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Sunday, September 30, 2012


Combating the Logic: How the Ground Game Increases Voter Turnout

The presidential election, arguably the single most important election in American politics and by far the most wildly publicized, has averaged a voter turnout of just under 54% of the voting age population in the last 20 years. This lack of participation is consistent with Mancur Olson’s The Logic of Collective Action. In fact, given the incredibly miniscule value of a single vote compared to the amount of time and effort an individual must spend to place his vote, I would go so far to say that percentage of participants  is actually much higher than Olson’s Logic would predict. Where does this increase of voter turnout come from? What selective incentives are being applied to increase voter turnout beyond what The Logic would predict?

 Some influence comes from numerous ads published by various sources in the weeks and months leading up to the election, which attempt to sway their viewers into action by appealing to their sense of patriotism and civic duty. However, I would venture that the majority of the incentives  are generated through the actions of local volunteers who actively seek to spread information about their candidate and increase voter turnout on election day. This “ground game” is often the deciding factor in borderline states where the candidates are roughly equal in the polls. Since only about half of the polled populace will turn out for the vote, the question becomes not which way the general populace is leaning, but which party can actually motivate the greater number of their supporters to actually go out and vote.

It appears that this ground game is the result of political parties realizing the same obstacles on voter participation that are outlined in Olson’s Logic. By organizing groups of volunteers and sending them out to organize things like free carpools to the voting stations, each party is attempting to reduce the opportunity cost for those who will vote for their candidate, leading to a greater showing in the general election.  


Just answer the question...

An article in The Economist titled “Private Effort Common Good” addresses the frequently asked question: “is America better off than it was four years ago?” The article focuses on the speeches made during the Democratic Convention and reiterates the Obama Administration’s tactic of avoiding answering the question and instead attacking Mitt Romney at every possible chance, even going as far as literally lying to make Romney look like a terrible person and presidential candidate. So since the Democratic Party refuses to correctly address the question, let’s do that here, keeping in mind Prof. Eubanks explanation that a good government is one with which people prosper.

Cutting the national debt in half was one of Obama’s pledges before getting elected in 2008, yet under his administration the debt has risen so high that, when asked, he did not even know exactly what it was (or maybe it is just that he really doesn’t care what it is). By the way Obama, it’s over $16 trillion, and, thanks to technology, easy to track—just ask the Republicans about their clock.

Another promise Obama made was to reduce the unemployment rate. Currently, the unemployment rate, including the underemployed, is right around 15%. This number does not even include the people who have given up on finding employment altogether! Yet instead of taking responsibility for this unacceptable reality, his administration wants to focus on ripping Romney apart over the statement he made regarding the 47% of citizens on public assistance. Well guess what, Mr. Obama, many of those people would not be on welfare if it wasn’t for your administration’s policies and strategies that have worsened the economic situation, rather than improving it.

Concerning the issue of private sector job growth—another of Obama’s supposed goals—using government force to prevent “shovel ready” private sector projects, like the Keystone Pipeline, achieves the exact opposite result.

So over the last four years have we seen more or fewer people prosper? With an unemployment/underemployment rate of about 15%, a national debt so high that bankruptcy is actually a possibility, and 47% of the population on public assistance, the answer is clearly fewer. So there’s your answer, Mr. President. The country is not better off than it was four years ago. In fact, it is substantially worse and thanks to your administration’s policies it is almost without a doubt going to get even worse in the coming years, because the national debt is so high that we have no choice, but to implement a plan to massively reduce federal government spending over the next 10 years, which will cause another rise in unemployment. And to add to this problem, with the most likely end of the Bush tax cuts and other
“nickel-and-diming” income tax policies, every worker will have less disposable income which will lead to even higher unemployment and slower economic growth than what we have been experiencing over the last several years. Bravo.

Friday, September 28, 2012


United Nations Taxation


In the news today I saw that the United Nations is proposing a tax on billionaires from all member countries as well as royalties on all underwater resource mining that takes place more than a hundred miles off a nations shore.  The United Nations would most likely be using this money to lend aide to less developed countries, mostly countries other than where the money is coming from.

