 1% of income) tax penalty. This could lead to the aforementioned problem, which is now known as the "death spiral". The issues with the website and nature of the tax penalty seem to incentivize an outcome with fewer young, healthy people than needed to sustain the program.

The threat of the death spiral shows that conformity with collective action should not be taken for granted, and I believe the existence of the death spiral is a testament of the inability of politicians to recognize the importance of incentives in achieving desired outcomes.

The Welfare Effects of Internet Piracy

This article, published in BBC News, discusses the shutdown of ISOHunt, a website offering downloads of pirated materials. After losing a lawsuit by the MPAA, ISOHunt has agreed to close its doors and pay $110 million in damages to the association. Chris Dodd, president of the MPAA, calls this a “landmark lawsuit” and claims that it will help to prevent future exploitation of those working in creative industries by piracy websites. The ISOHunt story clearly does not stand alone: The issue of internet piracy and copyright infringement in the Information Age has been widely discussed.

In thinking about this issue, I couldn’t help consider the welfare costs of both internet piracy and its prevention in light of the Tullock chapter we read last week. Internet piracy, like theft, involves a transfer of surplus - with internet piracy producer surplus in the entertainment industry shrinks, while consumer surplus rises as movies, music, etc. are made available at no cost. Interestingly, though, this is probably not a pure transfer: Many consumers of pirated material would choose not to consume if they were required to pay, so the loss of revenues resulting from internet piracy are likely less than than the benefit derived by those consuming pirated materials. This means that consumer surplus will rise more than producer surplus will fall, and the social welfare effects of internet piracy could actually be positive.

What about the costs of prevention? While ISOHunt’s payment of damages to the MPAA may simply be seen as compensation for foregone revenues, such payments are not the only costs of prevention. Regulating internet piracy also involves expenditures of time and money locating piracy websites and pursuing legal action. These expenditures are unproductive and involve the diversion of resources that could be better utilized elsewhere. While internet piracy may actually increase social welfare, then, attempts to prevent it serve the opposite end. True to Tullock’s argument, the actual welfare costs of internet piracy may be more in attempts to prevent it than in its actual practice.

Rent Seeking and Penny Auctions

Many internet shoppers have heard of or even used Quibids, a “penny auction” site that entices consumers with promises of up to 80% of retail prices on popular products like iPads or big-screen televisions. The way Quibids works is by auctioning off these retail items with starting prices in the single digits, and each bid that a consumer makes raises the price by only a few cents. However, Quibids charges the bidder $.60 per bid, whether or not you win the auction.  Therefore, even if one lucky bidder wins an iPad for $40, it probably took him and all the other bidders hundreds of bids before the auction ended, resulting in Quibids making a lot of money off of everyone who participated in the auction.

                The idea of rent seeking is about resources wasted in attempting to gain the rent, or extraordinary returns you may not find in a competitive environment. In the case of Quibids and other penny auctions, the rent is the prize sought by the bidders, and the money spent on each bid is the resources wasted in seeking the rent. Similar to the Tullock Auction demonstrated in class, penny auctions are a great way to demonstrate the harmful effects that rent seeking can have on the consumer, when you start bidding not to increase personal profit, but to decrease personal loss.

A Public Good Turns Private

Lately, I hopped on the Banksy bandwagon, finding the street artist's anonymous and spontaneous creations really interesting.  This month, the unknown artist has taken up residency in New York City, releasing one piece of public art every day.  This exhibition is called "Better Out Than In" and is already gaining a lot of attention.  His art is sometimes chiseled from walls and sold for thousands of dollars to fans and enthusiasts. 

This week however, random people  that lived near one of the pieces charged $20 for enthusiasts to take pictures. 

"The amateur curators used cardboard to shield the well-known British graffiti artist’s piece in their East New York neighborhood and will remove it only for a price."

The two conditions for a public good are that they are non-rivalrous and non-exclusionary.  Usually, Banksy's art meets this conditions as one person looking at a public wall with art doesn't detract from another's viewing, and it is (usually) not possible to charge someone to look a public wall.  However, Banksy's work has been changed into a private good as people living near the work have made it exclusionary, to those only willing to pay $20 to see it. 

