Cybersecurity: Whose Jurisdiction?

This past Wednesday, the Senate failed to pass a bill that would have provided a system of Cybersecurity for the nation by setting "voluntary security standards for owners of critical infrastructure, such as dams, energy and water systems."  The bill originated in the Senate Homeland Security Committee, where it received bipartisan support.  Sen. Susan Collins, a Republican on the Homeland Security Committee, cosponsored the legislation with Senator Joe Lieberman, an Independent.  Business interests, however, opposed the cybersecurity bill, arguing that it would be a financial burden to companies.

Although the failure of the bill seems to be an issue of protecting rival economic interests, the industrial organization of Congress itself may be at the root of the problem.  Senator Kay Bailey Hutchison, the ranking Republican on the Senate Committee on Commerce, Science, and Transportation, opposed the bill.  She suggested that certain interests were overlooked in the drafting of the bill and that all committees with jurisdiction over cyber issues should be allowed to provide input in the future.  Weingast and Marshall would argue that Condition 1 of their analysis of the legislative committee system was not strictly held in this instance, in that Hutchison (and presumably others) did not believe that the Homeland Secutiry Committee had a monopoly right over cyber policy.  Although there was a large degree of bipartisanship within the committee (and thus presumably bartering among committee members), there was little room for bargaining outside of the committee.  This led members of other committees that had something at stake - but little influence over the specifics - to reject the bill.

Stigler and Redistricting

In 2010, there were predictions that the Republicans would win majorities in both the House and the Senate, as well as gain the power to redraw district maps. Based on the 2010 census, each state’s Legislature would draw new boundaries for the districts within the state. Redistricting is so influential that it “could determine whether Republicans or Democrats dominate a state’s congressional delegation for an entire decade.” Because the Legislature is in charge of redistricting in most states, gerrymandering can be a huge problem.

According to Stigler, representatives cast their vote based on the economic interests of the constituents in their district. The newspaper article puts a lot of emphasis on how redistricting would help or hurt one of the parties. However, Stigler’s argument seems to make the parties’ preferences not as important relative to the interests of the constituents themselves. Redistricting could therefore have a huge effect when, for example, more farmers are in the same district after the new boundaries, because then the representative will probably have to vote for what the farmers want. Redistricting could also not have a huge effect even if the representative is now Republican instead of Democratic because they still have to vote according to the economic interests of their constituents, and not their own ideological interests.

Therefore, if the principal-agent problem is at a minimum in Congress, redistricting should not affect the parties so much as either help or hurt the politically active groups of people by being made smaller or bigger.

Lowering the Cost of Knowledge

As we’ve discussed extensively in class, it is rational for people to not vote. If they decide to vote, it is rational for people to be ignorant about whom they are voting for. Therefore, people who are rationally ignorant elect U.S. senators.

The reason people are rationally ignorant is because the cost of gaining knowledge of the candidates is greater than the benefit. To help lower the cost of becoming knowledgeable about our senators, there exist groups that monitor legislative action. One example of these groups is Americans for Democratic Action (ADA). In class, we observed their latest publication, which included how each senator voted and a score assigned by the ADA based on their voting record. They provide this information so that a person can determine which legislators to support by comparing the legislator’s voting to the person’s views. By providing this information in a simplified way, the cost of becoming less ignorant is lowered.

Additionally, the ADA works to further the interest of the members. For example, they recently were a part of an effort towards Senators Tom Carper (D-DE) and Chris Coons (D-DE) to, 

[urge] them to support policies that’ll raise taxes on the wealthy and strengthen the middle class as Congress tries to avoid going over ‘the fiscal cliff.’

Side note: I spent some time exploring the website for ADA and discovered a quiz entitled “How Liberal Are You?”. I had no luck discovering “How Conservative Are You” on the American Conservative Union website. 

It's Easier to be a Zero than a Hero

In class, we discussed how the voting records of our representatives and senators are published online, and specifically looked at the Americans for Democratic Action (ADA) 2010 Voting Record for the 111^th Congress.  The ADA makes it possible for constituents to observe how their representatives and senators voted, and to compare with the ideology of the each party.  In addition, constituents can observe how many of their representatives and senators are “Heroes”, or always voted with the Democratic Party, and how many are “Zeros” or always voted with the Republican Party.

