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.

Diamond Retailers Seeking Restrictions on Synthetic Diamond Market

With the increasing availability of synthetic diamonds, natural diamond retailers are seeking market restrictions over their competitors. The English jewelry company De Beers aided the launch of a trade association with other natural diamond producers in order to market the attraction of the natural diamonds over their substitutes, synthetic diamonds. The association also worked to create a faster and cheaper detector to screen small the synthetic diamonds that were previously not worth using expensive technology on. This will aid jewelry makers and retailers in determining the source of the diamonds they are being sold. These first steps signify the beginning of a struggle for control over the diamond market.

While they have not yet created government policy, the likely next step for the trade association is to lobby the government for regulations. This policy could be framed as public interest, protecting consumers from unknowingly purchasing man-made diamonds when they wanted natural diamonds or protecting consumers from being overcharged for diamonds that have a lesser market value. In reality, this regulation would restrict market competition and aid the natural diamond retailers the most, raising prices and increasing profit. According to Stigler, the industry will buy the regulation from the government, by means of both money and votes. Is the population of diamond miners and jewelry makers large enough to influence representatives or will the synthetic diamond makers have a greater influence?

Licenses for Medicine in Ecuador

In 2009 Ecuador’s government overrode hundreds of patents from foreign pharmaceuticals in order to produce medicine domestically, with the justification that the national medicine (generic medicine) would be sold at a lower price. However, in order to produce the medicines, medical laboratories required a license from the government. Obtaining these permits have multiple limitations, and there are currently very few companies that have acquired it. 

The license implementation has induced a social cost in different ways. First, given that the market opportunity is so big, there are high rent seeking intentions. The returns from producing medicine are far greater than the opportunity cost of using the inputs elsewhere. The rent seeking expenditures are not only a transfer of wealth from the potential producers of medicine to the government to obtain the license; but also includes the cost of the inefficient use of resources, the goods will be better produced in terms of cost and quality by foreign companies. Although the generic medicine is sold at a lower price than import goods, this price is probably a lot higher than what it would be under a competitive market. Therefore, there is a dead weight loss in addition to the previously mentioned cost. Both of these social costs are what Tullock refers to as the social cost of monopolistic behavior. Even though this is not a monopoly because there is more than one firm, the industry has the same characteristics because of high barriers to entry. 

Moreover, these licenses have also created costs of unemployment from people who used to work in foreign pharmaceuticals, as most have reduced their size or shut down in the last five years. Finally, something that is not always seen through a political perspective involves the quality and availability of the medicine. There are many medications that can no longer be found in Ecuador, and there are big concerns from doctors in regards to the quality that these medicines have. This is the result of a lack of technological resources and expertise from the Ecuadorian producing laboratories, which in turn increases the effects of the misuse of resources that these licenses have formed.

The ones who have been affected from these decisions, and are paying for the costs are society, not only their money is being wasted but their health is also affected. 

Rent-Seeking in the Lodging Industry

New York passed a law last month that prohibits New Yorkers' advertisement of short term home rentals, directed at the growth in the Airbnb business that has been taking over the lodging industry across the country, including New York. The new law signed by the NY governor Andrew Cuomo, which will impose up to $7,500 fines on rental listings that are for shorter than one month, was presented from one angle as "necessary to protect affordable housing" in New York.

However, after reading George Stigler, we can look further and see that this law is an effort by the American Hotel and Lodging Association (AHLA) to control entry by substitutes. Here, the hotel industry is looking to maintain the rents that they earn from providing essentially the only option for short-term renters taking a brief vacation to New York, particularly during the holiday season. By encouraging regulation over options that would take away customers from New York hotels through lobbying efforts, the AHLA is reducing competition for hotels and therefore using regulation to keep earning rents in the lodging industry. With fewer options, consumers are far more likely to purchase a hotel room for their vacation and because there are very limited alternatives, they'll be willing to pay a higher price.