Shutdown: A Condorcet Winner?

     This article in the Washington Post and its accompanying article on Yahoo.com show that 21 Republicans would vote for a clean continuing resolution which would re-open the government and fund ObamaCare. Attached is a chart I made in excel highlighting each winning coalition that kept the government running, eventually brought about its shutdown, and would hypothetically bring about its reopening.  Since we are only looking at whether the government will open or close we only need to look at the second letter.  However, looking at both letters tells an interesting story.
       First, lets look at the pre-shutdown vote tally.  Here, all 432 voting members of the House (there are currently 3 vacant seats) would vote to keep the government running independent of a vote on ObamaCare.  That makes sense, the government indeed was running.  It also tells us that 232 members would vote to defund ObamaCare independently of a vote on whether to keep the government open.  That too makes sense.  We know that numerous times the House has voted to defund ObamaCare.  Here, we see that the clear Condorcet winners - independent of each other - are to keep the government open and defund ObamaCare.  Between the last CR fight and October first, this was the state of the House.
      The second tally tells us a more interesting story.  The vote to shutdown brought these two issues together and Congressmen now had to vote on them together on whether to pass a CR that funds ObamaCare and keeps the government open or defunds ObamaCare and effectively closes the government.  This resulted in a forced, manufactured majority in regards to shutting down the government.  There were 21 Congressmen that were split on this vote and given the opportunity to vote on them separately we would see a continuation of the first chart and a natural majority for open government (Blue Highlight).  Instead, they had to vote on them together.  Given that at this point they valued defunding ObamaCare more than they valued an open government, (remember at this point you can only compare NN>YY) this manufactured an illegitimate majority of votes to shut down the government, and resulted in a non-condorcet winner in regards to shutting down the government. This was not their first preference, but given the preference table they were given, NN or YY, they chose to shut down the government.
     Democrats are currently working on a measure to bring a clean CR (YY) to the floor.  Given that 21 moderate Republicans now favor YY>NN,  this would again result in a manufactured majority, this time leading to the illegitimate funding of ObamaCare.  Here we see how rules of the game effect the outcome and lead to non-condorcet winners an inefficient allocation of public goods.  Here is a relatively clean example of how combining bills together can force Congressman to vote in ways they normally would not.  One can only think of how many inefficiently allocated public goods are dolled out in omnibus transportation bills through logrolling.

New Emphasis Put on Absentee Voting in Charlottesville

On September 30th, NBC29.com posted a video addressing the concern in Charlottesville of a lack of voter turnout for the upcoming election. On Tuesday, November 5th, the General Election for state and local offices will take place. Governor, Lieutenant Governor, Attorney General, Member House of Delegates, Commonwealth's Attorney, Sheriff, Commissioner of Revenue, Treasurer, two Members of City Council, and 3 Members of the School Board will be on the ballot. Clearly, the results of the election will affect many in the Charlottesville community. With the upcoming deadline to register of October 15th quickly approaching, voter registrars are making a last push to encourage eligible voters to register for voter registration forms and for absentees ballots.

Johnson, in his essay, "Voting, Rational Abstention, and Rational Ignorance," addresses this issue of a decline in voter turnout. He states that it was "around the turn of the century [that] the percentage of eligible individuals exercising their franchise began to drop [...] until only about one-half of the eligible population went to the polls during the 1980s" (Johnson 129). He also acknowledges a trend towards making voting easier, less restrictive, and more convenient. This is exactly what we see in this video. The voter registrars are making it much easier for the first time to be able to register for an absentee ballot online at the Virginia Board of Elections website. With the prediction of only a 40% voter turnout rate on November 5th, this push toward more convenient voting may (they hope) incentivize voters. Additionally, this low voter turnout rate may reflect what Johnson calls rational abstention theory - that is, that a rational individual would not vote, finding that the cost of voting will almost always be greater than the benefits obtained from voting, according to Johnson. Ironically, rational abstention theory is one of the most damaging theories to the democratic self-rule on which our country was founded.

