Whether You Vote Is Public Information

I recently saw an ad in Virginia with the following statement: "Who you vote for is private information, but whether you vote is public information." I thought that 'voting' and 'public information' being used in the same sentence was a little off putting, but if we think about this like an economist, it is easy to understand why this was the intended reaction of the ad. 

We should all be familiar with Johnson's theory on rational abstention. As a quick refresher, the marginal benefit of an individual vote affecting the election is infinitesimally small and is outweighed by almost any cost, such as time spent going to the polls. Therefore, abstention is rational. However, millions of people still vote. They vote not to change the election, but to avoid the social pressures, embarrassment, or informal costs associated with abstention. 

This ad implies that whether or not you cast a ballot matters to other people, and thus there exists a real cost to abstention. If you follow this link here, you can order a list of everyone who voted in Virginia. Interesting, right? You could use this list to shame people for not voting. 

This ad is a brilliant and economically sound way to increase voter turnout, helping to mitigate the damaging effects of abstention. 

A "Fine" Price to Block New Entrants

Meta was recently ordered to pay $25 billion for deceiving users about data privacy. Before reading Stigler '71, I would have viewed this ruling as the legal system protecting the public interest by punishing a misbehaving company. Now, I view it more cynically: Stigler states regulation is "acquired by the industry and is designed and operated primarily for its benefit," and Meta used this regulation to pay a short-term cost to beneficially hinder long-term competition by blocking new entrants.

Meta earned $52.48 billion in profit through September this year and had a valuation of $1.8 trillion. This regulation is ex post, as Meta already has a large user base and vast amounts of data that provide network effects, economies of scale, and market dominance. Meta can eat fines that would bankrupt new entrants trying to gain market share using the same tactics. No company wants to pay $25 billion in regulatory fines, but for Meta, that cost would certainly be worth protecting its $1.8 trillion market valuation.

Even if Meta publicly whines about regulation and litigates against it, one indication of whether it is willing to bear these costs to shut out new entrants is whether it has historically advocated for regulation on its industry. Mark Zuckerberg has done just that, but surely he desires government regulation for the sake of the public interest, not Meta's private interests, right?

Waste(ful) Management

For most, the intricacies of solid waste management qualify for rational ignorance. This was true for New Hampshire voters until 2018, when Casella Waste Systems proposed a new 70-acre landfill at the "center of the Ammonoosuc River watershed, half a mile from Forest Lake, located in one of the most wildlife-rich areas of NH." As Dalton's small (933) local community voiced their concerns, chief of which was lake contamination from leachate, the state media caught on. Such reporting uncovered a network of lobbying efforts on behalf of New Hampshire waste management companies, and a textbook example of rent-seeking. 

New Hampshire's undeveloped land (nearly 50% of the state) has made it an attractive target for landfill development, with approximately 2 million tons of waste disposed annually across the state's nine operating landfills. These numbers don't seem extraordinary, until put into perspective. Massachusetts (New Hampshire's neighbor) only has 19 landfills for a population seven times that of NH. Massachusetts isn't a benevolent recycling-friendly neighbor but rather constitutes approximately half of New Hampshire's landfill waste. This underground (pun intended) inter-state waste system, that jeopardizes the health and well-being of many NH communities, is the result of $250,000 worth of lobbying expenditures over the past three years. Such covert business for the sake of increased profits, was perpetuated by former NH Governor, Chris Sununu, who received $2,000 each from Casella Waste Systems and Waste Management during his 2022 general election campaign. Even the state capital's Mayor, Jim Bouley, and his son, Jackson Bouley, embodied Gurley's "revolving door," both serving as lobbyists for Casella Waste Systems for three years. 

A widely-circulated Dalton, NH, resident's quote: "don't let the financial interests of private industry outweigh what this small community wants and needs," speaks to the negative social value of the rent-seeking protecting this multi-billion-dollar state industry. With Chris Sununu in a comfortable Casella-sponsored retirement and the new leadership of Governor Kelly Ayotte, New Hampshire will begin to take the lobbyists' trash out.

Are You Qualified to Pick My Couch?

Stigler's "Theory of Economic Regulation" ends with an analysis of the correlation between an occupation's licensing laws and its political influence. Besides the occupations that Stigler looks at in his paper, interior designers are another profession that can act as an example of how a profession can use regulations to reduce competition in that industry in the name of "public interest."

As interior design is a more subjective profession that relies more on personal style and requires less specialized knowledge or technical skill than other professions, the barriers to entry for this profession would be fairly low without formal restrictions. Instead, the regulations vary by state but could include four years of undergraduate education focusing on interior design, two years of design experience, and paying for and passing the NCIDQ exam.

Stigler argues regulation is "acquired by the industry and is designed and operated primarily for its benefit," and the interior design field is no exception: designers in states with regulations have been found to earn wages 9-15% higher than those in unregulated states. However, the Council for Interior Design Qualificiation, which administers the NCIDQ exam, claims the licensing regulations are primarily to "ensure interior designers are qualified to protect public health, safety, and welfare," mirroring Stigler's first alternative reasoning for regulation in his paper. Although designers might have to occasionally make health or safety related decisions, such as making sure buildings abide by safety codes, they would most likely be under the supervision or guidance of an architect or engineer anyways, suggesting the real explanation for the regulations may be more than merely the desire for public safety. 

France on Fire

Young protestors looted and put France to the torch this past Saturday. No doubt, there were many Frenchmen like Nathan Mimoun who arrived at his electronics store to see that over 70,000 Euros of product had been stolen. Historian Sir Niall Ferguson, in a recent FP Article, argues that the source of the youth’s frustration and violence is that the French entitlement system is rigged against the youth and for their grandparents. Our understanding of public choice can tell us why France may seemingly be at war with itself over young versus old and why the costs to such a war might be high. 

First, we know from Milton Friedman that “the use of political channels, while inevitable, tends to strain social cohesion essential for a stable society,” specifically for political decisions made without unanimity. Buchanan and Tullock sharpen this point by saying that any rule short of unanimity lets a winning coalition impose external costs on the outvoted. In France, low births for the past quarter century have meant the median voter is increasingly old. This older voting base has made it politically difficult for France to enact any entitlement reform. While it can be hard to trace the origin of any social unrest, the argument, that the massive weight of state funded pensions and entitlements is crushing France’s youth and bringing them to the street, certainly makes sense.

However, it must be said that the French youth's looting is not harmless redistribution. According to Tullock, theft actually generates a great deal of welfare loss, for both sides spend resources on a zero sum transfer. For example, because of the looting, store owners like Mimoun will now spend resources, which could otherwise be used productively, on things like security cameras and armed guards. Additionally, the thieves spend resources on things like hoods and masks for an activity that ultimately generates no welfare. In all, this theft makes everyone worse off and certainly won’t help France solve its fiscal woes.