Obama, Romney reverse rolls as election looms

Obama, Romney reverse rolls as election looms

As November 6 draws near, both President Obama and Gov. Romney are exploiting all available resources to put up a final fight. Notwithstanding the increasingly "caustic" attacks on both candidates, Gov. Romney made an interesting twist to his standard speech. 

"Romney has co-opted Obama's campaign theme of 2008 by declaring himself the candidate of change in contrast to the status quo of what he called four more years of failed policies under the president."

Perhaps this is Gov. Romney's attempt to evoke voters enthusiasm towards voting, as did President Obama four years ago. If voting were as easy as arithmetic, then no one would vote because a simple cost-benefit analysis will tell us that voting is simply not worth it. Therefore, at this point, both candidates started to devote more energy and resources to convincing their supporters to come out and vote, rather than winning over those who are indecisive. 

Campaign Finance Rent Seeking

The 2012 presidential election is shaping up to be by far the most expensive in American history.  With less than two weeks until election day, the combined spending of the Obama and Romney campaigns has surpassed $2 billion.  Before Obama first refused it in 2008, all previous candidates had accepted a government stipend, capped at $100 million, to run their campaigns--but doing so limited the fundraising they could conduct.  Due to Obama's tremendous fundraising success in the 2008 election, a new paradigm of turning down the public funds in the hopes of obtaining larger private donations has been established, as Romney has followed suit this year. 

The massive spending in which the two candidates are engaged is a form of rent seeking.  By spending billions on attack ads and other promotion, each candidate is "bidding" to recieve a single, government awarded contract.  The only difference between this and lobbying is that the "audience" to which they are appealing is the American public rather than a political committee.  The loser's spending will be entirely wasted as it will not acquire him the presidential contract.  Similarly, the winner's spending should be subtracted from the value of the presidency to him (or the value of him being president to his donors) to find his net profit from the rent seeking behavior. 

The previous system, which gave public funds for the purpose of campaigning but limited other forms of fundraising, can be seen as a check on this form of rent-seeking.  It effectively capped the amount of spending candidates could engage in, and kept this wasteful spending relatively low.  Candidates have realized, however, that they have an incentive to turn down the public funding in order to increase campaign expenditure and more effectively lobby the public. 

Costs of the Texas school trial

 About 2/3 of the Texas school system has recently claimed that the state of Texas is not upholding its constitutional obligation to provide an “efficient system of public free schools.”  The public school system and the state of Texas have recently gone to trial over the issue and it is not expected to be resolved for a couple of months.  On the school districts’ side, the attorneys argue that it is unfair to expect schools to meet the higher standards, which have recently been put forth by the state, while dealing with massive budget cut backs.  The state’s response has so far been that the current crisis the schools have been facing is due to the local government, not the state.  It also contends that the crisis is not as much as a crisis as the school districts are making it out to be. 

            This type of back and forth can be expected to go on for some time.  But one prosecutor, Chris Diamond, has made a much more general attack on the way the state of Texas is handling its constitutional duty of providing a public education.  He claims the entire system does not work because the government has a monopoly on public schools. 

 "It is the poor, economically disadvantaged who are saddled with the monopolistic system,” he said.”

This case could be an example of the types of costs Tullock talked about in his paper.  The entire case, with all its attorneys and the amount of time it is expecting to take, could costs millions of dollars.  The monopoly has given one side more power than the other and has thus induced a legal battle, spending resources that could otherwise be used elsewhere.  If the prosecutors were not defending the school systems they could be fighting for some other industry that is also in need.  If the defense attorneys were not battling out this case they could be helping Texas in other matters.  There are a million different ways the money could be used in this trial over the state’s monopoly.  In an economic sense, these are all opportunity costs, which are worked into the cost of the case, making it very, very expensive.  

The State That Doesn't Vote

Due to its low voter turnout rate, Hawaii has been named the “state that doesn’t vote.” In fact, Hawaii is the state with the lowest voter turnout rate in the nation. Even in 2008 when Barack Obama, a native of Hawaii, was running for president, fewer than half of eligible Hawaii residents showed up to cast their votes. The first few pages of this extremely large article discuss several reasons for voter abstention that we discussed in class.

For several years after statehood in 1959, more than 90% of registered voters in Hawaii participated in the elections. Today, however, enthusiasm has died. One popular reason for low voter turnout was that voters believe the Democratic Party controls everything in the state, and that their vote would not make a difference. In class, we talked about Johnson’s idea of rational abstention when the costs of voting outweigh the benefits. Because citizens feel their vote does not count, there is very little individual incentive to vote. Yet another case for rational abstention, some voters truly feel that their vote is worthless due to the time change; because Hawaii is six hours behind the East Coast, national elections are often called by the news media/twitter before Hawaii finishes voting. One voter even recalls driving to her polling place when she listened to the winner be announced on her car radio. For these reasons, many Hawaiians feel disconnected from the rest of the US and its politics. In addition, many believe that Hawaii and the US have nothing in common. One woman even believes that the US is illegally occupying Hawaii, and she, therefore, abstains from voting on principle.