A Factional Split in the GOP?

This article, recently published in The Economist, discusses factional splits in existing political parties. The author claims that it is nearly impossible to build a new party from the ground up in the U.S. as voters, despite their ideological preferences, will only vote for one of the two main parties for fear of wasting their votes. When a new party forms due to a factional split in an existing party, however, this wasted-vote risk is diminished, as the new party already has power in Congress.  As long as the splinter party has a coherent ideology and a large enough voter base, then, it stands a chance at winning subsequent elections. The author of the article believes that tea-party Republicans have what it takes to eventually form a competitive third party in the U.S., with a coherent agenda and a strong voter base that is likely to follow them.

This article is clearly directly relevant to Downs’ Median Voter Theorem. If part of the Republican party stands a chance at breaking off and forming its own party, this suggests that a significant contingent of voters must feel alienated by the current system. This implies an asymmetric distribution of voters, with a sizable number of voters concentrated towards one extreme of the distribution. This asymmetric voter distribution is currently not an issue for the tea party, as theirs is the dominant Republican agenda. As more conservative Republican voters near the median begin to feel alienated and begin to abstain from voting, however, Republican ideology may begin to shift back towards the center and tea party members will then feel alienated. In either case, a significant contingent of the Republican party is alienated, meaning there is good reason to think a split in the party could be successful. Voters that feel alienated are likely to abstain, meaning that more moderate Republicans are less likely to vote where tea party ideology dominates and vice versa. In order to be able to satisfy both contingents, it is possible that the Republican party may need to split into two, thereby leading to a significant change in the American political landscape. 

McAuliffe appealing to Moderate voters in Virginia's Gubernatorial Race

          Ken Cuccinelli isn't the only one displaying more moderate views in the Virginia gubernatorial race, Democratic candidate McAuliffe appears to be shifting his views too.  As this article from the Washington Post reports, McAuliffe did not support offshore oil drilling for Virginia in 2009, but starting in May he began to support offshore oil drilling.  His spokesman attributed his change of heart to "technological progress," but the median voter theorem offers another reason for McAuliffe’s change in stance.

          According to the median voter theorem, a candidate in an election by majority will adopt the platform most preferred by the median voter.  In the case of Virginia offshore oil drilling, a stance against offshore oil drilling would generally be considered on the liberal side of the spectrum and a stance in favor of offshore oil drilling would be on the other side.  Assuming McAuliffe is only looking to win votes, shifting his stance to being in favor of ‘responsible’ oil drilling enables him to pick up votes from the middle, while keeping the votes from his liberal base.

          Conservative groups have already accused him of flip-flopping on the issue, and the Sierra Club’s Virginia chapter (an organization generally seen as very liberal) has expressed discontent with his and other politicians’ shifting positions.  If the assumptions in the median voter theorem hold, the shift will be to his benefit, but if the environmental groups get an unusually large number of liberal voters to abstain from voting, it could hurt his chances. Time will tell if moderating his position ultimately helps or hurts McAuliffe.  

The "Government Shutdown" and Public Goods

There is a lot of confusion in the public about what the "government shutdown" actually entails, and I found a short article that lists what you can and cannot do as a result of the "shutdown." The list of things that you cannot do as a result of the government shutdown includes many "public goods" like national parks, zoos, and museums.

In public choice, government provision of public goods is justified by the conclusion that private provision of these goods fails to achieve allocative efficiency. However, many of the public goods that are currently unavailable to the public include services like visiting the Smithsonian Museums or the National Gallery of Art. Not only are these two examples of services which are clearly rival and excludable, but this shutdown is causing thousands of dollars of deadweight loss as they are not available for consumption in the market.

In my opinion, this shutdown shows why the standard for what constitutes a public good should be more in accordance with the definition of true public good. Public provision on the Smithsonian, the National Gallery of Art, and other museums and services clearly shows public provision failing to achieve allocative efficiency in the wake of the government shutdown.

