Recently in Politics Category

That's right, don't take my word for it.  No less than Nobel Laureate Joseph Stiglitz--hardly my ideological compatriot, but an economist I certainly do respect--wrote in his latest book Freefall:

The cash-for-clunkers program also exemplifies poorly targeted spending--there were ways of spending the money that would have stimulated the economy more in the short run and helped the economy to restructure in the ways that were needed for the long run (p. 70).

Which is what I've been saying since August.  Thanks for having my back on this Prof. Stiglitz.

In a comment to this post, spencer writes:

What you are ignoring is that the objective of cash for clunkers was to eliminate the inventory overhang at the dealers so that firms would resume auto production.

You are evaluating the program on a completely different basis than it was designed to achieve.

It is like saying the doctor set my broken arm so it would heal properly but he failed because he did not make me look like a movie star.

And yet, the excitement over the program was, as you will recall, pretty intense, was it not?  It was something tangible for people to hold onto, yes.  There may have been some "animal spirits" effect on consumer confidence.  Politically, I think the administration got a lot more invested in the whole idea than spencer is admitting.

There is a way to test this going forward, of course.  Look at what the politicians say about cash-for-clunkers in the fall campaign.

Will they...

1.  tout its great success in helping the recovery and give it way more credit than it deserves because it's something tangible the voters can latch onto?  (Remember, the program accounted for about two weeks of pre-recession sales and moved those sales forward at most a few months.  Its effect has probably now been all but played out and auto sales continue to lag.)

or ...

2. will their silence show that they realize it didn't do much?

Or will they...

3.  say that it saved a few thousand workers from a temporary layoff at a cost of $3 billion and a non-trivial amount of destroyed capital?

Politicians love to look like they are saving jobs.  And certainly saving jobs is a worthy goal.  But what politicians never learn is that the politically easy ways to save jobs are seldom the most efficient.  CARS was an easy to explain, easy to understand policy that had obvious political advantages.  As I pointed out at the time, this crowded out discussion of better policies.  That's what's so frustrating.  Remember, I'm not saying that the government should have done nothing.  I'm saying (as I said then) that they could have done better.  Big difference.

If the leaders from both parties would stop acting like politicians and act more like statesmen we would have fewer things like this to make me frustrated.

This is an amazing back-and-forth from yesterday's White House press briefing.  They are doing this on the fly, folks.  They are governing based on public opinion polls and the 24 hour news cycle.  (Yeah, I know... this administration is not the first, but they are getting better with experience.)

Anyway, just read this.  Notice that Secretary Gibbs has no clue how to explain this.  Obviously he was badly prepped.  After reading this, and even after reading the NY Times article, I am left wondering what this would really do.  Is this just a device to strong-arm the states or would it have real power?  Have they even worked that out yet?  It's not clear to me.

What is clear to me is that it could put a lot of power to influence price and quality into a politically appointed panel being run out of a cabinet office.  What could go wrong?

Q    This new idea for the health insurance rate commission, I guess my confusion is, is this a commission that would sort of be -- serve as a guide to the other states, to the 50 states that do the actual regulating?  Or is this supposed to be a regulatory agency with --

MR. GIBBS:  No, no, no.  This is a -- the Secretary in conjunction with states will develop a review process for unreasonable premium increases.

Q    So the states are still going to be the regulators?  The federal government is --

MR. GIBBS:  Well, obviously they're still going to have --

Q    -- acting as a guidance counselor of sorts?

MR. GIBBS:  They're going to still have a big role in this.  Obviously there are state insurance commissioners that have some ability to change these.  Not everybody does.  But these can -- these will be looked at and evaluated in conjunction with the states, and then steps and measures can be taken.  Because again, Chuck, I think that -- I mean, we've even seen it now with Anthem, that proposed the 39 percent increase, that they've even put that increase on hold.  I think they understand that this was not a --

Q    No, I understand, but is this supposed to be a new federal regulatory agency?

MR. GIBBS:  It's not a new federal agency.  There's no new bureaucracy.  This will be done out of the Secretary's office in Health and Human Services.

Q    Out of HHS?

MR. GIBBS:  And we'll get -- I'll get Reid to walk you through some more --

Q    Okay, because that -- it's just a little confusing if this is a new agency.

MR. GIBBS:  Yes, ma'am.

The NY Times reports that President Obama wants the government to have veto power over private health insurance company rate increases.  (via Greg Mankiw)

WASHINGTON -- President Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation's health care system, White House officials said Sunday.

...

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats' health overhaul as a way to protect Americans from profiteering insurers.

Ok, 39 percent is a lot.  I'll give you that.  So my first question would be whether there is a reason for that.

Anthem, California's largest for-profit insurer, has announced premium increases for nearly 700,000 customers, citing the soaring costs of medical care and the effects of a weak economy in which many younger and healthier people are dropping insurance. But the increases, far outpacing the rate of medical inflation, led to outrage among officials in Sacramento and Washington.

Less disposable income leading to a worsening of the adverse selection problem?  I'd like to see the numbers on that.  While I'm a little skeptical, I'll admit that I don't know enough of the details.  Let's go on...

