Archive for 2015

Death to Bullshit

Awesome new site from Brad Frost.

People’s capacity for bullshit is rapidly diminishing.

When information is cheap, attention becomes expensive.
-James Gleick

Is the Answer to Lobbying More Lobbying?

Great thinkpiece by Lee Drutman over at the Washington Post blog, Monkey Cage.

The conventional wisdom about political influence is often summed up in the familiar three-word mantra: “follow the money.” It’s a mantra that assumes politics is a high-dollar vending machine with politicians and policies for sale. It suggests an obvious solution: get all the money out of politics. And while we’re at it, let’s also get rid of all the lobbyists, and all the “special interests.” Let’s make it so that Congress is “dependent upon the People alone,” as Larry Lessig put it, channeling James Madison.

I suspect this how many people want democracy to work. But it’s simply the wrong way to think about it, and it points to the wrong solution too. If we are concerned about the influence of special interests and lobbyists, we need to embrace a seemingly counterintuitive solution: more lobbying. But also different lobbying – lobbying that offsets the power of concentrated interests, not simply reinforces it.

The concept espoused is simple: people don’t really think special interests are per se bad, since, your and my viewpoints are…the views of special interests. What I think people mean when they say they want to get rid of lobbyists and special interests is that they want to get rid of the imbalance of power implied in the notion of lobbyists and special interests today. Democracy is about hearing all sides of a particular debate and ensuring that democratic principles play out.

I’ve been thinking a lot about the issue of money in politics since first hearing of the “Tullock Paradox” in scholarly work from Tyler Cowen. The Tullock Paradox describes a concept seen in lobbying.

The term Tullock paradox refers to the apparent paradox first observed by the public choice economist Gordon Tullock on the low costs of rent-seeking relative to the gains from rent-seeking. The paradox is basically that rent-seekers seeking political favors can usually bribe politicians to give them the favors at a cost much lower than the value of the favor to the rent-seeker. For instance, a rent seeker who hopes to gain a billion dollars from a particular political policy may need to bribe politicians only to the tune of ten million dollars, which is about 1% of the gain to the rent-seeker.

Put simply, the Tullock Paradox demonstrates the incentive for corporate entities (mostly) to engage in lobbying, because the cost to them is typically orders of magnitude lower than possible benefits received if successful.

Tyler Cowen links to a perfect example of this on his blog.

According to statistics United Republic assembled, the prescription drug industry spent $116 million lobbying for legislation to prevent Medicare from bargaining down drug prices — legislation that enabled drug companies to make an additional $90 billion annually. That amounts to an extraordinary 77,500 percent return on investment. Oil companies, in turn, had a return on investment of 5,900 percent, and multinational companies, 22,000 percent….

For example, the Carmen Group, a Washington lobbying firm, boasted on its Web site that for every dollar it collected in fees, clients got $100 in benefits.

There’s a Constitutional law concept espoused in equal protection and due process jurisprudence popularized by John Stuart Mill, referred to as the “Tyranny of the Majority”. The basic concept is that one of democracy’s central flaws is the ability of a perceived majority to place its own interests above a minority group. Particularly in the post-Citizens United world, I think the metaphor of this concept can be extended to the problem many see as a significant challenge currently facing our political democracy.

Lee Drutman continues,

The types of organized interests we might expect to provide a countervailing force to business — labor unions, groups representing diffuse publics like consumers or taxpayers – now spend $1 for every $34 business spends on lobbying, by my count. That’s up from a 1-to-22 ratio in 1998. Of the 100 organizations that spend the most on lobbying annually, consistently 95 represent business.

Those are some astounding statistics and underscore the Tyranny of the Majority concept, the majority here, being related to the central tenet of Citizens United, that money is speech. Controlling a majority of the money, it would seem, means controlling a majority of the speech.

The solution posed by Drutman is a fascinating one, which I need to give significantly more thought to. Much in the same way the U.S. Justice system is premised upon the right to a trial by peers, which, in turn, creates the need for a public defender’s office to defend qualifying defendants, Drutman proposes the idea of public lobbyists, either done through public matching of funds or direct subsidy. His rationale is that certain voices aren’t fully represented, and this would ensure certain aspects of democracy can be protected.

