Nothing I say here should discourage anyone from …

Nothing I say here should discourage anyone from … Nothing I say here should discourage anyone from voting. However flawed, we should do our best with the system we have. No such thing as not voting. Those who do not cast a ballot vote to let others decide. If you seek to protest the system, cast a blank ballot rather than no ballot. Why we should vote, wisely: 1) Moral duty, if you think so. 2) Sympathy for society: compassion, conscience. 3) Enjoy your moment of individual sovereignty. 4) Minor party vote: moral absolution - freedom from guilt. Not being responsible for bad outcomes. How does democracy fail? Democracy fails its purposes, its functions: 1) Social peace: to choose leaders and resolve disputes peacefully and sustainably. 2) To implement the will of the people, or the majority. 3) To implement optimal policy for social well being. Public choice problem #1: there is no general social will. The Condorcet voting paradox. Marquis de Condorcet (1793-94) Suppose 3 outcomes: A, B, C Group 1 2 3 % 35% 45% 20% st 1 choice A B C nd 2 choice B C A rd 3 choice C A B A > B, B > C, C > A Not transitive, not consistent There is no single outcome desired by the majority. Those who set the agenda can shape the outcome. The agenda: the choices presented to voters. Voting can cycle from one outcome to another to another. Public choice problem #2: an arrow shot through the heart of democracy. Kenneth Arrow. Arrow=s impossibility theorem. Rules for a good democracy: 1. If all want X, we get X. 2. Transitivity. 3. Independence from irrelevant elements. (A > B independent of C.) 4. No dictator. Arrow: no voting system can satisfy all these criteria. Public choice problem #3: Optimal ignorance of voters: it=s not worth knowing better. In an election with millions or many thousands of voters, the probability of one vote determining the outcome is almost zero. Informed voting is a big positive externality. Ignorance breeds apathy, and apathy breeds ignorance. Public choice problem #4: Tyranny of the majority. Tyranny of medianocracy. The rule of the median voter. Those on the tails get beaten. Minority interests and values are suppressed. The two-party system caters to the median, reducing political diversity, dampening debate. The median voter is ignorant, so ignorance sets policy. Deep ignorance: not only of candidates and issues, but of economics, ethics, governance. Public choice problem #4: The tyranny of the minorities. Special interests with clout. Caused by: concentrated interests, spread out costs. Example: sugar growers. Subsidy: high benefits for the few big growers. Cost: higher price for sugar. But per-capita cost is low. Policy: sugar quotas. Too costly to oppose. Losers: consumers, workers. Lifesavers moved to Canada. Taxpayers pay for subsidies. Society pays the deadweight losses, waste, inefficient use of resources. Special interests get: , subsidies , protection from competition , special privileges Deadweight losses > $1 trillion. Optimal policy: blocked. House: CandidatTotal Cashon Totalfrom es Total Raised Total Spent Hand PACs Totalfrom Indivs Party All 1285 $714,962,536 $553,626,388 $313,687,594 $246,062,960 $397,143,035 Dems 677 $330,180,617 $257,184,500 $140,890,558 $106,633,600 $196,778,966 Repu bs 540 $382,227,191 $294,132,966 $172,509,075 $139,386,866 $198,416,699 Senate: CandidatTotal Cashon Totalfrom Party es Total Raised Total Spent Hand PACs Totalfrom Indivs All 159 $463,958,512 $374,037,243 $142,087,085 $61,777,354 $324,313,690 Dems 63 $236,956,934 $190,263,224 $73,339,221 $26,211,507 $175,068,731 Repu bs 71 $206,319,165 $167,662,700 $61,150,336 $33,077,662 $132,600,064 Public choice problem #5: Incumbent Advantage 2006 Senate Type Total Raised Number Avg Raised Incumbent $318,615,165 31 $10,277,909 Challenger $141,290,839 96 $ 1,471,780 Open Seat $ 80,312,338 32 $ 2,509,761 Grand Total $540,218,342 159 $ 3,397,600 House Type Total Raised Number Avg Raised Incumbent $460,140,185 424 $1,085,236 Challenger $131,928,472 604 $ 218,425 Open Seat $122,949,896 259 $ 474,710 Grand Total $715,018,553 1,287 $ 555,570 Who is paying? Rank Contributor Total Dems Repubs 1 National Realtors $2,675,755 47% 53% 2 Goldman Sachs $2,623,483 61% 38% 3 Electrical Workers $2,183,578 97% 3% 4 AT&T Inc $2,178,785 33% 67% 5 Wholesalers Assn $2,167,250 29% 70% 6 Trial Lawyers $2,110,765 95% 4% 7 Credit Union Assn $1,950,874 43% 56% 8 American Bankers $1,900,500 32% 68% 9 United Parcel Service $1,889,670 30% 69% 10 National Builders $1,829,500 26% 74% 11 Engineers Union $1,823,805 77% 22% 12 Auto Dealers Assn $1,809,100 31% 69% 13 General Electric $1,739,911 39% 61% 14 Citigroup Inc $1,719,629 51% 46% 15 EMILY's List $1,679,633 100% 0% 16 Deloitte Touche $1,647,165 27% 72% 17 Laborers Union $1,611,750 83% 16% 18 Teamsters Union $1,609,931 89% 10% 19 Bank of America $1,595,524 41% 58% 20 Carpenters Union $1,594,890 69% 30% 21 Government Unions $1,594,221 97% 2% Campaign costs increasing Presidential Candidates Total Receipts Year Total (current, millions) 2004 $880.5 (up 66%) 2000 $528.9 (up 24%) 1996 $425.7 (up 29%) 1992 $331.1 (up 2%) 1988 $324.4 (up 61%) 1984 $202.0 (up 25%) 1980 $161.9 California 2005-2006 Prop 89 Governmental financing of political campaigns. Committees formed to support or oppose the ballot measure. 