At first glance, it seems there is a disproportionate number of Zeros and Heroes when looking at the voting record for the 111^th Congress.  Specifically, there are 111 Zeros in both the House and Senate, while there are only 54 Heroes.  These statistics imply that there is much larger number of steadfast Republicans in Congress who vote in line with the Republican Party 100% of the time, than there are Democrats who vote in line with the Democratic Party 100% of the time. 

However, upon further inspection, I realized that this is not the case.  When a member of Congress is not present to vote on a particular issue, the vote gets counted in as a zero.  This way of calculating drives the overall percentages to lower numbers, making some members look more conservative than they actually are.  For example McKeon, a Republican from California, voted with the Republican Party every vote he cast and even though he missed one vote, his percentage still stayed at 0% making him a Zero.  However when Eshoo, a Democrat from California who voted with the Democratic party every vote she cast, was not present for one vote it lowered her percentage to 95% and ruined her chances to become a Hero. 

This misrepresentation of absences as zeros makes the 111^th Congress look much more conservative than it actually is, and makes it much easier to be a Zero than a Hero.  The fact that there are twice as many Zeros than Heroes is not because of the ideology of the 111^th Congress, but more based on the way the percentages were calculated. 

The logic of the 1% ...return on investment.

I know that nobody wants to hear anything more about the election...but too bad because last week's lecture got me thinking about the logic of campaign contributions. I can't seem to understand why outside groups keep on spending millions of dollars up to election day trying to sway a more or less determined outcome. As this study points out, half of the (insane amount of) money put into the election yields no utility. This is simply painful in our given economic climate and is seemingly irrational. The National Rifle Association is an example of an interest group that got little return on it's investment on November 6th---it received a .81% return to be exact:

- 0.81% of $10,955,688 spent in the general election and ending in the desired result.- Supported 27 winning candidates ; 0.42% of money went to supporting winning candidates. 

- Opposed 5 losing candidates; 0.39% of money went to opposing losing candidates.

So, the logical question is why in the world do groups keep spending and spending even when the outcome of the election is more or less determined? There is no way that spending millions to the final day of the election makes rational sense, even in a race as tight as the one we just experienced. This relates back to the Mueller readings we did last week, which focused on campaign contributions as the constrained optimization of expected utility of candidate L or R winning or losing. The decision to contribute is affected by the marginal utility of additional consumption expenditures, your difference in utility between the two candidates, and the marginal impact of your contribution. So, my question is why do groups like the NRA keep putting so much money toward their candidates even when the expected marginal impact is decreasing closer to election day and the MU of additional consumption tends to hold relatively steady? The answer that Mueller's work would lead us to is that the driving force is the difference in utility between candidates--this has to remain very large for contributors on the likely losing side to keep funneling in millions of dollars into campaigns in the face of probable defeat, or, less likely, the MU of additional consumption must be very, very low for contributors. Clearly these outside groups and contributors are very invested, very polarized, and very loaded, but sadly for all of us sitting in front of TV sets, it means that the commercials don't stop until the race is called--even if the outcome has been expected for weeks. I know for a fact the NRA could more productive with it's ten million dollars in other ways and get more than a one percent return.

Why create ads that convey little information?

Television ads for companies, like television ads for political candidates, can either be informative or persuasive. In both cases, the decision to use informative or persuasive ads can be explained in a multitude of ways. Some people claim that the major reason to use persuasive ads is to keep the audience entertained. According to this argument, "In an age where people can TiVo their favorite shows and skip the commercials, people need a reason to watch the commercials, and entertainment is that reason." As a result, for many companies, persuasive ads tend to prevail, because they more effectively entertain their audience than informative ads do.

Alternatively, economics explains the phenomenon of prevalent persuasive ads in a different way. Economics teaches us that informative advertising will increase a company's appeal to those people who truly like the company or would like the company if they knew more about it. Persuasive advertising, on the other hand, because it gives litte or no new information about the company, can use methods that appeal to a wider audience. As such, companies often want to appeal to as many people as possible, so they use persuasive, non-informative, entertaining ads.

Waterfront Ideology

For the past year and a half, my hometown of Alexandria has been in a dispute over the possible rezoning of valuable waterfront properties, currently parks, in favor of building more hotels. This topic exemplifies the complex relationship between ideology and economic interest that, according to Kalt and Zupan, both have strong influence on politicians decision.