Alcohol Control in Colorado: The Slow Creak of an Opening Market

Alcohol is one of those classic products where policy is often deeply influenced by morals and potential safety risks over pure economic reasoning. The map depicted below shows the states as of 2015 that had state monopoly control over wholesaling or retailing of at least some kinds of alcoholic beverages. The obvious argument for this is something along the lines of responsible distribution to restrict use that would have deleterious effects for the individual or negative externalities for society as a whole. The estimated $230 million Virginia made from ABC stores in 2010 is also a nice consolation. However, my home state of Colorado isn't state controlled, so the free market should be fully functioning right?



Unsurprisingly, this is not the case (yet!). As of now, grocery and drugstore chains can only sell liquor, wine, and beer at one location in the state. At every location they do have the luxury of selling "near-beer," which contains 3.2% alcohol, but this is little consolation in a state known for its craft brews (that are almost always above this alcohol content level). This setup necessitates the creation of a multitude of privately owned liquor stores, which can't be chains either.

So when I went to the Trader Joe's last summer to purchase some 2016 vintage three buck chuck, I was sadly told that only one store in Denver was able to sell it. That perplexed me, until I read Stigler. The Colorado Licensed Beverage Administration (CLBA), established in 1954 and representing 1600 stores/owners, is a lobbying organization that estimated that it saved members $10 million in 2016 through "proactive legislation." Because the stores represent owners dispersed around the state, it would be hard for them to effectively lobby on their own, but with this organization, the liquor stores have been able to maintain a high degree of market control. However, in June, Governor Hickenlooper signed "the biggest rewrite of liquor code since Prohibition" in Colorado. Still, even in this decision to allow grocery and drugstore chains to sell liquor, wine, and "full strength" beer, the evidence of liquor store lobbying is obvious as it will take 20(!!!) years to be fully implemented. Overall, Colorado is tending towards a more open market approach to the alcohol sales industry, likely in part due to those who would benefit from it most such as large grocery chains, but the power of the well-organized and focused CLBA, similar to what Stigler would expect, has delayed this substantially.

Rent Seeking in East Texas

In 2013, there were "just over 6000 patent suits filed in federal courts across the country. One in four of those cases were filed in the Eastern District of Texas." How does a "largely rural district court" attract "a huge volume of high-tech patent ligitation"? The answer, in short, is rent seeking.  For the past decade, this federal court has consistently imposed policies that heavily favored the prosecution.  The result is the attraction of "patent trolls" or "kangaroo courts" designed to benefit the prosecutors in patent infringement cases at the expense of the defendant.  For example, the court system will expedite case protocol in order to litigate the "over 190 lawsuits filed in a single day." Rent seeking is evident as this rural district court has implemented laws that heavily favor the prosecuting attorneys in an attempt to make the defendant settle or risk paying heavier fees.

That being said, according to one of the previously mentioned reports, the district court and the attorneys that profit are doubling down on their rent seeking tactics by "retaining the services of Levick Strategic Communications" who have successfully lobbied the federal government in the interest of multiple groups over the past years.  If the attorneys and patent trolls interests are protected, the federal government will overlook much needed patent reform and continue to allow this system to flourish.  Naturally, the next logical step of this post is to put ourselves into the mind of George Stigler.  Using his cynical theory of economic regulation, it could be argued that the East Texas Bar Association and district court implemented these prosecution-favoring efforts originally in order to protect the small inventor from larger firms who could dwarf them with more resources and man-power. This could appropriately cover up the interests of prosecuting lawyers and patent trolls who would want the system shifted in their favor. Now that these groups are lobbying in order to slow down patent reform, it appears that their interests are solely "operating primarily for [their] benefit" (Stigler, 1) with no regard for the welfare of the public in accordance with Stigler's assertions.

Protective tariffs in the shoe industry

As discussed in class and in the Stigler reading, The Theory of Economic Regulation, industries seek to manipulate the powers of the state to obtain favorable regulation. Through monetary subsidies, control over entry, and price-fixing, various regulations serve to benefit domestic industries. Protective tariffs serve as an example of entry controls (or barriers to entry). In researching different protective tariffs, both pertinent and outdated, I came across the protective shoe tariff, which is definitely on the archaic side of the spectrum.

