Participatory Democracy

miscellaneous (H)

2012-02-07T19:03:00.002-06:00

Immigration Discretion

Earlier,

I wrote about the need for discretion in immigration matters, in marriage, and immigration.
Democracy Now, August 10 2011, talked briefly about a gay marriage where one member, the undocumented immigrant, is caring for his partner with AIDS. Regardless of one's feelings
about same-sex marriage, is there grounds for compassionate
discretion, when one person is caring for a United States citizen with critical health issues.

Is this best administered by a government, even the personal intervention
of the President, or participatory democracy?

The Federal Reserve

The Federal Reserve made a 15 billion dollar loan to Goldman Sacchs
and it had a peak balance of 34.5 billion. Credit Suisse had
a 45 billion balance. Fortunately, these loans were all paid back.

Bloomberg Business Week, July 11 to July to 2011

Irrational Verbal Exuberance

Stock analysts were more often give "buy" signal when the CEO used
charismatic vision language.

Business Week, Page 017.August 3 2009.

Green

Carbon credit mechanism allow offsets. By preserving trees in the Amazon,
one avoids putting carbon dioxide in the atmosphere. Should those producing
carbon dioxide be allowed to purchase such credits. But the problem is avoiding paying people for not chopping down trees that they would not have chopped
down any way. Deforestation now produces 18% of the global greenhouse
emissions, the same as all the world transport. But Brazil is doing less chopping down of trees now than it did before. (I recall reading many decades ago in a book on the global plenty, that the United States cut down one third of its forests. However, recently, there has been a net increase in forests
in the United States. Thus countries will naturally clear a lot and then
as the forest lands becomes more valuable as there are less of them.)

If money is paid to one group in a country, to preserve some acres, won't
the people who want to exploit simply move to another part of the same forest.
China paid people to stop using HFC-23, a greenhouse gas. But somepeople
received "windfall profits" and they had to create a "windfall profit" tax
to reverse the bonus.

The Economist September 26th 2009, page 94 to 95, Volume 392, Number 8650

Romney

About Romney's successes (Staples) versus jobs lost in other Romney
businesses. "IN sum, the form of capitalism that Romney practices helped revive the U.S. corporate sector in the 1980s and made it more efficient in the short term but left it less likely to produce new products
and technologies--with the excepton of Wall Street, where phenomental salaries lured the smartest young Americans to create fabulous new computerized gambling devices with,
as former Fed chairman Paul Volcker has noted, no redeeming social value."
These strong words came from Time December 12th 2011, article
"Where is the Love?" by Joe Klein, Volume 178 Number 23.

Similarity to the United States Constitution

Several law professors found that Countries adopting new Constitutions
were less likely to makethem like that of the United States.
Ruth Bader Ginsberg recommended the South African, Canadian Charter
of Rights and Freedom and the European Convention on Human Rights
as recommendations. And the United States Constitution is the most difficult to amend.
The average lifetime for a constitution is nineteen years--Thomas
Jefferson recommended that a Constitution should expire tat
the end of nineteen years. The U. S. A. Constitution protects

speedy public trial, not widely recognized
and is an "outlier" in prohibiting governemnt establishnment
of religion
the right to bear arms--only Guatemala and Mexico also do so.

And other Constitutions do protect:

right to travel
presumíption of innocence--specifically stated
entitlements such as to food, education or health care.

Also foreign judges are less likely to cite decisions of the United States Supreme Court.
New York Times, page A1 , February 7 2012

Miscellaneous (G)

2011-08-02T15:32:00.000-05:00

European Bank Stress Tests

I have proposed the alternative of share economy to our present banking
and debt system. And Ann Pettifor showed how the finance system
is a parasite creating money in a leverage.
And Nassim Taleb, of "Black Swan" fame, decries debt.

The Europeans, and similarly the United States of America Government,
is having "stress tests" of the banks.
After the financial crisis, many governments go through this exercise to
prove that their financial system is sound.
Unfortunately the Europeans use rather bland assumptions for
these allegedly
worst case scenarios:

What if the United States Dollar falls eleven percent
What if theEuropean unemployment goes up a mere 0.5 per cent to 10.5 percent.
if stocks drop 15 percent
gdp goes down a mere 0.4 percent

and specifically they don't consider that even a single European country might default on its debts.

And banks include assumptions over how much revenue their "trading desks" would generate.

Source: Page C1 and C2, Wall Street Journal July 14th 2011, "Late Stress Over Tests". Volume CCLVIII Number Eleven

Arab Unemployment

I pointed out in June 12th's Miscellaneous category the unemployment among educated Arabs. The IEEE Spectrum pointed out this issue. Sixty percent of college graduates do not find jobs in their fields. Engineers still face bleek prospectsd, but fortunately Egyptian Engineers are doing better, particularly electrical engineers. ("What Young Engineers Want Out of the Revolutions" Prachi Patel, June 2011, Pages 11 and 12, Volume 48, Number Six)

The Bond Market

"James Carville, Bill Clinton's political adviser, once said he wanted to be reincarnated as the bond market so that he could 'intimidate everybody.'"

