Sunday, November 27, 2011
Happy Thanksgiving from PETA
Sunday, November 20, 2011
Public Goods and Philanthropy
This article from the Charlottesville NBC is very striking. In the spirit of occupy Wall Street, Occupy Charlottesville has become a very serious social movement. With growing support in this local protest against corporate greed, Occupy Charlottesville has taken a longer term position in Leigh Park in downtown Charlottesville. The protestors who are staying in tents in the park have sparked some ideas about the possibility of letting homeless people make a more permanent residence in tents in any of Charlottesville’s public parks, even when there isn’t a protest happening.
The proposal would give some of the homeless people the opportunity to have a consistent place to sleep, but not everyone is on board. Though there seems to be a decent amount of support from Charlottesville residents, including some of the homeless population, the city doesn’t seem to be very in favor of the bill. Personally, I am confident that this idea, though maybe great at heart, will not pass. Though something similar happened during the great depression, the problem comes down to a public good issue. As soon as public parks allow people to make camp there, the park becomes an incredible “rival” good.
A reason for Penn State's demise
Honor
Weingast and Moran state that “the threat of ex post sanctions creates ex ante incentives for the bureau to serve a congressional clientele.” If doubt exists in the credibility of the threat of sanctions, then the incentives will be weakened. As a result, behavior will diverge from that which is desired. This same theory can be extended to countless examples, including that of the Honor System at UVa.
The Honor System and the “community of trust” it strives to maintain rest on the principle of “single sanction.” If a student is found to have cheated, he or she will be expelled. However, as of 2001, “of the students who said they were aware of an actual honor violation, 95.4 percent said they did not report it or initiate charges of any kind.” If students do not report violations then the threat of ex post sanctions has no credibility and thus does not create ex ante incentives; that is, if students do not report honor violations then there is no incentive to adhere to the honor code. One possible solution that has been explored is that of a multi-sanction system, but such a system has failed to garner the necessary support and also does not guarantee improved incentives. In order for the honor system to function effectively – with any number of sanctions – it is necessary for students to report honor violations. If increased initiatives are taken to promote honor and support students who report violations, then perhaps the status quo of letting violations go unreported can be replaced by an expectation that students will report violators. This would increase the credibility of the threat of the honor system, and, according to Weingast and Moran, decrease instances of honor violations.
Exploitation of Votes Using Small Parties
Informative Cainpaigning
This is an example of informative campaigning, in which candidates clarify their positions on the issues, as opposed to persuasive campaigning, in which candidates attempt to convince voters that their positions are the best and try to get voters to identify with them. This is interesting because basically all campaigning is usually persuasive, so as not to risk alienating voters. If informative campaigning were to dominate, someone near the median would win, but according to Mueller, persuasive campaigning generally dominates, and the two run together to become a single factor affecting the vote percentage gained by a candidate. In the case of the Republican Primary campaign, there has been slightly more informative campaigning than in a usual campaign in order for the candidates to differentiate themselves from each other, and when candidates have revealed positions that may alienate voters their opponents have latched on and brought them to the forefront in order to draw a larger percentage of the vote.
From Preference to Policy - A Traditional View
In an ideal democracy, the preferences of a nation’s citizens would determine government policy a 100% of the time. However, with a country consisting of over 300 million people (with a wide diversity of interest and knowledge on a torrent of issues) an ideal democracy is impossible to achieve and, to be perfectly honest, most likely not wanted as it would require a tremendous amount of effort on behalf of the voter. Instead, our democracy is based on the decisions made by our elected representatives and those our elective representatives put in charge of specific operations. Nevertheless, government policy should still be roughly in line with the people’s preferences by definition of being a democracy. The question is, “is it?”
