Public Choice Theory 101

Here's the introduction to any good public choice theory class. It explains why the recent budget "cuts" turned out to not be real cuts and why it is perfectly rational for politicians to take from the many and give to the few:

Moral Requirement of Voters

I talk a lot about voting, but rarely in the positive. If you do vote, here's some sound advice:

As a citizen, you do not owe it to others to provide them with the best possible governance. But if you take on the office of voter, you acquire additional moral responsibilities, just as you would were you to become the Federal Reserve chairperson, a physician, or a congressperson. The electorate decides who governs. Sometimes they decide policy directly. They owe it to the governed to provide what they justifiably believe or ought to believe is the best governance, just as others with political power owe it to the governed to do the same.

Or, as economist Bryan Caplan summarizes:

There's no duty to vote, but if you do vote, you have a duty to vote "only for things [you] justifiably believe would promote the common good."

How to Increase Voting

I'm very interested in the culture of voting. I talked plenty about how your vote doesn't count, which helps explain why it's so hard to get people to vote. I've posted about how Swiss mail-in ballots decreased turnout. And here's Megan McArdle on how early voting may do the same. I even wrote my graduate thesis on the effects of compulsory voting laws. So when I read about a way to actually get people to vote, I couldn't resist. So what's this magical method? Peer pressure. Here's the story:

Before the 2006 Michigan gubernatorial primary, three political scientists isolated a group of voters and mailed them copies of their voting histories, listing the elections in which they participated and those they missed. Included were their neighbors’ voting histories, too, along with a warning: after the polls closed, everyone would get an updated set.

After the primary, the academics examined the voter rolls and were startled by the potency of peer pressure as a motivational tool. The mailer was 10 times better at turning nonvoters into voters than the typical piece of pre-election mail whose effectiveness has ever been measured.

My next question is, do we even want those pressure driven votes?

Emptying the Bottle: Mid-October '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• The merits of non-voting [video] (earlier).
• We are loyal to our dentist because he causes us pain.
• Why Britian is always a forerunner. Ease of legislation.
• Germany finally pays off World War I debt.
• Government pays citizens to watch CCTV footage to prevent crime.
• Having too many channels can make you less happy (earlier).
• US health care spending as a percentage of GDP [graphic].
• ICP are insane, clowns, a posse, and... Christians?
• In future Russia, cars drive you.
• Democrats and Republicans selfishly disagree on Citizens United v. FEC.
• Story about the 1965 NYC blackout and resulting baby boom is apparently false.
• Improv thoughts from Jill Bernard [video] (related).

Always feel free to send me any interesting sites or articles you come across.

Economics of Afghani Votes

No this isn't one of my usual tirades against voting. Though I guess this isn't a celebration of democracy either. Last month Afghanistan their parliamentary elections. Unsurprisingly there was rampant fraud. One example, was vote buying:

In northern Kunduz Province, Afghan votes cost $15 each; in eastern Ghazni Province, a vote can be bought for $18. In Kandahar, they sell their rights for as little as $1 a ballot. More commonly, the price seems to hover in the $5 to $6 range, as quoted to New York Times reporters in places like Helmand and Khost Provinces.

And the exchange process was surprisingly formal:

In many places, so-called vote maleks organize the trade. These are brokers who collect all the voter registration cards in a community, and then peddle them to the highest bidder. Typically, the vote malek keeps half of the money and the voters get half.

Though the votes may seem cheap, you must consider Afghanistan is one of the poorest countries in the world with a per capita GDP of less than $1000 (compared to the US at $46,000). So, accounting for relative wealth (and ignoring the international importance of US elections), it's like an American vote going for around $250. Here's the silver lining of the fraud. It's less fraudulent than it could have been:

Vote buying is much more common in this election than the last national balloting here last year. The feeling, experts say, was that last year’s election was stolen wholesale by supporters of President Hamid Karzai, so there was little need for vote buying.

And it's also good news that fake voter cards, which apparently aren't as effective, went for about 23 cents each. But don't let the price of a vote imply anything about the patriotic value of the vote. If anything, illegal vote getting implies there are other illegal gains to be had once elected.

Hat tip to Marginal Revolution.