Political Disagreement Preventing Compromise

With the recent government shutdown, American citizens are asking what needs to be done to get us out of this mess. In this CNN article political editor, Paul Steinhauser, reports survey findings indicating that a large majority of Americans didn't think that shutting down the government in an attempt to dismantle the healthcare law was a good idea. Also with the debt ceiling crunch quickly approaching, a national survey published last week showed that a majority favored raising the debt ceiling. According to Steinhauser, 56% of Americans said it would be a bad thing if the debt ceiling was not raised and that it is more important to raise the debt ceiling than to delay Obamacare.

While this article talks more specifically about the heated political battle we find ourselves in between Republicans and Democrats, I found that it also illustrated what Downs describes in his essay on "The Statics and Dynamics of Party Ideologies." Downs restates Hotelling's claim that "the middle" will  always become the target of convergence on either side and essentially believes that political parties try to remain as ideologically distinct from each other as possible so as to attract votes but they, in reality, share the same platforms on several issues. Steinhauser points out in his article the irony that "you have bipartisan consensus among economists that not raising the debt ceiling would be a disaster, but politically you have a divide." This short statement I believe reinforces what Downs is getting at in his essay. Why is it that economists that belong to different parties can reach an agreement, but the political parties themselves cannot. Steinhauser here is elucidating Downs's idea that a "two-party democracy cannot provide stable and effective government unless there is a large measure of ideological consensus among its citizens" (Downs 114). How can we eventually reach a consensus to relaunch our government if the political climate remains a fight between political parties seeking to remain as ideologically opposed as possible?

The Relative Importance of Ideology for Political Candidates

                      

To what extent do party platforms matter? Suzy Khimm of the Washington Post addresses the relationship between party platforms and the views and actions of individual candidates throughout the political process (article). Since 1972, changes have been made to the nomination process that favors more candidate driven elections. For candidates in a two-party system, what matters is not where exactly they sit on the spectrum of political ideology, but whether or not they capture more votes than the opposing candidate. According to the median voter theorem, espoused by Harold Hotelling and Anthony Downs, the tendency of political parties is to converge to a central, more moderate platform and thus acquire the largest percentage of voters by winning "the median voter" (assuming a unimodal distribution of voters, with the majority of the voters in the center). Khimm explains that “’the nominee knows that he cannot be punished or rewarded for following the party platform,’ and may break from the party to appeal to independent voters.” And according to Downs, it is advantageous for a candidate to profess an ambiguous and broad platform to appeal to these "independent" or "median" voters as competition forces parties towards an equilibrium. It makes sense that candidates would seek to position themselves ideologically where they can potentially win the most voters.

But doesn't this tendency to move towards the middle alienate those at the relative extremes on the political spectrum? Don’t the two parties become eerily similar as they approach the middle? According to Khimm, “Even those who don’t believe platforms are all that significant agree they’re useful for at least one thing: highlighting the baseline differences between the two parties.” Not only do party platforms highlight the differences and so distinguish one candidate from another, they also hold candidates accountable to the ideologies they profess and the many promises they make during campaigns. Downs claims that voters must be able to detect the side of the midpoint on which a candidates falls, which is in part determined by the "extremist policies" the candidates espouses. Even voters at either end of the spectrum might agree that given two candidates, they would prefer the candidate who is relatively closer to their political ideology to win the election. Candidates have to position themselves centrally, but they also must be identifiable with their party's platform. 

A Multiparty System that Behaves Like a Two-Party System.