Even if our elected representatives are fully committed to carrying out the people’s choices, the likelihood that our preferences for policy are converted into results is far from certain. Because of the sheer amount of legislation that must be implemented, it is necessary for Congress to distribute the workload among different agencies. These agencies are legally liable to Congress, however the problem becomes how well is Congress able to monitor these agencies? While the article presented here might seem a little foolish, it raises a legitimate point. While I don’t doubt the general intelligence of our representatives at large, the fact is that not too many are specialized in fields outside of government and law. Agencies deciding environmental policy or nuclear waste disposal regulations are the clear experts and Congress can really only trust their judgment. This creates a certain degree of agency autonomy that Congress can only loosely regulate.
These agencies have their own utility maximizing functions that are different from Congress and are, in turn, different from preferences of voters. While Weingast and Moran have provided support for the idea that Congress does indeed possess a sufficient incentive system for keeping agency policy making decisions in line, I believe evidence for the traditional view of agency autonomy is still a more aesthetically pleasing argument if not necessarily as strongly empirically supported. If it is true that agencies are indeed somewhat autonomous of Congress, it would seem that our present governmental structure of representative democracy is not the most efficient means of transforming voter preferences into policy results. Then again, maybe turning voter preferences into 100% results isn’t the best thing for a nation anyway.
University Bureraucracies
Budget Troubles
A recent Washington Post article reported on Congress’s own frustration in meeting its budget deadline. While technically Congress should have a budget put together by April 15, this deadline is now reportedly “routinely blown.” The article outlines how the budget process is supposed to work: the House and the Senate each come up with twelve separate budgets (each one for a different agency) and then Congress comes back together and negotiates on the differences between the two to come to an eventual decision. However, in recent years, this system has failed and Congress has relied on short-term spending bills and omnibus bills that “allow greater speed but less scrutiny of agencies and programs.” This is a solution that Weingast and Moran predicted in their paper because it allows many issues to be voted on at once and thus, minimizes the chance of reneging so many people will agree to it. As a result, Congress has started to propose new solutions to help solve the problem. The ideas include shutting down Congress completely until something is passed, giving Congress two years to approve budgets, and most currently, a bipartisan super-committee.
Although the solutions to this budget deadlock seem logical and helpful, the solutions may not end up offering any relief. As we discussed in class, committees are budget-maximizing groups. That is, unlike the market sector, they do not have any incentive to keep their costs low – rather, just to keep their spending high so their budgets remain large. This obviously creates huge inefficiencies within the American bureaucracy. The current problem Congress is now facing is the simple fact that money is limited and the budgets must be more carefully constructed while each of the agencies have that continuing incentive to be budget maximizing. However, the solutions that Congress is offering to help speed up the problems may not be all that beneficial. If the three assumptions outlined by Weingast and Moran hold that agencies are monopoly suppliers, are the only ones who know the cost schedule and they follow the institutional rule of “take-it-or-leave-it” offers, merely offering more time for Congress to approve the budgets is not going to make a difference. If Congress however, could get knowledge of the 12 committees separate marginal costs, then perhaps, the budgets could become more efficient and Congress could slash budgets and start passing bills again. However, since agencies themselves cannot predict and in some cases, quantify, these costs with complete accuracy, this would be nearly impossible.
Saturday, November 19, 2011
Rational Abstention in Virginia
In this Washington Post article, the author claimed that the election this November would result in a particularly low voter turnout in Virginia. He had several reasons for this prediction. First: “quirks of the state’s calendar…produces a ballot every four years featuring no federal or statewide races to drive turnout”. Second, most of the state is not looking at a competitive election. Also, redistricting in much of Virginia may lead to some confusion of where to vote, which he said could possibly lower turnout. The last similar election similar resulted in only 30% of Virginia voters turning out as opposed to the 75% of registered voters who turned out in 2008. The author claimed that voters should care about this election because “control of the state senate hangs in the balance, and with it the possibility that Republicans could soon control all the levers of power in Richmond”, but he also recognized that voters wouldn’t vote.
Essentially the author tapped in to Johnson’s theory of rational abstention. For several reasons, voters in Virginia decided rationally not to vote. Even though control of the state senate was determined by this election, voters did not find this to be enough of a reason to incur the costs of voting. In class we discussed having to take work off, waiting in line, and confusion in the registering process as reasons not to vote. This author names another; confusion in where to vote, due to the redistricting.