The president's bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators. The bill would create a new Health Insurance Rate Authority, made up of health industry experts that would issue an annual report setting the parameters for reasonable rate increases based on conditions in the market.

Hmmm...

The legislation would call on the secretary of health and human services to work with state regulators to develop an annual review of rate increases, and if increases are deemed "unjustified" the secretary or the state could block the increase, order the insurer to change it, or even issue a rebate to beneficiaries.

The new rate board would be composed of seven members, including consumer representatives, an insurance industry representative, a physician and other experts like health economists and actuaries, the White House said. The board's annual report would offer guidance to the public and states on whether rate increases should be approved.

Seven (politically appointed) people in charge of deciding how much you'll pay for health insurance.  Of course, they will be infinitely wise, incorruptible, and above political influence, right?  Yeah, right.

[Senator Dianne] Feinstein said that only 25 states allowed their insurance commissioners to regulate rates and that California was not one of them. "For the life of me, I am not sure why not," she said. "The time has come for the secretary of health and human services to step into this."

I'm not a huge fan of government regulation, but in our country we have come to a basic agreement that insurance should be regulated by the states.  This is an imperfect system.  Some states will do it well; others will not.  But the same is true of roads and schools, which have also been left in their care.  So half of the states have figured out how to take care of this themselves, and we need the federal government to be the nanny for the ones that don't have the courage to do it.

Now the fact that Anthem is raising their rates 39 percent suggests to me that Anthem may have caught onto the fact that California's regulatory environment is lax.  If there was a stronger insurance regulator, perhaps they would be a bit less aggressive.  Perhaps.  I'm trying to give the benefit of the doubt here.  Ms. Feinstein, I agree with you that for the life of me, I'm not sure why California hasn't done it since it looks like it might be a problem.  But with all due respect, that's California's problem.

On a related note,

Leaders of the National Governors Association meeting in Washington on Sunday expressed frustration that they had been largely shut out of negotiations over the future of the health care system, even though they would be responsible for carrying out many of the changes envisioned by federal officials. They said they wanted more of a voice in shaping those changes.

Indeed.  Nervous about turning your state's regulatory power over to seven federal appointees?  Come on... what could go wrong?

Mankiw calls this an example of price controls.  He's right, to a point.  Our system of health insurance, such as it is, really stinks.  The fact that it really is 50 different statewide markets with different regulations is bad enough.  Tying health care to employment is another problem.  There are plenty of things that could be done to improve the system.

This isn't one of them.

Selling insurance isn't like selling apples.  There are a lot of variables to consider.  Suppose companies are forced to accept lower rate increases.  There are dozens of ways that they could respond to reduce coverage.  How is that seven member committee going to keep up with that for all the insurance companies in the U.S.?  Are they going to tell them what they have to cover?  What the deductibles can be?  Hardly realistic, is it?  I mean, that sounds like that seven member panel would be more ambitious than whatever bureaucratic apparatus would run Obama's health plan.

Actually, they would probably just publish guidelines as to what is acceptable, but how detailed could those guidelines be?  If a company wanted to go outside those guidelines would they have to appeal?

The mind reels.

There is no way that this would end well.

To be continued...

From Washington Wire

The latest stimulus showdown in the Senate: should money from the $787 billion package pay for signs that say a project is being funded with stimulus money?

No way, said New Hampshire Republican Sen. Judd Gregg, who today tried to ban funding for the signs, which are prominently displayed at the highway projects around the country. "Considering the questionable effectiveness of the stimulus bill, it is completely unreasonable that signs are being constructed at a price tag of hundreds to thousands of dollars apiece for lawmakers to pat themselves on the back about this legislation," he said in a statement. And offered an amendment to the transportation spending bill that would ban funding for the signs.

Democrats said the signs were absolutely fine. California Sen.Barbara Boxer said on the Senate floor that it didn't matter whether lawmakers voted for or against the stimulus plan, they should still fund efforts to tell people what it was doing.

...

At stake: jobs for sign makers, jobs for others if the money were to be used differently, and control over how the stimulus package is perceived. Since the plan was enacted, Democrats and Republicans have fought over how fast the money is being spent, and whether it has delivered results.

The signs present risks to both parties, though. If voters decide the spending was a waste, the signs will remind them of the Democratic program. If the stimulus is ultimately seen as helping the economy, the signs remind voters that Republicans largely opposed it.

Let's not delude ourselves.  It's all about how the stimulus package is perceived.  I seriously doubt the senators cared a whit about jobs for sign makers when debating this proposal.  But the proposal failed.  The signs will stay.  Which, if you take the writer's interpretation, suggests that the Democrats are more confident that people will see it their way.

President Obama wants his cabinet to find $100 million to cut.

In other news, I found 35 cents in a desk drawer today.

Is this simply rearranging the deck chairs, or is there more to this?  I want to know.

...comes from the editorial page of the Notices of the American Mathematical Society.

Global Crises from the Perspective of Complex Adaptive Systems

It's one page.  Rather than summarize or take a quote, I encourage you to just read the whole thing.  It helps to know a little about complex adaptive systems.  There are are a few things in there that will resonate with economists quite generally.