 The current President of Bolivia, Evo Morales, is the first indigenous president in Latin American history. He reached the presidency in 2005 and is projected to win for the third consecutive time in the 2014 elections. Historically, the “white” (Spanish descents) elite has occupied the influential political positions of Bolivia. Evo Morales dislikes this reality and since his early days in politics has developed a proposal of “decolonization” from the white and exalted the rights of the indigenous, which he then included in the new Constitution. He rose to power by imposing his radical opinions and portraying himself as the voice of the indigenous population. Bolivia has four main parties: Movimiento al Socialismo (MAS), Plan Progreso para Bolivia (PPB), Unidad Nacional (UN), and Alianza Social. Morales has succeeded by appealing to the working class which although are not the ones who have power, they represent the majority of voters. In a country with Downs’ figure 3 (pg. 121) distribution of voters, Morales is taking over the large mode at the left.  Among his radical reforms are the alteration of the Constitution, the change of the name of the country itself (from The Republic of Bolivia to Pluri-National State of Bolivia), the change in the county’s official language (to include the indigenous dialects), and a nationalization of natural resources. In the last presidential elections (2009) the defeated parties altogether did not even obtained 40% of the votes. These results have encouraged the losing parties to merge with each other in hopes to obtain a greater portion of the voters than that received by Morales’ party. In other words, they are developing what Downs called an amalgamation.  For this reason, Bolivia’s multiparty system is acting as a two-party system in hopes to defeat a very popular extremist candidate. In this situation, Morales and his party are not trying to move from their dominate position but the other parties do want to get as close to him as possible. However, Morales extremist position favoring indigenous population and rejecting Bolivian's European roots has started to create the "anti-Evo" movement among professionals; an outcome predicted by Downs' theory of democracy. 

Why vote in NJ/NY?

            For a region with multiple elections over the next few weeks, there may not be that much voting going on in the New York metropolitan area. As detailed in a previous post by Joe, both the Senate and Governor races in New Jersey are almost forgone conclusions, with polling slanted hugely in favor of Democrat Cory Booker (for senate) and Republican Chris Christie (for governor). As seen in the Star Ledger yesterday, those numbers are not getting any closer. 80 percent of people who were polled said they had already made up their mind, meaning for those would are still undecided, there is very little incentive to either vote or spend time to learn about the candidates.
            But it is even worse in New York City, where there is a mayoral election to succeed three-term Independent Michael Bloomberg. As the New York Times reported today, Democratic public advocate Bill de Blasio holds a 50-point lead in the polls over Republican Joseph Lhota, the former head of the Metropolitan Transportation Authority. For many New Yorkers, it may not even be worth their time to even know when Election Day is. The Mayor of New York holds a fair amount of power – more people live in NYC than live in all of Virginia – but as opposed to the vicious Virginia gubernatorial election, the race has become more of a waiting game than anything.
            As the Quinnipiac polling director put it, “de Blasio’s kids can start arguing over who gets the best bedroom in Gracie Mansion”

Are MOOCs Really Public Goods?

       Massive Open Online Courses (MOOCs) have become the star of higher education reform, sparking debates on the usefulness of online learning. As this article outlines, MOOCs are a proposed answer for America’s higher education flaws because they grant anyone access to education regardless of location, schedule, or income. The goal of MOOCs is to eliminate any accessibility issues that prevent potential students from earning an education, Because of this MOOCs been classified as public goods because they’re free resources that help better society.

            But are MOOCs really public goods? MOOCs are certainly non-rival as they are designed to accommodate “massive” numbers of students, meaning the enrollment of any one additional student does not hinder other’s ability to take the course. Defining MOOCs as non-excludable is slightly more challenging though. The whole motivation behind MOOCs is that they’re created to be used by anyone, anywhere in the world, but is this really the case? While it goes against the fundamental purpose of MOOCs, technically MOOC providers have the capability to prevent potential students from enrolling in a course, similar to the cable company example discussed in Mueller. Similarly, while MOOCs may be open to an infinite number of students, things like Internet access and computers, which are required to take MOOCs, are certainly not public goods indirectly limiting the number who can take any given MOOC.

            Overall, while MOOCs may be created as public goods intended to benefit the masses with no limit, the drawbacks mentioned above indicate that MOOCs are really impure public goods because they don’t fit the non-rival and non-excludable characteristics fully.