The author claims that independent voters will be the ones to stay home. This could be due to the voters feeling either indifferent to the candidates, or alienated by the candidates. Either the difference in utility the voter would derive from the Republican vs. the Democrat is outweighed by the cost of voting, or both candidates are so far from the voter’s ideology that they would not gain enough utility from either candidate being elected to incur the costs of voting. Finally the voters may have decided, as Johnson would suggest, that their vote does not make enough of a difference in the overall results of the election, to be worth the costs of voting (rational abstention). The author mentions this when he notes that most of the election in Virginia will not even be contested. The fluctuation in voter turnout depending on which offices are being contested is however, not necessarily supportive of Johnson’s thesis. After all, one vote out of all Virginia voters has a higher probability of making a difference, than one vote out of every voter in the US, for a presidential candidate. Yet it is the elections to determine the president that draw the largest percentage of voters. That being said, voters are much less likely to be indifferent to who holds the office of the presidency.The Super Case-Study
Friday, November 18, 2011
The TSA and bureaucratic inefficiency
Thursday, November 17, 2011
Keeping Agencies In Line
Last summer, Representative Cardoza (D-CA) was upset that the secretary of the Department of Housing and Urban Development was flying off to various conferences rather than dealing with the housing foreclosure crisis, so he eliminated the secretary’s travel budget. He said “Frankly I want to cause officials a little personal pain. I want them to understand they’re hurting folks in my district by their lack of actions and so they need to plant their butts at their desk and do the jobs they were appointed to do”. Rep. Cardoza added this cut as an amendment to the Transportation, Housing, and Urban Development spending bill.
If we had read this news story before taking public choice we might think that representative Cardoza lost his temper or overreacted a bit. However, Weingast and Moran enlighten us by explaining this kind of behavior. The Weingast and Moran article argues that Congress has several tools at its disposal to control agency behavior. Congress has created a system of incentives for agencies by rewarding agencies that pursue congressional goals and sanctioning those that don’t. Congress probably exercises its most potent oversight of agencies through the appropriations process. Since Congress controls the purse strings, it can cut off or reduce funds to agencies. Rewards go to those agencies that pursue the policy preferences of current committee members which reflect the preferences of the voters in their district. Specific committees have more influence than the rest of Congress over a specific agency. Cardoza was offended that the secretary of the Dept. of Housing and Urban Development didn’t notice the severity of the housing crisis and how it was affecting his constituents back home who were facing foreclosures. Clearly, the members of Congressional committees play an important role in influencing regulatory policy. Congress can use sticks or carrots to influence agency action and Rep. Cardoza thought sticks might be more effective in this case.
Sunday, November 13, 2011
U.Va Coal Power and the Group
Few may realize that among the numerous coal trains that travel rumble through grounds each day, a small percentage of their cargo is actually destined for right here at U.Va. The strange “chugging” sound that is sometimes present on the corner is none other than the sound of coal being unloaded from train cars and loaded into the silos of the University power plant nestled between the corner and the hospital. According to The Daily Progress, the coal that is burned on U.Va property accounts for about 40% of the total electricity consumption of the University. In addition to this coal, U.Va also burns natural gas and heating oil at the University owned plant while at the same time importing electricity from the national grid. With the average Virginian receiving, on average, 38% of their electricity from nuclear power, the large portion of U.Va that is powered by coal generated right here on grounds has irked many environmentalists here in Charlottesville.
