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Friday, February 29, 2008

 

What is I-70 After All?

The I-70 traffic-jams are a problem that all Colorado skiers are acutely aware of. As a skier myself, I have experienced this regular occurrence first-hand. On January 25, 2008, the Colorado Springs Gazette ran an article in regard to this dilemma. “Rush Hour Could Cost You,” by Chris Barge gives a brief overview one senator’s proposal for creating an incentive structure to relive the highway congestion during peak traffic hours.

Senator Chris Romer, D-Denver, proposed that skiers could be charged up to $12 for driving I-70 during the weekend rush hour. Romer explained that, “You’re just reallocation money from those who are time-sensitive to those who are price-sensitive, and that’s a perfect market-based solution.” Romer admits that most people will not be happy about paying for something that is currently free. For this reason he suggests giving a positive incentive to the people who choose to stay off the road during the most desirable times. For example “skiers who choose to go early or wait until after the rush could get a $25 check in the mail, or a coupon to spend that much at a slopeside restaurant while they wait out the afternoon rush. “

It is true that charging people to drive on I-70 will decrease the number of people who wish to be on the road. However, the problem is far too complex to be explained by a simple supply and demand graph. There are two main quandaries with Romer’s proposal. First off: is charging people to drive on I-70 an exploitation of a public good? I admit that I-70 is not a true public good. The space on the road is obviously rival as no two cars can occupy the exact same place at the same time. However, this interstate was paid for by taxpayer dollars and was intended to benefit the general public. Taxes are used to prevent free-riders. That means, in theory at least, that every driver on the road at rush hour has already paid to be there. By charging taxpayers to use I-70, the road is no longer a public good. Imposing a fee on drivers would make the road excludable, and therefore, a collective good. It may be economically more efficient to simply use price as a form of rationing for the highway in high demand. However, the struggle between efficiency vs. equity is impossible to overlook.

Secondly, Romer recommended offering an incentive to drivers who chose not to use the road during rush hour. This method of traffic reduction seems plausible at first and does not involve exclusion. However, offering a selective incentive for inaction has the potential to create a regulation nightmare. Romer envisions the ski resorts recording the time that each vehicle arrives and using that information to determine when the car was on the road. Gathering this data could be expensive and time consuming for the resorts. Would ski resorts willingly choose to bear the cost of solving a problem that is not their own?

Rush hour traffic on I-70 is a real dilemma. However, the unintended consequences of “fixing” the problem are equally real. Whether you are a skier or an economist, it may be worthwhile for you to ponder the implications of Senator Romer’s proposal.

 

Add snappy title here...

Link to the article: http://www.nytimes.com/2008/02/29/business/29cnd-tanker.html?_r=1&hp&oref=slogin

Here is a perfect example of special interest groups getting disrupted by one person shining a light on what they were doing. So to fill everyone in a bit, Boeing and Airbus are the two biggest commercial airline manufacturers in the world. Boeing has also been a major supplier of aircraft for the Unites States government. One would think that to be the natural result because Boeing is a U.S company and Airbus a European conglomerate. It’s only natural to think that a government should give business to companies in its own country. But could this hurt the country by sticking with its own businesses?

Boeing for the longest time has been buddy-buddy with the U.S government and has been handed deal after deal. However, even with how well their lobbying has been and how good their track record was, their expectations with the government fell trough and bit them in the ass. The Air Force is in need of replacing their fuel tanker aircraft. Boeing thought that they could easily get a deal with the government and reap the benefits. Well Senator John McCain being on the Senate Armed Forces Committee had the power to scrutinize the dealings between the Air Force and Boeing which lead the spot light to uncover the scandal within. A few of the Air Force and Boeing top officials were caught padding the deal for personal gain. Two people are in prison and more have resigned from their positions, one even committed suicide over the scandal.

John McCain brought to light that the public was getting raked over the coals with this deal that Boeing and the Air Force was trying to slide under the radar. This shows that there is still a little hope in defending the masses from the powerful small groups. But most likely it wasn’t from a benevolent feeling that McCain had. It seems as thought it was two special interest groups keeping each other in check. In the article it said at the very end that both sides spent millions in lobbying and advertising in Washington. But hey, we the people are getting more for our taxes now because the government is going with Northrop and Airbus for the deal as it is costing less than the Boeing deal would have been.

