The Economist: The Winning Policy Platform

I happened to stumble upon an article entitled Defining Realignment from The Economist, which analyzes where the American electorate stands on policy choices and priorities alone, freeing them from party labels to see what kind of winning policy platforms might emerge in the future.  When I saw the thesis of the article, I immediately knew that this related to Hotelling & the median-voter theorem as a tool to win an election based on simple majority rule. What this article is doing is the homework on what those winning policy platforms may be so that Candidate X and Y can use this research to attract most votes from a broad electorate. 

A quick summary on Downs and Hotelling in its relation to the class:  Hotelling argues that a rational voter would choose a candidate whose views showed most “proximity” to its own; so, it incentivizes political parties to take positions most likely to convince the voter in the electorate’s ideological middle. 

Researchers from The Economist used an online poll of “over 7,000 registered voters, which asked respondents both to express their preferences on 12 different issues and how much they cared.”  They then multiplied each position by its importance and added them up for all voters.  Using analysis, they can find which party they might support. 

The Conclusion:  Using the candidates’ actual platforms in the 2016 race, the results indicated that 52% of registered voters were closer to Hillary Clinton’s basket of policies than to Donald Trump’s.  Remember that this approach removes the error of any party loyalties.  This means that Hotelling’s median voter sits to the left of the midpoint between the presidential candidates.  The results also matched with Hotelling’s argument that the most ideologically extreme platforms are not worth it because the margins of the median voter theorem curve just don’t garner much votes compared to the middle. 

Implications for the two parties:  The winning coalition, or suggested “secret formula”, could be built around an anti-globalization message.  The Economist argues that “the candidate would have to take centrist positions on abortion, gay marriage and gun control, and alienate business by backing popular but costly government benefits like national health insurance.”  IF you combined this with supporting a border wall, opposing the North American Free Trade Agreement and ignoring climate change, this basket would secure 51.2% of the vote against a more socially liberal platform backing NAFTA and immigration: close enough to maintain a stable two-party system across election cycles.

I think it’s important to remember that Hotelling & Down’s model does fail to account for turnout, since its big assumption is that there are no abstentions.  While this is not a fatal problem - especially if the demographic studies are "likely voters" instead of "eligible voters", it does add a degree of uncertainty and risk - a politician may be deterred from repositioning even if it apparently makes sense if it risks alienating and lowering turnout among the base. This creates a degree of "stickiness" in terms of policy positioning.

Clinton Campaign: Using Illegal Immigrants to appeal to Legal Voters

   A hot topic in this election cycle is illegal immigration and how to reform the laws surrounding it. On June 15, 2012 DACA was established with support from President Obama. DACA stands for Consideration of Deferred Action for Childhood Arrivals and establishes guidelines and procedures for how people who came to the US as immigrants as children should be treated in terms of citizenship and deportation. Some of the guidelines for whether or not a person may request DACA are it they "were under the age of 31 as of June 15, 2012, came to the United States before reaching [their] 16th birthday [and] have not been convicted of a felony." While on the surface the country seems to be divided over this issue, a recent CNN-ORC poll shows that this is not the case. When asked "Thinking about the way the U.S. government deals with the issue of illegal immigration, which of the following policy goals should be the government’s top priority: (RANDOM ORDER)," the results were as follows:
 

These results show that a majority (with a 15% margin) believes that the government should do what it can to help illegal immigrants who are productive members to society become legal citizens. Another question from this poll asks: "Do you think the government should attempt to deport all people currently living in the country illegally or should the government not attempt to do that," with the overwhelming majority (66% of people surveyed) saying that the government should not. These two questions and their subsequent responses show that a majority of Americans feel positively about illegal immigrants living in our country and one day gaining legal status. 

 

   The reason I am discussing this today is because Hillary Clinton's campaign is being helped by "a group of undocumented immigrants [that] is knocking on doors in Northern Virginia" and in other places trying to mobilize voters on their behalf. They are doing this because they are "kind of in limbo, unsure about whether their status would be renewed under a President Trump and concerned that their family members could be deported.” In an earlier campaign this strategy was actually proven to be successful in helping to "stir up anti-Trump sentiments in Prince William County." I find that what this group, called CASA, is doing is very interesting in terms of what we learned in Johnson's writings about voter rational and the costs and benefits associated with voting. He concludes that "it is the rational voter who stays home and refuses to vote and the irrational one who votes,"but what would he say about someone who can't vote but is spending their time convincing others to vote for candidate who's policies are more favorable to them? I feel as though the whole thing is turned on its head as I question, "is it rational for the members of CASA to spend their time incurring large 'costs' with uncertain 'benefits'  (especially since they will not receive the benefit of voting)?" Costs referring to time and gas spent going door to door, etc. Johnson outlines several benefits with one of the biggest being the feeling of having made a difference and voicing ones opinion, but is this what is happening here? In terms of the elements of his equation, I feel like B is non existent and P is not their vote but rather their outreach and V1 and V2 being the biggest determine factors for the members of CASA. I feel as though the uncertainty of how the people with whom CASA members speak to will end up voting and the uncertainty of whether or not Clinton will actually continue the DACA initiative more than outweigh the cost, and I wonder if Johnson would agree with me. I feel as though perhaps CASA would be more efficient if they created a special interest group or worked on a larger scale than door to door knocking. In any event, on November 8th (or is it the 28th?) we will see if they are successful. 

Are Trump and Clinton ~Down~ with Downs's Median Voter Theorem?

This hilarious clip from Saturday Night Live's version of the Final Presidential Debate is remarkably close to what actually happened. Although it started off as a fairly 'normal' debate, with both candidates trying to portray themselves nicely to voters, shots were quickly fired. While I sat there watching the actual debate, I found myself infuriated by many things both sides had to say. I consider myself fairly close to what the median voter might be, so I wondered to myself if either of these candidates were successful in navigating themselves to capture the median voter from Downs's model?

This is an atypical election in that the voter population distribution is so polarized and bimodal that even the median voters are being alienated by candidates who are (supposedly) moving towards the median position! Hotelling would say that in any major election, the candidates function similarly to competitive firms, meaning that there are little -- if any -- distinguishing features between the two in an effort to gain the most votes. This could not be further from the truth this time around! Trump seems to alienate people by simply opening his mouth and pandering mostly to wealthy elites and white supremacists. But this makes at least a little bit of sense since he is not a career politician and therefore may not be well versed in the art of formulating a campaign that suits the voters' preferences instead of his own agenda (which we can debate over the values of this, just maybe in a less extreme candidate). Meanwhile Hillary Clinton, the career politician knows fully the importance of winning the median vote, but has flip-flopped so many times that she has ALSO alienated many voters! The SNL skit goes so far as to say: who do you want, Trump, or the Republican?! Trump is given his own category, meaning according to SNL he hasn't even come close to a platform supported by a median voter. Comparing Clinton to a republican is a testament to her attempts to gain more votes, but her more "moderate" platform may not be enough as she has already alienated people from her constant changes of pace, who's to say she won't change her mind again when she's sworn in?

These are all points that may come into conflict with the Downs's Median Voter Theorem, but it still is not enough to discredit it. If there exist two completely different candidates with voter distributions that do not even overlap AT ALL (which is slightly more extreme than even that of the 2016 election), then it will simply come down to how many voters there are in each of those distributions, and how many people either candidate has alienated within their own distribution. In other words, there will still be a winner, but it probably won't be one the true majority of Americans are genuinely happy about. (I wonder if we had another election system such as the Hare, Coombs, or Borda Count would the election look a bit different?)