The most recent elected Councilwoman Allison Silberberg is publicly against this rezoning: “’We should pause and get it right,’ she said, … She added later that the process should be opened up so ‘citizens are involved from the outset’ and that she would not like to see rezoning of the waterfront.”

Rezoning the Alexandria waterfront would raise the current restriction of hotels, undoubtedly creating economic surplus for the already tourist-driven destination. However, as votes, and countless petitions prove, the members of the Alexandria community do not vote with only economic interest in mind. In fact, for the elected candidates to be acting based on economic interest would be considered shirking, or misrepresenting the people.

Jesse Jackson, Jr. and the Principal-Agent Dilemma

Representative Jesse Jackson, Jr. has recently come under fire for alleged misuse of campaign funds. According to a report on mainjustice.com, Jackson used campaign funds to decorate his Washington, D.C. home. He also allegedly spent $40,000 on a rolex watch for a "female friend." Jackson (D-Illinois) has been charged with misuse of campaign funds in the wake of the scandal. As part of a plea deal, he will be forced to pay back the spent money and resign his post, although the resignation is for unrelated health reasons.

Rep. Jackson's misuse of campaign funds is a classic example of the Principal-Agent dilemma. In this situation an agent is selected to represent and carry out the interests of a principal. The problem arises when the agent does not fulfill the responsibilities to the principal. The agent may take advantage of asymmetric information and use his position to his advantage. A common example is the relationship between the managers and the shareholders of a corporation. In this case, Rep. Jackson is the agent and his campaign donors are the principal. Jackson exploited his role as the representative of his campaign donors' interests. He spent their money on his house, not on his campaign. One has to imagine that this is hardly what the donors had in mind when they signed their checks over.

Post-election campaign contributions?

Already a week and a half past the presidential election, the debate over the role of money in politics continues.  Even though the campaigns are over, elected representatives still receive money from interest groups, including more than $800,000 to 9 lawmakers elect, according to this article from thehill.com.  These groups “bundle” funds together from individual contributors since the FEC places no limits on bundled contributions.  The intention is for individuals to group their contributions together in a lump sum, and that a candidate will be more likely to respond to this lump sum.  According to Rep. Musgrave from Colorado, 

“Picture the candidate. You got a contribution here, you got a contribution there from different areas of the country. … Contrast that with bundling, where all this money comes in. That gives the elected official courage because of their stand on life when the issue comes up.” 

This, however, has created some controversy.  Kathy Kiely, a critic of money in politics argues: 

“People who give in these amounts, they are not just speaking, they are investing.” 

 

In class, we discussed two competing theories of what determines campaign contributions.  The political man view holds that contributors give to candidates whose positions are closest to their own, while the economic man view asserts that contributors give to candidates if their contribution affects the candidate’s position.  In the article, Kiely’s comments about contributions being an “investment” are evidence for this economic man position, which views representatives or candidates as investment goods.  The contributors’ intention is to affect the candidate’s position and ultimately voting behavior.  Also, as evidenced by the article, younger, freshman representatives are more likely to receive contributions since their legislative careers are still young, and they may be easier to influence.  Finally, with regards to bundling, Rep. Musgrave’s comments suggest that individuals have an incentive to organize and cooperate in order to donate money in a more effective, way, in a lump sum.  This implies some shared benefits to organizing, which is another principle discussed in class.  

Who is running for president?

In class we learned that it was rational to be ignorant in terms of knowledge about candidates. A recent poll shows how very ignorant we can be, in that many people do not even know who is running for president.

“A chart on the Google Trends website shows the skyrocketing popularity of a search for the term, 'who is running for president.'"

This makes sense given what we have discussed in class. Because the probability of one’s vote deciding an election is so small, the marginal benefit of voting is infinitesimal, even with a large benefit differential between candidates. In the case of a benefit differential of 100,000 dollars and a p of 1/100,000,000 the marginal benefit of voting would be .001 dollars.  If you look at the opportunity cost of voting just in terms of lost wages and you earned minimum wage, it would take you ($.001/$7.25/hr)*(3600 secs/hr) = .497 seconds (approximately one-half seconds of wages) to earn as much at work as the marginal benefit of voting. Thus, unless you can become informed and vote in less than one-half second, you would be rational to be ignorant (because MC > MB) and not know much more than who the candidates are (if this at all). With analysis such as this, it is easy to see how this trend on Google came about.