Implemented via the Smoot-Hawley Tariff Act of 1930, the regulation protected domestic footwear producers. Yet even throughout the 20th century, as domestic production declined and footwear production moved to foreign sites, the tariff remained. In 2011, The Tax Foundation estimated that "only 1% of US-consumed footwear is produced domestically." Up to 40% of the price of a pair of shoes can be attributed to the tariff. As AEI described cohesively, the "US has imposed protective shoe tariffs on Americans for decades, even with no domestic shoe industry to protect."

A few years ago, senators introduced legislation in an attempt to decrease the tax burden that consumers pay for shoes. Termed the Affordable Footwear Act, the legislation would eliminate "$800 million in duties on children's and low cost shoes out of the 2 billion in total duties collected on imported shoes in 2010".  The Act never made it to vote. Stigler would be especially unhappy with this tariff - not only was the tariff designed to benefit the domestic shoe industry, but it persists today with barely any domestic shoe industry left to benefit.

Is Hoo Crew Rent-Seeking?

UVA students are awarded tickets to UVA Basketball games through a lottery system, and the likelihood that a given student is selected in the lottery is directly proportional to the number of Sabre Points (accumulated by attending designated UVA sports events) the student has earned. 

I have heard from several sources that members of UVA's Hoo Crew have the ability to increase the number of Sabre Points attributed to their accounts. If true, this would mean that members of the Hoo Crew can heighten their chances of being selected in the lottery, giving them an advantage over other students who have to expend time and energy attending various games and matches to accrue enough points to give them a decent chance of winning the student lottery. 

A note at the bottom of the About section of Hoo Crew's website says that, although the organization is made up of UVA students, "it is not a part of or an agency of the University. Rather, "it is a separate and independent organization which is responsible for and manages its own activities and affairs." This is significant because the Sabre Point lottery is under the jurisdiction of UVA's Athletic Department. It would seem, therefore that members of Hoo Crew have connections in the Athletic Department that give them the opportunity to artificially increase their Sabre Point count. 

This means that members of Hoo Crew may be engaging in rent-seeking by lobbying the Athletic Department to gain an advantage over other UVA students and other members of Hoo Crew. While this lobbying may encompass the resources expended to work political connections in the Athletic Department, it also includes the time and energy spent by Hoo Crew members attending meetings and sports events to give them membership status in the organization. Each individual member of Hoo Crew is expending time to maintain their membership in Hoo Crew and to gain a standing within the organization that allows them the connections to manipulate their Sabre point totals. Hoo Crew members do not guarantee tickets by adding points to their accounts but do significantly increase their odds. Therefore, members of Hoo Crew invest resources (namely time) into their club involvement, not knowing whether they will win one of the limited number of student tickets. As more students join Hoo Crew, competition for tickets increases, and members engage in rent-seeking to give themselves a significant chance of winning a ticket. The rent therefore increases as more members invest time in the organization, and a welfare loss develops as many members waste time trying to increase their odds, only to lose in the lottery. 

The FDA According to Stigler

The U.S. Food and Drug Administration (FDA) has a wide scope of regulatory authority via the federal government. In addition to food and drugs, the FDA regulates biologics, medical devices, cosmetics, veterinary products, tobacco products, alcohol, and more. This amount of regulation is normally thought of being in place for the benefit of the public interest. Such regulations protect the public from consuming unsafe food materials. In countries without such regulatory boards, disease is spread more easily and there are higher death rates. This is justification for arguing in favor of FDA regulations on the basis of protecting the public's interest. When Americans think of the FDA, they generally think of the administration's importance on these lines of thinking.