1286190 taxpayers for fair elections, sponsored by the California chamber of commerce oppose 1287451 Californians for fair elections: yes on 89, major funding by California nurses association and California nurses association initiative pac, with support from concerned citizens and businesspeople support 1288245 clean money now - yes on 89 support 1288982 citizens for responsible elections Transfer seeking (rent seeking) The market for legislation. Seeking privileges (economic rent) from government. How legislation gets passed. Special interests influence only some legislators, and then the legislators trade votes: a.k.a. logrolling. The typical voter lacks the time and knowledge and motivation to monitor these votes. Public choice problem #5: One-man one-vote fails cost-benefit optimality. Voting Ayes@ or Ano@ does not take into account the intensity of preferences. The voter does not pay the social cost of his decision. Basic problem: mass democracy 1) Millions of voters choose among many candidates they don=t personally know, or issues they have little knowledge of. 2) Candidates must spend much to reach the voters. huge demand for campaign funds. Special interests supply them in exchange for favors (or to avoid damage). The problem is inherent in mass democracy. Attempts to limit campaign finance treat symptoms and effects. They do not eliminate the cause. Money will flow through the cracks and around the dams. Limits free speech. APublic@ governmental financing of campaigns? 1) Forces taxpayers to pay for negative, misleading ads. 2) Entrenches major parties. 3) Does not stop private money. 4) Treats the effects; does not confront the cause. Mass democracy has failed to achieve its purposes. 1) Often, mass democracy fails to achieve social peace. Examples: Iraq, Palestine, U.S. Civil War; disputed results (U.S., Mexico, Ukraine). 2) Often, mass democracy falls to dictatorship. Examples: German Weimar Republic, 1919-1933, fell to Nazis. Coups d=etat: Latin America, Thailand, Russia 1917, Greece 3) Special interests thwart the median voter. 4) The median voters stifle minorities. 5) Neither special interests nor median voters promote optimal policies. Constitutional constrains failed to prevent a large expansion of government. 6) Grafting mass democracy in unstable countries can create more conflict, elect interests with an agenda of supremacy. Groups fight over spoils. The remedy: eliminate the cause, replace mass democracy. Opposite of mass democracy: small-group democracy. Voting only in small groups. Neighborhoods of 1000. Divide the body politic into cells: cellular democracy. Jurisdiction are composed of neighborhood cells. Each neighborhood elects a council. Any voter may run. Contrast with mass democracy: ， Little money needed. ， Meetings are easy. ， Voters know the candidates ， Moneyed interests can be offset by personal contact. Then, each neighborhood council selects one of its members to a higher-level board of some 25 neighborhood councils. That is level 2. Some 25 level-2 boards then form a level-3 body. This continues to the highest level, the Congress or parliament. Congress would be elected by state legislatures, like the Senate used to be. Each level is monitored by the next lower level. Any representative may be recalled at any time. ， Bottom-up multi-level elections give voters leverage. Multi-Level structure Benefits: 1) The demand for campaign funding is greatly reduced. 2) The system promotes decentralized government. 3) Power is bottom-up. 4) Top officials can be recalled by any jurisdiction. 5) There is less voter ignorance, due to smaller numbers, personal knowledge, sympathy. Small-group, bottom-up democracy is especially suited to countries which lack civil society and democratic heritage. In Iraq, village and neighborhood councils would be seen as legitimate, not puppets. Anybody may run. Cellular democracy: necessary, not sufficient, for social peace. Condorcet and Arrow still apply, though with less damage. Thus, limit democracy: 1) decentralize 2) privatize (but not monopoly) 3) liberalize (more liberty) 4) use demand revelation: Each says how much he would pay, but pays a pre-determined amount. Those who change the outcome pay that social cost. We still also need constitutional rights, constraints on power. Also needed: economic equity, e.g. equal benefits from oil revenue. Henry George: Progress & Poverty, (ch25) AHow modern civilization may decline@: Awhile rotten democracy may not in itself be worse than rotten autocracy, its effects upon national character will be worse. ATo give the suffrage to tramps, to paupers, to men to whom the chance to labor is a boon, to men who must beg, or steal, or starve, is to invoke destruction. ATo put political power in the hands of men embittered and degraded by poverty is to tie firebrands [burning wood] to foxes and turn them loose amid the standing corn; it is to put out the eyes of a Samson and to twine his arms around the pillars of national life.@ My claim: Cellular democracy can remedy many of the failures of mass democracy, since it cures the cause. Without eliminating the cause, the problems will continue and may get worse. The problems of equity and constitutional constraints will themselves be more solvable with more effective democracy. The end. Questions?