Rent-Seeking in Poverty Statistics

It’s no secret that the Official Poverty Measure (OPM) reported by the Census Bureau is practically devoid of meaning. For one, its only measurement of income is pre-tax income. So, it completely ignores the effects of anti-poverty programs, since it doesn’t account for the effects of food stamps, of welfare, of even the Earned Income Tax Credit! If it doesn’t even reflect the measures taken by the government to combat poverty, then what even is its use! This useless tool, though, is the primary measure used by politicians in determining government benefit allocation.

So why haven’t politicians started using a better measure? Not for a lack of alternate measures, there are plenty. One explanation is rent-seeking. Changing the poverty measure results in winners and losers. A new poverty measure would mean a reallocation of benefits. So, if the new poverty measure reported a lower poverty rate for a certain group, then that group would get less benefits from the government. And so, that group would fight a change in the poverty measure. That group would rent seek. Since, as Mueller guesses, losers are (irrationally) more strongly motivated to fight against a policy change than winners are to fight for it, the losers dominate in their rent-seeking efforts.

However, taking a turn from typical rent-seeking groups, some of the biggest winners and losers are states and their state politicians. So, it’s likely that fewer resources would be spent rent-seeking since the federal politicians already have a pretty strong incentive to align with their home state’s interests, and thus don't need additional financial motivation. But, some states might be unaffected by a change in poverty measure, and so other states might put resources in fighting for the unaffected states’ federal representatives’ votes.

There are plenty of reasons outside of rent-seeking that the OPM still holds so much sway. For one, it's a partisan issue since with the OPM Republicans can claim that anti-poverty efforts aren't working and Democrats can claim we aren't doing enough. And, as previously discussed, this has a lot of elements of a politician-pursuing-votes issue. Still, rent-seeking is likely a fair part of it. And still, it's concerning that even something as supposedly impartial as government-reported statistics has a politics of its own.

Rahm Emanuel meets Tiebout

For the city of Chicago, 2016 has been a tough year thus far. By March of 2016 Chicago had seen their murder rate rise 72% and shootings surge 88% from the preceding year. With 141 murders and 677 shootings, Mayor Rahm Emanuel received significant criticism for not keeping his city safe. The problem was promulgated by the growing national debate over Police relations. Problems continued through the summer for Chicago as the number of shootings passed 3,000 in early September; in 2015 there were roughly 2900 shooting in the entire year.

This trend has been devastating for the citizens of Chicago and it's reputation across the nation. The most recent census report shows Chicago population dropping by about 10,000 people from 2014 to 2015. Furthermore, Chicago Tribune reporter, William Lee, attributes the population decline in part to "violence and lack of community interest".

Approximately a month ago, Police Superintendent, Eddie Johnson, alongside Mayor Emanuel announced a program that would increase the Chicago Police force by nearly 1,000 officers. Emanuel hopes the initiative will be incorporated into the 2017 budget.

Economist Charles Tiebout's theory of local expenditures explains the behavior above. Individuals have widely differing preferences - heterogeneity. If we view the revenue expenditure patterns of localities as a product, then we will see citizens sorting themselves into the localities that suit their preferences best. In the eyes of many Chicago citizens, the revenue expenditure pattern of Chicago was less desirable than other localities. So they moved. The city of Chicago in turn altered its revenue expenditure pattern, by adding more police, in order attract more individuals and maintain the ones living their now. In the end, this example and Tiebout's theory help solve the problem of preference revelation and increases efficient allocation by keeping power at the local level.

Occupational Licenses and Rent Seeking

Many jobs that require an occupational license do so because they have high consequences if the job is done poorly. I want to know that my doctor, accountant, or surgeon has completed appropriate training before trusting them to take care of my health, manage my money, or operate on my body. It would be too costly to investigate each doctor's background and competitively compare them. A medical license ensures that a person has certain knowledge of what they are doing because the job has high consequences. In cases where the consequence of a job is serious, an occupational license not only serves as a barrier to entry for that industry, but also as an appropriate screening mechanism in the interest of the general public.

There are, however, many jobs that require occupational licenses where the stakes aren't so high -- such as a barber, librarian, or interior designer. In order to get a license to be a barber in Nevada, it takes over two and a half years for the appropriate training. If you want to become an interior designer in NV, LA, FL, or DC it will cost you $400 and six years to get a license. While there is a clear argument for why a license is required to practice law or medicine, the same can not be said for more inconsequential professions such as interior decorators and barbers. The license requirements for these jobs are a result of rent seeking behavior. Existing merchants divert funds from their business in order to pay lobbyists to influence legislation. The funds directed toward influencing legislation are inefficiently used because they don't create anything "new" in the economy while hurting competition. Although this form of rent seeking is a huge inefficiency, Tullock brilliantly points out that the biggest inefficiency of all might come from merchants who were unsuccessful in their lobbying efforts. Perhaps its not the 2.5 years of training to become a barber that is most inefficient, but what this license requirement represents. The notion that the government is willing to promote an anticompetitive market for barbers in NV. And if it can be done in NV, why should other companies not try the same thing in their industry?

Will You Say Anything to get Elected?

During the first Democratic debate of this election cycle, Anderson Cooper "confronted Hillary Clinton with a laundry list of issues where her position has shifted."  Over a 25 year career, it appears that Clinton's values have changed drastically on many major issues (Keystone XL, Iraq War, War on Drugs).  On the other side of the aisle, Donald Trump appears to have crammed that same amount of policy change in a year of campaigning for the presidency. While their time in the political arena contrast vastly, the criticism from each candidates' opponents is almost the same.  For Clinton, the perception is "will you say anything to get elected?" For Trump, it's sifting through his statements to find "the most elusive presidential platform in modern history," Different candidates, Different levels of political experience, the same criticism of inconsistency in values.

Does this line up with Hotelling and Downs models? In both theories, the shifting of policies in order to gain voters is generally encouraged. Hotelling argues that it is in this competition that true stability among political parties is found. There is no limit to the number of changes a candidate can make in order to grab votes while also not alienating their supporters.  The main takeaway of each model is that eventually, whether in the political spectrum or grocery stores, the two opposing parties will end up as close as possible to the midpoint to gain the most voters and shoppers as possible. If Downs' assumptions hold, the "voters have as their goal the attainment of a government responsive to their wants" (Downs, 12). Using this statement, wouldn't it be beneficial for the voters when Clinton and Trump change their policies based on the perceived desires and values of the electorate?

Perhaps there needs to be further examination of the Downs' model. If it takes many changes in policy to reach the median, will the number of alienated voters increase due to the perception that the candidate is more concerned with "political expediency" than the values of the people? Furthermore, could this new metric of measuring alienation influence the deterministic voting model presented by Mueller if the candidate moves too far from their position on the political spectrum? In essence, would the perception that the candidate does not take into account the wishes of the people cause more alienation among voters so that they abstain.  If this is true, it makes sense that their opponents would accuse them of "political expediency" regardless of their time in office.

The Olympics & Rent-Seeking

The 2018 Winter Olympic Games will be held in Pyeongchang. The Republic of Korea (RoK) sees this as an honor and opportunity to boost its economy via tourism, the latter which can be seen as potential rents for their economy.