Global Markets: A Wild Ride, The Economist January 26th 2008, page 70, Volume 386 Number 8564

We are now so accustomed to governments running up billions of dollars in deficits every year that we take it as normal, even to people outside the country. "But it is insane to think that a country can run up such debts for years and not have it affect their fiscal autonomy." (Will Kymlicka, "Citienship in an era of Globalizstion: commentary on Held" Page 112 to 126, Democracy's Edges, edited by Ian Shaipro & Casiano Hacker-Cordon Cambridge University Press 1999.

Dr. Kymlicka went on to say that when Canada, which he discusses in the article, will soon be running a surplus and this will test whether it has more power.

But a share economy would deal with this appropriately--one would sell the bonds not at an interest rate but as a share of the income or tax revenue or imports or exports of the country. (I would argue that a country would be better to make it a share of imports so as toimprove its international competitiveness.)

And to be explicit, a bond holder gets a vote proportional to the amount of their share. So if two percent of the country's GDP is contracted away in lieu of interest. Then, the Currently the United States Public debt interest cost is 1.6 percent of GNP of 212 billion per year.

I propose to replace that by a share of the GDP instead of bonds. But the new debt would also include a vote--thus bond holders would together have voting power equivalent to 2% of the population.

In a share economy, the interests of the bondholders would be pretty much aligned with that of the citizens, although perhaps with a some difference in time preferences, but neither would really want to sacrifice long-term growth for a larger payment now.

In the United States, we talk about not saddling our unborn children or children with these debts. Make our bonds payable at a certain percentage of the income of all people who were of voting edge at the time the debt was contracted. The debt gets retired naturally as these individuals die off.

patents and patent trolls

On the pay everyone what they earned theory, I suggested that each individual and business pay a tax for intellectual property. They can then allocate this to the intellectual property they consider worthwhile, whether it be a drug, the result of scientific research, music, tv/memovies and services and content agregators like google npr or MSNBC, or the reporters who actually get the news. We would select a median amount to pay by a median process. Each person can then distribute their share to whichever intellectual providers THEY feel made the most contributions, whether it be Einstein, a researcher finding a great medicine, the latest Startrek movie, or google that provides a wonderful search engine.

When we have intellectual property or a public good as private property, one has problems. The most severe is determining who has worthy intellectual property. The worst of this is patent trolls, people who get me-too patents on obvious things. One example of the disfunctional system: someone in 2000 got a patent on toast. And the featured patent Chris Crawford for setting up internet backup or software refreshening softwares. There is a patent suit about the mouse bringing up a popup when it hovers over something. 30% of all U. S. patents are for things that were already known. And eighty percent of software engineers said that the patent system hinders innovation.

Intellectual Ventures, described as a largest patent troll, brought in two billion dollars. Nortels old patent collection sold for 4.5 billion dollars.

Unfortunately, it is difficult to define "Patent Trolls." using conventional statutes. "Under some definitions, the legendary independent inventor toiling in his garage could be a troll. Under other defnitions, well-known productive companies could sometimes be deemed to be polls, if they sue over a patent which covers a product the company does not currently sell." (Mechanical Engioneering, page 35 to 36, August 2011 Volume 133 Number Eight

The patent statute punishes companies who mark their item with a patent number, but the patent has expired or has been judged invalid. If a company marks their object with a patent number, then all companies are non notice about the patent. Otherwise, the company has to send a "cease and desist letter" to the infringer.

This kind of problem happens when a manufacturer still has usable molds, except that they have a patent number on them which is no longer appropriate. Do they make a new mold, or save money on molds but risk a lawsuit under the rule that one cannot put a misleading patent number on one's products.

All these things can be handled by sortiton juries.

ExpertLens

An online method that can use both experts and individuals to determine difficult policy questions. It uses some crowdsourcing and feedback between the group's answers and seeing if people changed. This is a type of deliberative polling. (Source, Mechanical Engineering August 2011, Page 21-22. Volume 133 Number Eight.

Weird Results

Undergraduates were asked to rate five personality traits of Chief Executives of Fortune 1000 firms solely on the basis of their photograph. And found that these were correlated with the firm's profits. By the way, another set of researchers tried to look at actual chief executive personality. They found no correlation between that and how well the company did. (Perhaps more profitable firms are able to get chief executives that look competent, dominant and who have "facial maturity," i. e., not "baby-faced.")

"Face Value" The Economist Page 78, January 26th 2008, Volume 386, Number 8564.

Safety First

The proposed design for a product included a particular safety features. Marketing wanted it removed to save money. The three engineers involved inthe design and a recognize testing laboratory stated that the safety device should be included (but no standard mandated the requirement). Marketing prevailed, but Eventually all the items had to be recalled because of the fire risk. It was of course much more expensive to do the recall than to have done it right the same time.

"Serving Two Masters" Brian porter, Mechanical Engineering August 2011, Volume 133 Number Eight

Predictions

Freakonomics Radio just had a good show on Predictions. Tetlock did a twenty year study of political experts predicting political events. Most did somewhat better than chance, but no better than regression. The predictors who were dogmatic were not effective. And the predictors who might make the big prediction, say the person in 2006 or 2007 who predicted the financial meltdown, did worse on average than others.