From WIU University Relations:

Western's Macomb campus had been selected as one of some 60 sites across the nation to host a "Neighborhood Ball," which will be webcast live on YouTube (youtube.com/inauguration), Flickr (flickr.com/photos/inauguration) and Twitter (http://twitter.com/obamainaugural) and taped as a possible feed on ABC network's inaugural coverage beginning at 7 p.m. (CST), according to Matt Bierman, director of residential life.

"We are among just a few universities, along with the University of Florida and Kansas State, to serve as site for a Neighborhood Ball. The majority of sites are restaurants, community centers and major public gathering places," Bierman said.

Very nice.  Kudos to the folks in charge locally.

Oh, come on, you knew he would get it, right?  (Time magazine)

Actually, since 1964 every president except Nixon and George H.W. Bush received the honor in the year they were first elected.  (See full list)

That's right.  Johnson, Carter, Reagan, Clinton, and George W. Bush all were Person of the Year in the year of they were first elected.

So this should not come as that much of a surprise.

You often hear economists say that voting is irrational because (1) the likelihood that your vote will decide the election is small, (2) it has a nonzero private cost and (3) it has zero private benefit.

You can't argue with (1) and (2).  (Admittedly a voter in a swing state today has a larger probability of being the deciding vote today than I do, but it's still pretty small.)  But (3) is where some would argue that they vote because they enjoy it, feel a rush of pride, want to be a part of history, want to have something to talk about at the water cooler, etc.

Funny.  Those are the same reasons I turn the channel to ESPN on fall Saturdays or show up at a stadium with a certain colored shirt.

I know that my cheering has almost a zero probability of being the deciding factor in the game (the "almost" is generous).  It is costly in terms of time, money, and effort--much more so than voting, in fact.  And yet, I enjoy it.  I get a rush of pride.  And I feel a part of something, dare I say, akin to being part of a community.

You may call me irrational, but I know a lot of economists who love college sports.

I know a lot of economists who vote, too.

So don't vote because you think you could be "the one".  You'll just be disappointed.  Don't vote because you feel obligated.  You're not.  If you vote, do it for the same reason that you do something else that you love even when others might call it irrational.

Tyler Cowen thinks its about expressive value.  As with sports, it can manifest itself that way.  For a lot of people it's more fun when it does.  But that is not necessary for my argument.  You might follow every box score of your team's from a long distance and never tell a soul.  You're still a fan.  You're still engaging in costly but outwardly useless behavior even if no one sees it.

And so I will vote after class today.  And I will sit in front of the TV and Internet all night engaging in even more costly but useless behavior.

Because I'm a fan.

CNN reports that Obama received 15 of the 21 votes cast this morning in Dixville Notch, NH--the town that traditionally gives us the first election returns.  McCain received the other 6 votes.

In 2004, Bush won in Dixville Notch by a vote of 19 to 7.  They haven't voted for a Democrat since Humphrey in 1968.

It's going to be an interesting day.

The CNN "Poll of Polls"

The poll of polls consists of eight surveys: ARG (October 25-27), IPSOS-McClatchy (October 23-27), Pew (October 23-26), ABC/Washington Post (October 24-27), Reuters/C-SPAN/Zogby (October 26-28), Gallup (October 26-28), Diageo/Hotline (October 26-28), and IBD/TIPP (October 24-28). There is no sampling error.

First of all, that this paragraph ended up in that article is sloppy copy-editing.  The poll results are not actually reported in this article.  But never mind that detail, CNN's reporting on the Poll of Polls has been widely discussed.

They continue to use the sentence "There is no sampling error."  Smart folks will point out that in a sense they are right--the average of the polls gives you the true average of the polls because you have the entire population of polls.  Of course there are presumably other polls that were not included in the sample, so in the strictest sense this is still a sample of polls.  But if we ignore that little detail, we can accept the Poll of Polls for what it is--the simple average of a number of poll results.  The relationship between that average and the true value is complicated by the different methodologies employed in the various polls.  The fact that the Poll of Polls is the average of the universe of polls does not mean that it has no margin of error when used for inference on the universe of voters.

But does the average reader or television viewer understand the difference, or do the words "There is no sampling error" lead the reader or viewer to see the results as more reliable than they really should?

To illustrate the point in a simple way, consider this.  Suppose I ask three people to flip a coin 10 times and report to me the number of times the coin came up "heads".  The first person says that heads came up 3 times, the second person saw heads come up 6 times and the third person reported heads 4 times.

Then I could legitimately say that the average of the three trials was 4 1/3 and that there was no sampling error in obtaining the average of the three trials.  I sampled the entire population of three people who flipped ten coins.  However, it would be wrong to draw the conclusion that the expected number of heads when flipping a coin ten times is 4 1/3.

Might people draw the wrong inference from such a statement?  Well, maybe not in my obviously simple story, but applied to real world polling it is more likely.  I see people make statistical errors all the time--some of them quite obvious--so yes, I think some might misunderstand the statement.

Of course, in my simple example I am quite confident that the law of large numbers holds and if I did this a few more times, I would very likely get closer to the true value.  If I did it many, many times I could get very close to the true value.  In the case of polls, there might very well be a central tendency (in the polls themselves), but the relationship of that central tendency to the true population proportions would depend on the survey methodologies--which are beyond the scope of this blog post.