Stakes were high in 2009. By then, the RoK had already lost bids to host the 2010 and 2014 Winter games. The resources it had taken to submit appealing bids to the IOC could not be recovered. Thus, before the bidding process to host the 2018 Winter Olympics had begun, the RoK President pardoned former Samsung chairman, Lee Kun-hee, who had been convicted of tax evasion and breach of trust, and accused of bribery. This was so Lee Kun-hee could resume his activities at the IOC and "boost the country's chances of hosting the 2018 Winter Olympics". In the end, Pyeongchang won 63 of the 95 first round votes securing the bid. Since Samsung had sponsored the IOC since 1997, Lee Kun-hee's role as a lobbyist was undoubtedly essential in securing the bid.

Rent-seeking has resulted in the expenditure of resources to (1) convince IOC voters to vote for Pyeongchang, and (2) restore the damaged perception of RoK's rule of law after pardoning Mr. Lee. Both are significant costs to society. Now, we can only hope that the rent value will exceed the costs of rent-seeking that have already been incurred.

Food for thought: Research has shown that "Hosting the Olympics is a terrible investment". In past Olympics, host countries have well exceeded their budgets in preparing to host the games. This calculation likely does not consider the rent-seeking costs that have been incurred by businesses to win contracts to build Olympic stadiums.

Cuomo's Donors vs. Airbnb

New York Governor Andrew Cuomo signed a law on Friday targeting short term apartment rentals. Anyone caught advertising a short-term rental apartment on a home-sharing site can now be fined up to $7,500. This is a transparent attempt to harm Airbnb's flourishing business, in a similar vein to the laws targeting Uber in many cities across the U.S and the Texas liquor laws Professor Elzinga described. According to the Wall Street Journal's editorial board, "The politicians are responding to hoteliers and unions that claim that mini-Donald Trumps are buying up properties and renting them as 'illegal hotels.'" But per the Board, this doesn't add up. "The real complaint is that Airbnb is unwelcome competition," says the Board, thus "This is a classic restraint of trade."

If the Journal's Editorial Board's suspicions are correct, then this is a clear example of rent-seeking. Hoteliers are spending resources to undercut competition and rig the game, rather than try to get better at it by improving their business. This will create negative social value, but it's totally rational behavior. If it's cheaper for entrenched interests like the Holliday Inn to simply donate to malleable politicians that will gut Holliday's Inn most disruptive competitor, rather than for Holliday Inn to actually innovate to find ways to cut its own costs, then Holliday Inn will prefer the former tactic. This highlights the importance of Tullock's paper. Not only does the new law create a dead weight loss, there are even more costs: all the resources rational firms diverted from productive avenues to instead lobby the New York state legislature for a new law to protect their business from competition. 

McMullin: Utah's Condorcet Winner?

In a fascinating recent article, FiveThirtyEight detailed the head-scratching situation in which Utah, a traditionally deeply red state, currently finds itself: deadlocked between Trump and Clinton, with Evan McMullin closing ground quickly.  In fact, McMullin is doing so well in Utah that the FiveThirtyEight Nowcast assigns a 9.7% probability of McMullin winning Utah if the election were held today--a number the author claims is far too conservative, given the facts that McMullin is Mormon, Trump finished third in the Utah Republican caucus, and that McMullin is already beginning to leverage Romney's leftover email list infrastructure from 2012.

I believe it's quite possible that McMullin is Utah's Condorcet winner.  According to FiveThirtyEight, Clinton and Trump both enjoy support from 26% of the electorate, McMullin enjoys 22%, and the rest of the electorate prefers another candidate.  What if McMullin were to go up pairwise against Clinton or Trump?  Well, in 2012, Obama only received 25% of the popular vote, with Romney reaping a hefty 73%.  2012 Obama voters tend to be 2016 Clinton supporters, so it's quite possible that her current 26% represents the loyal Democratic Utahn core. Would she receive much more than this if she went head-to-head against a Mormon candidate with traditional conservative values?  Likely not; McMullin would win Utah. Because Trump was Utah's third choice during the primaries, and because McMullin is already doing uncharacteristically well as a third candidate, I think it's very likely that McMullin would beat Trump in a pairwise election as well.

All that's left to see now is if Utah's county-by-county voting will yield the Condorcet winner on November 8.

A Sweet Deal That Leaves Costly Cavities

I'm writing about US sugar production. Believe it or not, I'm not the first. I didn't find it, but I'm sure there's an article from some paper complaining about it when it was "temporarily" instituted in 1934. Regardless, I believe examining this example from Stigler's perspective can help us to understand the durability of such poor policy. In some ways, the sugar industry is climbing an uphill battle at maintaining this domestic advantage. According to one paper FOR the American Sugar Alliance, less than .1% of America's employees and about .1% of America's economy comes from the US sugar industry. Additionally, the median per capita income of those in the industry is likely low and the occupation is located in rural areas. However, the US sugar industry does have an extremely cohesive oppositional presence to the reduction or elimination of these subsidies. While not every politician supports this (A 2013 Senate amendment to scale back the program garnered 45 votes), 46 percent of House members received money from American Crystal Sugar in the 2014 election cycle. With an estimated $1.9 billion annual cost, there is clear incentive and means to fund whoever needs be funded in order to perpetuate this cycle. This combined with the long-standing tenure of the sugar lobbying presence and the high number of candidates supporting these measures, makes it is difficult for voters to understand and effectively vote in their best interest on this particular issue. Maybe confectioners will make headway in reducing their input costs, but given their working relationship with the sugar industry, they may ultimately decide against confronting the status quo.

Rent Seeking in Wallonia

The EU and Canada are currently discussing a trade deal, CETA, that would eliminate 98% of tariffs between the two regions.  However, recently the vote on this deal was postponed because of opposition from Wallonia, a French-speaking region in Southern Belgium, who believes that CETA will disadvantage its local farmers as they will have a tough time competing with imported Canadian products.

Tullock believes that rent-seeking occurs when resources are diverted by attempts to seek rents derived from activities that have negative social value. In Wallonia, thousands of people are protesting, votes have been delayed, and negotiations have been complicated because the Wallonians have been attempting to preserve their tariffs.  These rent-seeking activities waste time and money, and while they may protect individual farmers, they do not increase total social value.  In this case, the tariffs are already in place, so the Wallonians simply want to preserve them, but even this wastes resources.  While some Wallonians may be better off from the tariffs, overall, the EU and Canada would likely benefit from more free trade and increased competition, as trade creates value. 

With less competition, the Wallonian farmers can charge higher prices, but Canada's entrance into the market would increase supply and therefore lower prices.  So, consumer surplus would increase, but profits for Wallonian farmers would fall. Therefore, it is rational for the farmers to seek tariffs to protect their own profits, even though it hurts consumers and Canadian producers. 

합리적 무지

Almost 20 years ago, the state of California passed a law that severely restricted bilingual education in public schools. They argued that students were lingering in their native language, which put them behind when they had to learn and use English in higher grades. If the state could somehow create a barrier to students using their bilingual skills they thought that this would help the merging into American society, but this is quite the contrary. For example, once a Korean student in Los Angeles switched from a dual language program to an English-only honors program, he lost his ability to write and speak Korean, which meant he couldn’t speak to his Korean speaking family. Activists are working to overturn this law and implement a unified program where half of teaching is taught in a foreign language such as Korean, Spanish, or Vietnamese, and the other half English.  