Michael Hudson on Democracy Now pointed out tht the bond rating agencies do not want to be liable to their "opinions." Thus, those who bought AAA-rated mortgage banked securities that turned out to be "junk" could not sue the rating agency that gave it an AAA-rating Dodd-Frank made the rating agencies liable. Michael Hudson proferred that the rating agencies are threatening to downgrade the United States debt if they don't repeal these provisions of Dodd-Frank.

The Freakanomics radio programs began with a new Romanian law that made "witches" liable for their bad opinions with criminal fines and jail sentences. But Romanian politicians were not liable for their bad predictions. We need to track each predictor's predictions over a lifetime. Right now, predictors have an incentive to make wild predictions because they can trumpet that "they predicted the big one." There is nobody to day that 90% of that experts predictions were wrong. In my clawback tax and the "pay when we really know" proposals, we should only
pay people much later than the predictions and hopefully their lifetime
record will determine people's rewards.

Miscellaneous

2011-07-15T15:28:00.049-05:00

Referendum News

This November, San Francisco will have
a referendum
might be unconstitutional as Jews and Moslems practice circumcision for
religious reasons. It also would be ineffective, as people could easily
have the procedure down outside San Francisco limits. It is sad that
referendums, a wonderful tool, are used for such silliness when Californians
have very pressing problems.

On the subject of silliness in California Referendums, Amazon is using the
referendum process so it does not have to collect sales tax, even though
it "has a physical presence in the state."

Unfortunately, it will probably end in court--apparently in.
California, budget related
laws and "laws that take effect immediately" can't be referendum-vetoed

And one borough is dealing with anti-budget referendum by a clause in its. And there is a move to discourage voting.
bylaws that says fifteen percent of the voters must vote in a referendum--otherwise the referendum is null and void

And Maryland is going to have a referendum on whether undocumented immigrants.
will be eligible for in-state tuition in the Universities

New Zealand will vote on which parliamentary voting system it will use:

Currently they use mixed-member proportional with 70 chosen from districts
and fifty thorugh party lists
single transferable vote with some districts electing more than one member
of parliament
a conventinal system like what the United States does, where each district
elects one represenative.
A variation of this with single transferable
and a variation on MMP, but where they don't try to adjust the party list members
to ensure tghat the percentage of each party in parliament matches the total
voting.

I discussed many of these voting options in my last Thoughtful Thursday posting.

Apparently, the voters will choose on two questions and then there will (I would be in favor of using approval.)
be another referendum in 2014.
voting here between the systems

Anti-nuclear referndum are popular world wide. Poland is planning one on shelving
building their own that were planning.

Italy voted against nuclear energy. Voters also rejected immunity for government officials, so they could
concentrate on their official duties. This is a referendum on Berlusconi who
would have to attend four separate trials.

Health Care

The new health care law allows businesses to pay two thousand dollars
instead of insuring its workers. At that point the workers move into
subsidized "exchanges." There is debate about how many businesses will But Freakonomics reports that when a day care center
take that option. And small businesses less than fifty employees pay nothing
if they choose not to pay their employee's health insurance.
moved from no fine for coming late to pick up your child to a three-dollar
fine, more parents were tardy to collect their kids. Sometimes, people
will take a minor penalty when given that option. With no penalty, moral
pressure will get them to do the "right thing" whether that be picking
up their kid on time or health insuring their workers.
In any event, my suggestion is to apply a sales tax based upon.
the business's provision of health insurance, among other factors.

Businesses would compete to be good businesses, and that includes

taking care of their workers.

elatedly, the June 28th issue of the New York Times (Andrew Pollack, page one)
reported on drugs that
extend the lives of a small percentage of prostate cancer sufferers, those
who are unfortunate enough to have the cancer goe beyond the prostrate and
for which hormone therapy has not worked. This is the question of whether
a few billion dollars is worth what appears to be a modest extension of survival.

And the Wall Street Journal just reported on several drugs that
are truly innovative as opposed to a me-too product. They include a new
drug for advanced melanoma, the first drug for lupus in over fifty years,
and improvements in hepatitis C care.

Of course, I propose that we have a fixed amount of money for drug innovations.

The drug companies would innovate to achieve the best improvements and try
to find drugs that work where no drug has worked before, as contrasted with
me-oo drugs.

Then, the money would be given to the teams and companies achieving the best
outcome, compared to current care.

Admittedly, the insurance companies are achieving this outcome already, by simply
demanding that their patients use generic drugs when such are available and
the new pharmaceutical, under patent protection, dosn't do much better.

Good Statistics, in 2006, pharmaceutical firms spent 45.8 billion on research,
17 percent of their revenue.
("Drug Makers Refill Prched Pipelines", by Jonathan D. Rockoff and Ron Winslow,
July 11 2011 BVol CCLVIII No 8, Wall Street Journal, pages A1, A12)

Another pork barrel project

Representative John L. Mica, who happens to be chairman of the House
Transportation and Infrastructure Committee, has pushed through a 61 mile
ommuter ail prject. The federal government ranks it as one of the least
cost-effective, only projected to serve 2100 people per day. Althougn in

Central Florida, it does not serve the Orlando Airport or Disney world attraction. The Federal government will pay CSX $432 million
for the use of its tracks. CSX and other contractors have contributed to
r. Mica's campaign.