Tonight, Senators Obama and McCain debate each other for the second time in a series of three debates as they compete for the highest office in the land.

150 years ago today, Abraham Lincoln and Stephen Douglas met for the fifth of seven debates as they competed for a Senate seat from the state of Illinois.  That particular debate was held in Galesburg, Illinois--just less than an hour's drive from where I sit.  (Next Monday is the anniversary of the sixth debate which was in Quincy--just less than an hour's drive in the other direction.)

If you have a yearning for a real political debate, read the transcripts of the Lincoln-Douglas debates.  You'll probably learn more from that than from anything you'll see on the television tonight.

My feed reader delivered this headline from the Wall Street Journal:  "North Korea Says Leader Not Ill."

Of course not.  He's "Il."  (Barrump-bump!)

But don't call him Mr. Il.  He is Mr. Kim.  Korean surnames come first followed by their given name.  According to answerbag.com, he shares this most popular surname with 22 percent of Koreans.

The headline on the link is different from what was delivered to my feed reader.  Perhaps someone noticed the odd way that it sounded.

We have had almost 8 years to fix the election system. And yet there are probably just as many, and perhaps more, problems and potential problems today. The NY Times' Adam Cohen opines...

It is chilling to think that state legislators and election officials would intentionally try to make it harder for Americans to vote, but they always have — with poll taxes, literacy tests and gerrymandering. There was a time when the Supreme Court regularly struck these restrictions down. In 1966, it held Virginia’s $1.50 poll tax unconstitutional. In 1972, it ruled that Tennessee’s one-year residency requirement for voting violated the Constitution.

Now the Supreme Court has switched sides. This week, it upheld a harsh Indiana voter ID law that could disenfranchise many poor, elderly and student voters. The ruling will make it even easier for other states to block voters’ access to the ballot box.

If the courts won’t protect voters, Congress has to. The Constitution, in Article 1, Section 4, gives Congress broad authority to set the rules for federal elections. It should use this power to set minimum voting rights standards that would apply nationwide and ensure that all eligible Americans could vote.

Voter registration rules are the place to start. Federal law should hold organizations like the League of Women Voters harmless if they make good-faith mistakes while registering people. There should be a federal voter registration form, usable in any state, and uniform regulations so Ohio could not throw out forms based on paper thickness and Florida could not bar voters, as it now does, from fixing small errors on a form within a month of an election.

Congress should also regulate voter challenges at the polls. Parties and candidates often use bad-faith challenges as a dirty trick — to intimidate voters or to slow down voting in certain neighborhoods. Senator Sheldon Whitehouse, Democrat of Rhode Island, has a good bill that would require challengers who are not election officials to sign an affidavit stating why they believe a specific voter is not eligible.

The prevailing sentiment, often unspoken, in both parties is that they value the option to be able to use what might be termed "dirty tricks" when they need to. That's the only explanation that fits.

Personally, I don't mind the idea of a voter ID card. I have one (though I think it is probably called a "registration card". I think that most counties or cities issue one when you register. Occasionally, just for fun, I actually show the election judge my ID card when I get my ballot. Sometimes they sort of lean back in their chair like they want to distance themselves from the thing and say firmly that they don't need to see it. I've always thought that to be rather odd. Of course, in all the years I've been voting, I don't think I've ever stood in line for more than 2 minutes, and I've never suspected any dirty dealings in my own precincts in any of the six cities in three states in which I have voted in the last 18 years. Count myself lucky, I guess.

Make it simple. My voter registration card is just a postcard. It is not very costly, and something the county does anyway. While forgery is possible, I'm not sure that most college IDs would be that much more secure. If you don't have your registration card, sign an affidavit and your vote should be presumed eligible until specifically challenged.

I'm less inclined to the idea of a standard ballot, though I think that it would be workable to have a set of minimum standards for a short list of possible voting methods. Let very small precincts count paper ballots by hand if they want, but put some parameters on ballot design. Optical scanners are a popular choice in many areas. Again, putting some parameters on the design would be ok. Electronic machines would ideally give you a copy of your vote which would be placed in a traditional ballot box--just in case. And count the paper copies in a random sample of precincts.

Coming up with a system that an objective outside observer would find to be fair (or at least subject to less potential for mischief than the present system) shouldn't be hard. Finding an objective outside observer to render that judgment may be the greater challenge. I, for one, am not holding my breath.

UPDATE: Just to make it clear... I do not favor a national voter ID card. No way. We don't need a national ID card. I just find it odd that my county goes through the effort to print a voter registration card and the election judges practically recoil in horror when I show it to them. I have no doubt that a little tightening of standards using procedures already in place could eliminate a lot of potential for mischief. But like I said, neither party really wants that.

Actually, I think the underlying problem is that most people take the election process for granted. If more people got serious about making the system work in a way that was as efficient and equitable as possible (recognizing that there are tradeoffs inherent in that), then we would be better off. Unfortunately, the incentives (monetary and political) are lined up against that, which is why I'm not holding my breath for any kind of positive change.

I will reiterate that I think it would be smart to count a random sample of paper ballot backups in precincts with electronic voting machines. Just sayin'.