Most of the advanced countries are already in economic turmoil and this new tax will not help the situation any.  This may however end up being a case of the weak extorting the strong.  Since there are more “poor” countries than “rich” countries in the United States this motion could be passed.  As a result the strongest of the countries would be held to the will of the poorer countries. 

This would certainly be an example of a global government using its force on sovereign countries.  While the countries themselves would in turn have to exert their force on individual citizens to comply with the new taxes.  In this situation it may be more difficult for lobbying organizations to stop this legislation.  They would have to come together on an international level, which is much less likely than coming together nationally as they currently are use to. 

Thursday, September 27, 2012


A Look at the Logic

In The Rise and Decline of Nations, Mancur Olson examines several questions - why certain places and peoples thrive at certain times, fir example - and starts his analysis of the questions by looking at the logic that governs groups. Smaller groups can take action more effectively because each member has a stake in the outcome, whereas larger groups of people have less individual incentive to participate fully, because there is less individual gain, unless there is some kind of requirement or punishment for failing to participate.

An interesting extrapolation of this can be seen in the article "Futures exchange members get relief on margin rule," a Reuters article that I saw in the Chicago Tribune. As the article explains, there are two margin rates that futures investors pay. One is a lower rate for people who are not professional speculators, who pursue less risky money, and a "speculator" rate for those that do. However, the pro speculators have apparently been paying only the lower margin, because a rule is set to be enacted by the Commodity Futures Trading Commission that will require them to pay the higher margin.

So, in order to get the most from each trade, the speculators managed to pay the lower margin and therefore reap more of a return. And it makes a certain amount of sense; futures are risky even to those who understand them, so why not take every (legal) avenue to reduce that risk, even minutely? But this was at the expense of the trade organizations, the group that allows them to trade futures. Therefore, they were working in tune with the logic.

Wednesday, September 26, 2012


Who is "touching the force" in the Natural Gas Industry?


I have been hearing about natural gas drilling and hydraulic fracturing, or "fracking", from my later years of high school to now, with increasing discussions about it over time. My first exposure to the 'problem' was through a movie called Gasland, which I'm sure many university students have seen, about two years ago. The movie presented the natural gas industry in a very negative light, and pushed, explicitly and inexplicitly, for government intervention to correct the problem, which was characterized by flammable water taps and hazardous gas causing sickness near the drill sites. Since the release of Gasland, most people I talk to often reference it in their arguments against natural gas as a feasible energy source, and many people I come across believe fracking is a bad thing.

However, according to this article (which has seemingly credible sources), government may actually be the source of the rapid expansion of the natural gas industry. According to the article, over three decades, the federal government has contributed "more than $100 million in research to develop fracking, and billions more in tax breaks." Alex Trembath, a researcher at the Breakthrough Group, a California nonprofit that supports "new ways of thinking about energy and the environment", states that "[T]he Department of Energy invested about $137 million in gas research over three decades, and that the federal tax credit for drillers amounted to $10 billion between 1980 and 2002." Many of the people referenced in the article seem to believe that government is largely responsible for the size of the natural gas industry today, and rightfully so given these statistics.

Although the article seems to be presenting this in an unbiased manner, the facts that were given reveal some irony within the arguments against natural gas. As I stated earlier, many anti-natural gas advocates look to government to correct the negative externalities caused by the industry, whether it be through tax deterrents or direct intervention. However, by stating that government is responsible for the size of the natural gas industry, it implies that, without government subsidies, the natural gas industry would be much smaller than it is today. Because of the subsidies, I suspect that more and more firms will begin to enter the market, resulting in more drilling. I also suspect that petroleum and natural gas companies had some kind of lobbying interest in the tax breaks and subsidies, but the fact of the matter is that government is both responsible for and expected to fix a large market with negative externalities, quite ironic!


