Winners take all

 I was intrigued by Stigler's idea on regulation, that "regulation is acquired by industry and is designed and operated primarily for its benefits." After listening to the presentation on Thursday on the Jones Act, I decided to research more into real-life examples of this theory.

Telecommunications Act of 1996 overhauled telecommunications laws to foster competition and reduce regulations, especially in the rapidly evolving communications and media industries. While the Act’s primary goal was to encourage competition within various communication sectors by removing barriers for entry by allowing different types of service providers to enter each other’s markets. However, in practice, it allowed large companies to consolidate thus inhibiting competitions.

Before the Act, there were strict limits on how many television and radio stations a single company could own. The Act lifted many of these restrictions, allowing companies to own more stations within the same market and across the nation. Apparently, large firms benefit significantly from economies of scale, where the cost of service decreases as the company grows. The Act’s deregulation made it easier for big companies to merge and gain these efficiencies, thus discouraging competition. Therefore, though initially intended to encourage competition, this government regulation has worked in the favor of the few, large firms, operated in their beneifts.

Democracy in Action: A Sickos Borda Count

As a big fan of voting (early and often), I was fascinated by the alternative voting rules we learned about earlier this month. The one that stood out to me most was the Borda method, ranking candidates and assigning descending point totals for each (with k candidates, choice 1 gets k, choice k gets 1). This is the preferred method for economists, sports writers, and, most importantly, the Sickos Committee, a group of self-described depraved college football fans with a penchant for the wild and wacky moments in college football. 

Each month, the Committee asks its followers to vote on the most Sicko team in college football, using the Borda method to rank its points similarly to the AP Poll and other collegiate ranking systems. The system has shown success in choosing the most Sicko team every year. Last year, Iowa took the prize for having one of the best defenses and worst offenses in college football -- at one point, their defense had more points than their offense, which is truly Sicko. This year's front-runner is Florida State, who started the year ranked near the top 10 before falling to 1-7 to start the season. And fans aren't limited to just college football teams -- the Chicago White Sox finished 18th last month due to the sheer Sicko nature of their season. All of this is to say that the Borda method reveals the Sicko preferences of college fans very well. If you want to participate in this poll and reveal your preferences to the Sickos Committee, you can vote here. Polls close Tuesday 11/5 at 9pm. 

RCV>Approval: A Sorority Girl's Op Ed

     Within my sorority Pi Beta Phi, I serve as one of 6 members on our Leadership and Nominating Committee (LNC). LNC’s role is to interview and slate members we believe should be on the executive team for the next year-long term. We submit our picks to the current executive branch, and they approve or deny our picks. The general population within the sorority currently has no say in who gets elected since the LNC is picked by Nationals. 

    I wonder though, how did Pi Phi decide on this voting method? When analyzing how I came to be on LNC today during the 4 hours of interviews I endured, I thought a lot about public choice and our current voting method/whether or not I think it is effective. What I realized was that, I do not think the way we vote is effective in producing Condorcet winners. 

    Connecting this to class briefly, I noticed that LNC elects their picks through the approval voting method - touched on in Mueller as an alternative to simple majority. Essentially, this just seems like a popularity contest. We pick everyone we like for that position, and the person we like the most (gets the most “approval” votes) wins. 

Now, thinking about this, I don’t love the way this sounds, and it didn’t seem like it would produce many Condorcet winners for each position as it would be statistically a low probability that the entirety of the chapter’s values align with the 6 members on LNC for every pick we make. For this reason, it seems to me the way we vote ought to change. An alternative I think would be effective in creating more Condorcet winners would be ranked choice voting, and opening it up to the entire sorority. Ranked choice voting has many pros, including the fact that it decreases the cost of voting by eliminating the need to return to the polls (the Pi Beta Phi chapter room) multiple times. It also allows for there to be multiple candidates for each position. Additionally, in a group of 160, the benefits of voting are drastically increased since your vote actually matters - making it rational to vote and likely meaning there would be high voter turnout - demonstrating its potential as a solid alternative to the approval voting method we now use through the LNC.

A What Kind of Prisoner's Dilemma???

As I was scrolling through the Financial Times (as one does), one article caught my eye: "Google and peers weigh an AI Prisoner's Dilemma". At this point in the semester, seeing the words "Prisoner" and "Dilemma" in any form together warrants my attention, and this article did not disappoint. The author argued that companies like Meta and Google are experiencing a prisoner's dilemma, because although the companies would be better off working together to develop AI, they still choose to compete separately. With trillions of dollars in potential value to be gained from AI, these companies want it all to themselves and thus compete and research AI separately.

While there certainly is a prisoner's dilemma regarding AI development, I think the article is missing another prisoner's dilemma that may occur in a few years. Although there certainly is real value to be had if firms work together to develop a strong functioning AI model, I believe another prisoner's dilemma may occur with pricing. If firms can collaborate on prices, they can charge much higher than with competition. With trillions predicted in a competitive market, the amount of money firms can make together would be astronomical. It remains to be seen if firms will go down this route, but if AI companies can band together, their profits will go through the roof.

Mcdonald's Ice Cream and the DMCA

McDonald's ice cream machines are infamous for being out-of-order. This is thanks to the Digital Millennium Copyright Act (DMCA) which prevents anyone except the original manufacturer from servicing it. However, ice cream lovers can rejoice since the US Copyright Office recently issued a new ruling that amends the DMCA and creates an exception for “retail-level commercial food preparation equipment." Theoretically, this means McDonald's will now be able to service these machines themselves and reduce the average down times. 

The DMCA is an interesting example of government capture. The legislation was largely spearheaded by the filmmaking industry that was concerned about copyright protection in the new digital age. The lobbying efforts by the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA) pushed for legal protections against illegal access, duplication, reproduction, and distribution of copyrighted property. These protections ultimately served to protect their own profits and market dominance. However, these DMCA protections come a direct cost to consumers who are restricted from utilizing the property in any way they desire or even repair the electronics that they purchase. The DMCA is the reason why the Right to Repair coalition exists. Household appliance, smartphone, and farm equipment companies utilize the protections from the DMCA to make it extremely difficult to source the tools, parts, and manuals a consumer needs to conduct a repair. Consumers ultimately have to spend more money on outrageously over-priced repair services from the manufacturer or buy a new device altogether.

Got Corn?

 Earlier this evening, a sense of dread overcame me as I filled my car with gas. As I watched the meter run over $60, I could feel my wallet let out a quiet weep of despair. While I stood there watching my bank account deplete, I noticed a sticker on the gas pump that said, “Contains 10% Ethanol.” 

After a bit of research, I realized that I had stumbled upon a classic case of Stilger’s capture theory. The reason that I was pumping fuel that contains 10% ethanol comes from a program called the Renewable Fuel Standard. This program requires that a certain volume of “renewable” fuel be mixed in with any transportation fuel (gasoline) sold in the U.S., which, in theory, will reduce the quantity of fossil fuels used and thus help the environment by reducing emissions. 

Since its implementation in 2005, the main benefactor of this program has not been the environment but instead the agricultural industry–particularly corn producers. Since the RFS was put into action, over a third of corn production in the US has been devoted to ethanol production. This new, steady demand for corn has led to negative production externalities such as the destruction of natural habitats (to turn land into corn fields) and water pollution from fertilizer runoff. Critics of the RFS have cited these environmental concerns and increased consumer costs as incentives to do away with the program. 

The RFS began as a promising program. Still, its effects have not been as intended, and it now primarily serves special interests who benefit from the market for corn it creates (as well as providing a barrier to entry for alternatives such as foreign oil).