Yes, you read it right. CNN sends me a breaking news e-mail.

(CNN) -- Fidel Castro announced his resignation as president of Cuba and commander-in-chief of Cuba's military on Tuesday, according to a letter published in the state-run newspaper, Granma.

A historic day indeed.

There will be a lot more discussion of this in the next few weeks, but here's a start. From the NY Times:

Senator Hillary Rodham Clinton of New York has proposed $70 billion in emergency spending programs, with an additional $40 billion in tax rebates if the economy worsens. Senator Barack Obama of Illinois has a $75 billion plan based largely on immediate tax rebates of $250 to most workers to encourage consumer spending.

...

The Republican presidential candidates have been more skeptical about short-term stimulus measures than President Bush has been. Mr. Bush signaled last week that he would propose a package of measures, probably dominated by tax cuts, in his State of the Union address on Jan. 28.

The debate among candidates about stimulus measures is largely academic, because economic conditions are almost sure to be entirely different by the time a new president takes office a little more than a year from now.

You would be seeing those rebate checks in the summer of 2009 at the earliest, just like we got Bush's rebate checks in the summer of 2001. Depending on how things go this year, the timing might not be as fortuitous. I would be interested in hearing what my readers think about various plans floated by the candidates.

With apologies to Art Linkletter, kids say the darndest things. Today's smile is from the Quad City Times:

DES MOINES — Forget politics, the concern of Chris Dodd's 6-year-old daughter is that Santa Claus won't find her in Iowa.

The Democratic presidential candidate recently moved his family, wife Jackie and daughters Grace and 2-year-old Christina, from Washington to Iowa in advance of the Jan. 3 caucuses. Jackie Dodd said Monday that the girls are adjusting well to their extended stay in Des Moines, where the family has rented a house until the caucuses. The Dodds also enrolled Grace in kindergarten at a nearby public school.

But Jackie Dodd said Grace is concerned that Santa won't get word of their move.

"Right now, her biggest worry is that Santa may not find her here,'' she said.

And then there's the fireplace.

"There's a fireplace in this new home, but it doesn't really work and she thinks it's too small for Santa,'' Jackie Dodd said. "She's a little concerned that reindeer can't land anywhere.''

Go click on over to the article. The photo is priceless.

Hat tip to Washington Wire, which also reports that Dodd wants to buy his toys from Iowa--a state with 10 small toymakers employing 113 people according to Ed Gresser of the Progressive Policy Institute. He suggests sports equipment instead as Iowa has 31 businesses in that industry.

From the NY Times Opinionator Blog:

Open primaries ­ in which voters don’t have to be a member of a party to vote for its candidates ­ have long been a thorn in the sides of national Democrats and Republicans. Now, according to the Associated Press, Virginia’s G.O.P. is going to do something about it: “If you’re planning to vote in Virginia’s February Republican presidential primary, be prepared to sign an oath swearing your Republican loyalty. The State Board of Elections on Monday approved a state Republican Party request to require all who apply for a G.O.P. primary ballot first vow in writing that they’ll vote for the party’s presidential nominee next fall.”

Oh, the joys of our system. This would be one reason I favor the caucus approach. These candidates are seeking the nomination of their parties. There's nothing wrong with requiring people to publicly declare their support for a candidate in an open forum like a caucus at this stage. Open primaries do leave open the possibility for interlopers to distort the nomination process. That said, if you don't like the law... change the law. But if you're going to have open primaries, then they should be subject to the same rules as any election. And this tactic would arguably seem to violate those rules. Sure it's unenforceable. But they are asking people to promise a future vote as a condition for voting in the present.

I'm sure the Virginia Republicans will argue that they have the right to restrict access to their primary ballot. After all, it's their party and their nomination process. But I think they're trying to have it both ways. If you don't like open primaries, change the law. Don't impose a loyalty oath. That just makes you look silly.

Her husband enjoyed widespread popularity for his handling of the economy. She, a lawyer and senator, ran for the presidency herself hoping to take advantage of her husband's sway with the voters.

Nope. It's not who you're thinking, unless you're up to speed on politics south of the equator. (Reuters)

And she won.

BUENOS AIRES (Reuters) - Argentine first lady Cristina Fernandez de Kirchner rode an economic boom and her husband's popularity to victory in a presidential election on Sunday to become the country's first elected woman leader.

Fernandez, a glamorous lawyer and center-left senator, will take over from President Nestor Kirchner in December in a rare power handover between democratically elected spouses.

Partial results showed Fernandez with 44 percent support and a wide lead, enough to claim victory and avoid a runoff vote. Her main rivals, former lawmaker Elisa Carrio and former economy minister Roberto Lavagna, both conceded defeat.

Fernandez, 54, ran an effortless campaign without a primary, a candidates' debate or concrete policy outlines. She instead met foreign leaders and trumpeted lower poverty rates since Kirchner took office four years ago.

The article also points out:

Argentina has had a woman president before, but she was not elected. Isabel Peron, the third wife of former President Juan Peron, succeeded him when he died in 1974 and ruled for two years until she was ousted in a military coup.

It wasn't even Evita.