Hollywood Logrolling

The hit series “ House of Cards” on Netflix follows House Majority Whip Frank Underwood in his pursuit of power and vengeance. While many parts of the film are admittedly dramatized (such as murdering of other congressmen and last-second, single-vote losses) this interview with the show’s female lead, Robin Wright, claims that she has talked to actual politicians claiming some of the show may have a base in reality.

A specific instance in the show that relates to our class is the idea of logrolling. Frank has been charged with getting a new education bill to pass. The way that Frank goes about doing this is by meeting other representatives and entering into an exchange like that we talked about in which reps trade their support for bills. Because of Frank offering up his support for other bills supported by other representative, the education bill gets passed within 100 days of its announcement. While we do not get an in depth look at the other bills to be passed and their costs and benefits, we cannot say whether this is a case in which cost outweighs benefit and ultimately harms society. What we can see is the way in which logrolling helps get things done and bills passed. If this is actually the way things get done, as Wright’s contacts would suggest, we do have to be vigilant of this possible harm to society due to logrolling politicians. 

Government Shutdown Prevents "Grand" Weddings

The citizens and visitors of Flagstaff, Arizona are facing terrible nightmares due to the recent government shutdown. Vacations are ruined; weddings are being canceled; restaurants and stores are losing business. The recent government shutdown is creating an external cost of production to the businesses and people that reside near national parks. These national parks can no longer produce a service for visitors due to the fact that Congress cannot vote on a funding bill; therefore, tourism in the surrounding areas of national parks are suffering. This article illustrates the effects and potential future effects of the shutdown in the area surrounding the Grand Canyon.

The Grand Canyon attracts many people to the town of Flagstaff and creates a significant revenue for Flagstaff businesses. The privately-owned business, Arizona Raft Adventures, stated, "If the government shutdown lasts a month, as some suspect it will, Grand Canyon river outfitters estimate a million dollars in total lost revenue." It's not only the furlouged government employees that are affected by the shutdown, but also the employees and private businesses, like Arizona Raft Adventures, that depend on tourism. Further, people have booked vacations to the Grand Canyon and have traveled many miles just to be turned down once they arrived. A spokeswoman at the Grand Canyon entrance stated, "We have a lot of international visitors that we've turned away this morning." The negative production externalities are not only financially hurting the people of Flagstaff, but they are also depriving visitors and people from appreciate the beauty of these national parks. Is it right for these private businesses and Flagstaff citizens to pay for the additional costs that Congress is creating? I don't think so. 

The Belgian Government Shutdown

This week, certain journalists have been comparing the American government shutdown to that of the Belgian government that ended just a few years ago. This comparative article explains that conflicting ideologies, rather than fiscal policies caused the rift between parties in Belgium, primarily between the North and the South. The Flemish prefer a laissez-faire system while the Walloons strongly believe in government intervention and regulation

The article explains: “Those two opposing political philosophies collided in June 2010, when the national election gave the New Flemish Alliance (NVA) 27 seats in the Chamber of Parliament with the Socialist Party (SP) in the south getting 26 seats. Ten other political parties divided up the remaining 150 seats, guaranteeing a political impasse and inevitably a government shutdown.”

Downs’ model of voter distribution can help explain this result. Originally, Belgium had a two-party system. The introduction of the Socialist Party (and then nine other parties) shifted it to a multi-party system with a multi-modal voter distribution. Voters in a multi-party system are more likely to vote according to matters of ideology than they are in the two party system because they are given a variety of choices that are more likely to be close to their ideological preferences. However, there is a limit to the number of new parties that can be successfully introduced in the multi-party model. A party cannot survive in the long run if it cannot get its members elected- in Belgium’s case, no single party won the majority, therefore in the long run, some parties that are close to each other on the scale might need to merge in order to receive more votes until they have a high enough chance of receiving a majority.

(Belgium has a fascinating political system. I would highly recommend reading a little bit about it! I spent most of my life living there, including the 589 days where there was no government- public services still ran very smoothly because of local policies and efforts.)

