Obama's in town...

[awm]

Today President Barack Obama was in Los Angeles to appear at a fund-raiser for Barbara Boxer (our candidate for US Senate).

 

Because of the president's motorcade, several major streets in the area were shut down for hours this morning. This caused substantial traffic problems during the morning rush hour. The streets were closed even for buses/pedestrian traffic, and most buses weren't running their normal routes. The end result was that a number of people were unable to get to work on time. In my case this caused me to miss a morning class I was supposed to teach at UCLA. I suspect that the cost to the city's economy was fairly substantial.

 

This is not really a criticism of Barack Obama. Certainly it was the same way when George Bush was President (although he spent less time in California) and the city would be shut down for his motorcade. And he also spent a great deal of time fundraising and supporting his party's local candidates.

 

However, it does seem bad that this kind of thing happens. The cost to the city of Los Angeles is probably a lot more than the money raised for Barbara Boxer! Basically we are paying out of all our (taxpayer) pockets in order to allow rich citizens to give money to their preferred candidates. It seems like public funding of elections would actually be cheaper as well as reducing the influence that wealthy individuals and corporations have over the process. And perhaps the President's schedule would be a little less hectic without all the fundraising obligations, allowing him to do a variety of other things which would benefit the country.

[peachy]

Fundraising obligations - OBLIGATIONS!

I am pretty ignorant about politics but is fundraising for a candidate an obligation of The President? I share awm's view.

[gwnn]

In some democracies the president is 100% "bipartisan", he has to be kicked out of the party after getting elected and then admitted back in after his term ends (in Romania this is completely the case but of course his decisions will sensibly favour his party while never openly admitting). I wonder if this is a good idea or not, but the situation described by awm would never happen.

[jdonn]

I love it. Have the rich donors predetermine their contribution amounts. Then let every resident of the city who will be impacted by the president's presence choose any amount they want to donate to stop him from coming. Larger amount wins. In an economic textbook this would lead to the most efficient outcome, in other words he wouldn't come if Adam is right that the cost to the city is larger than the amount raised from the donors.

 

This would also lead to the unique situation of large contributions from Republicans to Boxer's campaign in order to prevent Obama from campaigning for Boxer, which I would also enjoy.

[hrothgar]

I love it. Have the rich donors predetermine their contribution amounts. Then let every resident of the city who will be impacted by the president's presence choose any amount they want to donate to stop him from coming. Larger amount wins. In an economic textbook this would lead to the most efficient outcome, in other words he wouldn't come if Adam is right that the cost to the city is larger than the amount raised from the donors.

 

This would also lead to the unique situation of large contributions from Republicans to Boxer's campaign in order to prevent Obama from campaigning for Boxer, which I would also enjoy.

Love It!!!!!!!!

[rogerclee]

In an economic textbook this would lead to the most efficient outcome

I double

[Bbradley62]

Fundraising obligations - OBLIGATIONS!

I am pretty ignorant about politics but is fundraising for a candidate an obligation of The President? I share awm's view.

It is in the President's self-interest to help maximize the number of Congress-people who share his political views. So, protect that self-interest, he told Senator Boxer that he'd be there at her fundraiser. That made it an obligation. He may also feel obligated to return-the-favor for people who helped his campaign in 2008.

 

But yes, I agree that tying up a city is bad. When GWB did that for a Senate candidate here (in Atlanta), I emailed the candidate saying that I would not vote for him because I was angry about being late for work...

[jdonn]

In an economic textbook this would lead to the most efficient outcome

I double

Please explain your agreement about the meaning of that double.

[rogerclee]

It's not a cooperative game, residents don't "donate" as a single entity.

 

utility(Obama not coming to LA) > utility($100 to me)

 

is not the same as saying

 

I will pay $100 to a cause to try to prevent Obama from coming to town, even though my donation probably has no effect on the entire donation pool given that I am one of about 4 million residents and thus cannot have any meaningful impact on the total amount donated.

 

In real life people do not make decisions like this, but in an economics textbook they do.

[jdonn]

It's not a cooperative game, residents don't "donate" as a single entity.

 

utility(Obama not coming to LA) > utility($100 to me)

 

is not the same as saying

 

I will pay $100 to a cause to try to prevent Obama from coming to town, even though my donation probably has no effect on the entire donation pool given that I am one of about 4 million residents and thus cannot have any meaningful impact on the total amount donated.

 

In real life people do not make decisions like this, but in an economics textbook they do.

Everything starting with "even though" was completely irrelevent and should be changed to "because that's what it's worth to me." Can't you use the same logic to say no one would ever vote in an election? And don't forget utility can be combined linearly.

 

I redouble.

[rogerclee]

How much money would you pay to select the US president in 2012? How much money would you pay in order to vote for the US president in 2012? Are these numbers the same?

[rogerclee]

Let's play another game. Every eligible voter in the US is given a piece of paper and writes down how much he is willing to pay in order to select the US president in 2012. Nobody can see anyone else's paper or talk to them about it.

 

If you write down the highest number, you pay that much and select the president. If you do not write down the highest number, you pay that much and get nothing.

 

How much would you write down?