Results of Redistricting in California

In 2008, citizens of California voted for a redistricting to be done by a group of volunteer resident voters.  In the past, the district lines had been drawn by people inside California's politics.  But this year, for the first time, the congressional district lines were drawn by a wide array of people in professions ranging from doctor to teacher.  It was clear after the elections that the redistricting had a significant effect on candidate outcomes.  Representatives who had been elected in not the 90s's....not the 80's...but the 70's had trouble getting back into office.  Candidates who had been representing California for years did not get re-elected.  This is because many politicians had a new set of voters to persuade, and a new audience to familiarize themselves with.  This made their campaign that much harder and may very well have pushed them out of office.  Dakota Smith of Los Angeles reported,

"Redistricting really changed the landscape for everyone," said Stuart Waldman, president of the Valley Industry and Commerce Association. "Incumbents had to introduce themselves to new districts. Newcomers had opportunities that didn't exist."

Because the districts regrouped many of the California citizens, some of the incumbents were no longer "incumbents" to the people they were now running to represent.  Their face was no more familiar than that of the challenger.  Thus, the incumbent lost his edge and slid back down the S-curve (shown in Mueller) to where having an effective campaign is crucial.  Now the incumbent was back to square one, or much closer than he had been in 2008, and the marginal utility of each dollar he spent on his campaign was much greater.   Instead of being able to spend money proclaiming his platform, he had to spend money to get people to know who he was.  The incumbent was now on a level playing field with the challenger and only time will tell if the right man won.

US Food Aid and Rent-Seeking Behavior

The economic term "rent-seeking" is a reference to competition for state-sanctioned monopolies. The "rent" is a state-protected stream of revenue and "seeking" constitutes resources that are spent to secure that revenue. Common examples of rent-seekers are power and water companies that lobby for the right to provide services to a given geographical area. The problem is in the competition for securing these exclusive rights. Not all of the competitors will get the right to the business - the losing companies waste money and time trying to persuade legislators who to pick. 

Recently, the US foreign food aid programs have come under attack for rent-seeking characteristics. In an article in The Guardian, it was revealed that nearly 2/3 of the food bought for the $1 Billion US food aid program was purchased from 3 firms. These three politically powerful firms are ADM, Cargill, and Bunge. Together, these firms dominate the global grain trade. 

Concentration in the food aid market would not be an issue except for the fact that many aid experts have questioned whether or not this is the cheapest aid system that could be used:

"Rob Bailey, fellow of the UK thinktank Chatham House said: 'When you have got a process as concentrated and as uncompetitive as what the Guardian analysis reveals, you would expect taxpayers to be overpaying for the services of agribusinesses. We know only 40% of every taxpayer dollar goes on food itself, the rest goes into the pockets of agribusinesses and freighting.'"

The Guardian revealed that the United States still uses a system for food aid distribution that was created in the 1950's, with the vast majority of the food purchased, processed, and shipped by American companies, even if there are cheaper alternatives. Most other donor countries have abandoned this model because it "raises prices, delays deliveries, damages developing countries' markets, and does little to end dependence on foreign assistance."

In addition to the inefficiencies that the Guardian found present in the general structure of the US food aid system, it also found evidence that food aid programs can be manipulated to help firms offload surplus product. This occurs even though the US government has stated that the food aid program "is no longer a surplus disposal programme [sic]." The majority of the commodities shipped as food are, in fact, major grains, but also on the list are 80 tons of canned salmon that went to Laos and Cambodia. In response to a glut, industry groups sent lobbyists to Washington to get the canned salmon on the list of acceptable foods. 

It is ironic that this discussion is about aid - what is the real aid here, and who are the beneficiaries? Is it the food sent to third world countries or is it the protection that ADM, Cargill, Bunge, and other firms receive from the US government? 

Irrational Abstention

Holy polecats!  A Phoenix woman tried to run over her husband with her car because he didn't vote:

Holly Solomon, 28, was arrested after running over husband Daniel Solomon following a wild chase that left him pinned underneath the vehicle.  ...Police said Daniel Solomon told them his wife became angry over his "lack of voter participation" in last Tuesday's presidential election and believed her family would face hardship as a result of Obama winning another term.