In our class we’ve discussed the Rational Ignorance model that shows that there is an optimal level of ignorance. In this case the state of California back in 1998 argued that there is an optimal level of ignorance of say the Korean language for the native Korean speaking student, and most of the time should be devoted to learning English. But with the help of activists this type of thinking has changed. This change may be hard to accomplish because due to an increase in marginal costs like time, training, and wages for teaching staff, it may seem that it’s optimal to have more ignorance with a foreign language, but the present level of ignorance regarding the foreign language is showing to provide negative externalities for the student like loss of culture and identity, and the alternative provides positive externalities. With an extended bilingual program, students can succeed with achievements like graduating high school with a seal of biliteracy and broaden the way people can communicate within their community, in business, and with their families.

Rent-Seeking: the DNC and donations from lobbyists

As discussed in class, rent-seeking occurs when resources are spent to obtain rents which derive from some activity that has negative social value. The issue itself is not the rent, but the rent-seeking, as it rediverts resources and produces a deadweight loss.

Mueller briefly touches on the issue of rent-seeking as it applies to political donations, lobbying, and government representatives voting on pertinent legislation. He reviews particular studies that find a correlation between political action committee contributions, and the way congressmen vote on protectionist legislation. Mueller writes that the studies “found a positive and significant effect of the size of political contributions from the interest group, and the probability that a congressman voted in favor of the protective legislation” (351).

Incorporating funds from lobbyists and PACs has been a contentious issue for the Democratic National Convention. In 2008, Obama introduced a restriction that “banned donations from federal lobbyists and political action committees,” according to this Washington Post article. Yet in February of 2016, the DNC reversed that decision, and ended the ban on donations from lobbyists and PACs. The Wall Street Journal projected that through June, registered lobbyists alone donated $7 million to Clinton’s campaign.

Given that lobbying is an example of rent-seeking, it will be interesting to see the cumulative effects of the DNC’s decision. As businesses divert more resources toward obtaining rents, a greater social welfare cost will be imposed upon society.

Energy Oligopoly in Virginia develops from FERC regulations

The much discussed Atlantic Coast Pipeline, designed to improve the reliability of gas delivery, is reaching the final stages before construction.  As the number of customers for Piedmont Natural Gas and Virginia Natural Gas continues to grow, the 550 mile long pipeline will allow for price stability and will ensure that customers will have continuous access to the natural gas to heat their homes and businesses, especially on the coldest day of the year. While at first met with fairly strong opposition, recent polls have shown a strong voter support for the pipeline.

So what's the holdup? In order to begin construction, the Atlantic Coast Pipeline must first be approved by the Federal Energy Regulatory Committee (FERC). As environmental assessments have already been completed, the final decision is left to the FERC. This committee was created to determine if there is a need for this additional infrastructure and whether this pipeline is an economic solution to the demonstrated need.

Tullock would argue that this additional step is unnecessary in the market economy and wastes resources by diverting them to get approval for this project. While the Virginia natural gas market is more similar to an oligopoly than a monopoly, the same rent-seeking problems exist. In order for companies to expand and grow, they must devote significant resources to "obtain rents," or permits, that allow them to expand. These permits have a negative social value and create dead weight loss because the resources and capital spent on obtaining them could have been put into the economy instead, thus creating additional growth. While I understand the need to regulate energy to create a safer community and to protect the environment, there is already strong demonstrated support from the market for this pipeline, leading me to think that Tullock would argue the additional analysis from the FERC is unnecessary.

Corruption in the Crescent City: Tullock on Rent-Seeking

     New Orleans has a colorful political history to say the least. Remarkably, the previous mayor is the first in the city's history to go to jail for corruption. C Ray Nagin, who was in office from 2002-2010, is now federal prisoner number 32751-034. Ray Nagin was found guilty on 20 of 21 charges of fraud, bribery, false tax returns, conspiracy, and money laundering resulting from kickback schemes in cooperation with city contractors. Among his misdeeds, Nagin gave preferential contracts to city contractors who included his son's granite company in their bids for municipal work; he was sent on extravagant vacations in order for firms to secure million dollar contracts, and he also received outright bribes.
     The welfare loss due to the unjust distribution of city contracts is concerning. Instead of putting together the best bids possible and therefore the best city projects as possible, crony capitalism led to those with the right connections receiving the bids. This is harmful to the taxpayers whose money isn't being used as efficiently and who will be using these public goods. However, this is not the sole loss as Tullock is clear to point out in his paper. The costs of the bribes themselves and the effort put forth by the contractors to secure the windfalls from the extravagant city contracts add significantly to the welfare cost. The plane tickets from New Orleans to Las Vegas, Hawaii, Chicago and many places in between add up, as do the luxurious meals and hotel stays. Furthermore, the efforts put forth by Nagin and the politicians around him to be in a position to receive bribes contribute to the welfare loss. The corruption and bribery under Nagin's watch led to less qualified applicants receiving city contracts and a welfare loss resulting from rent seeking, particularly harmful in Katrina's wake.

Carbon Tax as a Solution to Fossil-Fuel Negative Externalities

Bill McKibben, a leader environmentalist who has written extensively on the impact of global warming, has long argued for some kind of price on global warming pollution. Specifically, McKibben is trying to push for a carbon tax price because it isn't fair that the "fossil fuel industry is allowed to put out their waste for free, using the atmosphere as an open sewer." He sums this up as a massive negative externality imposed upon the world, having been caused by the fossil fuel industry. McKibben's solution is to simply tax carbon directly since many alternative schemes (cap-and-trade systems, etc.) have not worked effectively. This removes the "arbitraging games and artful dodges that have helped undermine many schemes" to combat emissions and global warming. Another proposal that he favors even more is the "fee-and-dividend" approach: it sets a price on carbon, and then rebates the revenue straight to the citizens by sending them a monthly check. It's a mind-boggling proposal where it will increase what we pay at the pump, which is good, because then we ride bikes more; yet, the check will cover the increased cost. Everyone’s made whole, and if you push up the tax you push up the rebate too. McKibben quotes it as a "kind of perpetual motion machine, a virtuous cycle."


His reasoning resonates with our reading "Public Finance and Public Policy" by Gruber. Specifically in Chapters 5 & 7, Gruber outlines Public-Sector remedies for externalities. Gruber details the argument for corrective taxation in which there is a tax to the perpetrator of the negative externality that can effectively internalize the externality and lead to the socially optimal outcome. The perpetrator in this case would be the fossil-fuel industries who have allowed to spill over high pollution at no cost. For the "fee-and-dividend" approach, McKibben is using Gruber's concept of subsidies as a solution to positive production externalities by making the consumers who drive less and produce less carbon emissions a "check" (subsidy) to incentivize them to save more and more.

Does Clinton Appeal to the Moderate Voter?

It is argued in Downs that in the primaries, one can see a bimodal distribution between the leftists and the rightists. Once a candidate is chosen on both sides there is a race to the median voter by both candidates. Whichever candidate can better appeal to the median voter receives the most votes and wins the election. One of the nuances of the transition from a party appeal to a general appeal is the appeal to the extreme voters. As an extreme voter you can either vote for the candidate that is from your party (although they no longer represent the platform you truly want) or to abstain from voting because you feel alienated by the new platform.