The idea to create any new government agency should always be served with a large dose of skepticism, particularly when purposeful underfunding of that entity would create intentional ineffectiveness. But the idea is novel and appears to address one of the most complicated challenges facing our democracy today.

Politico presents stupid theses

Here’s the latest from Politico: Abortion bill’s collapse shows moderates’ clout

John Boehner has a new balancing act: Handling the moderate backbencher resurgence.

That’s their opening line. First off, the GOP’s strategy since 2013 has been to avoid outing extreme conservative ideas, which is why they had such little success in 2012. The midterms were all about laying low, and after the government shutdown, Boehner really buckled down and shut up the fringe in his party that were hurting them at the polls. Because, while the base pushes for an ever more conservative agenda, which is generally good in midterms, it isn’t anywhere near as effective in Presidential years when our electorate is built much different, demographically. Perhaps 2014 demonstrated that even in the midterms, ideological purity may be off-putting, which is why the GOP avoided much of the discussions of abortion, etc. last year.

But I think Politico’s thesis is incredibly simplistic, and even wrong. There isn’t a moderate backbench resurgence that the parties are catering to. When elections roll around, both parties are focusing a majority of their attention towards a narrow swath within the same general demographic that tend to be more fluid in their voting habits, and hence independent, than entrenched, partisan, ones. If I had to describe that demographic, they would be white, middle-class, and college educated, conveniently known as “soccer moms”, as this group tends to vary election to election more than possibly any other group. It’s the one group of whites where the GOP does not win with significant margins and could be particularly damaging in a Presidential election that features a woman at the top of the Democratic ticket. Capturing this demographic, or I should say, ensuring this group comes to the polls, in my view, is what wins a majority of general elections (assuming your base is energized and excited, not necessarily a guarantee these days).

I grow more tired of the momentum narratives told by the media as each day passes. While convenient, our political sentiment cannot be explained solely by policy decisions made by leaders during that year. New demographic groups do not just magically appear or resurface. Policy choices cater to specific portions of the electorate that hold different weight depending upon the realities of particular election cycles. When turnout varies so widely from one election year to the next depending upon the emphasis placed upon particular election years by the media and the public’s perception of the relative importance of particular elections (say, for president, as opposed to a “mere” local election), it’s clear that momentum plays a much more muted role in political outcomes than does the average type of person that comes out on any given year. There’s a reason why presidential elections tend to be younger and browner. And that reality has an effect on results.

Theses that ignore these simple truths (however upsetting and unsettling they may be), are quite simply, stupid.

Dynamic Scoring of CBO gets rid of Congressional Referees

This is ripe.
Why the Republican Congress’s First Act Was to Declare War on Math

The first substantive act of the new, all-Republican Congress was a telling one: House and Senate leaders, now in partisan accord and able to impose an undiluted partisan imprint upon the institution, struck a blow in their decades-long struggle on behalf of low taxes for the rich and against the bookkeeping standards that have stood in their way. In a rapid vote yesterday, the House directed the Congressional Budget Office to use “dynamic scoring” — a Washington term of art to describe imposing conservative ideology upon the once-neutral task of measuring the budgetary impact of legislation.

The Congressional Budget Office [“CBO”] is a 40-year-old institution that has acquired enormous clout within Washington by virtue of its reputation for ideological neutrality. It furnishes Congress and the public with budgetary estimates that, if necessarily imperfect (as all predictions must be), are arrived at fairly. It is also a perfect modern expression of an old Progressive Era–ideal: that policymakers should be informed by the work of impartial experts. That the conservative majority has set out to corrupt this institution as one of its first major acts is, therefore, perfectly fitting.

What is Dynamic Scoring? In simple terms, we can think of it like this: Under the old method of Static Scoring, if the government spent $1 on an apple seed, the CBO would calculate the cost of that seed to be whatever estimate it concluded to be the direct economic benefit of that spending (for random example, let’s say that in today’s terms, a $1 apple seed is worth $1.25 to the GDP). Under Dynamic Scoring, if the government spent that same $1 on an apple seed, the CBO would now be tasked with estimating the future macroeconomic effects of this spending. So instead of $1 creating $0.25, CBO would need to make significant assumptions about that seed, and perhaps conclude that the production of apples from this seed would lead more people than today to consume apples, that this increased demand would create more apple farmer jobs, and that the resulting job growth would lead to increased tax revenues. Such dynamic effects could make that $1 spent seem worth significantly more.