The article also states that Fernandez has a tough road ahead:

Argentines recently called for boycotts of tomatoes, potatoes and other foods as prices have soared. The president-elect says she will fight inflation by striking deals with businesses and unions to cap profit and wage demands.

Uh-oh.

The Road to the White House, a multi-day mock presidential election event is off to a tremendous start here at WIU. Tonight, students played the roles of primary and caucus voters from a selection of states. Other students played the roles of campaign workers trying to sway the voters. Broadcast students used it as a real-world training exercise and broadcast the proceedings on the college cable channel. Print journalism students were seen scribbling on notepads and taking photos. Our state senator was in attendance. Faculty supervised the ballot process, answered questions, and kept the process moving forward.

Students were given a taste of what it is like to vote in a primary or take part in a caucus. Having participated in the Iowa caucus once back in the day, I volunteered to coordinate a couple of the caucuses. What a rush! (That is not a phrase that I use often, and probably never have used on the blog to this point.) Before we started, the look on some students faces was one of apprehension and confusion. Many, if not most, have not participated in any "real" politics. Maybe some have voted in a state election, but not many in this bunch would have voted in 2004. Given that we are in a primary state, I doubt that many have caucused (though we do have many students from Iowa--some of whom I learned from conversations are planning to caucus in '08).

At the end of the session, I noticed a visible change in the facial expressions of those students. It was no longer apprehension and confusion, but a look of satisfaction. A look that said that this wasn't so bad after all, and maybe it was even interesting.

The best part of it is that this mock election event is spread out over a couple of weeks. The energy will continue to build. Many of the students are signed up to participate each night, giving it some real potential for creating a lasting impression.

Here's the main website for Road to the White House. You can read more about the events here and here.

The results of tonights polling of the students? On the Republican side, they like Giuliani. Romney was close behind, and Ron Paul was surprisingly strong. On the Democratic side, Obama was the clear favorite. Now of course, we are in Illinois, and there is obviously some home bias. It wasn't even close. This may be one area where the simulation is not quite in sync with reality. Obama clearly has the hearts of these students even as he has lost ground to Clinton in the larger population. Can he come back? I just saw a ballroom full of students who hope so. Whatever your political affiliation, it was quite a sight to see on our campus tonight.

From Washington Wire (WSJ): "Thompson and Obama Cross Paths in Coralville"

They spoke at the Marriot in Coralville (Iowa) just a couple hours apart. I used to go jogging very close to there.

From The Politico (Ben Smith's Blog):

The politics of global warming got very concrete, and oddly difficult, in a meeting with local environmentalists in the coastal town of McClellanville today, where Elizabeth Edwards raised in passing the importance of relying on locally-grown fruit.

"We've been moving back to 'buy local,'" Mrs. Edwards said, outlining a trade policy that "acknowledges the carbon footprint" of transporting fruit.

"I live in North Carolina. I'll probably never eat a tangerine again," she said, speaking of a time when the fruit is reaches the price that it "needs" to be.

This inspired the Chicago Boyz to work out a rough estimate of a tangerine's carbon footprint.

If the tangerines are raised by a farmer 60 miles away, and he brings 500 lb of them to market in a pickup truck getting 20 mpg, then he is using 3 gallons of fuel each way–6 for the round trip–which equates to 333 tangerines per gallon. This is worse than truck from Florida, worse than rail from California, and worse than ship from Spain.

Read the whole post to see their calculations. I'm sure someone will point out minor flaws and refinements, but the basic idea is sound. Transporting bulk quantities long distances by boat, barge, or train is very fuel efficient in terms of ton miles per gallon. Reducing carbon emissions is not a compelling reason to buy locally. At best, Edwards should have thought more carefully about her example.

Anyway, back to The Politico...

Asked about her comment immediately after the event, John Edwards avoided the question twice, then said he isn't sure.

"Would I add to the price of food?" he asked. "I'd have to think about that."

Let them eat cake?

Hat tip to The Door.

Too much activity around the holiday set me behind on blogging. Time to get back into it.

I thought I'd start by informing you of a rather interesting situation north of the border. Canada's minority Liberal government is expected to get a no-confidence vote as early as tonight. That would mean federal elections in Canada, probably in January. Conservative whip Rob Nicholson tells the Globe and Mail,

"I think there is a little less suspense about the outcome of this but it is historic nonetheless. And you feel the buzz, you feel the excitement in Ottawa today. That something historic is going to happen, that this government is going to be taken down and the Canadians will get an opportunity to change that government. So there is quite a bit of excitement in the air."

If you aren't familiar with the parliamentary system, click on the link to learn more. One of the advantages is the flexibility to call elections at any time through the use of a no-confidence vote. Though our American sensibilities are so accustomed to the 4 year (2 year for Congress) cycle that the thought of having to ramp up the election machinery over the Christmas holiday would seem to be a disadvantage. There are other features of the system that may be positive or negative depending on your perspective as well.

Why does this deserve attention on an economics blog? Because in reading about the coming vote, I noticed some interesting things going on in Canadian fiscal policy. Namely, a lot of spending going on. The Toronto Sun writes,

Let's get a federal election under way before this government of ours has the whole country in the poor house.

