Persuasive Campaigning for GOP Candidates

This article, from Fox News, expresses the competition between basically all of the Republican candidates in the state of Iowa for the upcoming caucuses. This article shows that there is no big front runner for the state of Iowa, and that basically "'It's anybody's game right now.'" Because of this, each candidate is looking for a solid campaign strategy moving forward. Many Iowa voters are unsure about their support for these Republican candidates. It seems that is article is implying that for success in the state of Iowa that these candidates will need to put on a more persuasive campaign strategy. The article says that, "Fewer than 20 of Iowa's 76 Republican legislators have publicly declared their support for a candidate, and no single candidate has a clear edge among those who have picked sides." This implies that these voters seem to all be indifferent towards all of the candidates, probably because each candidate seems closely related to each other on policy. This is directly related to the Mueller 20.2 reading that expressed that with the use of purely informative campaigning, the median voter theorem would win out, which increases indifference in the voters for any candidate. According to Mueller, the persuasive strategy is an attempt by candidates to convince all voters that their position is best, and increase all votes for them. In Iowa, it seems that these candidates have sporadic support from some groups, but that this spread is almost evenly among supporters, preventing any candidate from really gaining mass support. It seems that Iowa is informed of each candidate's position, but now the battle looks like it will be for persuasion to the voters that their position is best. For example Romney is working to, "cast himself as the candidate with the strongest economic credentials." This looks as though he is putting on a more persuasive strategy by trying to show voters that his economic policy is the best. However, other than simply looking for a persuasive campaign, it seems Romney is also looking to clarify his individual positions on issues. The article says, "while he's stepping up his Iowa activity, he's also picking his spots." According to Mueller's model, simply choosing either informative or persuasive campaigning is not ideal, but that it is a mix of both. The probability that a voter will choose a particular candidate is based on the candidate's position, their opponents' position, their informative campaigning expenditures, their opponents' campaigning expenditures, their persuasive campaigning expenditures and their opponents' campaigning expenditures. Regardless, it looks as if these GOP candidates in Iowa need to seek a more persuasive campaign strategy, informing more of the undecided society that their position is best and that they are the "candidate who can defeat Democratic President Barack Obama next fall."

Emerging Markets Seek to Increase Regulation to Move Up the List

An article in the Wall Street Journal discusses the progress emerging markets are making in regulating their industries in order to improve market efficiency. The World Bank Group has a ranking of the different economies in the world and their overall ease of doing business. The “Doing Business” project, which began nine years ago, was started to assess how countries deal with concerns of different firms’ ability to secure construction permits, pay taxes, enforce contracts, etc. The list seeks to point out faults in the countries’ regulation systems so that they may fix the issues and move up the list, hypothetically attracting more business. Emerging markets often have little regulation, allowing many foreign investors to take advantage of resource and labor rich countries and exploit them due to lack of infrastructure. Technology has paved the way for many of these emerging market countries to become more organized, and take initiative on regulation in order to protect their resources. Stigler’s paper on the Theory of Economic Regulation would be in support of this project as one of his main reasons for supporting regulation is because it “is designed and operated primarily for its benefit.” Stigler continues to propose that industries that have the power to be able to control entry will do so because it is profitable. Although Stigler’s proposition focuses on controlling entry in order “to retard the rate of growth of new firms,” in emerging markets, growth of firms is often welcomed, as long as it happens in an efficient and non-exploiting manner. The article highlights that things as simple as putting property records on computers, actually enforcing permits and contracts, and stipulations to investors that would require them to use local resources i.e. labor have led to great benefits for these countries. Stigler also highlights the importance of representatives to argue these regulations because voting forums can be very costly. One of the reasons why these emerging markets are so behind in regulation practices is because they often do not have the political infrastructure and sometimes stability to have representatives to debate these issues, so it is too costly to figure out efficient regulation. Sometimes the emerging markets that do have representatives have large amounts of corruption that prevent them from finding out what regulation is best. As emerging markets make strides to increase profitable regulation practices, Stigler would be a good person to keep in mind as they figure out efficient forums to debate these issues as many of these countries are already suffering from large amounts of political corruption.

State Alcohol Laws- Arbitrary?

In this article, the writer expresses frustrations in what he believes to be “punitive and arbitrary laws” that the Department of Alcoholic Beverage Control sets in regulating the market for spirits. The author sites laws requiring establishments to regulate lighting and music volume, as well as requiring that food sales account for 45% of the total. The author expresses frustration with these laws because he only examines two of the rationales for regulation as mentioned in both Stigler’s article and in class. The author claims that the laws do not serve any public interest, and therefore are arbitrary.

George Stigler would disagree with this conclusion. Stigler claims that politicians are rational and use their power to benefit members of society. Stigler would say “every industry or occupation that has enough political power to utilize the state will seek to control entry” (emphasis added). Rent seekers, he would say, essentially pay politicians through votes and other resources in order to gain entry controls to the industry. The author is missing an essential piece of the puzzle. Just because heavy regulation is not necessarily in the interest of the public, or even owners of bars, does not make the laws arbitrary. A more interesting question for the author to address would be who is gaining from the heavy regulation. Stigler would say that some subgroup involved in the sale of alcohol is benefiting from the regulation because they "payed" to gain it. Another question the author could ask might be why bar owners, or an irritated public are not able to overcome the heavy regulation. The author briefly touches on this point when he mentions that “Virginia’s alcohol laws… give an inordinate amount of power to state bureaucrats…”. The author claims that bar owners are not able to challenge the regulations because they do not have the funds to fight. Stigler has a reasoning for this claim. Because benefits are concentrated to successful rent seekers and costs dispersed amongst the rest of the population, the public has little incentive to organize to combat the regulation. Bar owners would then be unable to change regulations because costs of organizing and lobbying are too high. Thus they fall in to the category that does not have enough political power to utilize the state.

