Shirking on NSA Reform

Were it ever to pass, the USA FREEDOM Act would restrict the NSA’s privacy-infringing data collection to individuals reasonably suspected of associations with foreign governments or terrorist groups. As this article reports, however, the bill – needing 60 votes in the Senate to be debated on – fell short by two votes earlier this week. Of the senators whose support the sponsors had counted on, Rand Paul's no-vote was by far the most surprising. Known as an impassioned critic of the NSA, Paul justified his seemingly contradictory decision by citing one provision of the bill that would reauthorize portions of the Patriot Act set to expire in 2015. Nevertheless, many commentators saw the USA FREEDOM Act as a net gain for privacy rights.

That Paul serves as a member of the Senate Homeland Security Committee is indicative of the vast procedural power that committee members have over their respective issues. But this dramatic episode also supports Kalt & Zupan’s theory of ideological shirking. Although Kentuckians (Senator Paul’s constituents) are not necessarily more pro-privacy than voters in other states, Paul has received support from demographics that do not traditionally vote Republican because of his civil libertarian stance on privacy issues. Such voters are concerned about recent NSA depredations and want the agency to change its behavior. Paul, by comparison, is ideologically opposed to all overreaches of government power. As a consequence, he insists on foregoing incremental NSA reform at the cost of extending the Patriot Act, an older law about which his constituents are less concerned. As Kalt and Zupan argue, representatives (the agents) adopt ideologies that conflict with the interests of their constituents (the principals) because it enhances their utility at minimal costs. Those costs that Paul will face are minimal because 1) he will not face reelection for another two years, 2) his future competitors are unlikely to care about civil liberties at all, 3) rationally ignorant voters will likely not examine his voting record thoroughly, and 4) his supporters care about other issues in addition to NSA overreach. As such, Senator Paul's initially surprising no-vote on NSA reform can be explained as a classic example of ideological shirking.

Shirking in the Judicial Branch

In this Time Magazine article, the author discusses special interests essentially “buying” judges that they believe will support their interests. The author claims that big businesses, corporate lobbyists, and others contribute significant amounts of money to getting judges elected. The author claims that this is a problem because “as money floods into judicial elections, we are getting courts that are filled with judges whose first loyalty is not to justice or to the general public – but to insurance companies, big business and other special interests”. In class terms it seems as though this author is accusing judges of economic shirking, as discussed by Kau and Rubin.

According to Kau and Rubin, congressmen are influenced by contributions from interest groups, though they would not say that this is necessarily shirking. One could vote in favor of legislation that supports both constituents and special interests. Theoretically, justices also could vote in an ideological way that matches the ideology of their constituents. That being said, Kau and Rubin do not address the issue of justices behaving ideologically, and/or shirking.

This author seems to be most concerned with the fact that justices are responding to economic contributions by special interest. However, it seems as though the judicial branch was in many ways designed to allow ideological shirking but not economic shirking. Many judges are given appointment for life terms, which both eliminates any incentive to contribute funds to justices, but also almost facilitates ideological behavior, as they can never be “punished” for ideological shirking. My concern is not that "shirking" occurs, but rather that it is economic rather than ideological. The election of justices in some states simply creates another politically driven body, and does not truly serve its purpose as a judicial branch dedicated to justice rather than the interests of either constituents or special interests.

Shirking by the ATF Hurts Justice Department

Often there are times when people’s different intentions do not align and there are undesired circumstances as a result. This article on the Justice Department’s disagreement over gun-trafficking probes shows how when the department’s desires do not align with the individuals within it how there can be consequences. The article discusses how parts of the Justice Department like the Bureau of Alcohol, Tobacco, Firearms and Explosives engaged in gun-trafficking probes that let suspects buy firearms. These missions like Fast and the Furious and Wide Receiver have led to thousands of guns being unaccounted for which has led to unknown amounts of violence. The Bureau said it took these risky actions in order to try and help the overall image of the Justice Department. However, the United States Attorney’s Office in Arizona has said that these practices have not been condoned by their institution. Although, the Justice Department and the ATF have the same end goal, the way they achieved these goals and was different and there was inefficiency as a result. Grier describes this problem as the principal-agent problem where the agent, the Bureau, is charged with acting on behalf of the principle who is the party that gains and loses from the activities in question, the Justice Department. The disconnect that can happen between the principal and the agent occurs because although both parties are the utility maximizers, they do not have the same utility function. The disconnect that is happening in this scenario is called shirking because the ATF was trying to maximize its own utility, rather than taking into account how the risky behavior would affect the utility of the Justice Department. The oversight on behalf of the ATF that has consequences for the principal, the Justice Department, could be fixed by assessing Kalt and Zupan’s remedies for shirking. If the Justice Department had done a better job of monitoring the ATF, defining their responsibilities, and assessing their performance than these reckless missions would likely not have been undertaken and there would not be firearms unaccounted for. Kalt and Zupan would argue that the Justice Department needs to curb the shirking tendencies of their constituents in order to prevent inefficiencies like unaccounted firearms in the future.