All government projects should go before a sortition jury for approval.
New York TimesJune 28th, pages A1 and A3, "A Congressman's Pet Project;
a Railroad's Boon" by Eric Lipton.

Thoughtful Thursday, Construction Construction Kit Two and the ACE

2011-06-23T08:01:00.001-05:00

Protecting minority rights can be written into a Constitution. There are two cases. The easiest case, the approve case, is when the people have a plebiscite to say something is OK with them. It is a take-it-or-leave-it-proposition. The usual case is ratifying a Constitution, or voting Yes, is OK to cede sovereignty in some matter like joining the European Union, or a giving major rights to develop the country's mineral or oil resources or building a free city. The more complicated case is choosing among several alternatives. This has been studied extensively when there are n people running for a single office, e.g. President . This means that the the plebiscite has more alternatives. Allow the people to choose one of many proposed constitutions.
I discussed this briefly in the case of finalizing a peace treaty between two peoples. I explained that Israeli demos and the Palestinian Demos together would find the best peace deal for themselves without relying on their leaders to negotiate one. Simply seeing which peace deal got the most votes
total won't work. One must find one that gets the best possible approval from both
sides.

And there could have been several health care bills presented to the people.
In such a multi-candidate election, there are many techniques of converting the votes into a "Who Won?" or a ranking among candidates--approval voting, range voting, Single-Transferrable voting, Kemeny and Dodgson Scores. But these all keep all voters alike. Assume in Ethnic Group A is 55% of the population; ethnic group B is the rest. If 98% of a want to do something B really don't like such as outlawing their religion. In a simple majority or any sophisticated multi-candidated election, a could get their way. And if 60% of the A's want to do something and only 40% of B want to do it, then it will be done. But how could we design a Constitution to ensure that issues get support among both (or all) ethnic groups. Or how could we design a Constitution to encourage the legislators to prepare bills that also get support from a wide variety of individuals?

We could simply require that no bill passes unless x percentage in y percent of the ethnic groups approve the act. Thus, in our simple example above, we could require that any bill that passes earns at least 40% of the votes of each ethnic group as well as the traditional 50% of the entire population.
And the Constitution could make a broad rule of the above sort, to pass a plebiscite, in addition to getting 50% of all votes cast, it must get at least 30% of the voters in seven out of the ten designated ethnic groups.
What about a multicandidate election or a referendum with seven choices of what bill to pass. The first is simply to do whatever we were going to with the multicandidate election, but add that whatever came out of it must also pass an approve. If the winner by Dodgson score, Approval Voting or whatever method the Constitution selects, did not meet the approve criteria, where to go the next one in the ranking. See if that meets the approve criteria, otherwise, go on to the third one in the ranking. Etc.
The other option is more gentle, it adjusts or subtracts from each voting total by a deviation factor. A bill that gets the same percentage support from each ethnic group has no adjustment factor downward. A bill that gets all its support from a single ethnic group, even a majority, would have the highest adjustment factor downward.
The constitution specifies the adjustment factor.
We describe this in terms of Wally Smith's COAF system. Recall that this means that each voter gives a number for each candidate. The most general is range voting, where each candidate gives any number from one to ten, let's say. The least general, and arguably the most problematic, is the basic plurality system. Each voter gets to vote once for only one candidate. The winner is the one with the most votes.
Assume our votes came as follows in a three way election. X,Y and Z might represent candidates for the president. Or they may be one of three alternatives in a referendum.

Ethnic Group	X	Y	Z	Percentage
A	3	2	1	15
B	3	6	1	15
C	15	18	25	70
COAF SUM	2	26	27

(The percentage of the population of the ethnic group is not used in the calculation, it simply explains why the vote totals are so much higher for ethnic group C.)
The next step in calculating the ethnic group by candidate is easily done. We simply find what percentage of each ethnic group voted for each canddiate. We then average these

Ethnic Group	X	Y	Z	Percentage
a	50.00%	33.33%	16.67%
b	30.00%	60.00%	10.00%
c	25.86%	31.03%	43.10%
Average	35.29%	41.46%	23.26%

The next step is computing the deviation from the average for that candidate for each of the boxes. This gives us the the three data rows in the table below.

Ethnic Group	X	Y	Z
A	14.71%	-8.12%	-6.59%
B	-5.29%	18.54%	-13.26%
C	-9.43%	-10.42%	19.85%
Squares	216.5	66.0	43.4

Then, we sum the squares of those deviations, This a classic case of "sum of squares" or "norm two." Assume the constitution specifies an adjustment factor of 0.02. The new scores for the choices X, Y and Z. This gives us

	X	Y	z
Adjusted Score	14.3	15.6	14.7

Y won!. Thus, observe that even though Z won the popular election with 27 to 26 votes, that candidate was somewhat more skewed than y, turning the election over to Y after the adjustment factor.

nth smallest voting

There is another technique, nth smallest voting. The Constiution specifies a number nth smallest percentage is the winner. I suggested this in my first Thoughtful Thursday on the Constitution Construction Kit.
Assume, that there are seven provinces, which I call a, b, c, d, e, f and g. And assume there are three choices or candidates: X, Y and Z. And assume the Constituiton specified n = 3, or the third smallest vote,by province, determines the winning candidate. The table below states in the election of how many voted for each choice. (We allow each voter to vote for more than one alternative, like in approval voting, so the percentages don't add up to 100 per cent.)
The third smallest in each column is marked with a -.

