Virginia Political Economy

A Hot Topic?

Two weekends ago, environmental activists organized the first ever presidential forum on climate change.  Seventeen presidential candidates were invited to attend, and three chose to do so including Democratic heavyweights Hillary Clinton and John Edwards.  At the event, candidates outlined their own plans to deal with global climate change and spoke passionately about the need for government-led intervention.

The low attendance helps to illustrate another point though. Although approximately 66% of the American public wants the country to take action to reduce greenhouse gasses, and there are substantial differences between the candidates regarding the issue, environmental leaders are having a difficult time moving the conversation about global warming to the forefront of the political ballot. This contradicts the assertion by Becker that organizers of larger groups will not experience the free rider problem and will be able to maintain a high level of political motivation among group members. In this case, the free rider problem is present to such a degree that even though the median voter takes the position of the group, the majority of candidates chose to not even attend the conference.

Watch Out Hilary!

Today, CNN reports that Hilary Clinton might not take Michigan so easily.  Clinton is thought to have it easy since four other top candidates' names do not appear on the ballot.  Instead, she faces those voters who are "uncommitted".  If the voters who do not support any of the candidates on the ballot, they have the choice to mark "Uncommitted" when they vote in January.  Democratic activist Bob Alexander thinks "that's a intriguing prospect," especially since supporters of the four candidates left off of the ballot (Obama, Edwards, Richardson, Biden) would make up some of the voters who vote "uncommitted". 

This week in class we've covered rational ignorance in voting.  By the miracle of aggregation, Hilary Clinton wouldn't have a problem winning since she is thought to be the better candidate and the percentage of voters that are knowledgable of this would solidify her victory.  On the contrary, we've learned from Caplan that not all errors in politics are random which negates the miracle of aggregation.  In this particular situation, the possible error of rational ignorance could as well be tied into the knowledgable.  The fact that four of the other top candidates are not on the ballot could be a systematic error by combining votes for each of the four candidates into one vote, the "uncommitted".  This could tighten the race in Michigan and so Hilary must not be such a lock after all.

Lobbying for Pigeons

     Protesters recently gathered outside the New York City council office hoping to halt a piece of legislation that most average New Yorkers would probably find very unobjectionable. About twenty members of the People for Pigeons stood ready to protest a proposed ban on feeding pigeons, a piece of legislation aimed at reducing the bird’s overpopulation. They sold t-shirts, held pigeon signs, and made both religious and patriotic appeals to fellow citizens. As a show of solidarity they even attempted to stage a mass pigeon feeding, which regrettably faltered when not one of New York’s famous winged creatures appeared. Unfazed by this temporary setback, one protestor explained her pro-pigeons position, saying “they sacrificed their lives for humans [in World War II as messengers]” and “[they are a] symbol of the unappreciated”.

     Despite the ferocity of their message, the intimate nature of their numbers suggests this group faces different pressures than bigger interest groups. Bigger interest groups often experience free-rider effects as their proposed goal becomes a public good. This can often limit their effectiveness, so smaller, more organized, and passionate groups can often be more effective in their pleas to government. Unfortunately for the People for Pigeons, it appears that they may find themselves handicapped by their small numbers, in terms of raising funds and leveraging political pressure. Their saving grace might that if the social costs to the average New Yorker of dealing with superfluous pigeons are rather low, then perhaps no group would rise in support of the bill. By the end of the protest, an advisor to the bill’s major proponent even bought a pro-pigeon T-shirt. If these twenty protestors actually change a bill meant to benefit an entire city, then certainly it would serve as an extreme example of the influence of a small interest group in the face of a broad populace. Time will only tell, but in American politics, apparently no issue remains too small and vote-maximizing legislators have little choice but to listen.

FDA wants more Allowance...

I think it would be safe to say that the Food and Drug Administration (FDA) possesses a significant amount of pull when asking for more money when they say that American lives are at risk with their lack of funding for scientific advances. Stating that they suffer from a "plethora of inadequacies", the FDA lacks scientists and therefore is struggling with a low rate of food inspections. The agency regulates more than $1 trillion of products annually, which includes food, drugs, cosmetics and medical devices. Members of a panel, known as the Science board, fear that "without substantial increase in resources, the agency will fall behind making it unable to meet the mandates of congress or the expectations of the American public."

FDA employees and officials both agreed in the need for more science staff. The reports also indicated insufficient inspections of manufacturers. They make it very clear that the food supply grows riskier each year and combine that with the inability to regulate and speed the development of new therapies, the FDA presents a valid argument. The report also blames Congress for giving them too many responsibilities with the lack of funding. Sad to say that a budget of over $2 billion is not sufficient enough for inspections. Democratic representative, Rosa DeLauro from Connecticut states that "more money is one component of what is necessary to help remedy the problems the agency is facing." Then again, when is more money not the remedy for all of agencies' problems. I would say that the FDA has done a good job of securing their jobs and budget increases for the next year.