Spending Under Control?

This afternoon, House Republicans voted in favor of eliminating earmarks on legislation passed during the upcoming session of Congress. The incoming Majority Leader, John Boehner claims that, “’Earmarks have become a symbol of a Congress that has broken faith with the people.’” This would signal the intention of representatives to follow the wants of their constituents instead of shirking their responsibility. However, this will make a great deal more difficult to obtain subsidies and benefits for their constituents, which will negatively affect them. This does not appear to be as large a concern to Republicans, who ran on a platform of greater fiscal conservation during these elections.

“House and Senate Republicans are now united in adopting earmark bans,” said Mr. Boehner, who will be the new Speaker of the House, inn his statement. “We hope President Obama will follow through on his support for an earmark ban by pressing Democratic leaders to join House and Senate Republicans in taking this critical step to restore public trust.”

At this point, Senate Democrats haven’t agreed, and it remains to be seen whether the House would vote on bills from the Senate that included earmarks.

The Principal-Agent Problem and Shirking in the Property Market

This 2009 article discusses the derogatory findings that the Office of Fair Trading found and published when researching the state of the property market in the United Kingdom. The report discusses how real estate agents are known to incorrectly describe the homes that they are selling by “modifying promotional photos or falsely claiming [the homes] have central heating…In one particularly audacious pretence the advert for a fisherman's cottage in Dungeness, Kent, failed to mention the two nuclear power stations just 100 yards away.” The article goes on to discuss how many consumers are looking into alternative ways of buying and selling houses because they are fed up with the dishonesty of real estate agents. The OFT market study report illustrated that “although the majority of sellers still used a high street agent…more than a third initially considered selling their home privately, using an online estate agent or selling their property at an auction. [The report] said there was a marked increase in interest in online estate agents compared with when it last carried out a survey on the issue in 2004.” However, the article closed by enunciating a huge contradiction that the research found; the research also saw consumer satisfaction with real estate agents actually increase during the past 5 years.

This article struck me as interesting in relation to our class discussion on the principal-agent problem and shirking. In class, we discussed how the agent (in this case the real estate agent)’s utility function is different from the principal (the person buying or selling the house)’s utility function, and therefore economic history has shown that the agent will always want to maximize his utility function above all else (aka above best serving the needs of the real estate consumer). The first part of this article that discusses how real estate agents are providing false information to consumers about properties in order to simply sell a house so that they can get their commission proves that there is evidence that real estate agents shirk. The consumer’s preference would be to know everything about a house before buying it, and because a real estate agent serves his own interests (aka increasing his salary) ahead of the principal’s preference, he shirks.

However, the conclusion of this article, which highlights the increasing consumer satisfaction levels with real estate agents, provides evidence that the principal-agent problem is not really a problem in the real estate market. As consumers realize the shirking of their real estate agents, they become more open to other ways of buying/selling homes (like using an online agent or service), and thus they create incentives for real estate agents to act on behalf of consumer preferences. The real estate agent knows he can be monitored by his consumer and is aware that if he shirks too much, he will lose his client to online real estate agents/other more honest real estate agents; thus the agent now has an incentive to maximize consumer preferences and decrease his own dishonest practices, which probably caused the increase in consumer satisfaction with real estate agents. Through this analysis of the article, one finds evidence that the “strict view of representative behavior” holds to a certain extent in the property market, despite some shirking by the real estate agents. The article provides evidence of some degree of shirking by real estate agents, but also claims that those agents who do shirk are in the minority. It will be interesting to see if real estate agents’ shirking completely disappears in the future because of the ease with which consumers can switch to online real estate markets due to technology advances.