	X	Y	z
a	38	47	43
b	12	42	42
c	13	32 -	40
d	35 -	27	34
e	60	35	37 -
f	20	28	32
g	50	50	50

Thus, the winner would be Z as its 37 for the third smallest is higher than that for other two candidates (35 and 32, respectively).

Electoral systems

The ACE Electoral District discusses many country's experiences and many statistics on how the countries choose the systems. It is a goldmine of information and analysis and suggestions for those making the decisions about constructing a Constitution. I see the fundamental division between proportional systems and geographic districts. The United States uses the latter. Each House Representative is elected from a contiguous, if not compact, district. And each voter gets to choose only one representative.
114 have districts and 35% use PR-type systems.
And twenty-two countries have some representatives being elected from districts and other representatives being elected at large or via proportional representation. A nice twist is to deal with the "wasted vote" problem. The proportional votes are distributed so as ensure that the percentage for each party matches the percentage they got fromt he whole country. E. G. Assume, there are 150 seats in parliament and 100 districts. And assume there are two parties: A and B. The top winner in each district gets elected, just like the United States. However, assume that because of the way each district votes, only 55 members of party A get elected from the districts, and 45 of the districts B. This parallel system would then take the top 35 from the A list and 15 from the Party B-provided list. This means that the parliament would have ninety members from party A and 60 from party B--this gives the proportionality of the list system but allows each person to have a represenative for their geographical district.
And there is a really neat variation of the proportional system. The voters can rearrange the list from the parties, or just vote for a particular party.
And countries can and do use the many techniques of dealing with multiple candidate elections. Thus, if there are three people running in a district, they can simply have the one with the most votes wins, have a run off between the ones with the top two vote counts, or use one of the Hare-techniques.
And the Hare techniques can be extended to multi-member elections. Assume there are three members in a district. Those candidates getting 33% or more are chosen. Then, the bottom most candidate's second choice gets added to the total for each candidate. We then see if any of the remaining candidates got 33% votes. If not, the second choice of the second-lowest vote getter gets added to the totals. This process can continue until all the members are selected.

Minority Protection

The Ace Electoral System points out that several countries designate certain seats for specific ethnic groups including Jordan, India, Pakistan. (Also Iran reserves seats for specific groups including Zorastrians, Jews, Assyrian Christians and Armenian Christians. And of course several countries simply overrepresent certain regions in the legislature. This, of course, is done to favor ethnic groups tending to live in the area. And many nations have special arrangements for women.

Referendum News

2011-06-12T17:36:00.000-05:00

British Columbia is referendum voting on a different way of consumption, a "Harmonized Sales Tax) versus
the older provincial sales tax. Of course, this is a take-it or leave-it proposition.
Why can't the people vote for the tax rate (median) and choose which items are to be subject to the tax and at which rate.

The Seattle citizens are deciding part of the major tunnel
project. Sadly, it give the people an opportunity to simply not build the tunnel. They only vote on part of the document or agreement authorizing the project.

Miscellaneous

2011-06-12T16:19:00.003-05:00

Obviously, I dropped the ball on this blog. I anticipate preparing
five or six more "Thoughtful Thursdays" over the next year. And sending out
more of these miscellaneous postings.
I have been focusing my
writing energies this semester on the complete Requirements Document for the
Constitutional Construction Kit
The next Thoughtful Thursday is from that effort.

Hack for Egypt

The Hack For Egypt , as part of Cloud Camp 2011, has proposed
a "crowdsourcing" project for the new Egyptian Constitution.
They are looking in the future at a crowdsourcing for the Bill of Rights in
that Constitution.
This is a much less ambitious proposal than the one I am working on. one needs
a simulation component where the Egyptians.
The Egyptian unemployment
is concentrated among the young, as it is in
many other countries including the Arab world.
And 50 percent of educated of
men
and ninety percent of young female
college graduates are unemployed.
So there is a resource of time to work on the Constitution.