Bone Marrow Transplants and Stigler

In this recent column from Bloomberg, the article detailed the story of Amit Gupta who was in need of a bone marrow transplant. Unfortunately for him, bone marrow transplants require very close genetic matches so the odds of finding a match were about 1 in 20,000. Thus, a close friend offered $10,000 to someone who would be a match and donate to Amit. A second friend also offered this same amount, bringing the total “reward” for a bone marrow transplant up to $20,000. However, it turns out these offers were illegal under the National Organ Transplant Act of 1984. The law’s intent was to minimize corruption within the system that could lead to a lower social marginal benefit. However, as the article points out, there could also be possible positive social marginal benefits to money being offered in exchange for bone marrow donations. Most obviously, more people would probably be tested for matches to bone marrow thus increasing both the possibility of the bone marrow receiver finding a match as well as the possibility that additional other people could take advantage of these cells too. In other words, as the article quotes, “there are huge positive externalities in the bone marrow context to allowing rich people to post big bounties.

It seems that Stigler’s theory of economic regulation may not hold perfectly in this case. In the case of bone marrow transplants, it would seem that potentially both the medical industry as well as the bone marrow receivers themselves would not favor the regulation that is currently in place. If, as the article says, there were indeed more bone marrow testings (and consequently, more procedures) that would begin to take place as the economic incentive rises to be tested then it would seem that the medical industry would be in favor of this regulation being lifted—as well as the bone marrow seekers themselves. Stigler argues that firms are in favor of regulations because it is the same as if the government wasn’t present and they had a monopoly. However, in this case, it is not the same for the medical industry. It seems the only thing this regulation benefits is what Stigler offered as one of the alternative views: that regulation is for the benefit of society (in this case, minimizing potential corruption) and contributing to come common good. But, this “common good” seems to have much greater social costs than benefits.

Tunisians saw voting as rational on their first democratic election

Today, millions of Tunisians streamed to the polls to cast their votes on the first democratic election the country has had since 1994. As the WSJ article mentions (link on title) more than 80% of the registered voters went to the polls to vote. Given the higher the expected turnout and the lack of experience in conducting elections, people had to wait up to 2.5 hours in line in order to vote. Regardless of the wait time the lines to vote went around the buildings and people were excitedly waiting. Furthermore, there were more than 11,000 candidates and 80 political parties but only a few were known to most Tunisians. Johnson, in his chapter "Voting, Rational Abstention, and Rational Ignorance" argues that it is rational to abstain. In order to decide whether to vote or not people weight the costs and the benefits and for the benefits from voting are very small compared to the costs. Thus, it is rational not to vote. The costs for Tunisians to vote were very high: they had to spend a really long time waiting in line, they had to walk or drive to the polls and they had to take time off their Sunday to go vote. However, Tunisians went and voted. Why? I think that the benefits of voting for Tunisians were more than just having a candidate win. Even though the know that their vote will not make a difference (and thus the benefits are very small compared to the costs) they voted because they were supporting democracy for the first time in years. Also, there is the possibility that there were social pressures that made people vote. The supporters of democracy may have pressured people socially to go to the polls. Even though Johnson's theory of rational abstention did not hold for Tunisians, his theory of rational ignorance does hold. Tunisia had over 11,000 candidates and 80 parties, which makes it very costly to learn about the parties and candidates. Therefore, voters knew very few of the candidates and very little about their campaigns. Thus, candidates voted but they were ignorant about the candidates.

Ranked-Choice Voting

In class, we discussed various voting system alternatives to the plurality, and examined the relative ability of each system to reflect the true preferences of voters. This NY Times article examines a system of ranked-choice voting, "instant runoff" voting, which the city of San Francisco recently adopted as the method to be used in its mayoral races.

The "instant runoff" appears to be a slightly modified version of the Hare system. In the "instant runoff" system, voters "select their top three favorite candidates in order of preference." If no candidates wins a majority, then the candidate with the least number of votes is eliminated. The voters who originally voted for the eliminated candidate will then have their votes automatically counted towards their second-choice candidate, and the votes will be tallied again. Candidates will continue to be eliminated in this manner until a majority is reached. This system has been championed by electoral reform activist Steven Hill, who claims it is fairer and less costly than the plurality system traditionally used in U.S. elections for public office. (For more information on this particular voting method, check out the website for Steven Hill's organization.)

In theory, this system should be superior to the plurality system. For one, there is much less incentive for strategic voting. For instance, unlike a plurality system, the "instant runoff" system does not create a situation where voters are afraid to vote for a third-party candidate because this candidate would 'take away' votes from a second-choice mainstream candidate. However, according to this article, voters are having trouble understanding how this system works -- they are either leaving their second and third choices blank, or they are choosing more than three candidates, causing their ballots to be invalidated. Perhaps it is the case that voters simply have not been made sufficiently aware of the how the voting system works. Another potential drawback to keep in mind, though, is that this system requires the voter to have more knowledge about each of the candidates (compared to the plurality system). The voter must know not only who his favorite candidate is, but who his next two favorite candidates are (in order). Many voters will likely not be sufficiently knowledgeable.