Takeaways from SuperFreakonomics, Part I

I just finished reading the popular economics book SuperFreakonomics, the sequel to the book I recently posted about Freakonomics (Part II). The subtitle is "global warming, patriotic prostitutes and why suicide bombers should buy life insurance". You can read their current writings at the Freakonomics blog. Here the first part of my takeaways:

Whether it's books or business, you are battling the lethargy that comes with success.

While there are exceptions to every rule, it's important to understand the rule to understand the exception.

Per mile, drunk walking is 8X more dangerous than drunk driving for the intoxicated person.

In India, over half of men (and women) said domestic abuse against women is justified in some cases. However, in houses that had TV's, women were given more respect. They also had a lower birthrate (important for women's autonomy and health).

In an average year, there are about four fatal shark attacks in the world. Here are some statistics. Is the human fear of sharks our most irrational fear?

Understanding small things is important to understanding big things.

If the government wants to ban something (think prostitution or drugs), perhaps it should focus on buyers, not sellers. If you remove the current suppliers, more will arrive (watch The Wire). If you remove the consumers, the current suppliers will leave.

The price of prostitution has fallen dramatically in the wake of the sexual revolution. To put it plainly, there is more "free" sex to be had.

30% of unpaid sex from prostitutes went to police officers. It's true, in most cases prostitutes are more likely to have sex with a cop then be arrested by them.

The female college conundrum: Get more education to make more money. Yet, now that you have this education, you can marry a man with even more money. Now you are more likely to stay on home with kids. Sounds like a case for missionary dating.

Men and women, Ceteris paribus, perform similarly on most tests. However, if you pay them for right answers, men will outperform women. Does this mean it is efficient to pay men more than women?

Mastery is a result of "deliberate practice", not inherent skill. So do what you love or you'll never enjoy the process of getting good at it (earlier).

Characteristics that predisposes one to be a terrorist are similar to those that predispose one to vote (wealthy, high level of education, desire for political action). And as I shared before, it may be more effective than voting.

Moral norms change from generation to generation more than we like to think. Even life insurance was seen as an uncomfortable profit from the death of a loved one.

Emptying the Bottle: Mid-August '10 Links

Here is a list of the worthwhile sites I've Bookmarked recently:

• What it looks like when economists try to lose weight.
• Practical suggestions for threatening situations.
• Voting in churches makes you more likely to vote conservatively.
• Dutch council helps jobless women find rich men to marry (earlier).
• Good advice for any presentation.
• Immigration and the protection racket.
• Why you should reveal more about yourself.
• Commuting is bad for your health (earlier).
• China is richer than... El Salvador.
• Good summary of the last 10 years.

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Why I'll Probably Never Vote for a Republican

Last year I explained why American liberal's fear of markets will probably keep me from voting for most Democrats. However, as Obama's approval rating is plummeting, I'm actually growing more frustrated with American conservatism. Though the words liberal and conservative have muddled definitions, there is a clear difference in my understanding of them, how they view change. Liberals embrace the hope of the future, expecting that there will be improvement. Conservatives, embrace the successes of the past, worried about the repercussions of that change*.

The situation in America is uniquely convoluted. If conservatives are afraid of change, then the Founding Fathers were liberals. However, they set up a conservative Constitution meant to keep national policy stable. Both ideologies are perfectly logical, but the pessimistic conservative worries me more. Though some change has been harmful, most of American history has been positive change. Conservatives are afraid to roll the dice, worried that the change will be harmful. But by attempting control and not allowing some risk, we miss out on the great things that change can bring. It is that control that worries me most about conservatives. Coercion of others is one of the great threats to our humanity.

Conservatives, because they fear change, are less likely to tolerate things they don't prefer (think immigration and drugs). They need more categories for things they dislike and things they find morally reprehensible. Sadly, this is also true for many American liberals (think environmental laws and gun restrictions). But it is the conservative distrust of the new and different that can lead to social division like nationalism and racism. Although conservatism is useful in dealing with situations we don't fully understand, it also limits growth by being afraid of new things. The liberal argument fails when things are fine the way they are. The conservative ideology fails when our current path continues to be beneficial. I believe both of those are true, so I'll continue to be weary of liberal Democrats and conservative Republicans.