Whatever the reason, the rational behind abstention in Hawaii is certainly not apathy, as can be inferred from the voter turnout following statehood in 1959. In addition, efforts are currently being made to increase turnout by going door to door to talk about the importance of voting and registering people to vote. Visiting people in their homes and asking them what issues are important to them, as well as asking them to vote, “is re-knitting the fabric of communities in Hawaii..it’s giving anonymous residents a voice.” As it turns out, these efforts have been quite successful in increasing voter turnout, and surveys indicate that citizens are feeling a greater connection to politics; more people feel that their participation in the political process can make a difference. 

Oil-seeking in Russia

BP’s board has approved an offer from the Russian state oil company, Rosneft, to buy most of BP’s business (TNK-BP) in Russia for cash and shares in Rosneft, further consolidating Russia’s control of its oil industry. According to this article, if Rosneft ends up buying both BP and the Russian billionaires who control the other half of TNK-BP, Rosneft will become the world's largest publicly traded oil company. And this will increase the federal government's share of the oil industry up to above 50 percent. 

John Lough, a former TNK-BP official who is a Russia specialist at Chatham House, a British research organization, said in an interview.

“At the moment, the way the Russian system works is by achieving a distribution of influence and access to rents to achieve overall equilibrium on which the state is based.We have seen this remarkable strengthening of the influence of Rosneft and Sechin (Rosneft's chief executive) personally.” 

Given the enormous "rents" for Rosneft and the milestone in the consolidation of the Russian oil industry for Mr. Putin, no wonder Sechin, a former military intelligence officer and close aide to Mr. Putin is sparing no effort on making this purchase happen. And in return, Mr. Sechin's support of greater state ownership in the oil industry is precisely what President Putin needs. 

Extremely Loud and Incredibly Close

The predominantly student populated neighborhoods that surround the university come alive on Thursday, Friday, and Saturdays nights.  Walking in between Rugby Road and 14th Street it is almost impossible to escape the sounds of music and laughter intermixed with the opening of beer cans and the shouts of partygoers. For most students the weekends are a harmless outlet and a break from their school and work obligations.  However, not all members of the Charlottesville community see it that way. Members of the Venable and University Circle neighborhoods have approached the Charlottesville City Council with legislation intended to crack down on what they view as the excessive noise generated by student parties. As it stands,

           

            "[P]eople found in violation face a class four misdemeanor,which is punishable with a fine of up   to$250 and no jail time. But with proposed changes, multiple violations couldresult in higher            fines and jailtime, including a penalty of six months behind bars and a $1,000 fine for asecond o      ffense, and a year in jailand $2,500 fine for three or more offenses."

           

The noise pollution generated by these parties spills over into the surrounding residential areas and is one example of a serious negative externality associated with living near student housing. This past summer representatives from the affected neighborhood associations went before the Charlottesville City Council [at a time when most students were not in town] to try and solve the problem. Johnson's chapter on voting, rational abstention, and ration ignorance highlights many of the costs associated with voting and political information seeking. Had out-of-state students wished to participate in the noise ordinance discussion before the city council they would have had to expend considerably more resources than a Charlottesville local. Locals have a much greater incentive to "gather and retain information about issues" and will likely be more successful in shaping Charlottesville's laws. 

A "Bad" Public Good?

In the study of Public Choice, the theme of public goods and their implications on the role of government often cause much dispute. This article discusses the idea of higher education as a public good, however it refers to it as a "bad public good."

"But education may also make you a better citizen and enable you to work more cooperatively with other people and produce and even invent products that create opportunities for others. To the extent that it benefits the public in general, your education is a public good."

Shaw's analysis of higher education as a public good is slightly flawed. Firstly, she failed to define a public good in the true economic sense as something that is (1) non-rivaled in consumption and (2) infeasible to exclude. Any student enrolled in a college or university may be quick to argue that his application process what anything BUT competitive, and the fact that their is a need for an application implies that colleges can be selective in acceptance, disproving both (1) and (2). While knowledge may be a public good, higher education fails to hold up to these two standards.

Another issue in Shaw's discussion is her reference to there being a "bad public good." As we talked about in class, Buchanan said that goods do not have to be purely private or purely public, rather they exist on a continuum between the two, therefore it is very likely that, in this case, the good is somewhere in the middle of this spectrum. It is true that others may benefit from another's higher education, however the idea that the benefits from a person's education is distributed as equally among society as national defense (possibly the closest thing to a pure public good) seems a bit defective.