However, Stigler would provide another explanation for the high amount of FDA regulation: the capture theory. This theory, coined because the industry "captures" the government, is that regulations benefit industry and are therefore rational to desire on the industry's side. In this case, Stigler would argue the FDA's regulations benefit the industries in which they are found. For example, companies could potentially benefit from FDA regulations if they restrict entry and thus lower the supply of the good. This would create true economic profit in the form of rent for the companies.

A counterargument to this is some biopharmaceutical industry members arguing that the FDA regulatory process diminishes their businesses' value by increasing the time it takes for new drugs to get approved. In this case, Stigler would argue regulations are not rational under this theory as they do not benefit the industry.

If Coase and Chevron were BFFs

Research done by Chevron, an American energy corporation has shown that when there is an increase in Pollution there is also an increase in the economy.  Why? Because the country is using more oil, gas, and fuel to power homes and factories to create products. But recently in the less than 50 years, Chevron shows that we’ve been able to use less energy in relation to our growing economy. For example, An increase in natural gas use opposed to polluting substances is correlated to an increase in GDP per capita. In addition, more natural gases and energy efficiency has done the following:

• Increased efficiency gains per vehicle miles traveled 
• Used less harmful gas emission per capita 
• Made electric energy more efficient 
• Declined CO2 emissions 
• Decreased pollution by a whopping 70% over the past 40 years

This example relates to our discussion of the Coase Theorem of local expenditures to an extent. Before there was a recorded decrease in pollution, there was an increase in pollution correlated with an increase in the economy. The amount of pollution, which is an external cost, plus the private cost to an individual sums up their social marginal cost. But regardless of who was liable for the pollution, whether it be the individuals driving their cars or firms’ factories giving off CO2 emissions, each party continued to produce the pollution because their marginal benefits were greater than the social marginal cost. But within the past 40 years or so, the external cost of pollution had grown to a point where it could not be offset by the marginal benefit, so to resolve the issue companies like Chevron have innovated energy efficient ways to bring the economy closer to an equilibrium point but keeping our social marginal costs lower than our marginal benefit, which is the increase in $1 of GDP per capita. Because MB > SMC, we still continue to produce pollution, but at a lower and more efficient rate.

Rent-Seeking and Cable Boxes

The Federal Communication Commission (FCC) voted in February for a tentative proposal that would essentially allow third party programmers to provide cable services that currently only companies like Comcast and Time Warner can. The FCC ruled that cable companies must build apps that can be used in other devices, like an AppleTV or Tivo, allowing a choice for customers instead of having to rent a set-top box to access cable. Proponents of this plan argue that allowing more producers would promote competition in the cable TV industry.

According to the rent-seeking model that we have discussed in class, the current cable companies like Comcast and Time Warner will be willing to spend almost all of the rent that they earn from having control over the cable industry lobbying the government, or in this case, the FCC, to maintain the current standards that allow them to be the only suppliers of cable TV. In relation to Stigler, the current cable companies are lobbying to maintain their ability to control the entry of new rivals in the industry. It is not the rent that these companies earn that is the issue, but instead it is the rent-seeking efforts where resources, like labor, are inefficiently used: the resources are being taken away from production and are instead used to lobby the government to allow them to keep earning these rents.

Rent-seeking Lives Among the Dead

When a family member dies, mourning is usually interrupted by the several decisions one has to make. At the center center of all the questions lies the most important one: how should our loved one be mourned? The “right” answer can vary according to many factors including religious beliefs, household income, social norms, etc. The growing popularity of home funerals during the last couple of years in the United States triggered commercial funeral firms to engage in serious rent-seeking. After all, this is one more industry trying to get the most profit over all the other competing alternatives, just like many other firms in different industries do when they feel challenged.