Two Conditions Facilitating Prosperity

Two Conditions Facilitating Prosperity
The United States is one of the most prosperous countries in the world.  Why is it that we prosper and others don’t?  It may be the market we live in, but I don’t think so because everyone has a market.  The government (force) and their ability to use their power may be a better indicator as to why we are able to prosper and others cannot.  Government may be the ultimate dictator in our ability to prosper but “To know why some countries prosper while others fall behind, then, we need to know which industries in which countries are more productive and why.”  In the political economy we live in, it can be very misleading to only look at traded goods; we tend to see international business’s facing a bunch of competition.  “Domestic industries, by contrast, are often protected from competition.”  Remember, government is force, and they can force to protect and implement policies in order to keep us safeguarded.  “Poorer countries are hampered mostly by government policies, especially high taxes that drive businesses underground, rather than by the inherent problems of poverty, Mr. Lewis argues. If they could solve their policy problems, they would attract foreign investment. Businesses could train workers on the job, achieving competitive productivity.”  We see the opposite government effect in the United States. 
Economist look at the whole world through a paradigm of exchange, exchange is voluntary.  So to understand power and prosperity we must not only look at exchange (voluntary social interaction), but also the logic of force-used by the government.  It is human nature to truck, barter and exchange; lie, steal and go to war; nasty, brutish and short.  We cannot think of government and economics separately, and as the point of the class we see people prosper in good governments and people suffer in bad governments.  For example, in human history we see prior to 1800 people living in subsistence around three dollars a day!!  Yet in 1800 we see a huge spike in per capita income, people going from three dollars a day to 137 dollars a day and increasing from one horse to two horses to 4 horses and eventually cars.  What we are seeing is the difference between good and bad government and the switch around the 1800’s.  In the 1800’s we had the “Great Divergence/Great Fact” and it was the masses of people that were prospering.  Many people don’t prosper like us and live in poverty for two main reasons:  (1) we have protected property rights and, (2) lack of predation.  To prosper we must all touch the force and get it to back our actions in order to have a prosperous/productive economy.

Monday, September 24, 2012


Chicago Teachers Union

Being that we have just finished reading The Logic of Collective Action, I feel it to be an appropriate time to comment on the incompetent mess that is the Chicago Teachers Strike.  Union formation is inefficient – this we know – and in this case, the parents and their children are the ones being forced to suffer the consequences.  If I understand this correctly, the teachers not only want pay increases but they no longer want to be held accountable for student performance.  Well…my question is: What exactly do they want to be held accountable for?  A teacher should be evaluated on how well they are able to engage a body of students – and more importantly – how well they are able to instill a certain level of knowledge within them; with the chief emphasis being on retention of knowledge.  Compensation should be directly tied to that design, just as it is for the rest of us workers.  For example, a plumber wouldn’t keep his job very long if he couldn’t snake a simple drain.  Yet, all he would have to do is join a union that says his performance cannot be directly tied to whether or not he keeps his job and then all his problems would be solved – he wouldn’t have a care in the world.  But customers would certainly be upset, for they would all be stuck with clogged pipes due to ineptitude.  The same scenario applies to this teacher fiasco.  Parents are sending their children off to school and yet when the student comes home after a day’s worth of schooling, nothing has been learned or retained.  “Karen Lewis, president of the Chicago Teachers Union, has objected to any objective analysis of teacher performance despite the fact that just 15% of fourth-graders are proficient in reading and four of 10 CPS students do not graduate from high school.” Who’s to blame for this?  To me, it sounds like an incompetent teaching staff.  But apparently the competence of the teachers shouldn’t really matter.  These teachers must think school is just like day-care, all the way up until students reach the age of 18.  No matter whether the kids learn anything as long as I keep getting that paycheck – and whenever we feel like exploiting the taxpayer, we’ll just throw a strike and demand more money for a job not well done. 
This certainly doesn’t make any sense to me.  A city like Chicago cannot afford any unwarranted exploitation from an already greedy set of teachers.  Check this out: “John Tillman of the Illinois Policy Institute notes Chicago's unemployment rate is just under 11% and that the average Chicagoan makes just $30,203 compared with the average teacher's salary of $71,000, even before benefits are included.  And unlike parents who go to work each day to be judged on their productivity and who fear each day might be their last, dismissing a bad teacher is harder than spinning straw into gold.” What a joke.  And by the way, enough with tenure at the high school level.  I understand why University Professors gain tenure but why do high school teachers need (read: deserve) it?  Unless it is one of the honest, ethical teachers (and it doesn’t look like there are many in Chicago) all tenure does is grant already unaccountable and lazy teachers an extra cushion to abuse the time and knowledge of their students.  Enough already.  I say teachers should absolutely be directly tied to student performance because frankly I can’t think of anything else to judge them off of.  If your classroom of students are repeatedly getting low scores on standardized testing, then adios amigo! That seems to be a better plan than the alternative – which is giving the teacher a substantial raise.  