[jjbrr]

bout tree fiddy

[Mbodell]

However, it does seem bad that this kind of thing happens. The cost to the city of Los Angeles is probably a lot more than the money raised for Barbara Boxer! Basically we are paying out of all our (taxpayer) pockets in order to allow rich citizens to give money to their preferred candidates. It seems like public funding of elections would actually be cheaper as well as reducing the influence that wealthy individuals and corporations have over the process. And perhaps the President's schedule would be a little less hectic without all the fundraising obligations, allowing him to do a variety of other things which would benefit the country.

Moreover, what is the number 1 cost of most campaigns? Television advertising. Who are they paying to place their ads? Television broadcasters who have purchased monopoly rights to their part of the spectrum from the gov't.

 

So public funding wouldn't even cost a lot of money, necessarily. It could just be part of a charter of the FCC and other regulators that in order to broadcast TV you need to allow political ads during elections for free.

[jdonn]

Let's play another game. Every eligible voter in the US is given a piece of paper and writes down how much he is willing to pay in order to select the US president in 2012. Nobody can see anyone else's paper or talk to them about it.

 

If you write down the highest number, you pay that much and select the president. If you do not write down the highest number, you pay that much and get nothing.

 

How much would you write down?

You are changing around my little game in two very important ways. If you lose you don't have to pay. And the one highest bidder doesn't win, rather it's the sum of all bids that counts.

[rogerclee]

My examples were not meant to mimic your situation, just to illustrate a point. I will try one last time.

 

Obama wants to come to town. There are 4 million residents of Los Angeles who may potentially be opposed to this. A bunch of rich old people donate $5 million to make this happen.

 

You estimate that about 500000 people in Los Angeles might be inconvenienced by this (yourself included) and are politically inclined enough to donate to a campaign to stop this from happening. That is, the 500000 people have to donate an average of $10 each in order to stop Obama from coming.

 

You would personally be willing to pay $30 to see Obama not come to town. By donating $30 to this cause, there are three possible outcomes:

 

1) The other 499999 people donated an amount greater than $5 million. You are out $30 for no reason.

2) The other 499999 people donated somewhere between 4999970 and 4999999 dollars. Your $30 is the difference between Obama coming or not coming.

3) The other 499999 people donated an amount less than 4999970 dollars. Either nothing happens or you lose 30 dollars, whatever the rules of the game are (it wasn't clear to me from your original post what was going to happen, but I guess in your situation you simply keep the $30 dollars).

 

How much should you donate? If you want to stand up for what you believe in, $30. If you rationally judge situation (2) to have basically 0% likelihood of occurring, you donate $0.

[jdonn]

I don't see what any of that has to do with anything. Maybe to clarify I was obviously ignoring a number of underlying assumptions (that's what I meant by "in an economics textbook). The one you are referring to is a form of the free rider problem, to say to yourself "I will hope to get what I want without shouldering any of the payment." It doesn't make what I said wrong at all.

 

Like I said before it's the same argument people use to say no one should vote (what are the odds my one vote will make the difference?) And yet so many people still do.

[cherdanno]

I think economics textbooks, among other things, teach the free rider problem. Thus they will assume it is true. Thus they will assume that Clee is right, and that Josh's suggestion won't lead to the most efficient outcome.

[Mbodell]

Sort of like the Yogi Berra quote "No one goes there anymore; it's too crowded".

 

Behavioral economics is much more interesting than classical economics anyways.

 

But it is true that there are a lot of negative side effects from requiring politicians to fund raise.

[Echognome]

Like I said before it's the same argument people use to say no one should vote (what are the odds my one vote will make the difference?) And yet so many people still do.

There are alternative explanations for this:

 

1. They receive enjoyment (econ jargon utility) from the action of voting, whether that be some warm glow of being a part of the process or a sense of obligation or pressure from the people around them.

2. They do not understand probability and believe their vote counts (which we know it does in aggregate, just not individually).

3. Related to 1 - there is some external incentive to voting. I understand that in some countries you are required to vote. In other countries you receive a tax benefit if you vote. Etc.

[Echognome]

I think economics textbooks, among other things, teach the free rider problem. Thus they will assume it is true. Thus they will assume that Clee is right, and that Josh's suggestion won't lead to the most efficient outcome.

I agree with this. He just has to work harder on his mechanism to overcome the free-rider problem.

 

Perhaps something like this. The town being visited has a vote on a referendum. If the referendum passes, then there is a special 0.25% city sales tax levied over the next X months to cover the amount of the funds being raised. Of course you also get to choose the majority needed to pass the referendum (simple majority, 2/3 vote, etc.). In return, the president is not allowed to disrupt the streets and traffic.

 

In addition, one cost we expect the city to incur is the lost of sales tax due to decreased economic activity while people are stuck in traffic.

 

I'm sure this mechanism carries its own distortions and doesn't capture the losses of all those affected by the motorcade, but you are going to face similar problems finding the right people to ask to donate as well.

[jdonn]

I hereby swear to never use another analogy.

[Winstonm]

I hereby swear to never use another analogy.

I double. :)

[Al_U_Card]

I hereby swear to never use another analogy.

Next time, try phrenology :)

[jdonn]

Good point I can't hold to that.

 

I hereby never swear to use another analogy.

 

Better?