Climate Change

I talked about using sortition-based consumption taxes to address
climate change. The Wall Street Journal
had a special issue on Energy and the first article, which frankly
is an editorial, on Climate Change. They say that emissions cuts,
raising energy costs with taxes, cuts economic
activity. Countries do not want
to do this. By putting the tax at the consumption side, this attacks
imports, and tends to get people to consume in ways
that are not energy-intensive.
They may not buy a computer-they may use an internet cafe.
Imports get taxed based on the embodied energy.
They may buy a smaller and more energy efficient house, use public transportation instead of a car.
The article suggest that governments should push for innovations that produce
less costly energy.
Wall Street Journal, November 29th 2010, Page R1

United States Health Insurance Mandate

As I assume all readers of this blog know, the United States has
mandated that all people purchase health insurance. However, there
is some question whether that is constitutional. The famous "necessary
and proper" clause of the United States Constitution gives the
United States Congress the power to make laws "necessary and proper" to
exercising its enumerated powers.
Does mandating that everyone buy health insurance fall within the
"necessary and proper" clause? One District Court has said no!
And it appears that a Florida judge will rule the same way.
However two lower courts said yes, they did.
I made a proposal that would resolve this. Make individuals tax rate
dependent upon their financial responsibility. We already have deductions
for contributing to IRA and for some education items. Individuals who are
purchasing disability insurance, health insurance, education should pay
lower taxes than those who are not.
There are people who cannot be expected
to have money for
health insurance, the single mom putting
herself through Nursing School. However, those who have money
for a flat panel TV or internet, should spend or invest
it some other way such as health insurance.
The New England Journal of Medicine article,
"Can Congress Make you Buy Broccoli? and Why
That's a Hard Question" by Wendy K. Mariner J.D. M.P.H.,
George J. Annas, J.D. M. P. H. and Leonard H. Glantz J.D.
said that Congress had two goals in passing the health reform
it did:

provide a way for all Americans to gain health care
preserve the private, commercial health industry

Obviously, it is not reasonable to require the health insurance companies to insure anyone regardless of sick they are and let people wait until they are in the proverbial ambulance to buy health insurance.
When a person wants insurance and has a "preexisting condition," we need to distinguish between those who simply waited until they got sick and those that had good reasons for not purchasing health insurance. A bureaucracy cannot. A sortition jury can.
Judge Vinson asked "If the government decides that everyone needs to eat broccoli, can Congress require everyone to buy Brocolli." If Congress chose to expand Medicare or Medicaid to cover everyone, they could have. Congress could then raise everyone's taxes to do so.
I believe at tax time, everyone should compete to show how responsible they are, buying and eating their broccolli, and saving, whether for retirement or their health needs.

Bronte Capital Management Blog

I met Mr. Hammond on the plane to New York City, and then by luck as I walking near 42nd Street in Manhattan. The first article I turned to, was the one on the Australian financial system. There is concern about one of the strategic funds in Australia. More importantly, he discusses the risks with privatized social security of fraud.
There are many other articles there, often very insightfully showing the numbers in investments and securities, from Chinese bus adverts and alcohol sales to Australian Real Estate near the iron ore mining boon.

Benefits Schemes

A gentleman who won two million dollars from the lottery is still collecting food stamps. The food stamp program uses income and lottery winnings is not considered income. State of Michigan is talking about getting a special waiver from the Federal government. (Ron French, Detroit News)
This is why all benefit recipients should go before a sortition jury to eliminate those who don't deserve them, even though they may qualify under the rules.

State Income Taxes

Wall Street Journal, Volume CCLVII Number 70, Page C1 and C2, March 26th to 27th, "The Price of Taxing the Rich" Robert Frank
Million dollar a year incomes pay 45 percent of California's Income Tax receipts. Similarly percentages for Connecticut and New Jersey. The problem with this is that these individuals incomes are erratic. Of course, when the market is up, these people "take their profits." And they have to pay their taxes on the capital gains, and tax revenue goes up. (We saw that when the federal government was briefly in surplus around the turn of this century. But some of this was due to "hundreds of millions in unanticipated tax revenues from taxes on capital gains.") In one year, the top one percent of the taxpayer's income dropped sixteen percent. In 2006, California anticipated a six billion change, either direction, from year to year on a regular basis. In the dot com bust, revenue from capital gains changed from seventeen billion to five billion.
Of course, states can protect themselves with "rainy day" funds. But state governments, like people in general, do not have the discipline to do this.
This blog has long called for salaries and other expenses to be a share of their revenue. Thus States would make goverment salaries and pensions a percentage of revenue. (Note that under the full share economy, government workers and retirees would set their mortgage, rent, etc. as a percentage of this amount. Thus, if this varied fifteen percent a year, they would not be between this decrease and an expense that does not change. Their discretionary income for day-to-day purchases would go up or down by the same percentage as the state's revenues.) And their "borrowing" would be the same way. Thus, rather than selling a three percent bond due in thirty years, they would sell a perpetual bond that paid out nnn percent of the revenue. I earlier called for a "clawback" tax to deal with, among other things, those earning high pensions.
A consumption-based sortition "badness tax" could have firms competing to avoid the taxes necessary to fund the state government.
And with individuals having a share of the income of the companies in which
they invest, there would be less variability of income. Individuals
earn money as the company does, not by selling the shares.

Referendum on how to elect United Kingdom House of Commons

2011-05-08T19:34:00.001-05:00

The United Kingdom had the referendum on "alternative vote" system for its House of Commons (parliamentary) elections. They voted resoundingly no. If passed, there would be multi-member districts, with alternative voting, or ranked ballot, to choose who would represent each district. The referendum vote was part of the agreement to form a coalition between the Conservatives and Liberal Democrats.