In the United States, 16 states require that human remains be embalmed or refrigerated usually within 24-48 hours. Virginia is one of the most particular cases. Virginia State Senator Kenneth Alexander proposed a bill that requires the remains to be refrigerated at a temperature of no more than 40 degrees. However, this law has no scientific base. The temperature at which remains must be refrigerated is not strictly that, and cooling via dry ice or other means is perfectly fine, from a biological point of view. This and other similar regulations are supposed to avoid potential health hazards caused by human remains. Nonetheless, science has proved that un-refrigerated human remains don’t really pose significant public health risks. So, what is the real reason authorities are inclined to these regulations that place heavy burdens on families and religious communities that want to take personal care of their deceased relatives? Well, it happens to be that Senator Kenneth Alexander is a funeral director himself who is knowledgeable about this topic, so he has good reasons to impose these regulations… And apparently he has been successfully spreading his advice to other state Senators across the country. 

Who would have said this industry was also an opportunity for entrepreneurs?

Public Policy Negative Externality: Mandatory Helmet Laws

In a recent WSJ article, an argument is made the mandatory bike laws have resulted unintended consequences. When mandatory helmet laws are established, some places see a decline in head injuries in bike crashes. However, the helmet laws result in two different actions. Many bikers stop biking because they don't want to wear a helmet, resulting in a net negative health consequence for them. Additionally, some researchers have found that when a biker wears a helmet the surrounding cars in fact drive closer to the biker (which can lead to more dangerous crashes).

As related back to Friedman and Gruber, the government is faced with an interesting public good problem. The governments, in an act to keep their citizens safe, have enacted a policy that itself causes its own externality. This policy also touches upon a Coasian solution. By mandating bikers to wear helmets, bikers endure the cost of purchasing the helmet to keep themselves safe rather than forcing drivers to drive further from the bikers. The government defaults to putting the cost on the biker, when other alternatives could be considered.

http://www.wsj.com/articles/do-bike-helmet-laws-do-more-harm-than-good-1444662837

StudCo Lowers Students' Costs of Voting

Earlier this semester, Student Council launched numerous initiatives in efforts to increase student voter turnout. Some of these are UVAVotes.com (an online hub where students can locate important registration voter deadlines and locations), transportation to polling places on Election Day, and accesible locations to register on Grounds. StudCo is attempting to make it easier for students to both register beforehand and vote. These efforts and more collectively lower students’ costs of voting (C), the costs an individual expects to incur while participating in a vote. By lowering costs for students, StudCo is affecting the proposed voting equation:

            pB + D > C

Where p is the probability that your vote is decisive, B is the marginal benefit of casting a decisive vote, D is the utility derived from the act of voting itself, and C is the cost of voting.

By decreasing the right side of the equation, C, StudCo is increasing the chance that a student will vote in the election as it would take less for the benefits of voting to outweigh the costs. Indeed, voter registration rates are higher at UVA than in years past. Student groups including StudCo have registered over 3,000 students this year alone. Some part of StudCo’s initiative is taking hold. 

StudCo largely seems to ignore the pB in the above equation, the expected benefit of casting a decisive vote. While this is interesting, it makes sense. There is little that can be done to affect this probability. Virginia is somewhat a swing state, but there is nothing StudCo can do to change this. It is better for them to devote their resources to decrease C. Come Election Day, we will see whether or not StudCo’s initiatives decreased the costs of voting enough for marginal benefits to outweigh marginal costs to convince students to show up the polls.

The Economist: The Winning Policy Platform

I happened to stumble upon an article entitled Defining Realignment from The Economist, which analyzes where the American electorate stands on policy choices and priorities alone, freeing them from party labels to see what kind of winning policy platforms might emerge in the future.  When I saw the thesis of the article, I immediately knew that this related to Hotelling & the median-voter theorem as a tool to win an election based on simple majority rule. What this article is doing is the homework on what those winning policy platforms may be so that Candidate X and Y can use this research to attract most votes from a broad electorate. 

A quick summary on Downs and Hotelling in its relation to the class:  Hotelling argues that a rational voter would choose a candidate whose views showed most “proximity” to its own; so, it incentivizes political parties to take positions most likely to convince the voter in the electorate’s ideological middle. 