This article argues that the DNC divide from the primaries between Clinton and Sanders has left the  Sanders supporters (viewed generally as more extreme) feeling largely alienated from Clinton. A poll from YouGov released mid-September "showed that only 51% of Sanders supporters plan to vote Hillary". That is a substantial base of the democratic party, and one that could ruin Clinton's chance at the office if the supporters hold true to their poll vote. Even further, the author argues "the divisions between Democrats may be far more deep-seated and electorally consequential". To put it in Downs-ian graphical lingo, he sees there may be a rift that questions the idea of the unimodal median distribution, where voters vote for their aligned party candidate although they have altered their platforms for the moderate voter. This begs the question, is it time for a third party coalition to form for the extreme liberals? Only November will show if far-left voters will follow the Hotelling model and vote for Hillary, despite their qualms with her stances or if they will abstain in an expression of intolerance for the liberal party's acceptance of her moderate platform.  

http://www.thedailybeast.com/articles/2016/10/02/despite-donald-trump-many-bernie-sanders-supporters-won-t-forgive-hillary-clinton.html

Tiebout is True: Northern Virginia's Population Growth

According to population data from the University ofVirginia's Weldon Cooper Center for Public Service, northern Virginia counties and the city of Alexandria drove more than half of the population growth for the state. The amenities offered by the northern Virginia area attract more citizens than the amenities offered by other regions in Virginia. This holds true in my own experience of moving in Virginia. My family moved to Reston, Virginia, an area in northern Virginia, from Dahlgren, Virginia, a very small town more south. The better public schools, proximity to D.C., and number of restaurants and things to do attracted my family to relocate. This long-term drastic growth of northern Virginia proves Tiebout’s model of consumer voters voting with their feet to match his or her preferences to a local government’s expenditure plan. Instead of Virginians changing their locality’s expenditure plan to match their preferences, they move to the area that already has the amenities they desires. 

There are some assumptions to Tiebout’s model that do not necessarily hold in real life, such as perfect information and no costs associated with moving. However, I found in my situation that in the long-term these assumptions do not interfere with the model itself. For example, while in the short-term the cost of moving stopped my family from moving, in the long run this cost proved less than the benefits we received from relocating. I believe that in the long term the assumptions of the Tiebout model such as no moving costs can be held true.

An Overseen Presidential Election in 2016

With the whole world on top of these coming US elections, I had forgotten Nicaragua’s [my home country] presidential elections are also happening this coming November. Do I just care more about the country in which I’ve been living for the past 3 years? Johnson would agree with me in that it has nothing to do with a lack of patriotism or moral responsibility. Through Johnson’s Rational Abstention model, we were able to conclude that the costs of voting are higher than the benefits, and that people vote because they derive some utility from voting and to minimize the maximum potential regret from abstaining. However, this theory assumes no other external costs/obstacles, like faulty institutions. Nonetheless, in Nicaragua, like many other Latin American countries, this obstacle has a lot of weight on many Nicaraguans’ decision to abstain from voting.


Current Nicaraguan president, Daniel Ortega (from the socialist National Sandinista Liberation Front party), changed the country’s constitution last year, for the second time, to run for re-election for his third consecutive period. Fortunately for Ortega, Nicaragua’s National Assembly “randomly decided” to destitute the now ex-candidate of the Independent Liberal party (opposition), Luis Callejas, together with 28 congressmen from the same party. The reason: A legal dispute against the Liberal party that started back in 2007 and that was “suddenly” brought up to court earlier this year; during the least appropriate time. Weird huh? Well, the list of random incidents keeps going. It was decided (there’s still a debate over who really made this decision) that the new candidate of the Liberal party would be Pedro Reyes a.k.a The Stranger. To be fair to Mr. Reyes, the Supreme Electoral Court accepted his request to dismiss the few congressmen left of the opposition party who did not accept his leadership. I know this post is already too long, but to end the list I want to put one more fun-fact out there. Ortega’s vice-president became ill earlier this year, which forced him to relinquish to his position, leaving the first Sandinista congresswoman as the new vice-president. Any guesses? None other than his wife, Rosario Murillo.


There’s no doubt 2016 was by far the luckiest year for Daniel Ortega. 

Beating the Presidential Elections

The coming presidential elections for Ecuador will happen in February 2017. This election is considered critical, as it could create significant economic and political impact for the country in the long run. Ecuador’s current president, Rafael Correa is the representative of the socialist party Alianza Pais (PAIS Alliance), considered to be from the left. This party has held office for the last ten years, and if reelected their power could be maintained indefinitely, thus, the importance of this election.  Many people disagree with the political ideologies of this party, which has given strength to the opposition. At the beginning of the presidential campaigns, there were many “strong” candidates running for office representing the major political parties, opposing the current president. However, now as the election time approaches, the opposition leader, Jaime Nebot, a political activist, suggests that the main opponents of Alianza Pais unite their parties, in order to gain the most votes and win elections.

The scenario presented can be directly related to Downs and the median voter theory. Nebot has made an intelligent suggestion, by saying that the main opposition candidates, Guillermo Lasso, Paco Moncayo and Cynthia Viteri, should combine their ideologies, and select one candidate in order to increase their chances of winning the elections. By having so many candidates in the elections, the votes are dispersed between the parties. Thus, according to Downs theory, in a multiparty system, the equilibrium allocation depends of the distribution, which cannot be clearly determined. Therefore, it is difficult to predict who the winner of the election will be. If the candidates are reduced, to two major ones, being Alianza Pais and the opposition, the candidate who reaches to the median voter will win. If the new party formed by these three candidates, unites their ideologies and political perspectives, then they will move towards the median of the population. If this happens, voters who do not support the government will have a unifying force to vote for a candidate, increasing the likelihood of winning the elections. 

What's Wrong With This Election??

I've never been one for the show Dirty Jobs, but after reading what celebrity Mike Rowe had to say to a fan asking him to encourage his fans to vote, I instantly gained a massive amount of respect for the guy. While agreeing with his fan that voting is fundamentally important, Mike goes one step further and acknowledges what so many people fail to: that the very voters celebrities encourage to head to the polls are also some of the most ill-informed people. This touches directly on the issue of rational ignorance. Without using those exact words, Mike Rowe addressed one of the underlying issues with our political system. With such a large number of voters, a fraction of those people will be well educated and well versed in the major issues at hand each election cycle. To encourage those who do not take the time to study economics, history, politics, and other relevant subjects, is to encourage ignorant people to make decisions for the whole country.

Not only does Mike address the idea of rational ignorance, but he takes the stance that voting is not a duty or a moral obligation but is instead a fundamental right. With that, he likens encouraging people to go out and vote without first educating themselves to encouraging people who know nothing about guns to go buy an AR-15. Does this seem responsible to you? He pushes back against celebrities using their visibility to send people to the polls by saying that kind of ignorance is how we have arrived at our current predicament with two downright lousy presidential candidates. This is because the rationally ignorant voter is just as likely to vote for issues/candidates that are against their self-interest as they are to vote correctly in line with their beliefs. Mike would therefore relax the assumption in the Downsian model of no abstentions, and even encourage people to abstain from voting if they wish to remain rationally ignorant. He sees abstaining from voting as a positive if the people who would otherwise show up to the polls choose poorly. Because of these poor choices, now it is a game of 'who do we hate the least' instead of selecting the most qualified person for the job.

Mills Godwin's Downsian Switch

Mills Godwin Jr. served as Virginia's governor twice, from 1966 to 1970 and from 1974 to1978. He is remembered as a the father of Virginia's Community College system, the architect of the 1971 Virginia State Constitution and the institutor of Virginia's sales tax. What people often forget, is the massive political transformation he underwent between the two terms.

From World War II until the early 1970's, the Byrd Organization and the Democratic Party dominated state politics in Virginia. The Byrd Organization was a political machine that effectively controlled the election of state officials ranging from localities to the state level. Godwin's career blossomed under the Byrd Organization's support in the early 1950's, and he remained a prominent member of the organization until he became governor in 1966.

