Has the holdout problem doomed plastic waste management?

This week, Busan, South Korea, is hosting final round negotiations over a legally-binding agreement designed to address the issue of plastic pollution across the world. Going into the week, there are still some major issues to be resolved. The primary divide is on how much plastic companies (and countries) are allowed to produce.

A proposal by the ‘High-Ambition Coalition’ (HAC), consisting of the European Union and many African and Asian countries has proposed a holistic look at the problem, placing guardrails and caps on each step of the plastic lifecycle- production, consumption and end-of-life. Some of the most stringent measures include fixed caps on production.

Some of the major holdouts in the process have been countries with fossil-fuel focussed economies, many Middle-Eastern nations, China and the US for example. These countries have expressed concern with the more restrictive measures that would curb the production of the capacities of their economies, arguing that “many countries do not seem themselves represented in [HAC’s proposal].” 

With the recent election of President Trump in the United States, America’s position on the issue has been thrown up in the air, with many believing the United States will not sign on to this treaty. With the stance of some of the world’s largest plastic polluters unclear, any hope of a treaty being finalized be doomed due to the holdout problem

No Such Thing as a Free Point

 Every year our teachers ask us to fill out teacher reviews. It seems to be in the best interest of teachers for us to fill these out, as many try to incentivize us to do so. Many teachers go with the straightforward approach: students that fill out the survey will receive an extra point or so added to their final grade. Some teachers get more creative with it, having some threshold of students needing to fill out the survey for everyone to receive an extra point (these teachers are likely not aware of the incentive given here to free ride, my public choice learning warns against this approach). 

I think this represents some solution to the principle-agent problem. Though students are not exactly agents for professors, this is still an effort to align the incentives of the student and the professor. The professor would like for the survey to be filled out, but most students are unlikely to do so if there is nothing in it for them. One thing I do find interesting about this is that this is done in some classes where the final grade is decided by a curve of overall performance in the class, so if everyone were to fill out the survey the point would be meaningless.

One of my teachers this year has decided not to follow the free point model. They instead have informed us that any student that does not fill out the survey will have points taken off of their final grade. From a public choice perspective, this should achieve the same outcome, as for the consideration of the student their grade will be one point higher than otherwise if they decide to fill out the survey. But if I am not thinking from a public choice perspective, I think this is pretty uncool. If any one reading this blog happens to have the opportunity to enforce this same rule for a class of their own, I would warn them that I have recently been reading about the benefits of creating a union...

Bureaucracy Goes to Bat

While watching Moneyball this weekend, I saw parallels between the A’s scouting department and some of the issues seen in bureaucracies we’ve talked about this semester. 

One issue within the scouting department was the measurement problem. Most scouts relied on qualitative characteristics like intangibles and physical attributes, along with traditional stats like batting average to evaluate players. However, these methods failed to capture a player’s actual value, as Peter Brand (who graduated from Yale with an Econ degree) pointed out using sabermetrics. This is similar to how school districts use standardized test scores to evaluate student performance, which we know fails to capture a student’s true academic ability, and can lead to an inefficient allocation of resources. 

In a very loose sense, the A’s scouting department could be collectively viewed as monopoly suppliers of their good: recommendations on which players to sign/draft/trade for. In the traditional model, the only ones fit for the scouting job were those with superior expertise and experience in the sport. This introduced information asymmetry, where management had to trust scouts’ subjective evaluations without an independent way to verify their accuracy. It was then easy for the scouts to blame inefficient outcomes (i.e., losing seasons) on their small budget compared to large-market teams. They argued they simply couldn’t compete without a larger budget. 

Billy Beane and Peter Brand tackled the measurement and supply within their front office by utilizing more tangible units of output (OBP, FIP, WAR, etc.) which gave an alternative source of information separate from the scouting department’s subjective opinions. This led to a more efficient outcome for the A’s (a record-breaking season) and the implementation of analytics-based evaluations across the league.

More Housing, Not that Simple

In Minneapolis, real estate developer Cody Fischer aimed to take down one big house and instead build an energy-efficient, four-story, 32 unit apartment building. He got the main approval to do his project but then had to halt. 

A group of environmentalists sued the Minneapolis government because its housing plan did not undergo environmental review. They believed the increased density would harm the city’s water, air, and ecosystem. Fischer’s proposal was also initially rejected by the planning commission because local neighbors were against it (concentrated interests of a few).

Eventually, the state government stepped in and removed these legal obstacles for cities like Minneapolis that had a detailed housing plan. Fischer and other developers were able to start their projects.

This ties to Becker’s conclusion that no policy that lowers social welfare will be passed. Increasing housing will bring about positive social welfare. The two competing groups were developers (S) and neighbors/environmental group (T). Ultimately the pressure by developers won, implying a larger group size and higher resources per capita. Free riding didn’t break down the group. Additionally, higher level government can be more effective in addressing broader issues like housing. At the local level, private interests (neighbors) can overcome the greater social interest (those who can't find housing).

AI's Water Footprint

A while ago at the beginning of the semester we talked about externalities. Externalities are a cost or benefit that affects a third party who is not directly involved in an economic activity. More recently in class we have talked about the usage of AI platforms such as Chat GPT, and how they so positively impact our everyday lives. However, there is a cost to using AI like Chat GPT that often goes overlooked - the environmental impact.

There is a negative externality in production associated with the provision of AI tools that is accelerating the loss of our scarcest natural resource: water. Companies that provide these AI tools have drastically increased their water usage over the past few years as their technological reach has expanded. The massive water consumption stems from a need to maintain optimal temperatures for densely packed servers and computing hardware racks so as to not overheat these components crucial to providing the technology used in AI. 

While there are currently no comprehensive regulations targeting this water usage, there are a few public-choice backed ways regulation could be implemented. 

1. A tax on water usage past a certain level (though this does not incentivize corporations to innovate)

2. A market for permits for additional water past the permitted level 

3. Or, as Coppock once said “Shut the bastards down” 

A Complete and Thorough Review of Abigail Spanberger

My congresswoman (Yes, I know who it is, Professor Coppock) is Abigail Spanberger. Congresswoman Spanberger has represented VA-7 for the past five years, and I have always thought she has done a terrific job. However, after our class last week, I realized I might not be doing a great job of holding my representative accountable for her votes in Congress.

As a result of my rational ignorance (I mean, I have econometrics to study—why would I keep track of her voting record?), I’ve come to understand that I may have inadvertently contributed to the slack that allows my representative to vote according to her own ideology without much consequence from the electorate. This excess slack creates more opportunities for shirking, enabling representatives, like Abigail Spanberger, to avoid fulfilling their full duties to their constituents.

To combat this problem single-handedly, I decided to conduct my own analysis to see how satisfied I truly am with my congresswoman’s actions. As it turns out, you can find a record of every congressperson’s voting history and ideological score on GovTrack. Here are some surprising facts I discovered:

• She was one of the only Democrats to vote no on the Protecting American Lungs and Reversing the Youth Tobacco Epidemic Act of 2020 (potentially influenced by her constituent Altria).
• She was one of seven Democrats to vote against the Freedom for Health Care Workers Act, which repealed the COVID vaccine mandate for hospital workers.
• She was one of four Democrats to vote in favor of making the assault of a law enforcement officer a deportable offense.

I was surprised to learn that Spanberger is one of the most moderate Democrats in terms of her ideology and voting score. While I may not be thrilled with some of her votes, I am still proud to have her as my congresswoman. Perhaps in the future, I’ll pay closer attention to ensure she isn’t shirking her responsibilities—especially if she becomes our future governor.