Reflections on the Colorado Election

This article from the New York Times interviews different people and asks them about their reactions to the elections results. It focuses mainly on Larimer County, Colorado and the Senate race in Colorado. Despite the fact that recent nationwide trends favor the Republicans, Democratic incumbent Michael Bennet won the election by a slim margin. But many like Ms. Hamrick, one of the people interviewed, thought that the Republican resurrengy was beneficial; as she put it, "challenge is good...It’s like 'Kind Coffee' and Starbucks...competition makes you check everything that you do." (1) But the problem with this analogy is that competition for a political position is not nearly as close to perfect competition as the coffee market. But what is interesting to note is how close the elections results actually were. Mr. Bennet won by less than 16,000 votes in an election in which 1.4 million voted! That means he won by less than one percentage point. Based on these voting results, a person that favors an independent candidate or any third party candidate might feel indifferent because they feel that both parties are essentially the same; in this scenario, the political system would be far from pefectly competitive.

Based on different interviews, it seems that many people genuinely believe in the workings of democracy. Annyce Stone for example, a Republican college professor, believes that if representatives "don’t listen, I think they’ll be voted out." (1) This Downsian view proclaims that we will not see shirking. But in this Colorado Senate race, it seems that Mr. Bennet displeased his constitutency by voting with health care and other spending bills. In order to understand how this democratic incumbent was able to stay in office at a time when a majority of Republicans were winning, it is helpful to see who his top contributors were. It turns out that the Colorado race was actually the most expensive race in the country; it recieved 33.4 million dollars from outside groups! Mr. Bennet's number one contributor was ActBlue, a Democratic political committee that raises money for Democratic candidates on the internet. Although there would be a considerable incentive to free ride, thousands contribute to this large group that has become one of the largest fundraisers for democratic candidates.

In order for all these outside contributions to be meaningul and have an impact, these various groups must have expected this Senate race to be very close, otherwise, their investment would have been futile. In order to overcome the wave of conservative voting trends, a lot of money was spent on persuasive advertising. To illustrate this point, the article explains that "In a state about evenly split...the Senate battle was noisy, costly and nasty to the end, with a barrage of television and radio ads." (2) The Democratic campaign focused on highlighting the social conservative policy preferences of Republican Ken Buck had, including his opposition to abortion in all cases and his questioning of the seperation of church and state.(3) Although Bennet might have been shirking by voting with the health care bill, the persuasive advertising by the Democrats motivated socially liberal voters, such as college students, to go out and vote. In this case, the reason shirking can persist is because politicians have views on many issues and people care about certain issues more than others. Furthermore, despite being an effective strategy for Democrats, a rational voter should realize that the major bills that were voted on by the Senate dealt with issues such as health care reform, banking reform, budget resolutions and not with exclusively social issues. It seems that the campaigning by Democrats attacked certain socially conservative beliefs while remaining vague on actual policy preferences. Anthony Downs must have been correct when he said that in a two-party system, "if any party believes it can increase its changes of gaining office by discouraging voters from being rational, its own rational course is to do so."

1. http://www.nytimes.com/2010/11/14/us/politics/14larimer.html?pagewanted=2&ref=politics

2. http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110303608.html

3.http://www.huffingtonpost.com/2010/11/03/colorado-election-results-2010_n_778108.html

Why Tom Perriello's defeat was nearly inevitable

The article called “Losing the Fifth” dated November 9th 2010 examines the reasons why Tom Perriello lost the 5th District Congressional race to former State Senator Robert Hurt after only serving one term in office. The paper gives many reasons as to why Perriello may have lost this election, but a couple of points stood out as more probable reasons. The article states that one of the reasons that Perriello lost was because he supported the Democrats unpopular legislation, from the $787 billion economic stimulus, to cap and trade, to health care reform in a district that is historically a conservative district. This relates to Peltzman’s idea that all votes can be explained by examining economics interests. Representatives vote for the economics issues of their constituency, and when they do not, they are punished by voters by not being re-elected for another term. This could have been the case with Tom Perriello.