So much for Diversity of Information Sources

This morning, cable industry executives and lobbyists were relieved by the decision to alleviate some of the proposed strict regulation on the industry by the FCC. The 70/70 rule of the Cable Communications Act of 1984 would intensify regulations over the cable industry, especially the National Cable and Telecommunications Association.  After hearing the outcome, the NCTA president stated that “consumers are best served by marketplace forces, not government micromanagement.” This is contradictory of Stigler’s argument that industries will “actively seek out and acquire regulation.” Ironically, what did pass was the protection of independent programmers by making it less expensive for them to lease channels. Stigler would argue that the cable industry should have been equally opposed to this because their long-run profits could possibly be diluted by these new firms entering the market.
        This outcome supports what Winegast and Moran would refer to as the congressional dominance approach. Not only did cable executives lobby the agency, they also met with top White House Officials. Even the House and Senate sent letters to the FCC chairman. This is evidence that agencies are not independent of the legislature since it is apparent that these dramatic lobbying efforts had an effect on the outcome of the FCC final decision.
        On the other hand, perhaps renomination played a roll in the outcome. FCC Commissioner, Adelstein, expressed concern for the 70/70 rule because he didn’t think the data was sound and asked for more time before he had to make a decision. President of the Media Access Project stated that Adelstein is suspected to be more favorable to cable companies than he leads on, and this excuse could possibly be an outlet to get out of taking a side that may endanger his renomination. A conglomerate of these incentives played a role in further postponing the regulation of this monster industry.

Huckabee Talking Jesus

Sunday morning, Republican presidential hopeful Mike Huckabee spoke to two churches in South Carolina as reported by CNN.  Huckabee, a former preacher, spent an hour and a half talking with the two congregations, claiming, "I am here to talk about Jesus and not to talk about me."  He later claimed, "I always try to remind people that there is a place for politics, but when I come to church, it's to worship."

While Huckabee tried to make his sermons not politically related, it still seems as if this is a political ploy to win over voters.  It really seems as if he is merely targeting the median conservative voter, in hopes of winning the Republican nomination.  It obviously is not an attempt at targeting liberal voters, many of whom had pretty harsh comments about Huckabee's seeming mix of church and state.  Either way, this is a good way Huckabee can set himself apart from Romney and Giuliani to win over more votes from the Republican Party and it seems as if this would be received pretty well from the median conservative voter.   

The Ron Paul Revolution

            An earlier blog post noted that “the young and the restless” and their leftward leaning tendencies could push the Republican party closer to the left and subsequently prompt the creation of a relatively extreme “influence” party that would pressure the Republic party to return closer to the right.
            Whether or not a result of the left-leaning “young and the restless”, the Republican party does seem to have converged closer to the left, at least according to these Washington post writers. Their article points out that although conservative Republicans rose to power in the 1990s by attacking Big Government, once they took control, they proceeded to sign off on the Medicare prescription drug benefit and build “literal and figurative bridges to nowhere”. With federal outlays expected to have grown by 29% between 2001 and 2008 and the Big Government expansion of wars in Iraq and Afghanistan, many would agree that the Republican party has indeed shifted to the left.
            These Post writers go on to suggest that perhaps because of this shift, a relatively extreme right-wing movement – an extreme “influence” party, to put in terms we discussed in class –  has arrived, and arrived with a bang – the Ron Paul revolution.
            As their article explains, “the force is less about Paul than about the movement that has erupted around him – and the much larger subset of Americans who are increasingly disillusioned with the two major political parties’ soft consensus on making government ever more intrusive at all levels”.
            With approximately 5 percent – and increasing – support of Republican voters, this unexpectedly successful candidate set a one-day GOP record by raising $4.3 million from 38, 000 donors via the Internet.
            Obviously, Paul has a large base of supporters.  He probably won’t be taking office in the White House, but along with his supporters, he could very well play a role in prompting the Republican party to return closer to the right over the next several years. As these Post writers put it, “It’s clear that a new and potentially transformative force is growing in American politics”.