There was discussion of having a threshold that fourty percent turn out would be needed to pass the referendum.

The Green Party of England Wales is in favor of a proportional vote. They believed that the alternative vote system in the referendum would be a step in the right direction. And this illustrates that we should have several possibilities in a referendum. In this case that would include the Alternative Vote proposed, Proportional Voting, and the Status Quo.

"At a March 2011 Voting Power in Practice annual workshop, held at the London School of Economics (LSE), 22 voting theory specialists voted to select the "best voting procedure" to elect a candidate from a selection of three or more. First past the post received no votes, compared to 10 for AV, although another system, Approval Voting (not on offer in this referendum), received 15 votes.[106]

By the way the Yes campaign outspent the No campaign three to two.

Iceland Referendum rejects bailout repayment

2011-04-10T09:19:00.003-05:00

Iceland rejected a second time a bailout in a referendum. I mentioned in this blog that Iceland had a referendum to repay bail out, and in fact rejected a previous offer, but that was part of the negotiation process. The Icelandic spoke twice no.

Leadership Part Five, Thoughtful Thursday

2010-12-30T21:49:00.005-06:00

Winston Churchill, First and Second Volume of the Five Volume Set on World War I

As England was mobilizing for World War I in the first part of the 1910's, Mr. Churchill as in charge of the Admiralty. And he made to decisions regarding the new warships being built. Should we build with fifteen inch round guns? Or stick with the 13.5 inch gun which were a tried and true commodity? Every time one increases the caliber of a naval gun, it fires longer and more weight. Going from twelve inches to 13.5 inches increased the size of shot from 850 pounds to 1400 pound. But there was concern whether the gun barrel steel would withstand the stress. (As a Bachelor of Science in Metallurgical Engineering, I certainly can appreciate the possibility. Having seen how much was learned since then about fatigue propagation, low-cycle themal fatigure and creep, as well as the cracking of the Liberty Ships from low-temperature brittle failure. The brittle failure became a problem because of a technology change, going from rivetted construction to welded steel. Thus a crack once started, could go all through the ship. IN all fairness, once they figured out was wrong, the applied a fix to each boat and no more ships lost due to this problem--Google Books, Does Measurement Measure up? How Numbers Reveal and Conceal the Truth, John M. Henshaw.) As Winston Churchill, pointed out, his decision to go ahead with the larger size did work, but just as easily, it could have meant his downfall politically as young and rash, had the materials failed in the new untested gun size.

But the entire design of a naval boat revolves around the decision as to the guns. If the guns did not work, and they had to go back to 13.5 inch gun, the whole redesign of the ships would have been in vain.

A science fiction story of 1913 had the Germans with a 15-inch gun totally defeating their enemies. W. Churchill was happy that the boot was to be on the other foot.

Winston Churchill also made another decision to go with untested technology, using oil instead of coal. The oil had a greater energy density so the ships could go faster than the enemy. The ships would not have to dock to recoal or refuel so often and the men would not have the thankless job of shovelling coal.

But just as shifting to electric cars now would have the expense of redoing the fueling station infrastructure, shifting to oil would be an expense in setting up the infrastructure and reserves of oil. And founding the Anglo-Persian Oil Company. Winston Churchill pointed out that the government invested 2.2 million pounds Sterling. They gained from thirty to fourty million pounds. (Foot note on page 139 and 140 of the volume.)

The people were in an uproar! A German cruiser force attacked fishing towns killing five hundred innocent civilians. The British attempted to pursue them. They were lost in the mist! But like our own terrorist defense, they had to have had people and ships everywhere.

And he talked about the power of naval intelligence, using a little bit of data. In World War I, like World War II, the German code books fell into Allied hands. But the Germans suspected something, so they often used other code books that the Allies did not have. And they also gained much from triangulating on wireless telegraphy from ships. And, then as now, much was made of the analysis part of intelligence, putting the pieces together to make actionable intelligence.

He closes the first volume on the beginning of the problem with the Dardanelles.Britain was trying to keep Turkey neutral. Unbeknownst to him there was a secret agreement between the Young Turk party. The Balkan states saw that Germany appeared to be winning in 1914, and to some extent because of the antipathy with Russia, which was fighting Germany on the allies side, decided to go with Germany. Three months after the hostilities opened with Turkey, the forts garding the European part of Turkey were undefended. And Winston Churchill was concerned that Christians might be massacred in what is now Israel.

At this point, Winston Churchill does his masterful summary. England cleared some stray German warships that were terrorizing shipping throughout the Indian Ocean, Pacific and South Atlantic. "From the uttermost ends of the earth ships and soldiers are approach or gathering in the Easter Mediterranean in fulfilment of a destiny as yet not understood by mortal man." "The arrival of the Anzacs [Australians and New Zealand] created the nucleus of the Army, needed to attack the heart of the Turkish empire. The deadlock on the Western Front, where all was now frozen into winter trenches, aforded at once a breathing space and large possibility of further troops. While Australian battalions trampled the crisp sand of the Egyptian desert in tirless evolutions, and Commander Holbrook in his valiant submarine dived under the minefields of Chanka and sank a Turkish transport in the throat of the Dardannelles, far away in the basins of Portsmouth the dockyard men were toiling night and day to mount the fifteen-inch guns and turrets of the Queen Elizabeth. And yet all was unconscious, inchoate, purposeless, uncombined, Any one of a score of chances might have given, might still given, an entirely different direction to the event. No plan has been made, no resolve taken. But new ideas are astir, new possibilites are coming into view, new forces are at hand, and with them marches towards us a new peril of the first manitude. Russia, mighty steam-roller, hope of suffering France and prostrate Belgium--Russia is failing. Her armies are grappling with Hindenburg and Ludendorf, and behind their brave fronts" there is already signs of weakness.