Researchers from The Economist used an online poll of “over 7,000 registered voters, which asked respondents both to express their preferences on 12 different issues and how much they cared.”  They then multiplied each position by its importance and added them up for all voters.  Using analysis, they can find which party they might support. 

The Conclusion:  Using the candidates’ actual platforms in the 2016 race, the results indicated that 52% of registered voters were closer to Hillary Clinton’s basket of policies than to Donald Trump’s.  Remember that this approach removes the error of any party loyalties.  This means that Hotelling’s median voter sits to the left of the midpoint between the presidential candidates.  The results also matched with Hotelling’s argument that the most ideologically extreme platforms are not worth it because the margins of the median voter theorem curve just don’t garner much votes compared to the middle. 

Implications for the two parties:  The winning coalition, or suggested “secret formula”, could be built around an anti-globalization message.  The Economist argues that “the candidate would have to take centrist positions on abortion, gay marriage and gun control, and alienate business by backing popular but costly government benefits like national health insurance.”  IF you combined this with supporting a border wall, opposing the North American Free Trade Agreement and ignoring climate change, this basket would secure 51.2% of the vote against a more socially liberal platform backing NAFTA and immigration: close enough to maintain a stable two-party system across election cycles.

I think it’s important to remember that Hotelling & Down’s model does fail to account for turnout, since its big assumption is that there are no abstentions.  While this is not a fatal problem - especially if the demographic studies are "likely voters" instead of "eligible voters", it does add a degree of uncertainty and risk - a politician may be deterred from repositioning even if it apparently makes sense if it risks alienating and lowering turnout among the base. This creates a degree of "stickiness" in terms of policy positioning.

Clinton Campaign: Using Illegal Immigrants to appeal to Legal Voters

   A hot topic in this election cycle is illegal immigration and how to reform the laws surrounding it. On June 15, 2012 DACA was established with support from President Obama. DACA stands for Consideration of Deferred Action for Childhood Arrivals and establishes guidelines and procedures for how people who came to the US as immigrants as children should be treated in terms of citizenship and deportation. Some of the guidelines for whether or not a person may request DACA are it they "were under the age of 31 as of June 15, 2012, came to the United States before reaching [their] 16th birthday [and] have not been convicted of a felony." While on the surface the country seems to be divided over this issue, a recent CNN-ORC poll shows that this is not the case. When asked "Thinking about the way the U.S. government deals with the issue of illegal immigration, which of the following policy goals should be the government’s top priority: (RANDOM ORDER)," the results were as follows:
 

These results show that a majority (with a 15% margin) believes that the government should do what it can to help illegal immigrants who are productive members to society become legal citizens. Another question from this poll asks: "Do you think the government should attempt to deport all people currently living in the country illegally or should the government not attempt to do that," with the overwhelming majority (66% of people surveyed) saying that the government should not. These two questions and their subsequent responses show that a majority of Americans feel positively about illegal immigrants living in our country and one day gaining legal status. 

 

   The reason I am discussing this today is because Hillary Clinton's campaign is being helped by "a group of undocumented immigrants [that] is knocking on doors in Northern Virginia" and in other places trying to mobilize voters on their behalf. They are doing this because they are "kind of in limbo, unsure about whether their status would be renewed under a President Trump and concerned that their family members could be deported.” In an earlier campaign this strategy was actually proven to be successful in helping to "stir up anti-Trump sentiments in Prince William County." I find that what this group, called CASA, is doing is very interesting in terms of what we learned in Johnson's writings about voter rational and the costs and benefits associated with voting. He concludes that "it is the rational voter who stays home and refuses to vote and the irrational one who votes,"but what would he say about someone who can't vote but is spending their time convincing others to vote for candidate who's policies are more favorable to them? I feel as though the whole thing is turned on its head as I question, "is it rational for the members of CASA to spend their time incurring large 'costs' with uncertain 'benefits'  (especially since they will not receive the benefit of voting)?" Costs referring to time and gas spent going door to door, etc. Johnson outlines several benefits with one of the biggest being the feeling of having made a difference and voicing ones opinion, but is this what is happening here? In terms of the elements of his equation, I feel like B is non existent and P is not their vote but rather their outreach and V1 and V2 being the biggest determine factors for the members of CASA. I feel as though the uncertainty of how the people with whom CASA members speak to will end up voting and the uncertainty of whether or not Clinton will actually continue the DACA initiative more than outweigh the cost, and I wonder if Johnson would agree with me. I feel as though perhaps CASA would be more efficient if they created a special interest group or worked on a larger scale than door to door knocking. In any event, on November 8th (or is it the 28th?) we will see if they are successful. 

