Tuesday, April 15, 2008

The Upside of Tax Opacity

Ok, so y'all have done your taxes, and you're probably thinking that perhaps an anarchist system wouldn't be so bad after all. Much of that has to do with the fact that you gotta pay money that you thought was yours, but it's also the fact that taxes are really complicated, and therefore doing taxes is a horrible experience.

Everyone rightly laments the complications in the tax code, but it's worth it to point out that there is a nice silver lining. Basically, a progressive tax system in theory creates distortions in the labor supply by creating a disincentive to work (although the magnitude of this effect is HOTLY disputed). But incentives and disincentives only cause behavior changes if individuals know about them. In this case, the worker needs to know how many cents on the next dollar they make will be taken. Deductions, credits, and anything else that contribute to a more opaque tax system prevents workers from discerning their marginal tax rate, and thus make it more difficult to decide how they should change their behavior in response to the tax. Most likely, cognitive limitations are, to a certain extent, currently causing people to ignore the disincentive to work, thus avoiding the distortionary effect of the tax. Conversely, making the tax system more transparent might then create more distortionary effects of the tax.

Just something to think about.

Thursday, April 3, 2008

National Geographic Event "Human Footprint"-- RSVP today!

Sorry this is kinda last minute (RSVP due TODAY), but it looks like it should be a great event on preserving our planet (click on image to enlarge):

Wednesday, April 2, 2008

DNC

The question was never about authority. I argue:
My underlying point was about DNC threat credibility. The four states didn't break the rules, so therefore their intransigence does not threaten the DNC's credibility. Sure, you may argue that it's unfair, and that, as you say, "we might have to change the system" and mention the 4 region idea. Great idea. But who enforces it? If one state pulls a short straw and is scheduled to go in May, what entity will prevent them from moving their election up? Basically, any solution requires that the DNC enforce the rules of the solution, and enforcement requires punishment.
You can basically come down on one of two sides in this: either the DNC should have the power to issue credible threats (by having the power to enforce the rules if necessary), or they shouldn't.

If you argue that the DNC should not have the power to issue a credible threat to states, how can we possibly prevent the frontloading chaos in the next election?

Tuesday, April 1, 2008

Clinton campaign views on superdelegates

I can't believe I almost forgot this.
[Harold Ickes, Clinton campaign spokesman) confirmed that the Hillary campaign could still try to woo super-dels even if she lost the popular vote, with Michigan and Florida counted.
So let me get this straight: it's OK to get superdelegates to overrule the pledged delegates because she might still win the popular vote at the end of the day, but even if she doesn't, it's still OK to get superdelegates to overrule the pledged delegates. So why are we even arguing about pledged delegate vs. popular vote? Even the Clinton campaign now says that it doesn't matter.

Let's rehash, because this is totally underreported: Clinton is now saying that even if every single metric imaginable says that the primary voters prefer Obama to her, she will still attempt to get the party establishment to overturn those results. WOW.

Primaries cont.

OK, I think we've talked the "who is accountable for FL/MI's actions" thing to death. Just a few parting responses.

You're right, they didn't do their best to express their opinions. If they had, they would have sent letters, made phone calls, and otherwise harassed their elected leaders demanding why they would risk having their votes not count. And you're right, it's possible that it's because they didn't realize what was going on, which I would argue is the most generous interpretation of the situation. But so what? Who's fault was it that they didn't know what was going on? We have internet news sites that track the actions of your representatives down to the hour. We have newspapers that were reporting on it for months. Hell, I remember when Florida and Michigan were threatening to move their election up, and I don't even live there. Ignorance is an explanation but it doesn't excuse responsibility, and it's obvious that in this case the voters of those two states did not do their due diligence, only bothering to pay attention after it was too late.

That's also the most generous interpretation. I tend to think that they (policymakers and citizens included) did know would could happen and just decided to take the risk because they didn't think that the DNC had the balls to enforce the decision. But I also have an irrational dislike for Florida, so maybe my personal biases are intruding (Michigan's cool though).

But let's remember something: both the DNC and MI/FL could get their votes to count. MI/FL could just do a revote. They chose not to. Why is the Clinton campaign not blasting MI/FL for not ensuring that their citizens' votes would count? Because they never wanted a revote in the first place (see here and here for evidence). It's obvious why: they'd rather have this issue as a political football than actually get a real election in those two states, and it's a helluva lot easier to bash the national party (the Clinton wing of the party never liked Dean anyway) than it is to bash the very state policymakers that are your biggest supporters in MI/FL. It's sad that her campaign is playing politics with civil rights issues because it dilutes the validity of all legitimate claims of voter disenfranchisement, of which there still are plenty.

OK, done. Next topic, primary calendars.

We have a problem with the primary calendar. State faces a prisoner dilemma, when deciding to schedule their primary: they have an incentive to move their state up (defection), but that hurts everyone else. Because each state's dominant strategy is to move their state up, in the end they will all arrive at a suboptimal outcome, which is the following: campaigns will start years and years before the actual voting starts. Presidential candidates will declare for 2012 two years earlier, in 2010. Presidential and midterm campaigns will start to overlap. The perpetual campaign will be the multilayered perpetual campaign, with campaigns running for 2010 and 2012 at the same time. Time spent campaigning displaces time spent governing, and as a result the quality of policy will decrease.

The solution to a prisoner's dilemma is to create an independent entity that can rearrange the payoffs by punishing defection, thus making it more sense for states to follow the rules than defect and move their states up. That's what the DNC tried to do, and it was successful for 48 states (actually 44, because IA, NV, NH, and SC got what they wanted). But Michigan and Florida pushed their elections forward, and actually laughed in the face of the DNC while doing it. No, literally. Watch the video for yourself.

A teacher friend of mine once told me that when you get a new class, you have about a week to succeed in bringing order, which you do by establishing yourself as someone who lays out the rules and then enforces them. Of course, there are always a couple students who want to test out the rules and see if the teacher will actually follow through on the threats. If the teacher does not enforce the rules for those students, he or she will have lost the class for the rest of the year. It is that critical.

The DNC's power to solve the frontloading problem rests on the credibility of its threats. Like the rest of the class who watches to see how the teacher handles the unruly students, all the other states are watching to see if the DNC will enforce its rules. If it does not, it will be lord of the flies chaos, with each state trying to leapfrog all the others, and the DNC sitting on the sidelines, its credibility demolished, impotent to create order.

In this situation, we the voters, all the voters, suffer. My question is this: how would you solve this problem? If you argue that the DNC should not have the power to issue a credible threat to states, how can we possibly prevent the frontloading chaos in the next election?