 

Economic Stimulus.... Really? Mr. President, Really?

President Bush entered his predidency when our nation was at a stong point since the late 70's and early 80's recession. Clinton made the economy stronger and ran down the national debt, than it had been for a long time. Between all the natual disasters, consecutive wars and attacks from 911 our nation's economy has seen many ups and downs. None have equalled the slowdown that we are now experiencing. Stocks down, oil up, housing market down, and general economic instability all face us.
I recently heard Bush's speach on the state of the nation, and I can say his view on the economy is correct, however he is off on the severity of the current state. Mr. Bush thinks that the nation is in a slowdown period, and he may very well be right, however I believe that we are on the verge of a major recession. We are currently in a GDP slump, and in one case an actual GDP loss. I have noticed the rate of unemployment has also risen, and I believe that this is because bussiness' have reacted to the early stages of a national economic meltdown.
I would like to bring some of my own insight to Bush's economic stimulus plan. Instead of putting money into the hands of those who do not need it, I would have focused on the national debt. Our national debt is an estimated 9,345,296,162,390.31, and I believe that this has caused the value of the American dollar to dramitically decrease. The decrease in the value has caused a currency deficit with other countries. If we were to decrease the national debt considerably, I believe that this will create a stronger dollar and give markets more security. Most of the U.S. is going to receive 600.00 per household. If we are approaching a recession, wouldn't most people opt to save their money instead of spending? Bush hopes that people will go out and spend spend spend money, but if it were me and I knew the threat of a recession lurked near I would drop that 600.00 in the bank.

I conclude with Economic stimulus....really?............ I mean really? <----probably not!

 

On the Web No One Can Hear You Scream

Because I enjoy arguments I’m going to attempt to flesh out a conversation held in class that became drowned in yelling and a myriad of attempts to define the word rational. Hopefully I can be controversial enough here to break the trend and generate at least one comment, or God forbid (an apt choice of words) a legitimate discussion.

I would submit it’s fairly obvious the church, specifically the Christian one because it’s what I’m most familiar with, is a large group, and as thus, under the theory put forth in Mancur Olson’s Logic of Collective Action there’s some question as to how it manages to hold itself together.

We explored previously the idea of social incentives playing a role and I think it’s difficult to miss the logic in that. Churches may not operate exactly like Cheers, where everybody knows your name, but to some extent it’s surprising if you’ve been attending for a fair amount of time and haven’t formed a bond with at least a few other attendees. Moreover every local church I can think of offers a variety of activities throughout the course of the week that could double as a social life for the interested parishioner, or at least help them form a social tie strong enough to require their continued attendance.

What we left largely unexplored, however, was the possibility of the church as a federation, i.e. a large group comprised of a series of smaller groups, which by their very nature are easier to hold together. I’d think this would be a fairly obvious assumption to make as when we make reference to “the church” we’re often referring to the religion as a whole, or at the very least a specific denomination of it, for example Baptists, or Lutherans. But when you ask an individual about their church rarely will they go on a diatribe about the health of the religion in general, instead they’ll make reference to a specific place, perhaps somewhere down the street; they’ll tell you about the pastor and what time the service is on Sunday. This is important to remember. A person’s relation to the church generally isn’t to the entire infrastructure, but to their one, local, piece of it.

Finally, let’s move on to the one issue that’s most likely to get people upset. Olson says compulsion is perhaps the most effective way to hold together a large group, and at the very least you can see it in the church’s past. There was certainly a period where the choice was join up or die in a variety of progressively unappealing ways, and, not surprisingly, membership was quite high at the time. But such things are no longer the case, at least not in this country, I leave you to your own analysis of foreign locales, and befitting Olson’s theory one would note, per capita, membership has fallen off quite a bit as we’ve branched out religiously since those policies were lifted.