OK, people, so this little lady has some anger management issues.  But the real problem here is her ignorance regarding the electoral college: Romney won Arizona!

Super PACs pulled Romeny away from Median Voter

Conservative Super PACs spent gobs of money to get Mitt Romney elected in the general election, but they may have contributed to his problems courting the Median Voter. 

As we discussed in class, the power of Super PAC money in the presidential election forced him to gain the support of the more conservative donors and their Super PACs by using more conservative rhetoric to align with their views. This pulled him further to the right on the policy spectrum, and away from the Median Voter.

This article from NPR claims the influence of Super PACs prolonged the Republican primary, also forcing Romney further to the right.  Both Newt Gingrich’s and Rick Santorum’s campaigns received a second wind from large contributions from conservative Super PACs. Romney had to continue to appeal to Republican voters and conservative activists within the party to secure the nomination. In addition these PACs ran attack ads against Romney in the primary, laying out a strategy for persuasive advertising Obama would use in the general election. The Super PAC that supported Gingrich, Winning Our Future, launched an ad criticizing Romney’s history at Bain Capital. According to political analyst Tim Cooke, these persuasive tactics laid out by republicans helped Obama take a “baseball bat and beat [Romney's] brains in.” He says, “Romney could not recover. The bashing defined him, and he ran out of time to moderate his message from the far-right tack he took to secure the Republican nomination.”

Election for Sale?

Section 20.3 of Mueller's textbook focuses on the rationale behind campaign contributions and the real impact that they exhibit. With over $2 billion spent on the presidential election alone, the 2012 election season, by far the most expensive in history, presents an interesting case study for this material. Mueller predicts that a rational outside group will only provide campaign contributions to candidates if 1) there is a connection between the amount of money received and the probability of electoral victory and 2) there is a connection between a contributing group's policy agenda and the realized votes of the elected candidate.

What makes the 2012 election particularly interesting is that it was the first election after the Supreme Court's Citizens United v. Federal Election Commission ruling, which declared that parts of the existing campaign-finance legislation violated the First Amendment and led to the proliferation of the "super PACs" that inundated this election cycle with limitless outside money. This outside money, though no longer routed directly through a campaign, was furnished with the hopes and expectations on the part of the contributors that Mueller analyzes.

So what's the verdict? Did record amounts of money and advertising influence our nation's choice of president? It's hard to say. This New York Times page reports that super PAC spending by Republican groups outstripped that of super PACs with Democratic agendas. But spending directly by the Obama campaign exceeded that of the Romney campaign. And of course looking at the outcome of an election as solely the product of campaign spending leaves out many important explanatory variables.

Having lived through election season in a swing state, one part of section 20.3 that I think we can all attest to is the diminishing returns to this money. By November, I found myself beyond the upper flat part of the S-curve Mueller describes and into a realm where the only influence political advertisements had was to make me consider abstaining. The real victory for Virginians of all political stripes is that we no longer have to experience a barrage of election advertisements through every medium imaginable. Just in time for Christmas shopping ads in November!

Obama's Persuasive/Informative Ad

"Mitt Romney isn't the solution, he is the problem"

This is probably one of the most hard hitting videos I saw during the campaign.

We talked about different types of campaign videos, persuasive and informative, being in two separate categories.  However I believe the Obama campaign did a superb job of combining the two to deliver a full and complete ad to define Romney using facts and intangibles.  It successfully moved Romney away from the middle ground by using his record, and at the same time, it used his lackluster performance of "America the Beautiful" to persuade voters that he isn't a good sing... guy.


Let's put it this way, he probably wouldn't make the Hullabahoos.

