I was wrong

It's very rare that I can say something and be wrong about it the very next day. After I raised my eyebrows at a piece from Vox that criticized, but suggested nothing the Academy put out an announcement that they were changing their rules for membership in order to bring in more diversity. I'm not sure it will be successful, but it's action, and rather swift action too.

It brings up the possibility of anger leading to groups in power coming up with solutions. The groups in power may know more than the people on the outside, and find better ways to fix the system. On the other hand, they may just offer token improvements if policies aren't handed to them.

I think this case saw success because the Oscars are all about their moment in the sun, while other groups can just ride out the media buzz. The media cycle peaked at just the right time to threaten the business model that the Academy is built on.

Good for them. I was wrong.

A few thoughts on this week's news.

A couple of very very quick thoughts on the week's news I've read.


-All of the stories about the weather, and particularly the current weather in DC show where journalism comes from in this country. Or, at least, the journalism that I read. Two feet of snow in Minnesota wouldn't even get noticed by the press, but if it happens in DC you see articles on how to drive, how to walk, how to shovel, and more. I'm too lazy to get links, but they're out there.

-African American media anger cycles rarely talk about solutions. I've read or seen at least two dozen articles on the Oscars and how few African Americans are put up by the Oscars. There are a lot of reasons why this is the case, which means easy solutions are hard to find. Therefore I haven't seen a single solution to this problem besides instituting a rule to look at at least one minority candidate for each role. I like that idea, but so far no movement has emerged around solutions to get back room stuff done in a way that gets more African Americans in the pictures.


The news made me sad this week.....

Changing Parties ~ Democratic Inaction

So a certain paper has been rattling around in my brain for a while now. The paper, "Ideological Republicans and Group Interest Democrats: The Asymmetry of American Party Politics" presents a fairly convincing case for rethinking the concept of the modern American politic parties. The basic argument is that the two parties are not fundamentally the same; Republicans are individuals built on principle while Democrats are a coalition built on action. It attempts to explain some Republican action since the George W. Bush administration. It's limited government vs. specific policy proposals. Weirdly enough, a majority of the country supports both concepts. In the words of the authors:

"Liberal positions are more popular than conservative positions, and sometimes substantially so, on nearly all domestic policy issues, even those—such as crime or welfare— sometimes thought to be “owned” by the Republican Party. Yet conservative responses predominate on items measuring ideological self-identification or attitudes regarding the general size and power of government. Depending on the scope of the questions asked, this summary of American public opinion reveals both a center-right and a center-left nation."

A Democrat will often talk about class, working mothers, the working class, the poor, women, etc according to the authors while Republicans will often say that they believe in a smaller government, stronger military, or individuals to be responsible for their own lives.

The person who brought this to my attention, Tanner Greer (check out his blog) says that the Republicans are transforming from a party of ideals into an interest group party like the Democrats. Trump, the center of the plague on the Republican party has appealed to only one group: white working class Americans. There is fairly good statistical data supporting the fact this has not been the case, and Trump certainly is going in that direction. I don't really mean to challenge this concept or idea in any sense.

I think this is a good explanation of my own way of looking at the world as well as Hillary Clinton when it comes to Democrats and that the Democratic Party is going through the opposite of the Republican Party with Bernie Sanders. I've had a number of times where I've read articles (like this one just today) that bugged the hell out of me. There is a large trend in liberal politics seen through Occupy Wall Street and Black Lives Matter that push more rhetoric than substantive policy. In both cases I've understood the reason for anger, but could never see a common policy or game plan for either movement. Awareness isn't going to solve these issues in the media environment we live where one moment big banks and racism are problems and the next we're all upset with a Minnesotan dentist who shot a lion. Systems don't move fast enough to react to simple anger. I've had a number of discussions on Black Lives Matter where I ask what it is they want to accomplish. There are a number of things I agree with (body cams, federal prosecution for police murder, etc.) and there are some I can't get behind (giving reparations).

But what separates Democrats from Republicans is how they try to get these things done. Republicans can shut down government, but Democrats make compromises and fight little by little to get what they want. When Black Lives Matter shuts down a highway, shuts down a mall on Christmas, or shuts down an airport on Christmas I see more Republican tactics than Democratic ones. All of my policy minded friends out there should know that supporting a socialist will not lead to compromise or progress, but will simply gum up the system. Republicans can do that, as they win if nothing happens or the system gets gummed up, but Democrats are supposed to make the system run. What will happen when both parties are against action?

The Mayo Clinic and Inequality

I was writing about Rochester Minnesota and I remembered a lesson from my undergrad public economics class.

The lesson was that weirdly enough, inequality increases public goods. The understanding beyond writing out math is that when everyone is equal it is hard for anyone to step up and provide the good of their own free will because of the free rider problem. Due to this fact the government uses coercion to get its money to provide a more optimal level of public goods than we would willingly just give over. On the other hand, in really unequal areas, the government doesn't have to do much to create public goods. The rich will simply do it on their own.

For a while I had to scratch my head to think of any examples of the rich providing public goods. There were a lot of counter arguments that popped into my head. Most charitable giving goes to places that receive a lot of other charitable giving. If there is an expensive park around built by a rich philanthropist, there are probably other rich people around that the philanthropist could hope to free ride on to get some public goods. Additionally, a lot of philanthropy is not for public goods that the philanthropist himself plans to use. Usually it is something the philanthropist has already used or a cause that gives him or her some utility from helping others. The standard economic model did not fit as well, or so I thought in class. Of course, behavioral quirks got in the way of another rational economic model.

However, I feel the Mayo Clinic shows the model can work. Especially when applied to businesses that are more rational than the individual. The Mayo Clinic fulfilled a number of important parts of the model. It employs around one third of the town, dwarfing other businesses in the area. There is a lot of money in the area, so you can actually have public goods. Finally, the model's results jive well with what is happening in Rochester MN right now. The city is undergoing an expansion called "Destination Medical Center" that aims to make Rochester an even better place to live and visit (for medical treatment).  The plan will cost six billion dollars and the vast majority of that money is being spent by Mayo. Most of that money is going into public goods for visitors, residents, and medical tourists.

It's fairly logical for Mayo to do this. On the website for the Destination Medical Zone they say that medical tourists spend 70% of their time out and about in Rochester, so their business depends on the amenities available in Rochester. It's also not possible for Mayo to free ride.  There are no other businesses that could build these public goods in Rochester. It would be a bad idea to rely entirely on the government to provide the public goods that Mayo wants, as Mayo knows its preferences better than the city officials do.

It seems to me that the model was a fairly accurate way to describe how things are going in Rochester. There's a lot that can be learned from this in how industries set up public goods institutions. In places where you have a company that dominates the area, it can be the institution that provides public goods. In areas that you have multiple institutions you need a coercive mechanism or a strong private partnership institution that can provide public goods.

It would be an interesting idea to explore how institutions vs. individuals provide public goods within this model. What level of inequality do you need with individuals to get public goods? what level do you need with businesses to get public goods?

Below is some of a model I wrote up for the class. Feel free to plug and chug to find something else fun. The variable A is a way to change preferences and how much the agents like the public good.