Olson would see the generation of power here at U.Va as a public good being provided by a relatively large group of people. The 20,000+ U.Va students who pay tuition at U.Va and the countless other faculty, staff, and visitors who also have a stake in University activities make up this group and share in the benefits and costs of generating power right here in Charlottesville. A group here at U.Va, Beyond Coal, has embodied some of the issues that Olson finds with large groups. The students among this group could be assumed to have a rather large personal interest in the elimination of coal power at U.Va and would gain a large amount of personal utility if this goal was accomplished. Their proposals for accomplishing this goal are generally a move to cleaner fuel sources such as natural gas and renewable sources such as solar power. These sources of energy would be more expensive to the U.Va community if used to supply the same amount of power currently supplied by coal. I would also argue that the majority of U.Va stakeholders would prefer to have their energy generated in the cheapest possible way and if given the choice of higher tuition costs or continued coal generation, would choose the latter. The relatively small interest group, Beyond Coal, is looking to take advantage of the size of the group by free-riding the cost increase of the cessation of coal generation among the entire U.Va community.
A small group, Beyond Coal is very focused in their interests and has little internal debate among their members about their goal. They would likely be unwilling, however, to take the entire cost that ending coal generation at U.Va would incur and internalize it in their small group. It is likely, however, that they value the cessasion of coal generation at U.Va at more than they would personally pay should the cost be divided among over 20,000 people. They would prefer instead to spread it out among the large group that is U.Va. If they succeed in eliminating coal power at U.Va they would incur a personal utility gain that would far outweigh the personal expense that they would endure once the expense is divided among the whole group. In this way we find a good example of what is wrong with large groups right here at U.Va where a small group has the possibility of gaining a large gain in personal utility at the expense of the large group.
The Man Who Can Make Larry Page Sweat
Herb Kohl is a US Senator from Wisconsin who made headlines this summer when he subpoenaed Google's CEO Larry Page. After being issued a subpoena, Larry Page reluctantly appeared before the Senate Judiciary Committee and allegedly began sweating when interrogated by Senator Kohl. Besides being known for his ability to make corporate heads sweat, Herb Kohl is also known as the CEO of the Milwaukee Bucks and the chairman of several influential committees. He is the chairman of the Senate Committee on Aging, the Judiciary Subcommittee on Antitrust, and the Appropriations Subcommittee on Agriculture.
As we read in the article "The Industrial Organization of Congress", committee assignments are based on seniority. Kohl's committee assignments can be partially explained by his ranking in the seniority system. Kohl is a four term democrat who has been in the Senate since 1989 so he is given priority when bidding on committee assignments. As chairman, he has property rights over three committees including the powerful appropriations subcommittee on agriculture. Kohl represents Wisconsin which is known as the dairy state or America's farmland. Many of his constituents are dairy farmers that enjoy receiving agriculture subsidies and Kohl has the ability to appropriate those funds to them. A congressman's reelection prospects depend on his ability to obtain benefits for his constituents therefore, legislators seek assignment to those committees that will have the greatest impact on their electoral fortunes. We know from the Weingast and Marshall paper that committees are composed of high demanders or individuals with greater than average interest in the committee's policy area and that committee members gain a greater share of the benefits from these policies. Kohl's policy interests reflect his constituent's interests and the committee system serves his electoral needs because it allows him to provide benefits to his supporters. Congress is organized to support the electoral needs of members like Kohl.
Do Governments Work for Public Interest?
This article shows a simple example of government regulation taking place in the country of Hungary in the retail market. The government is attempting to apply regulation on retail store sizes, banning the construction of any building over 300 square meters. This use of entry controls is what Stigler would say is the ‘most important’ form of government regulation. It seems, at first, that the government might be trying to issue this regulation with a public interest argument by saying that the regulation would help local, smaller retail businesses. A Hungarian government official explained that these larger retailers, who are typically controlled by international groups, were controlling about 69% of all returns, while they only represented “1% of all retail enterprises.” The public though, explains that this regulation is in fact NOT looking out for public interest, since this regulation is neglecting the potential loss of local jobs, regardless of corporation ownership. This ban also is negatively affecting other local Hungarian business, such as the real-estate and office market. Despite this attempt at government regulation for supporting local businesses, it seems that the government might not have really been looking into the best interest of the public. It might have looked ‘good’ on paper to do this as a way of supporting local businesses, but this neglection of some basic international trade shows an obvious negative impact. Stigler would argue that there could be a possibility here that the industry is looking more towards itself rather than at consumers and the negative impacts outside of the industry. Some firms, we learned, seek government regulation because it allows them to act and receive the benefits of a monopoly/oligopoly without the work of getting to that position; instead, the government does it for them. So here, we might be seeing a government trying to ‘cover up’ almost selfish industry seeking behavior with a ‘so-called’ public interest argument.