Taking the Initiative

This article from The Harvard Crimson (which has nothing on the Cav Daily, I think we can all agree) explores the effect of pressure groups on ballot initiatives such as the one which legalized marijuana in Colorado last week. As with standard elections, political action groups expend resources to maximize their utility. In essence, money spent on "circulating pamphlets, identifying voters, and other forms of campaigning" figures into pressure groups' political influence function via Becker.
An interesting distinction between campaigning for ballot initiatives and stumping for candidates lies in the necessity for groups to articulate their positions (informative campaigning) on ballot initiatives as opposed to spewing out the standard, bland persuasive campaigning rhetoric that defines candidate-centered elections. For Defend Oregon, the PAC examined in the study, to lobby for/against its ballot initiative, it necessarily must elucidate to voters a clear stance on the issue at hand (tax-breaks for big corporations, in this case). Still, Defend Oregon's website brims with vague sentiments intended to rally every voter around the issue. The group claims, for instance, to be protecting Oregon's "most important priorities"--implying that all Oregonians should support them if their priorities are in order.
Despite its salient messge, this article does fail to fully explain how the study controlled for variables in determining that flyers for ballot intiatives in the 2008 election directly influenced voters.

Sandy Jackpot

While super storm Sandy destroyed much of the New Jersey shoreline, there was a 5.1-mile stretch that was spared.  This year, an $18 million project was completed to rebuild the beach and dunes in front of 30 casinos that line the Atlantic City coastline:

“The government has protected their cash cow, the casinos, at the expense of the people,” said Edsel Coates, 57, whose home near the inlet flooded and roof caved in. “The casinos are receiving preferential treatment and there’s neglect of the average Atlantic City resident.”

 25% of the residents of Atlantic City live in poverty. That is 16% higher than the state average. They are subject to the negative effects of rent-seeking by the casinos. While the casinos were able to lobby the state and federal government for the funds required to protect their beachfront properties, Atlantic City’s largest and poorest neighborhood had their seawall project delayed. The project is scheduled to start soon but the damage has already been done. Problems like this will continue because the casinos will always be able to commit more funds to rent-seeking than the impoverished neighborhood can. What is sad is that, even though the result lacked morality, rent-seeking in this case was technically efficient because, monetarily, the group that benefited the most from the rent received it.

The External Benefit of Skyscrapers

Republican congressman Darrell Issa recently announced that he intends to hold hearings on amending the Height Act of 1910, a piece of legislation that limits the height of buildings and other structures in Washington, DC to 130 feet. Working with DC delegate Eleanor Holmes Norton, Issa has asked the National Capital Planning Commission and the DC government to conduct a study on raising the height limit outside of the city's federal core. 

While opponents argue that raising height limits would ruin Washington’s open skylines, those who support changing the law argue that limiting how tall buildings can be in the city stunts its economic development, while also driving prices for the limited housing and office space to some of the most expensive in the country. So, allowing for taller buildings in DC would promote economic activity and enable both regular residents and the government itself to save money – but that’s not all. In the Slate article, "Skyscrapers in DC Would Be Good For America," Matthew Yglesias raises another important possibility that decision makers considering this law should take into account:

“If housing in the DC area became cheaper, then in effect real compensation of DC-area federal employees would rise (allowing the government to attract better workers) at no cost to the taxpayer.”

Thus, the lowered cost of living that would result from allowing the construction of skyscrapers in DC would result in the important positive externality of drawing higher quality government workers to DC, benefiting not only those who live in the city, but the rest of the nation as well. This suggests that the current quantity of skyscrapers being demanded in DC is too low, since individuals fail to consider the added social benefit of more effective government workers that could result from constructing taller buildings. Perhaps if Issa's opponents looked at the issue in this way, they would be more willing to change their stance. 

Excessive Advertising?

Over the course of this election season, the Barack Obama and Mitt Romney campaigns are reported to have spent over $1 billion on political ads. In class we discussed the high proportion of persuasive campaigning in lieu of more informative campaigning. Persuasive campaigning attempts to get everyone in the distribution to vote for the candidate, rather than attempting to garner the vote of those near the candidate's position.

The article talks about how much the two candidates spent money on airtime and political advertising. The article notes that most of the advertisements have been shown in the same nine battleground states, and most focused on Florida, Ohio, and Virginia. This  observation seems to be in line with the idea that consumer-voters and campaigns would want to spend money in advertising in these areas, in order to sway voters across the spectrum of issues to vote for their candidate.

Also, sorry Virginia. According to CNN, " in an indication of how competitive Virginia is, both campaigns increased their ad spending there in the last 24 hours -- Romney now totals $3.6 million and Obama $3.3 million"

The increased advertising frequency in the battleground states in another example of wasted resources due to lobbying as well!