Friday, September 21, 2012


The Dependent Class

As the election inches ever closer both candidates, with any chance of winning this election, are put under a microscope and anything they say or do will be scrutinized by the opposing party. Recently a video of Republican Candidate Mitt Romney was released showing him speaking in front of a group saying "There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them." Here Romney is discussing the amount of people that depend on welfare, food stamps, government disability and similar programs. This has become the source of outrage in the media, but how far off the truth is the presidential hopeful?
As we have heard over and over in the campaign there are more people dependent on government than ever today, Obama has been given several nicknames including the "Food Stamp President." According to sources from Investor's Business Daily "A record 47 million Americans are on food stamps, a number that has risen exponentially under Obama" and "According to the Tax Policy Center, 46.4% of American filers pay "zero or negative" income tax. According to the Bureau of Labor Statistics, a record 88,921,000 Americans were "not in the labor force" in August. Only 63.5% of the civilian population participated in the labor force — lowest in 31 years." More and more people are becoming dependent on the government to aid their lives as a smaller portion of the population is paying taxes everyday. We have more people filing for food stamps everyday then those finding jobs.
When so many are dependent on so few we will inevitably see a concentration of money to a select few, and probably some form of economic collapse. So when Romney claims that he is not going to attempt to reach the 47% of the population that depends on the government for sustenance, he has good reason because they are likely to vote for the candidate that will keep these social programs going. If Romney's view really is to encourage small businesses and job creation he will have to appeal to the middle and higher class individuals as they are his best chance of becoming elected.


Tuesday, September 18, 2012


Are we in the "Twilight Zone"?

  As we slump out of the current recession, are we stuck somewhere that anything can happen?
“It could go either way,” said Joachim Fels, chief economist at Morgan Stanley in London, who coined the description in an Aug. 15 report.  "It doesn't take much to tip us into a global recession.”  As the Fed embarks on to QE3 (Quantitative Easing Round 3), which is an unconventional monetary policy set in place to stimulate the national economy by having central banks buy financial assets with newly created money.
  “Central banks have steered us from recession, but on their own they can’t bring us into sustainable recovery,” Ben Bernanke said. “To get out of the twilight zone takes government action.” The Feds decided to purchase $40 billion a month in mortgage debt until the labor market improves.  So with the increase on money supply, how much of inflation will rise as well?  Ben Bernanke is confident about the economy and "modest inflation expectations".  
  Martin Feldstein said that QE2 led to a rise in the stock market, which contributed to increased consumption in the late 2010.  President of the Chicago Fed Charles Evans, supports this policy because Evans expects unemployment to fall around to 7% within the next two years.   Evans said the Fed should be willing to risk a little more inflation in order to help improve the labor market. The Fed should “not be resistant” to policies that lower unemployment closer to its longer-run level “but run the risk of inflation running only a few tenths above our 2 percent goal.”  
  But should the recent events of the past week, impede the work of the Fed.  With an expected increase in inflation and turmoil in the Middle East, the price of oil should rise as well as causing taxes to rise and Interest Rates to fall near zero.  The injection into the economy could cause a growth that is greatly need or a terrible out come that would send us into another recession or worse.  So are we in the "Twilight Zone"?


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