Republicans Ignore Median Voter Theorem

In recent polls, a majority of Americans sampled stated that they would be worse off due to Obamacare, as well as disapprove of the health care. Based upon the median voter theorem (MVT), it would be in the interest of not only the Republican party, but both parties to move toward the median opinion, which in this case is to change Obamacare. However, one assumption of the MVT is that there is a spectrum of choices rather than just two extremes. In the case of health care this spectrum may range from all inclusive, universal public health care to no public funding. So, the median voter's opinion, and thus the preferred stance of a political party, would be somewhere between the current proposal for Obamacare and no public health provision.

At the same time, a majority of Americans have criticized total defunding of the program and the Republican response to Obamacare (here). While the Republican party had an opportunity to maximize votes and find the median position, their push to totally defund Obamacare lies at the most extreme right of this single issue, i.e. single dimension. Clearly, by moving further left by any extent, there is a possibility to capture more votes, and this is true regardless of incomplete information on the distribution of voter opinion. By maintaining this position some voters that wish to decrease the magnitude of the policy are alienated. Despite these implications of the MVT, total opposition towards Obamacare has become the stance of the Republican party, and as shown empirically in the article public choice has reflected the MVT, which is disapproval of the Republican party. This now gives the Democratic party an opportunity to move toward the median, and in doing so capture public opinion.

A Race To The Middle - Virginia Lt. Governor

With the election a little more than a month out, the candidates for Virginia Lt. Governor seem to be vying for the median voter, a more moderate Virginian in this case.  The debate between E.W. Jackson and Ralph Northam showed this attempt at a shift, especially from Jackson. 

"E.W. Jackson, the Republican candidate, made an attempt to moderate himself, reaching across the aisle to Democrats — the same party he had previously called the “anti-God Party"

"Jackson tried to put his controversial comments about gays, Democrats, Planned Parenthood and religion behind him."

While Jackson is attempting to capture a more moderate vote now, he did not start out that way after his candidacy was announced earlier this year.  However, as the election gets closer, his actions make clear this race to the middle as Downs' Median Voter Theorem suggests.  Seeing how marginalized Jackson's position was early this year, his recent movement towards the middle fits well within Downs' model. 

Can a Tax Slow Global Warming?

Although factories in the US increase production, provide jobs and stimulate the economy, they can have a very negative impact on the environment.   The carbon emission of these factories is a negative externalitie of production, harming the environment and leading to global warming.  Unfortunately, the executives of these factories only have business on their mind.  They will sell the market clearing quantity and price where their marginal cost of production is equal to the marginal benefit of selling the products.  But what about the social cost of all the harmful carbon emissions?

This article, Progressive Carbon Tax, explains how a progressive carbon tax can internalize the social costs of the pollution.  This would make for a more economically efficient outcome becasue the social marginal benefits would equal the social marginal costs.  As part of the Clean Air Act, the tax would impose the cost on the decision maker, and make the factory executives decide if the pollution is worth the costs, or if they should seek our greener alternatives.  The article explains the various ways in which we could internalize the costs, whether it be a flat tax per ton of carbon released, or a "cap-and-trade" system, where there is a set limit, and based on factories needs, they can buy/sell each other pollution rights.  Any of these policies would reduce the negative externalizes these factories provide.    

Why can't I find any articles not on the #shutdown?

"American people held hostage in effort to blackmail the President": this is the impression that I came away with after reading this opinion in the Washington Post. While not known for being particularly non-partisan, the language and out-of-context quoting used was surprising to me. The opinion victimizes poor children and pregnant women as the bearers of the brunt of the Republic party's aggression, cast aside carelessly in favor of tourists attractions.

Mr. Milbank plots the net position of the Republican party in a particular way - pro troops, veterans and "tourist attractions" and anti poor children, pregnant women and business regulation and tax collection. These are the  "lifeboat" issues that the Republicans want to save. Milbank suggests that they "need a bigger lifeboat", that is, in order to pass a budget Republicans need to build a wider ideological base into their budget. At the moment, it is too conservatively focused and will not garner enough momentum even within the Republican party itself. The ideological distribution of the House is not condusive to the competing budget positions.