Although the studies on legislative shirking disagree on what constitutes shirking and how to empirically test for shirking, it is the tendency of representatives to support their own economics self interests and ideologies rather than that of their constituencies. Robert Hurt said “Congressman Perriello, with all due respect, did not listen carefully to the people he represented or to those who are the job creators and instead voted for policies that harmed our economy.” Even so, A “no” vote on health care would have negatively affected Perriello’s campaign. Would President Obama still have still came out and rallied for him? Would liberals have been willing to donate so heavily and volunteer so much of their time for him if he had done that? It’s a known fact that representatives change their votes based on monetary contributions, but this could have hurt Perriello in the long run. In a district that is historically designed to swing Republican, it is hard for Democrats to hold on to the Fifth. To hold the seat in midterms, a Democrat will have to win over more voters somewhere, and it’s not enough to depend on college kids for votes. Regardless, of the way the election turned out for Tom Perriello, I expect him to accomplish great things in the future.

The Principal-Agent Problem and Shirking

This article analyses the principle-agent problem that arises in the relationship between politicians and citizens. It is usually believed that politicians elected by residents of the state are supposed to generate higher returns to the citizens by increasing the value of the state assets that are both geographical and political varieties. However this is not always true. According to the paper of Kau and Rubin that we discussed in class, the congressmen who vote ideologically may or may not reflect tastes of the constituencies; this depends on whether politicians will be reflecting their own preferences. They emphasize further that even if congressmen do shirk and act in their own interest, they are punished quickly and therefore this is not of a big empirical issue. However, according to the author of this article, politicians who fail to increase the value of the state assets, are not always booted out, which in turn, manifests the principle agent problem: it is hard for person A to motivate person B not to follow B’s self-interest never mind what the incentives are, and, as a result, congressmen will never reflect tastes of their constituencies:

The same goes for politics and political science, respectively. Politicians will always rob blind the state. They will always manipulate electorates, political parties, legislatures, and the judiciary to induce them to collude in their shenanigans. They will always bribe constituents and legislators to bend the rules. In other words, they will always act in their self-interest. In their defense they can say that the damage from such actions to each citizen is minuscule while the benefits to the politician are enormous. In other words: such misbehavior is the rational, self-interested, thing to do.

Kau and Rubin define this type of behavior as self-interested economic shirking. However, if this is the case, why do citizens cooperate with the politicians and engage in election activity if the politicians follow their own interests in any case? According to the author, the answer is that citizens and politicians are both allied against the state and not set in conflict against each other. In fact, this means that both principles, constituencies, and their agents, congressmen, are concerned with the performance of their individual assets rather than with the performance of the state. While politicians enjoy inflationary perks and pay packages, citizens hire politicians as stock manipulators to generate expectations regarding the future prices of their stakes in the state.

YMCA, Softball, and Shirking

Most have probably seen the Save McIntire signs throughout town, but what are they proposing to save? I've taken two courses where we have talked extensively about a project to build a YMCA on the Western edge of McIntire Park. The majority of Charlottesville residents are in favor or indifferent to the YMCA. Advocates site it as a cheap option for low-income residents who can't afford the high rates of private gyms and don't have access to other wellness programs. It will also be close to Charlottesville High School and a safe and productive afterschool option. This Daily Progress article about the project touches on two different ideas we have gone over in class. First, as Olsen would predict, the original major opponent to the YMCA was a small group of individuals - the city's softball league. These (approximately 400) members were the source of an uproar against the project that was supposedly going to destroy a couple of softball fields. They were a small group, but they were certainly organized behind their leader, a 7-year softball fanatic and 30-year resident of Charlottesville, Bob Fenwick. He started the Save McIntire campaign, which has now expanded to include efforts of other preservationists. This project has been in the works for years and it's quite impressive that these small pockets of opposition have been so effective, yet not surprising according to Olsen. Shirking is the second idea we have discussed in class that comes up in this article. Fenwick accuses city council of not being responsive to citizen demands. “It’s been my experience that politicians soon forget that they represent the people,” Fenwick said. “And that’s when they get into trouble.”Fenwick addressed this supposed principal-agent problem by starting a independent campaign to run for City Council. Despite Fenwick's accusations of shirking by the Council, I'd argue that they are actually representing the people of Charlottesville, the majority anyway. A representative can't accurately represent every person in his or her district, but they can; however, represent the majority, since that's all the support they'll need to be reelected in the next session anyway.