Following the supreme court decision in Brown v. Board of Education (1954), numerous conservative state legislators balked at the idea of integrating and instead began a movement know as "massive resistance". The Byrd Organization fully supported massive resistance and Godwin followed suit. Despite massive resistance's early success, with the signing of the Civil Rights Act 1964 by President Johnson and the efforts by civil right activists, by the late 1960's and early 1970's school integration was inevitable. Massive resistance and the Byrd Organization were ousted in 1970 when Virginia elected its first Republican, non-Byrd, pro-integration candidate since the Civil War - Linwood Holton. Holton won the election by garnering African American support and exposing the corruption of the Byrd Organization.

The following election, in 1974, Godwin ran again and won. This time as a Republican, a non-Byrd candidate and an advocate of integration.

This massive political realignment can only be explained by the economist, Anthony Downs. As Downs says "parties (and candidates) formulate policies in order to win elections, rather than win elections in order to formulate policies." In this case we can clearly see Godwin's political platform reflecting the Downsian hypothesis. Linwood Holton's success ushered in a new era of politics. With the growing number of African American voters starting in the 1960's, candidates could no longer stand by segregationist policies without jeopardizing their chances of winning. As Downs proposes in his essay - assuming candidates are vote maximizers, they have the tendency to adjust their policies towards the median voter. In this case, we see that the distribution of voters and the median voter are evolving. Therefore, we see candidates, like Godwin, altering their platform to maximize votes.

Swiss Bliss or Swiss Miss? Rational Abstention or Irrational Irrelevance ?

      I spent last semester studying abroad in Geneva, Switzerland, so when we started talking about low voter turn-out rates in Switzerland, I immediately wanted to know more. I did think it was odd that during my time living in Geneva there was almost no mention of Swiss politics, with the favorite political conversation being about Donald Trump. I saw no political advertisements in newspapers or around the city and I left knowing no more about the political system than when I first arrived. Johnson tells us that “ the only country with a voting turnout lower than the United States is Switzerland." Only about 40% of people in Switzerland vote. 

      This article, while not refuting that fact, explains that “'selective voters'” constitute the bulk of the electorate, simply picking and choosing which votes to take part in” and thus showing that disinterest is not the sole determining factor, but it is rather disinterest in or ignorance of some issues. Per this article, Switzerland has seen a decrease over the years, but in contrast to the US, they are asked to vote three or more times per year. Another reason voter turnout is so low is attributed to the fact that the political parties are not as polarized and conflicting as they are here, and that the same “four main parties have held the seven cabinet seats for more than half a century under a power-sharing agreement.” It seems that even though in my opinion Switzerland is the ideal place to live, (a fact that is backed up by Forbes which places Switzerland as the 3rd happiest country), the lack of interest in voting is a problem that is being remedied by online voting. It remains to be seen whether or not this will make a difference and change things for the better. So in summary, the reasons the Swiss don't vote are perhaps the high frequency of being asked to vote, the consistency of their political system and a strong interest in some issues over others. I would ask, is it really that bad that people aren't voting? Rational abstention and rational ignorance about some issues are very real but clearly they are working for the country, so why are they seen as something that needs to be fixed? 

                                         

Brexit and Tiebout

In a well-known, controversial vote held in June, the people of the United Kingdom voted to leave the European Union - a decision universally known as "Brexit." The "leave" camp passed by a vote of 52% to 48%, with a voter turn out of over 70%.

While, of course, there are numerous views regarding the advantages and disadvantages of this decision, Tiebout likely would have said that the vote should not have even occurred in the first place. If UK citizens were unsatisfied with the revenue-expenditure patterns of their government, the best option would be to vote with their feet and move to another "community," or in this case, country. Tiebout's argument is based around the fact that individuals have heterogeneous preferences, and so providing goods in a heterogeneous fashion eliminates forced conformity. Tiebout asserts that the governments' revenue-expenditure patterns should be taken as given and individuals should move to the locality in which that system best meets their preferences; in this case, the best option would have been for unhappy individuals to move to a different community.

Downs and McMullin

In "The Statics and Dynamics of Party Ideologies," Anthony Downs distinguishes between two types of new parties: The first is designed to win elections, and the second to influence already existing parties. The first is concerned with the present, the second with the future; Downs describes this second type of party as forming simply to blackmail existing parties. Given this criteria, how do we categorize Evan McMullin?

The New York Times reported last Friday that McMullin -- a former GOP staffer and independent candidate running as the only "true conservative" in the presidential race -- is quickly gaining in the polls in Utah. McMullin began his campaign as essentially a protest candidate, someone able to give Republican voters a candidate they can vote for without feeling like they have to take a shower immediately afterward. However, McMullin has focussed his efforts almost entirely on winning Utah in the hopes of throwing the election to the House by depriving both Trump and Clinton of 270 electoral votes; this is an unlikely but plausible scenario if Trump wins enough swing states (see attached map for one scenario). The fact that his team does have a strategy for winning the White House would suggest McMullin's candidacy is more than just protest or blackmail.

In my view, how McMullin fits into Downs' party categories depends not on if he wins the White House (he won't--Clinton is poised to win in a blowout), but on what path the GOP takes after the election. Contra Trump, McMullin is a typical Republican in that he's an advocate of free trade and the TPP, and a staunch critic of Trump's isolationism and Muslim ban. If after November 8th the GOP reverts back to its traditional positions of free trade and interventionism, McMullin will forever be known as a protest candidate--i.e. one who springs into action only if his party drifts too far from its original ideological position. However, if the GOP embraces Trumpism and becomes an Americanized version of France's National Front, I think McMullin and his backers will see no choice but to officially start a new party committed to the GOP's former principles. The first option seems more likely, but the second is more fun to think about.

Why the Borda Count Makes Sense for MLB MVP Election, Not for U.S. Politics

In class we mentioned a few of the rare real world examples of a Borda Count. One of these examples is the Major League Baseball election of the Most Valuable Player. The Borda Count is used in many such sports elections, but this system makes far more sense in sports than it does in politics. Although the Borda Count is the voting system with the highest Condorcet Efficiency, it has some practical pitfalls in the political realm. The United States has one of the lowest voter turnout rates of any country in the world, due at least in part to the high number of opportunities we have to vote. With so many elections, Americans can often plead rational ignorance. The Borda Count, like other forms of Ranked Choice Voting, requires voters to know enough about every candidate to rank them in order of preference. A Simple Majority Vote, by contrast, allows voters to be more selective in their engagement. The MLB MVP is elected by the Baseball Writers' Association of America (BBWA), a selection of national and beat reporters from across the country. It is part of these writers' jobs to be well informed on the statistics of the best baseball players in the country, so, unlike in the case of American political voters, MLB voters have a high incentive to be informed.

The other issue often raised about the Borda Count is strategic voting: the incentive for voters to put their candidate's rival or biggest threat at the bottom of their rankings, even if this candidate would not actually be their their last choice. In American political elections this is a real danger. It is not hard to imagine Republican voters ranking a Democratic nominee below a third party candidate, or vice versa, even if that third party candidate is clearly unqualified for the job. Again, MLB voting differs. Sportswriters do not have an explicit stake in the outcome of an MVP vote. While an American political voter may risk seeing his taxes raised or rights infringed upon, the sportswriter is simply trying to reward the best player in the league. Sportswriters also tend to have a level of objectivity, a willingness to vote for a candidate that they don't like personally but respect professionally, that is rarely achieved in American political voting.