Are Trump and Clinton ~Down~ with Downs's Median Voter Theorem?

This hilarious clip from Saturday Night Live's version of the Final Presidential Debate is remarkably close to what actually happened. Although it started off as a fairly 'normal' debate, with both candidates trying to portray themselves nicely to voters, shots were quickly fired. While I sat there watching the actual debate, I found myself infuriated by many things both sides had to say. I consider myself fairly close to what the median voter might be, so I wondered to myself if either of these candidates were successful in navigating themselves to capture the median voter from Downs's model?

This is an atypical election in that the voter population distribution is so polarized and bimodal that even the median voters are being alienated by candidates who are (supposedly) moving towards the median position! Hotelling would say that in any major election, the candidates function similarly to competitive firms, meaning that there are little -- if any -- distinguishing features between the two in an effort to gain the most votes. This could not be further from the truth this time around! Trump seems to alienate people by simply opening his mouth and pandering mostly to wealthy elites and white supremacists. But this makes at least a little bit of sense since he is not a career politician and therefore may not be well versed in the art of formulating a campaign that suits the voters' preferences instead of his own agenda (which we can debate over the values of this, just maybe in a less extreme candidate). Meanwhile Hillary Clinton, the career politician knows fully the importance of winning the median vote, but has flip-flopped so many times that she has ALSO alienated many voters! The SNL skit goes so far as to say: who do you want, Trump, or the Republican?! Trump is given his own category, meaning according to SNL he hasn't even come close to a platform supported by a median voter. Comparing Clinton to a republican is a testament to her attempts to gain more votes, but her more "moderate" platform may not be enough as she has already alienated people from her constant changes of pace, who's to say she won't change her mind again when she's sworn in?

These are all points that may come into conflict with the Downs's Median Voter Theorem, but it still is not enough to discredit it. If there exist two completely different candidates with voter distributions that do not even overlap AT ALL (which is slightly more extreme than even that of the 2016 election), then it will simply come down to how many voters there are in each of those distributions, and how many people either candidate has alienated within their own distribution. In other words, there will still be a winner, but it probably won't be one the true majority of Americans are genuinely happy about. (I wonder if we had another election system such as the Hare, Coombs, or Borda Count would the election look a bit different?)

Rent-Seeking in Poverty Statistics

It’s no secret that the Official Poverty Measure (OPM) reported by the Census Bureau is practically devoid of meaning. For one, its only measurement of income is pre-tax income. So, it completely ignores the effects of anti-poverty programs, since it doesn’t account for the effects of food stamps, of welfare, of even the Earned Income Tax Credit! If it doesn’t even reflect the measures taken by the government to combat poverty, then what even is its use! This useless tool, though, is the primary measure used by politicians in determining government benefit allocation.

So why haven’t politicians started using a better measure? Not for a lack of alternate measures, there are plenty. One explanation is rent-seeking. Changing the poverty measure results in winners and losers. A new poverty measure would mean a reallocation of benefits. So, if the new poverty measure reported a lower poverty rate for a certain group, then that group would get less benefits from the government. And so, that group would fight a change in the poverty measure. That group would rent seek. Since, as Mueller guesses, losers are (irrationally) more strongly motivated to fight against a policy change than winners are to fight for it, the losers dominate in their rent-seeking efforts.