The feds are spending money like drunken sailors as they attempt to shore up support and convince Canadians to give them another term in office.

And the Globe and Mail reports the new spending proposals of the last few days. It's a long list.

While I don't follow Canadian politics terribly closely on a daily basis, I try to keep up with the major stories when I can. (More than most Americans, I am quite sure!) It is an intersesting development. Not that different from our own experience. We're all familiar with politicians trying to push spending policies to generate votes. But there does seem to be a different dynamic in the parliamentary system, especially when the ruling Prime Minister does not have a majority.

If indeed the imminent collapse of the government causes a rush of spending, it is worth noting. Just doing a quick search on the political economy of parliamentary systems yields some good papers. One particularly intriguing that I might want to read is titled "The Size and Scope of Government: Comparative Politics with Rational Politicians" by Persson and Tabellini. It is NBER working paper 6848 and published in the European Economic Review in 1999. Comments are open for other papers you might suggest.

UPDATE: Mr. Martin's Liberal government fell in a 171 to 133 vote. Tomorrow, Prime Minister Martin will officially call for elections, most likely to be held on January 23. More from the Globe and Mail. I watched the Liberal and Conservative speeches on C-Span tonight. It's going to be quite a campaign up there.

She'll be coming for your state next. First this (which I reported on earlier), now this (NY Times):

I would rather not spend the next Election Day the way I spent the last one: wondering just how much to hate Ohio. My vote was written off because I live in the perpetually sewn-up state of New York. But because the citizens of that battleground state could not make up their gosh darn minds, their votes actually counted. They chose the current president of the United States.

Or rather, to be accurate, last Nov. 2 they chose the rich guys and party hangers-on known as the electors of the Electoral College, and on Dec. 13, those folks elected the president.

But here's the depressing what-if. If neither John Kerry nor George Bush had received the necessary 270 electoral votes to win - which was a real possibility - the House of Representatives would have chosen the president. What's wrong with that? Nothing much - if each state's representatives all voted. But in such a contingency, each state in the union is allotted a single vote for president. Let me repeat that: a single vote. So the half-million residents of Wyoming would have had the same amount of say in electing the president as the 34 million citizens of California.

What is the most pressing social issue in 92-percent-white Wyoming? Whether people should be able to ride snowmobiles in Yellowstone.

(I will go on the record as being against snowmobiles in Yellowstone - not because I'm an environmentalist but because I am not "fun.")

Am I the only New Yorker (or Californian or Texan) who, nearly nine months after Election Day, can still name the specifics of Ohio's concerns to a "Behind the Music" level of detail? That its jobs have gone to China and its schools have gone to hell? That Cleveland is the poorest big city in America?

...

But I cannot live with that equation of Wyoming = California, that one-state-one-vote House contingency. I know it is merely one small procedural rule. It is not as dramatic or as significant as Supreme Court confirmations. It is not as pressing a morass as the war that looks as if it will go on for the rest of all our lives. That is actually why it is a pleasant problem to ponder in the middle of July, years away from the next election. It is solvable.

Let me make one important point of fact before subjecting you to my opinion.

It's not a foregone conclusion that Ohio will decide the presidency in 2008. I can envision scenarios where it is Michigan or Iowa. I think there's even a wild permutation that could make make Colorado or New Mexico come to the forefront. In 2000 it was Florida. In 2004 it was Ohio. In 2008 it could be one of those or something else.

The center of electoral power moves as the voting demographics change. That could be seen as a strength of the system, not a flaw.

Now for my opinion. Electing a president through the popular vote would be impractical and subject to a lot of... well... you know, without a VERY good system of preventing voter fraud. The cost/benefit calculation for those who would mess with the system would shift in favor of evildoing. It's a virtual certainty (by my way of thinking anyway) that both parties would behave in dishonest ways to a greater extent than they do today.

Furthermore, can you imagine a bipartisan commission to explore changes in the way that we vote for a president? If you're imagining it now, please stop. You'll give yourself a headache. Any change would end up being a compromise between what each party sees as being in its short run interest. That can't be good for the long run.

We have a strong history of Federalism in this country. We are, after all, the United States.

The mechanism by which we elect a president reflects the basic principles by which we govern ourselves. To change the former would betray the latter.

Sarah Vowell (NY Times) writes:

...last year, [the Department of Homeland Security] distributed $38.31 per resident of Wyoming, but only $5.50 for each person living in the state of New York.

When Senator Hillary Clinton started using the adjective "threat-based" in talking about how to divvy up the homeland security funds, I thought my head might explode. Not because she was wrong. But because - simpleton that I am - I kind of assumed that the "threat-based" thing went without saying.

I was clueless enough to think that the very idea or, let's face it, ideal, of effective counterterrorism involved, at the very least, an educated guess about our national vulnerabilities - and I even thought that the money and equipment and personnel would be distributed accordingly. Which probably sounds simply adorable to those of you who have ever heard of the United States Senate.

I love Wyoming. I grew up right next to it in Montana. But from where I now sit in an apartment in the Flatiron neighborhood, staring at the Empire State Building, an apartment that, admittedly, isn't the Brookings Institution or anything, but does have high-speed Internet access and all the cable channels, it seems to me that New York has more ports and borders and financial centers and people and, yes, subways, so Wyoming could stand to throw a buck or two more our way per person.