Wal-Mart Goes Green

In an unlikely pairing, the environmental nonprofit group Conservation International joined forced with S. Robson Walton, chairman of Wal-Mart, to raise awareness of deforestation of the home of the Kayapo Indians in the Amazon. The partnership is part Wal-Mart’s radical new approach called engaging the opposition. Wal-Mart has traditionally been accused of treating workers poorly, crushing small independent businesses, causing outsourcing of manufacturing jobs, and causing deadly pollution in underdeveloped countries. Up until recently, these criticisms were largely regarded with silence by the retailer. As sales began to slow, efforts to expand were blocked and the chorus of critics spread to lawmakers in  Washington, it realized it had to act, and the environment is just the beginning. Wal-Mart’s main goal is to improve the company's image so it can operate unhindered by the automatic opposition its reputation has inspired. To achieve this end, Wal-Mart has increased its lobbying force to a $2.5 million operation.

So what does Wal-Mart joining the in the environmental lobby mean? According to Becker, if interest groups are relatively equal in power and act as to maximize the utility of its members, there will be significant advantages gained by the environmental lobby in general and to Wal-Mart’s power as an interest group. For Becker, increasing group size is beneficial because it increases resources available as well as distributes costs. However, as Wal-Mart is the largest spender on lobbying of any retailer, spends $1.3 billion on campaign donations and employs experienced professionals in its lobbying force, it’s easy to see Olson’s point that some groups are more powerful than others. Olson additionally emphasizes the importance of individual as well as common interests. In the case of Wal-Mart, its overarching interest in participation in the environmental lobby is to improve its image to avoid the opposition its reputation has caused. So the potential outcomes of Wal-Mart joining the environmental lobby for Olsen may not be positive if other groups free-ride off its efforts and Wal-Mart pursues its individual interests over the common interests of the lobby. On the bright side, even the smallest changes within the company have the potential to resonate with both its vast customer base and its 60,000 suppliers, potentially making huge positive environmental changes.

“The American taxpayer should be outraged – as I am”

So says Sen. Lieberman, chair of the Senate Committee on Homeland Security and Government Affairs; its Subcommittee on Disaster Recovery oversees FEMA, which has recently been accused of wasting $30 million last year in Mississippi on Katrina recovery efforts, based on a report released by the GAO (as in Gary’s post).  Lieberman said that taxpayers should be outraged that “‘in a six-month period FEMA managed to waste approximately half of the $60 million it spent’ on trailers in Mississippi alone,” and Sen. Susan Collins, the Committee’s ranking Republican, cited “phony inspections, phantom trailers and rigged contract bids” in saying that it’s “unacceptable that . . . FEMA still is wasting millions of taxpayer dollars.”

So we have both the GAO and the overseeing committee accusing yet another agency of running amok – another seeming victory for the traditional approach.  Is there any evidence to support the congressional dominance approach?  It seems hard to argue that any Congressmen would have wanted FEMA to actually throw away its funding.  But let’s take a look at those on the overseeing committees anyway: Sen. Lieberman is from Connecticut; Sen. Collins was Chair before him and is from Maine.  Doesn’t seem to tell us much . . . the current Chair of the Senate Subcommittee on Disaster Recovery, however, is Sen. Mary Landrieu of Louisiana – but this ad hoc subcommittee was only created last January.  In the House, the Subcommittee on Emergency Communications, Preparedness, and Response oversees FEMA.  It was also created this year, and Rep. Henry Cuellar of Texas is the Chair.  Its parent committee is Homeland Security, of which Rep. Bennie Thompson of Mississippi has been the Chair since January, and Rep. Peter King of New York was Chair before him.  Hurricane Katrina mostly affected Louisiana and Mississippi, so some of the recent changes in committee and subcommittee leadership could be considered to lead to changes in policy to benefit the Congressmen’s constituencies as much as possible; but the expenditures in question are from last year, and these changes occurred this year – and FEMA has been accused of wasting funding ever since Katrina hit.  It seems like the only possible application of the congressional dominance approach would be if the new leadership not only criticizes FEMA, but actually makes some changes in policy happen in the near future.

Wal-Mart Geometry

Wal-Mart is trying to shed its “capitalism at its worst” image in order to promote its legislative agenda. It has a presence on K Street, makes donations to political campaigns, and consults with environmental groups. In order to win legislators’ support, Wal-Mart is spending its way to the median on the environment-axis.

We all know about the Harberger triangle, or the deadweight loss due to Wal-Mart’s monopoly power (whether due to an unfair advantage or a natural monopoly from economies of scale). In this triangle, we might imagine mom and pop stores or transportation costs.  

Tullock focuses on the rectangle. His view is that the inefficiencies of political contributions and K Street salaries are easy to see and probably take up a good amount of the rectangle. However, some of this expenditure is a transfer to environmental causes like green product promotion and saving the rainforest. And I thought rectangles were a simple shape.