The "Government Shutdown" and Public Goods

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

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

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

Political Disagreement Preventing Compromise

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

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

The Relative Importance of Ideology for Political Candidates

                      

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

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

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

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

Why vote in NJ/NY?

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

Are MOOCs Really Public Goods?

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

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

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

Hollywood Logrolling

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

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

Government Shutdown Prevents "Grand" Weddings

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

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

The Belgian Government Shutdown

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

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

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

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

Republicans Ignore Median Voter Theorem

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

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

A Race To The Middle - Virginia Lt. Governor

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

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

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

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

Can a Tax Slow Global Warming?

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

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

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

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

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

The Role of Third Parties in Senate Races

             In this article on Politico, the author observes the role of Ed Marksberry, a Green independent candidate, in the Kentucky Senate Race, positing that he can “outflank Democratic Senate candidate Alison Grimes from the left.” Downs’ theory of static and dynamic party ideologies lends explanatory power to role of independent candidates, like Marksberry, who ‘outflanks’ the Democrats from the left by taking a stance with an ideologically stronger far-left position, which is only possible because the Democratic Party candidate has strayed further towards the median voter and thus also further to the ideological right, allowing the creation of a more liberal party to capture more extremist voters. 

Marksberry explains the Democrat’s shift towards the median voter, claiming that Grimes or "anybody for that matter, [is] going to be pro-coal because they’ve got to be pro-coal in order to be elected.” Grimes takes a pro-coal stance, even though the ‘perfect’ ideological liberal would take a greener energy stance, as she is aiming to gain further votes in Kentucky’s coal country. While this would theoretically allow Grimes to gain more median/conservative voters while keeping the liberal votes to the left, as she is still more liberal than the conservative candidate, her shift towards the median voter has made the Democrat susceptible to Marksberry entering the political spectrum by ‘outflanking’ her to the left and seizing more extreme liberal votes. 

An important distinction is that candidates cannot ideologically jump over one another in this system, thus causing a stable equilibrium of two parties, as supported by the American electorate’s distribution. It is also rational for the parties to have equivocal and ambiguous policies to confuse the electorate, so that their vague position will cover “a wide spread of voters in a two party unimodal system.”[1] The author addresses this concern by suggesting “Grimes is…too nervous to take a position on anything for fear she’ll make herself unelectable.” In such as system, the third party candidate can never win a significant and competitive race against Democrats or Republicans, but they can swing the election in favor of either of the candidates by outflanking one of the candidates and extracting their closest extreme votes. Marksberry effectively wins the election for Mitch McConnell, the Republican candidate.

-

[1] Downs, Anthony. "The Statics and Dynamics of Party Ideologies." An Economic Theory of Democracy. 122. Print.