I really don't understand the part about high-speed Internet access and all the cable channels. Is she trying to say they don't have those things in Wyoming? Maybe not in every nook and cranny of the state, but the cities and towns are not exactly primitive. That seemed a bit gratuitous.

Anyway, the mental arithmetic here is pretty easy, so let's talk about it. It so happens that the population of Wyoming is just about 1/2 million. New York is just about 19 million. New York has about 38 times the population of Wyoming. Hence, by the numbers Vowell cites, you could wipe out all the Homeland Security spending on Wyoming and it would only add another dollar per person for New York. Putting New York and Wyoming on equal footing in terms of per capita spending would require eliminating nearly all of the spending now going to Wyoming.

I'll leave it to the reader to contemplate whether eliminating Homeland Security spending for Wyoming (or Montana, North Dakota, etc.) would be appropriate. Your response will probably depend, at least to a degree, on whether you live in more rural areas or not. I live in a college town in a rural part of one of the most populated states in the country, so I can see this one from both sides.

The fact of the matter is that the quantity of Homeland Security services provided in rural areas is less than that in urban areas. Yet, there is a certain fixed cost associated with providing certain types of security. For example, providing security at an airport in Cheyenne requires a significant investment in equipment, not to mention a commitment to an ongoing cost in staffing--just like it does in New York. Now, of course, a small airport may have only one security portal and a large airport has several, but even then, there are certain economies of scale. Now, think about how many more people pass through JFK than pass through Cheyenne Regional Airport. Remember too, that the security chain is only as strong as its weakest link and you realize that there simply must be some disparity in the per capita spending on things like airport security. It's simply a matter of economies of scale caused by the high fixed costs. A simple extension of this concept explains why protecting trains and subways is orders of magnitude more difficult and costly. There are 428 subway stations in New York City. That compared to 579 airports in the entire US that are certificated for Part 139 passenger service.

I don't have a magic solution to this problem. Providing any sort of minimal air travel opportunities outside coastal population centers will necessitate some disproportionate spending on rural areas. Protecting New York's subways (not to mention the rest of the nation's railways to the same standards would require an incredible amount of spending. But then, if you don't protect the Amtrak train coming into the city from the rural areas, you're back to the same problem.

It's not a pleasant set of circumstances. And I'll admit that the current allocation is probably not optimal, so additional discussion on this topic is warranted. As situations change, so too our Homeland Security spending priorities must adapt. However, I would refrain from simplistic comparisons of per capita spending without a nod to the economies of scale that come with protecting population centers.

I suppose that in the '30s there were some city folks who objected to spending all that money on rural electrification. But the REA and TVA were meant to address similar economies of scale problems. Cities had electricity because there were lots of customers per mile of wire (and cost depends largely on distance). Rural areas had fewer customers per mile. Now, the good folks in rural areas have electricity, cable, and high-speed Internet--just like Ms. Vowell in her Flatiron apartment. (And that's great because it means you can read my blog whether you are in Cheyenne or Manhattan.)

Today's problems and priorities are different, but there are some principles that one would do well to keep in mind when thinking about these things.

John Tierney thinks so.

Ok. This might have seemed like a good idea when he thought of it, but you cannot do justice to this in 700 words. Trying to do it in such a short space is just not right.

Smith knew that some people professed love for all humanity, but he realized that a man's love for "the members of his own family" is "more precise and determinate, than it can be with the greater part of other people." Hence his famous warning not to rely on the kindness of strangers outside your family: if you want bread, it's better to count on the baker's self-interest rather than his generosity.

Theory of Moral Sentiments vs. Wealth of Nations. Also called the "Adam Smith Problem" (or as I prefer, the "so-called Adam Smith Problem" since it's really not a problem). Got it. Familiar with the concept.

Tierney uses the first half of his column to compare this to the Jedi's use of the Force for good vs. Anakin Skywalker turning to the dark side. (Must...resist...puns...about...an invisible hand.)

Nonsense. I don't think Adam Smith regarded this as a good vs. evil issue. The "Adam Smith Problem" is not a problem. Tierney's only real cinematic example to support his claim is that Anakin recognizes the limits of altruism. Well, it's a big step from that to... well, you know how the story goes.

Then, in a return to reality, Tierney mentions a paper by Daniel Klein, which I think I might like to read. It's called "The People’s Romance: Why People Love Government (as much as they do)." Sounds interesting. I think this paper probably has a lot more to do with TMS and WN than Star Wars does. Tierney was just straining for an analogy to pitch this idea in his column. Sometimes you find an analogy that works, sometimes you don't. The Darth Vader/Adam Smith thing didn't do it for me.

Luke Skywalker would be a better candidate for an Adam Smith character. (Ok, ok... I'm not saying the analogy works that well for any character, just that Luke represents Adam Smith better than Vader does.)

UPDATE: Brad DeLong and Matthew Ygesias agree. Brad says:

...first, because praise of the ethics of Darth Vader is simply bizarre, and, second, because it is a clear misreading of Adam Smith

That pretty much says it all.

Weird. Really weird.