*Economist F. A. Hayek's essay Why I Am Not a Conservative was helpful in the formation of several ideas articulated here.

Takeaways from Madison's Montpelier, Part III

This is the third post in a series about my experience at Montpelier, the home of President James Madison. The week included readings, lectures, tours, and groups discussions. Here are the first and second posts transcribed from my notes from the week. Just a friendly reminder, these ideas are mine and are not necessarily those endorsed by the Center for the Constitution. Here is part three of my takeaways:

Both because of structural changes by states and the increased power of political parties, the electoral college does not function like it was originally intended. Though I have no idea if there is a politically feasible was to fix it.

When a court rules, it's labeled an "opinion". That's important when understand the fallibility of the judiciary.

Federalism, that is division of power between the parts and whole, existed in Old Testament Jerusalem with the twelve tribes.

The Constitution was meant to restrict the government's ability to be swayed by the people's "passion".

Nowadays people complain about the partisan griping in Washington, DC, longing for the days when American politicians were more harmonious. Although it may be measurably worse, that is hard to measure, that harmonious time never existed. One of the first meetings of our nation's leaders to discuss the federal government's duties had to take a day off because things got so intense.

It is important to note, most (probably all) of the drafters of the Constitution were frustrated with it. It was built on compromise.

Key to understanding anything: What is the relationship of the parts to the whole?

Do not be fooled by false options. Sometimes the answer is somewhere in the middle.

Counterintuitive teaching is not only interesting, it's Biblical. Jesus himself is regularly quoting using this format: "You may heard this, but the truth is this".

In any discussion, ask yourself if the opposite is also true.

Originally the founders were afraid of a overly powerful legislature. Overtime, it has the executive and judicial branches that have increased their power the most. Look at how often the legislature simply looks the president for leadership. This has occurred because the people love the presidency, and the presidents allow it.

When the executive does the job the legislative branch, it fails to do it's own job effectively.

The power to declare war rests with Congress, from Madison's perspective, to prevent the executive from grabbing more power during a time of crisis. This balance fails when we have quasi-wars: Vietnam Conflict, War on Drugs, War on Terror, etc. This is partially discussed by John Yoo on the Daily Show.

James Madison is the only American to make the executive powers and then use them. For this reason alone we should pay more attention to his presidency.

Every "great" president is one that stretched the bounds of his position.

Though James Madison thought building more roads and canals would unite the country to great benefit, his last act as president was to veto that legislation on the grounds that is was unconstitutional. Today the Supreme Court is seen as the only branch required to make such decisions.

In our loud times, we can' appreciate a quite leader. We praise the showman, not the workman.

One of the speakers for the week emphasized the original role of impeachment as a punishment for politicians overstepping their bounds. Sadly, it has mostly been used for petty crimes (not following a contrived law or lying under oath).  Crimes should be punished legally. Constitutional matters should go the Senate. However, impeachment can't be used correctly unless the people understand the Constitution.

James Madison was a politician that learned and changed his mind. Do we want our politicians to be learning on the job? Jon Stewart certainly doesn't when he plays competing sound bites.

If James Madison was born today, which party do you think he would join? The automatic answer for me was the Libertarian Party, which would probably agree with him on issues the most. However, I don't think he would join a party of government opposition that is so in the minority they cannot participate realistically in government. There is some wisdom from him there.

It is possible to disagree without being disagreeable.

Saying there is a trade off between government and freedom is a false choice. Here's a quote from Stephen Colbert that puts it nicely: "I believe that the government that governs best is a government that governs least, and by these standards we have set up a fabulous government in Iraq."

As I sat in what I called "nerd camp" I had to ask myself, and the group, if what we were doing really mattered. Sure 40 teachers were convinced of the benefits of Constitutional presidencies and together we may convince 4000 students, but that is just a fraction of the voting public. The group decided it does matter, because America has a lot to gain from learning what we have to teach.