Climate Change: Classic Prisoner's Dilemma

Today, President Obama praised an international deal to phase out emissions of hydroflourocarbons beginning in 2019.  Roughly 200 countries signed the agreement, including the US, which carries legal force and which aims to cut such emissions by 80% by 2047.  Hydroflourocarbons are a type of pollutant emitted by air conditioners and refrigerators, and as the middle class burgeons in large countries such as China and India, statisticians predict that without this treaty, the widespread adoption of such consumer goods may balloon HFC emissions by 15% per year.

This article naturally reminded me of our discussion of the Prisoner's Dilemma and the "thug" rationale for government, but on the international stage.  Without legally-binding emissions treaties, individuals and corporations alike have little incentive to singlehandedly curb their consumption of hydroflourocarbon-heavy air conditioners and refrigerators, because such behavior would carry high switching costs without any guarantee of unilateral behavior among other individuals and firms.*  In other words, keeping one's current cooling systems is a dominant strategy, and one that does not lead to a socially optimal outcome.  This clear example of the Prisoner's Dilemma provides a rational basis for a legally-binding international treaty, and President Obama's praise is well-deserved.

*It is interesting to note, however, that--contrary to what we might predict--a few US corporations have already switched to more expensive, greener cooling systems.  Why?  Likely to reap the marketing benefits of appearing as a progressive company.  After all, now that the treaty has been signed, the lion's share of companies will merely conform to legal standards by switching, and can no longer market such a choice as "green" or "progressive."

Will Alternative Voting Systems Function As We Want in the Real World?

In class we discussed how alternative voting systems such as Hare, Coombs, and Borda count all can lead to high Condorcet efficiency and resolve some of the issues of simple majority. Still, politically, these systems have gained little traction. Is there a rational answer for this, or are the lawmakers standing by plurality simply failing to heed the advice of economists once again?

One explanation could be that simple majority benefits the two major parties in control. Many journalists this election have been emphasizing the importance of not voting for a third party candidate, which may make us consider if the current voting system helps keep these arguably less than ideal parties in control.

Another explanation could be the feasibility of the multiple rounds of voting some of these systems require. Primary runoffs had an average reduction of turnout of 35.3% according to one report. Not only this, the reduction was biased with regards to demographics. This is likely not ideal for a more widespread election system.

Lastly, strategic voting may erode much of the benefit of these alternative voting systems. To clarify, strategic voting is "when voters cast an insincere ballot in order to increase their expected value for an election outcome." As seen in the graphic below, the group satisfaction when people vote strategically can decrease significantly when using these alternative systems. Still, the group satisfaction is likely to be higher than when using plurality. Overall, while these explanations at least provide some reasoning for the prevalence of plurality, it may be time to reexamine if alternative systems could perform better in various scenarios.  

U.S. Tax Evasion: A Major Free Rider Problem

We have discussed the basics of public goods and externalities in Samuelson's paper "The Pure Theory of Public Expenditure", which detail the function of public goods and its two notable characteristics of being non-rivalrous and non-excludable.  It is important to note that the free rider problem stems from its non-excludability, meaning that that certain good cannot be excluded and will be difficult to restrict access to the good based on price.

The question begs to be asked if America is slowly becoming a nation of "Free Riders" with tax evaders. The argument holds that those who evade in taxes are labeled as free riders because it "creates horizontal inequalities, since equally well off people share different tax burdens."  This is because the government is deprived of revenues from tax evasion that could have been set aside for the production of public goods.  There's a huge irony here.  We have learned (and the author mentions this as well) that the free rider problem generally arises in common property resources or even in the provision of private goods.  So, it would "be necessary to use enforcement mechanisms of taxes and/or user charges with the force of the law."  The tax system that was meant to solve the free rider problem in the first place has its OWN free-rider problem!

But this is where it ties in to Samuelson's argument.  The author states that "tax evasion, if pervasive due to lack of monitoring and enforcement, may necessitate higher tax rates, thus causing further evasion and loss of productivity and income."  Samuelson would argue that individuals are rational and base their decisions on what is in their best economic self-interest.  The reality, whether we like it or not, is that these tax-evading individuals are acting economical and according to their self interest, as they have realized that there is a much higher Marginal Benefit to avoiding taxes legally than their Marginal Cost (in this case, the financial cost of paying taxes that will be allocated to the government for public goods if they didn't decide to tax evade).  Why pay taxes if you can free-ride off the public goods provided to you if it's not excludable?

GE Relocates to Boston

Approximately 6 weeks ago, General Electric officially relocated its headquaters to Boston, Massachusetts. Fairfield, Connecticut had been the home of GE's headquarters for nearly 35 years; which begs the question - why relocate now? The answer is simple - tax incentives. Mayor of Boston, Martin J. Walsh, has been working hard over the past several years to rid his city of its"taxachusetts" nickname. The main tool Mayor Walsh has been utilizing is tax breaks for businesses.

GE had been threatening to leave Fairfield for a number of years but it wasn't until January, 2016 that GE announced they intended to follow through on their promise. GE ultimately decided to transition to Boston, rather than Providence, RI or Austin, TX (other cities vying for GE's business) because of Boston's generous 25M city property tax incentives and another 120M in state subsidies towards infrastructure development (roads and parking facilities). In a press conference, GE executives cited these tax incentives, as well as Boston's emphasis on small business startup, as the main reasons for their relocation.

This is an obvious application of Tiebout's essay on public goods, local expenditures and the problem of preference revelation. In this paper, Tiebout criticizes Samuelson's reliance on national government to provide public goods. Instead, Tiebout argues that localities can take the role of producers with revenue expenditure patterns as their product. Then individuals could buy/vote with their feet by moving to the locality that best suits them. In this example, we see the differing revenue expenditure patterns of Fairfield and Boston creating trade offs for individuals and corporations. In the end, this example proves that, due to heterogeneity of individuals, it is often more efficient to create a market for public goods and let individuals / corporations vote with their feet.

Using the STV to End Gerrymandering

Though gerrymandering is widely disliked by both the Republican and Democratic general public, solutions to gerrymandering have not been very forthcoming. Independent commissions are often independent in name only, and fair redistricting is a harder problem for computers to solve than most would expect. But ranked-choice, instant-runoff voting, often called the Single Transferable Vote (STV) is a possible solution.

As this study outlines, movement to multi-member districts with STV voting could effectively end the gerrymandering problem. The STV allows for the most widely-supported candidate to win. However, STV alone won’t solve gerrymandering, since that widely-supported candidate would still likely be the candidate from the party for which the lines were drawn to protect. Thus, the need for multi-member districts.

Large multi-member districts bring their own problems, though, which the STV would remedy. Specifically, large distracts would hinder the ability to create majority-minority districts, which are imperative to the Voting Rights Act. If a state has just a few large districts, they may not have a large enough minority population to make one of those districts majority-minority. And therefore, state legislatures could use this as an excuse when drawing district lines to dilute the minority vote by dividing them among separate districts. Therefore, some minority groups may not even be able to elect one representative, bringing us back to the state-of-affairs before the Voting Rights Act. The STV, therefore, is required to ensure that there is some acknowledgement of the minority viewpoint. STV could, as Supreme Court Justice Thomas said, “produce proportional results without requiring division of the electorate into racially segregated districts.” In addition, STV makes election more competitive and difficult to predict, and therefore make manipulation of district lines more difficult to successfully implement.

Unfortunately, STV’s political feasibility is iffy. As we’ve discussed, candidates support policies that get them reelected. And, gerrymandering is a very effective “policy” that gets incumbents reelected. So, efforts to curb gerrymandering are bound to face significant political hurdles.

