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Sunday, August 26, 2007

Harry Plotter and the Slithering Senate

I was recently browsing through "The Strategic Constitution", well-written book of political science theory by Robert Cooter. Few models bearing straightforward welfare implications caught my eye and I decided to elaborate further to expose more details of those models. In this post, I am attempting to present my thoughts in a very linear and structured format. I hope that both my fellow students and people with little to no economic training will find this post easy to understand and interesting.

Pg. 15

Elections ideally transmit the preferences of citizens to politicians who head ministries or agencies…when citizens remain rationally ignorant, politicians need costly campaigns to influence citizens and win votes. To finance campaigns, politicians trade political influence for money from lobbyists.
People typically think about democracy as a system where politicians cater to the will of the majority. It is also a “tyranny of the majority,” is it not? It typically would be if the will of the majority was of prime interest to the politician and if all casted votes had equal weights.
However, when a politician (suppose a future senator) campaigns for a seat in Senate, he trades political influence for money from lobbyists. In plain English, he gives up some of his power with regard to certain legislature/future projects that at some point will appear on the agenda of the legislative body. In other words, a senator predetermines his vote on a future issue. Does he represent the will of the majority? Only if the will of the majority coincides with the lobbyist’s interest. Considering that lobbyists represent special interest groups, the likelihood of such coincidence is purely accidental. Further, if the above cause and effect analysis is correct, any political representation previously funded by special interest groups is not truly indicative of a democratic system. The fact that the majority of votes elected an individual does not indicate his intention to act upon the promises he had made during campaigning, at least not to the fullest extent. Instead, a politician is more likely to engage in balancing the promises to the public and the implicit agreements he had made with the lobbyists. Acting upon the promises he had made to the public would mean fulfilling the promises he had made to his constituents who had voted to get him into the position of power in the first place. Such would make sense because: 1) A politician needs public votes to get reelected. That provides a clear and present incentive to appeal to the public and act upon the previously made promises and ensure the future reelection. 2) To get reelected, a politician also needs money that is more likely to be procured from lobbyists, quite possibly those he already had previous business arrangements with. That is why a politician is constantly in the position of balancing the promises in order to maximize his self-interest: narrowly money + power.
Another issue of lobbyists funding election campaigns of politicians is log rolling. Explicit log rolling (two politicians meeting over lunch and agreeing to vote on each other’s bills) represents a voluntary exchange. Both parties have a double coincidence of wants and will both be better off after completing an exchange. Senator A exchanges his vote for senator B’s proposal and in return receives senator B’s vote to support senator A’s proposal. Log rolling represents a barter of votes and is deemed illegal.
If we think about lobbying it is almost the same. The two parties meet and decide implicitly (without a legal contract) to exchange the future senator’s vote for money that will be used to finance his campaign. Hence, to a lobbyist, funding the campaign of a candidate to legislature represents a prepaid asset but only if that candidate gets the seat in Senate. Is it just me or is there something seriously wrong with such a transaction?
We slap the wrists of those that try to exchange political favor via explicit log rolling. We do that to prevent our representatives from acting in their own self-interest and instead to create the incentives to represent us, their constituents. That’s an entire reason we voted for them instead of other candidates, is it not? So how is log rolling different? A reasonable spectator of politics understands that the money aided in electing a government official. If he desires reelection, he will inevitably need money again. However, the only condition for him to receive the funds now is to fulfill the promises he had previously made to the lobbyists. What if those promises are not in tact with most of the general population’s beliefs? If a public official desires reelection and opts to fulfill his promises to the lobbyists, will he get reelected? Chances are he will. Why? Perhaps because most of us are rationally ignorant voters, people with our own problems and daily lives, who might ignore the senator’s voting record for the past several year for one reason or another. Maybe most of us will simply vote on what we know already and what he promises to do for us in the future. One thing is certain: we can only hope this public figure will choose us and our interests instead of his own urges for money and power that lobbyists and their companies so willingly offer.

Pg. 44

Assume that the three alternatives form an intransitive cycle, where A defeats B, B defeats C, and C defeats A. Assume that the person who sets the agenda wants A to prevail. To assure the final victory of A, set the agenda so that the first vote pits C against B, and the final vote pits the winner of the first vote against A. Given this agenda, B defeats C in the first vote, and A defeats B in the final vote. Thus the person who sets the agenda gets the most preferred outcome.

I find it interesting that living in a democracy, people really believe that the candidates they choose and vote into the office will truly represent them. Obviously, any such representation becomes highly questionable in the light of transitivity avoidance. I’m particularly concerned with the ability of senators to overcome the will of the committee’s chairman. In spite of its legality, I don’t consider transitivity avoidance a democratic process, bar none. The reason I render this unfortunate conclusion can be clearly expressed in two sentences: Generalizing, democracy can avoid intransitive cycles by empowering someone to dictate which majority will prevail. Allowing the chairman to set the agenda achieves this end by one means (46).
Maybe I am wrong, but ‘dictating which majority will prevail’ surely does not seem like a legitimate democratic process because it uses other people’s ambitions (those of senators), prompts them to act in the pursuit of what they deem to be appropriate, yet renders a result that only one person (a chairman who is a minority outnumbered by the majority of senators) has modeled and successfully accomplished solely due to his power, ability, and willingness to do so. In spite of perfectly fulfilling the functions of representative democracy, I cannot help but perceive it as an element of autocracy.
Unless the end result of voting in this arranged and manipulated situation coincides with the result of a hypothetical vote, one where the senators use some sort of majority rule to decide upon the sequence of competing alternatives (choices), the probability of the two voting outcomes coinciding is purely accidental, especially involving cases of multidimensional choices (I imply, more than 3 choices). Curiously, the probability that a chairman-determined voting sequence outcome will coincide the senators-determined sequence outcome (majority rule based) diminishes greatly as the number of choices increases (probability and number of choices are inversely related).

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