Two thoughts on this:

  1. The CBO is supposed to Congress’ scorekeepers. While there are notable problems with static scoring, since it takes microeconomic assumptions into account (under static scoring, even that $1 apple seed would assume, for instance, that there’s $0.25 benefit, based upon market realities), it cannot predict future policy or events, and is agnostic about underlying policy decisions that do have real world effects. Adopting a dynamic system is inherently built upon biases. It forces assumptions that are incredibly difficult to predict and bases such assumptions upon variables that have not yet happened and may not actually occur.

    Continuing with our apple seed hypothetical, under static scoring, the $1.25 return on the $1 may be incorrect. It may only be $1.20. Or it may be $1.50 or cost us $0.50. But this is an issue of accuracy, not precision. Your variable was incorrect, but the methodology underlying it is sound and we can focus on improving that variable in future scoring.

    But using Dynamic Scoring makes precision incredibly difficult as well because the variables you are forced to predict compound. Multiplying three or six or 15 variables that can lead to outcomes that are not just inaccurate, but also imprecise. Thus, you can have in incredibly wide range of outcomes in Dynamic Scoring, that does not exist to the same extent with Static Scoring.

    We have to ask ourselves what the purpose of the CBO is in the first place. Economic predictions are incredibly difficult to make and thus, it is fairly likely that regardless of which scoring system you choose, you are going to have an accuracy issue. There’s no way around this. So even though accuracy should always be a goal, reality makes such a goal impossible to obtain. So then what? From most accounts, CBO exists to create a standardized and nonpartisan best and consistent prediction of the impact any change in policy will have on revenues and expenditures. Dynamic Scoring destroys hope that predictions for legislative impacts will lack precision, which is the entire point. Static Scoring evaluated a moment in time (i.e. currently, an apple seed creates $1.25 of value on GDP, even though it’s possible that an apple seed purchased today but used 10 years from now may only create a $1.20 return). Dynamic Scoring attempts to predict the future (i.e. an apple seed creates $1.25 of values on GDP today and since this is a net benefit, more apple farmers will plant apple seeds, which will lead to higher availability of apples, which will reduce the average sale price of apples reducing the effect on GDP to $1.05 in ten years).

  2. While I think Dynamic Scoring is unhealthy because of the precision problems it creates, I’m not per se opposed to it. Dynamic Scoring does get at the heart of a significant shortcoming of the existing way of scoring legislation: policy has real world effects (even if those effects are near impossible to consistently predict, considering the almost infinitesimal number of variables that may effect a given outcome).

    The real problem is how Congress has chosen to impliment Dynamic Scoring. The implications ensure that the only referees in the Congressional game will no longer be nonpartisan. As passed, Dynamic Scoring will only apply to Republican policies (cutting taxes), while Democratic policies (infrastructure, appropriations, social programs) will largely be exempt. That seems fair…

    Under the rules passed, Dynamic Scoring applies to legislation:

    • that impacts greater than 0.25% of GDP (or $43 billion)
    • excludes appropriations bills that are largely need-based projects that subsidize local projects that usually have multiplier effects on GDP

    As Representative Delaney (MD-6) writes,

    If dynamic scoring is truly about reflecting the on-the-ground impact of government action, it must be applied to both sides of the ledger: spending and revenue. Unfortunately, the Republicans’ new rule effectively amounts to dynamically scoring only tax cuts. It does this by excluding appropriations bills and stating that only “major” pieces of legislation — defined as affecting the economy annually by 0.25 percent of gross domestic product, or $43 billion per year — will be dynamically scored. While that sounds reasonable, only comprehensive tax reform bills would meet that threshold. Other bills that increase investments in infrastructure, education and research generally do not rise to that level.

    So tax cuts will be seen in a shiny new light, while smart investments will remain unattractive[, when scored]. One-half of the policy agenda will use one set of facts, while the other half will use a different set. This is intellectually dishonest, and it’s wrong.

Dynamic Scoring, as applied, is disingenuous and undermines open and efficient government. It’s no wonder it was the GOPs first order of business once taking control of both houses of Congress.