As a final note, Arrow’s Impossibility Theorem tells us that no voting system is perfect. A multi-member district with STV will not solve all of our problems. Still, it will probably leave us better off than before.

Low Voter Turnout Results in Platform Stagnation

We have discussed Johnson’s paper “Voting, Rational Abstention, and Rational Ignorance” in class which argues that it is rational for people to abstain from voting because an individual’s single vote has little probability of affecting the outcome of any election. Johnson also pointed out that a large portion of the American population do not vote. This New Yorker article describes non-voters as typically younger, less educated, and of lower income brackets which aligns with Johnson’s descriptions. The New Yorker article furthers that non-voters have “roughly the same view of the Democrats.”

If non-voters decided to vote, electoral races would be swept by the Democrats. The public’s assumption that America is more or less evenly split between Democrat and Republican values is an incorrect reflection of reality. Johnson clarifies this as a problem when he notes that non-voters’ preferences are not reflected in the outcome which “is difficult to interpret as consent of the governed.”

The incorrect belief that the public is evenly split between Democratic and Republican values is one of the most dangerous implications of rational abstention. If every American voted, more Democrats would be elected than Republicans due to the non-voters’ liberal preferences. That in turn would cause the Republican Party and its candidates to change their platform so that they could win elections because, as Downs pointed out, candidates change their platform to win elections. Altering party platforms is part of the natural evolution of politics. However, if the non-voter trend increases, we risk platform stagnation. As voter turnout decreases, our candidates and parties increasingly do not represent contemporary American values.

Shifting Voter Distribution Leads to Shifting Politicians

As the center of the voting population disappears and voters become more polarized, the probability distribution shape of voters has changed to reflect that. Assuming the Downs model of the Median Voter Theorem holds, even a strongly polarized bimodal distribution has a median voter. The Theorem focuses on one central idea: candidates formulate policies (and campaigns) in order to win elections rather than win elections so that they can formulate the policies. The candidates position themselves to appeal to a certain demographic of voters, with the median voter in mind, and plan a strategy in order to capture those voters to win the election.

Donald Trump is one such example. He trademarked "Make America Great Again" a mere 6 days after Obama won reelection in 2012 leading one to assume that Trump has been planning this campaign for at least the last four years. He has studied the changing electorate and positioned himself in a place he believes is optimal to win the median voter. His slogan, "Make America Great Again" was taken from Ronald Reagan's campaign and revived for this 2016 campaign. Reagan's presidency is considered the Republican heyday by many conservatives, which may be the reason Trump chose that particular phrase.

The problem Trump may face in the election, however, is that the Downs assumptions are not the way real life works, and voters can chose to abstain. Trump is likely to alienate voters and lose a good portion those that stay home or those that vote for a third party candidate.

Coase v. Pigou: A False Dichotomy?

The typical introduction to Coase seems to be framed as an alternative to a Pigouvian tax. This seems a bit unfounded to me.

The Coase theorem may work well as an alternative to legal/court action (in a small and local sense), but in the case of its opposition to a more generalized Pigouvian tax, its primacy is less clear. Take, for example, a standard Pigouvian tax: the carbon tax. A condition for an effective Coasian solution is property rights. But how do you assign property rights in the case of global atmospheric pollution? There is also a condition that costs are generally known* by the affected parties. But with the sweeping and invisible effects of global warming, how is the damaged party supposed to both be aware and able to determine the costs to themselves? Are they aware of the difference in their medical bills, food costs, insurance premiums?** In addition, there is difficulty in achieving the cooperation of affected parties. Though most global warming is a result of rich countries’ actions, the ramifications are most felt by people in poorer nations or poorer areas of polluting nations. Though these affected may be willing to pay in negotiations, they are far from able. Furthermore, the real victims are the one who will inherit a damaged earth; do we expect the unborn to mobilize in their opposition?

It seems unlikely that Coase himself would universally oppose a carbon tax (or he'd at least acknowledge the subtleties of each argument). We acknowledge that a Coasian solution works best when the parties involved are small, yet a Pigouvian tax is almost never implemented on just a handful of local actors. A Pigouvian tax is generally seen in a larger national context. It may even be that when Coase’s conditions are least likely, that a Pigouvian tax is a type of Coasian solution. In class we certainly acknowledged this, but I wanted to explicitly state it.

*Though with Coase individuals to not have to precisely calculate the costs (like they do with Pigou), they do need to be aware of the difference between a “bad” and “good” deal.

**There are also monetary benefits of climate change on the general public, such as cheaper energy. No matter who is doing the calculation, it’s a difficult process. However, the general point is that in this case the government may do a better job in measuring costs than the private individual. This is further complicated by the global nature of global warming.

Roommates, Chores, and Making the Pareto-Optimal Move

How do we deal with a roommate who won't do her chores? This can be a big issue. After all, a clean apartment is a public good that everyone* can enjoy. Although our dominant strategy would be to not clean to avoid the costs of spent time, everyone would be better off if we all did our weekly chores.

My apartment has been experiencing this issue recently, and I instantly recognized it as a classic prisoner's dilemma situation. My immediate thought was: "If we want A to do her chores, we should all stop doing ours until she does her fair share. Then, she'll know that if she does her chores, we'll do ours too!"

The Internet had some advice as well. This article suggested that we develop a mini market economy and use chores to gain "points". Certain chores would earn more points than others. This means that when one person is not able to do a certain chore that week, they can pay another person “points” to have them do the chores instead. Of course, as a result of market transactions, everyone is better off! However, we cannot keep any one person from experiencing the benefits from the clean apartment, and therefore we may still have free riders. This does not solve the problem.

In the end, my roommates came up with the best solution. When sharing my idea with them, they replied: "We'll keep doing our chores, because then we can actually tell A to do her chores as well." They were taking it upon themselves to be the external enforcers** that the apartment needed to ensure that we were making the pareto-optimal move to live in a clean apartment. What a great idea!

*that is, everyone living in the apartment
**they are technically not "external enforcers" as they are also living in the apartment, but they are trusted to do their part, and I am assuming away any corruption.

The Median Voter Theorem and Hillary Clinton's views on the Trans-Pacific Partnership

The Trans-Pacific Partnership is a trade agreement among 12 countries on the Pacific Ocean aiming to promote trade by reducing or eliminating over 18,000 tariffs that act as a barrier to US trade with the other 11 nations. After years of negotiations, the TPP was agreed upon in February of this year, but has not yet been ratified by Congress. Hillary Clinton initially favored this agreement, stating in a 2010 speech that "we know that [the Trans-Pacific Partnership] will help create new jobs and opportunities here at home."

During her campaign in the Democratic primary for the upcoming election this year, though, Clinton faced Bernie Sanders, who openly objected to the Trans-Pacific Partnership. In order to remain competitive with Sanders among democratic voters on such a key topic for this election, Clinton began to shift her views on the TPP to the left. She claimed that she was against the agreement in a primary debate last October, announcing that it "didn't meet my standards."

Downs' Median Voter Theorem helps to explain Hillary Clinton's behavior here. If the median voter is decisive, then candidates will shift their views to be right at the median to ultimately win that determining vote. Clinton's initial view on the TPP was too far to the right for the audience from which she was campaigning to win votes, so she altered her position to better reflect the median voter's views, between Bernie Sanders and herself, regarding the issue of this trade agreement. This example supports Downs' claim that "parties formulate policies in order to win elections, rather than win elections in order to formulate policies."