Showing up the Shirkers
Committees and Sen. Scott Brown
Senator Scott Brown has been a member of the National Guard since 1979. He completes annual training every year, and this year did his training in Afghanistan. In the Senate he represents Massachusetts, a state whose population is only 8.3% veterans, notably less than the national average of 9.8%. Thus it seems that his constituents would not have particularly strong preferences with regard to veterans’ affairs. However, Sen. Brown serves on the Senate Committee of Veterans’ Affairs.
Weingast and Marshall’s discussion of committees implies that committee members are generally preference outliers. That is, states whose preferences are particularly strong with respect to agriculture are more likely to have a representative on the agriculture committee. The Committee on Veterans’ Affairs does not seem to follow this logic. Only five of the fifteen members of this committee come from states in which veterans comprise at least 12% of the population (of which there are nine), and Sen. Brown comes from the state with the sixth lowest veteran population percentage.
An alternative theory on committee membership presents expertise as a leading factor. As for Sen. Brown this explanation seems to fit. Sen. Brown is also a member of the Committee on Armed Services and the Committee on Homeland Security, both of which require some knowledge of the military. It seems that Sen. Brown has a comparative advantage in military knowledge that makes him a suitable member for these committees. Whereas other senators might need to learn quite a bit to function on these committees, Sen. Brown already has an applicable base of knowledge and opportunities to gain more, such as his training in Afghanistan. In addition to comparative advantage, Sen. Brown also gets to take advantage of intellectual economies of scope through his membership on these particular committees since some of the knowledge they each require separately is common to all of them. Sen. Brown’s committee membership is one example of inconsistency with Weingast and Marshall’s theory.
Madagascar Faces Too Many Parties
It's all about your attitude
In this article, Michael Medved claims, “Romney’s real problem isn’t a question of ideology, it’s a matter of attitude.” Out of all of the papers we have read thus far in the semester, attitude has not been sufficiently addressed. Attitude in this context is not synonymous with ideology, but rather the approach or mind-set about a set of issues or election.
Attitude is difficult to include in public choice theory because it is always changing, and it is very hard to measure because it is multidimensional. Attitude is also something that does not follow “party lines”, and it is completely dependent on the state of the country at the time of the election.
The concept of attitude can be best applied to public choice through the relationship between constituent and representative’s attitudes. Constituents can pressure representatives to adopt certain attitudes, and many legislators base their campaign off an attitude. Attitude plays a major role in a constituents support for their representative. For example, during the 2008 presidential election, Obama relied heavily on the attitudes of “hope” and “change”.
Medved claims that Romney’s attitude is not aligned with the attitude of his fellow conservative constituents. Mitt Romney’s followers from the 2008 presidential election have a much angrier attitude towards Obama and the current state of the country going into the 2012 presidential election. Although, Romney still shares the same ideology with his conservative constituents, his lack of aggressive attitude seems to be his downfall. Romney might respond to this demand for more passion in his campaign in order to please his Republican constituents that share his ideological views, or he may continue to stay composed in an effort to attract moderates. If Romney can win the primary for the Republican Party, conservatives that agree with Romney’s ideology will definitely vote for him over Obama. If Romney realizes that he already has these votes secured, it might be smart for him to maintain his composed attitude going into the 2012 presidential election, because an angry attitude against the Democratic Party and the current state of the country might deter potential moderate votes. Romney’s attitude dilemma demonstrates the importance of constituent and representative attitudes in campaigns and election outcomes.