Some would argue, however, that compulsion is still at play. It’s been suggested that the threat of hell should you leave the church is compulsive, especially if you’ve been raised to fear such a place, but there is the large caveat that such a threat is only coercive so long as you believe in the ability to back it up, which would require membership in the church to begin with trapping us in a bit of circular logic. So in that regard I leave the question up to you. Have at it boys and girls, let’s hear what you think.

Jaeson Madison

 

A public good via self-defense

Whilst browsing blogs, I came across a post entitled Meditations on Self Defence, written by LawDog, who I believe to be a policeman in Texas. He essentially argues that if everyone learned how to defend themselves, then a public good would be created in the form of a lower crime rate. If you want to argue that point, you should comment on the original blog, as I'm going to assume that self-defense does in fact provide a collective good. What I'm interested in if this will ever actually be provided, so I will look at it using ideas from The Logic of Collective Action by Mancur Olson.

The first thing to consider is that the benefit would go to every member of society, whether or not they as individuals help in any way. Society would then definitely be a latent group, or a group that is too large to actually organize sufficiently without the use of selective incentives or coercion. Each member has little incentive to act because the group is so expansive that his individual effort would not really be noticeable, but he would still receive the collective good.

There is really no coercion currently in place in the United States. Government is the major source of coercive force, and it allows self-defense, but it doesn't force anyone to do it. Some other countries have compulsory military service, which would probably result in the same thing in a roundabout way, but many people object to the idea. I have yet to hear of any lobbying for any other kind of forced instruction.

As for selective incentives, there's really only one, but it's a big one. You improve your chances of keeping your property and avoiding harm. Some people argue that attempting to defend yourself might actually only exacerbate matters, but again, anyone who wants to argue that can comment on the original blog. Apparently, this is not enough of an incentive for most people, probably because it also incurs so much cost in terms of time and effort. Also, part of the problem is that because crime is spread throughout the whole latent group, individuals assume that they, personally, won't be attacked.

So actually lowering the crime rate using self-defense would obviously require some other type of coercion or selective incentive, which seems unlikely to occur.

I would appreciate any comments or questions.

 

lobbying in politics

With the political races heating up and trying to find out who is going to be the representatives for each party it is interesting to see how they are able to get the money to fund these extravagant campaigns. The answer is they get the money from all kinds of different lobbying groups. Most people know this is the case as this has been the case for a very long time. These groups have backed candidates for a very long time. The trouble with the situation that I have is what makes it worth their while. They are investing their money and obviously have to get something out of it. The problem is for the most part the public is not exposed to what these benefits actually entail. There has to be a lot of corruption and "under the table" dealings that go along with these situations. The politicians are ghiving the power back to these groups and are causing problems at every level of society. As we talked about in class this leads to the slowing down of the entire economy for a few people to be better off. Until we find a better way to produce campaigns this will continue to happen and we will have these side effects on the entire society.

Thursday, February 28, 2008

 

Sacrifice Freedom for the Common Good?

I was reading Somebody's Gotta Say It by Neal Boortz last night and I came across a quote by Adolf Hitler. After reading Olson's Logic, I felt this quote would make for some interesting conversation. Hitler states:
It is thus necessary that the individual should come to realize that his own ego is of no importance in comparison with the existence of his nation; that the position of the individual ego is conditioned solely by the interests of the nation as a whole...that above all the unity of a nation's spirit and will are worth far more than the freedom of the spirit and will of an individual...This state of mind, which subordinates the interests of the ego to the conservation of the community, is really the first premise for every truly human culture...we understand only the individual's capacity to make sacrifices for the community, for his fellow man.

With his deep understanding of the individual's instinct to serve their own self-interest, I believe Olson would scoff at the concept of individuals being willing to put aside their own egos and interests to serve the common good for a long period of time. Hitler obviously had little understanding of human nature.

I am no scholar and my knowledge of history is severely limited, but from my observation, it is usually those individuals - the ones that advocate limitations on individual rights - that seem to be pushing that agenda to serve their own ambitions and self-interests. The most dangerous individuals are those that seek to diminish the significance of the individual and to enslave the hearts and minds of the people (through the sacrifice of personal freedoms for the common good) for some misguided and impractical "ideal".

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