However, taking a turn from typical rent-seeking groups, some of the biggest winners and losers are states and their state politicians. So, it’s likely that fewer resources would be spent rent-seeking since the federal politicians already have a pretty strong incentive to align with their home state’s interests, and thus don't need additional financial motivation. But, some states might be unaffected by a change in poverty measure, and so other states might put resources in fighting for the unaffected states’ federal representatives’ votes.

There are plenty of reasons outside of rent-seeking that the OPM still holds so much sway. For one, it's a partisan issue since with the OPM Republicans can claim that anti-poverty efforts aren't working and Democrats can claim we aren't doing enough. And, as previously discussed, this has a lot of elements of a politician-pursuing-votes issue. Still, rent-seeking is likely a fair part of it. And still, it's concerning that even something as supposedly impartial as government-reported statistics has a politics of its own.

Rahm Emanuel meets Tiebout

For the city of Chicago, 2016 has been a tough year thus far. By March of 2016 Chicago had seen their murder rate rise 72% and shootings surge 88% from the preceding year. With 141 murders and 677 shootings, Mayor Rahm Emanuel received significant criticism for not keeping his city safe. The problem was promulgated by the growing national debate over Police relations. Problems continued through the summer for Chicago as the number of shootings passed 3,000 in early September; in 2015 there were roughly 2900 shooting in the entire year.

This trend has been devastating for the citizens of Chicago and it's reputation across the nation. The most recent census report shows Chicago population dropping by about 10,000 people from 2014 to 2015. Furthermore, Chicago Tribune reporter, William Lee, attributes the population decline in part to "violence and lack of community interest".

Approximately a month ago, Police Superintendent, Eddie Johnson, alongside Mayor Emanuel announced a program that would increase the Chicago Police force by nearly 1,000 officers. Emanuel hopes the initiative will be incorporated into the 2017 budget.

Economist Charles Tiebout's theory of local expenditures explains the behavior above. Individuals have widely differing preferences - heterogeneity. If we view the revenue expenditure patterns of localities as a product, then we will see citizens sorting themselves into the localities that suit their preferences best. In the eyes of many Chicago citizens, the revenue expenditure pattern of Chicago was less desirable than other localities. So they moved. The city of Chicago in turn altered its revenue expenditure pattern, by adding more police, in order attract more individuals and maintain the ones living their now. In the end, this example and Tiebout's theory help solve the problem of preference revelation and increases efficient allocation by keeping power at the local level.

Occupational Licenses and Rent Seeking

Many jobs that require an occupational license do so because they have high consequences if the job is done poorly. I want to know that my doctor, accountant, or surgeon has completed appropriate training before trusting them to take care of my health, manage my money, or operate on my body. It would be too costly to investigate each doctor's background and competitively compare them. A medical license ensures that a person has certain knowledge of what they are doing because the job has high consequences. In cases where the consequence of a job is serious, an occupational license not only serves as a barrier to entry for that industry, but also as an appropriate screening mechanism in the interest of the general public.

There are, however, many jobs that require occupational licenses where the stakes aren't so high -- such as a barber, librarian, or interior designer. In order to get a license to be a barber in Nevada, it takes over two and a half years for the appropriate training. If you want to become an interior designer in NV, LA, FL, or DC it will cost you $400 and six years to get a license. While there is a clear argument for why a license is required to practice law or medicine, the same can not be said for more inconsequential professions such as interior decorators and barbers. The license requirements for these jobs are a result of rent seeking behavior. Existing merchants divert funds from their business in order to pay lobbyists to influence legislation. The funds directed toward influencing legislation are inefficiently used because they don't create anything "new" in the economy while hurting competition. Although this form of rent seeking is a huge inefficiency, Tullock brilliantly points out that the biggest inefficiency of all might come from merchants who were unsuccessful in their lobbying efforts. Perhaps its not the 2.5 years of training to become a barber that is most inefficient, but what this license requirement represents. The notion that the government is willing to promote an anticompetitive market for barbers in NV. And if it can be done in NV, why should other companies not try the same thing in their industry?