Economic Benefits of Political Apathy

Yesterday I discussed the inherent flaws in democratic votes and how shouting (rioting, protesting, donating) can actually be more efficient. In the past this has convinced me of the benefits of political apathy. Apparently I should have been a little more specific:

there is another critical competitive advantage for America in relation to its other democratic peers. It is the fact that in American presidential and congressional elections, about half of the electorate never turns out to vote. And the unique competitive advantage arises from the fact that unlike in other Western democracies, the people who end up staying away from voting in the U.S. belong overwhelmingly to its poorest, least educated sections.

He goes on to discuss the reasons why the poor don't vote:

Historically, many of the southern states have had a nasty record of officially and unofficially making it more difficult for blacks and poor whites to vote, a position that largely prevailed until the Voting Rights Act of 1965. Other reasons include the disenfranchisement of its prison population, which, at two million, is the largest in the world. Moreover, felony disenfranchisement laws in most states make it difficult for ex-felons to vote. As a result, about 5.4 million offenders and ex-offenders (about 2.5 percent of the electorate) were excluded from the voting rolls in the 2004 presidential election. Also, the fact that Election Day in the U.S. is not a national holiday makes it difficult for those holding low paying jobs (where wages are paid by the hour) to go out and vote.

So why is this good for the American economy? It's something I've already mentioned before on this blog, more educated voters leads to more libertarian voters, which leads to more economic growth:

A critical factor which determines the economic success of a country is how well it strikes a balance between its short term needs and long term requirements. The short term interests veer towards more spending and consumption, while the long term interests lie in greater investment for the future and in shaping an environment conducive to creation of wealth. Essentially, the poor and the disadvantaged within a country would tend to have a short term outlook. Their interest would lie in having the government spend more on generous social security benefits and subsidies and in laws that protect labour. They would be far less enthused by the investments and sacrifice required to further the economic well-being of the country over the long term, or in promoting the entrepreneurial class.

This also supports my graduate school thesis about the correlation between compulsory voting laws and government spending. So here's the question: do the economic benefits of voter disenfranchisement outweigh the social costs? My guess is most people would say no.

When Shouting is Better than Voting

A while back I questioned the value of public protesting and suggested handwriting a letter instead. I've also questioned the value of voting, the most traditional way of citizen involvement. I certainly don't think voting is worthless, but I do have a different understanding of why I and others really vote (even for a third party). Not only is the probability of your vote making a difference in national election statistically impossible, voting also has another huge flaw, everybody only gets one. No matter how how passionate/apathetic and educated/uneducated you are, all voices count the same. This is simultaneously democracy's greatest strength and weakness. Luckily, citizens have created other ways to influence government, some better than voting:

"One man one vote" is not always optimal. I reported a few days ago that technocrats can under some conditions take better decisions than a referendum could. The point there was about information and heterogeneity of preferences.

Surajeet Chakravarty and Todd Kaplan use similar arguments to compare simple voting and shouting matches. In the latter, those caring more about the outcome put more effort into shouting. Thus, if there is a lot of variance in opinions, shouting better reflects marginal utility and yields something closer the social optimum.

How is this shouting concretely expressed? It should be a signal that is costly and in some way wasteful. In France, it is demonstrating on the streets. In the United States it is donating to political campaigns. In Thailand it is erecting barricades. Usually seen as major inefficiencies, all these can actually be good.

Greece seems to have their own, less conventional method. This is why I was happy with the Supreme Court case earlier this year that struck down limits to campaign finance. I've done a lot of research on the topic and it seems to be one of the most efficient ways for citizens to show their preferences for government. Criticizing the equality in voting probably makes many very uncomfortable, but that only confirms to me that voting is less about producing an effective government and more about satisfying a citizen's desire for participation.

Real Political Impact

A good friend of mine who lives in D.C. recently posted some first hand accounts of Tea Party protests. It was helpful in getting a better understanding of the movement. It also got me wondering just how helpful protesting is in creating political change. My gut feeling is not that successful. Unless you number in the millions or have a incredibly famous charismatic leader and very specific goals, I'm not convinced protesting has much impact. I've also mentioned that voting has little impact on political outcomes and that political involvement is more about consuming something than producing it. So what's the politically motivated to do? How do you change policy without being lost in the crowd? Politician Omar Ahmad says that the best way, is the old-fashioned way:

Here's the TED Blog to keep you updated of new talks.