They had to deal with the submarine menace. There was no harbor for the fleet to retrofit. Thus, do we keep the ships moving where they would be less vulnerable. But, they would suffer wear and tear and burn up precious fuel. Or do we let them rest, and be sitting ducks should Germany get submarines into the harbor. England was frantically setting up booms and nets to stop the submarines.

"Resources, almost measureless and of indescribable variety in ships, in men, in munitions and devices of war will now flow month by month steadily into our hands. What shall we do with them? ... "Shall we

use our reinforced fleets to turn the Teutonic right in the Baltic
or their left in the Black Sea and the Balkans
or shall we hurl our manhood against sandbags, wire and concrete in frontal attack upon the German fortified lines in France?"
Shall we save Russia
shall they try to ally some of the smaller nations
shall the British army only fight in Belgium or should they open a new front
"shall our fleets remain contented with the grand and solid results they have won, or shall they ward off future perils by a new inexhaustable audacity."

In the beginning of the 1915, there were two possibilities. The ships could try and seize a German island giving them a foothold to fight or stop their fleet. Then the Russians army could be transported on their Northern front to open up a new front. Or, they could turn Turkey and hopefully turn a front on the South.

The Tank

After the German and French armies were stalemated in trench warfare, Winston Churchill demanded that someone develop what is now known as a tank. Winston Churchill, as serving in the admiralty, ordered 70,000 pounds Sterling worth of "landships." He pointed out that he went out on a limb here, having no authority to do so.

The idea of a tank was not new. Several peple proposed it. Winston Churchill acknowledge H. G. Wells had written science fiction about tanks in 1903. (Wikipedia has an excellent article showing the concept goes back to two letters published in the 1833 The London United Service Magazine and a patent in 1878.) (I had occassion to read H. G. Well's Outline of History that he wrote in 1921 with concern that the next war would have poison-gas-belching mechanical monsters.) Winston Churchill wanted a large number of landships prepared in secret--that would overwhelm the Germans and punch through the trenches. Winston Churchill sighed that the British government built very few of the tanks, destroying the potential to smash through the barbed wire, taking several lines of trenches at night. He presented his plans in a memo of December 3, 1915, calling for "above all, surprise." But this was not put into affect until November 1917. (Winston Churchill also looked into smoke and gas warfare.)

Energy

The Demos is faced with a similar high stakes scenario, dependent in large part on metallurgy like the fifteen inch gun, the TerraPower reactor. A self-contained reaction breeding fuel from depleted Uranium 235. (When one enriches Uranium, one extracts Uranium 235 and leaves the Uranium 238 behind. It is useless for conventional fission reactions or nuclear bombs. It is used in munitions and armor.)

But the question is whether the materials would withstand the heat and neutrons over decades. Do we go on a fast push or the slow push--the company plans to have a test reactor in 2020 and not have it commercialized for several years after that.

I get the IEEE Spectrum each month--I am a member; it is the IEEE flagship. There are many articles on wonderful schemes that could revolutionize energy production or space travel, including the space ribbon and a plan to mine asteroids.

Vacillation

At first, the plan in the Dardanelles, was that the Navy would destroy the forts with guns from their ships. The British had longer range guns than the Turkish forts, so they could simply destroy the guns therein from the Sea without risk being attacked in return. Thus, the ships would methodically destroy all the guns defending the pathway from the Mediterranean to the Black Sea. Then the ships could operate at will, splitting Turkey into an Asiatic part and the remainder on Europe.

The Army said it had no divisions to spare, so the plan was a ship-only plan. But as there were successes in South Africa, more training and the French made committments, as well as troops from Australia and elsewhere, the issue of sending the army at the same time was made. Thus, the Turks would have faced an attack on their European side, the famous Gallipoli, while dealing with British Navy steaming up and down the water way separating them. The Twenty-Ninth Division was the one that they discussed sending there.

Lord Kitchener was pivotal in this as Secretary of State for War. Yet sometimes he was in favor of sending armed forces to the Dardanelles, and sometimes felt that it would be unwise to have a two-front war weakening the effort in France and with insufficient forces in Turkey to win. After a few ships had problems, apparently from mines or torpedo tubes mounted in the gulf, the War Council voted to hold the navy attack and rely primarily on the military, an exact reversal of their earlier procedure.

The Dardanelles Commissions said that after they started the attack, There were really only two alternatives that were thoroughly defensible. One was to accept the view that by reason of our existing commitments elsewhere an adequate force could not be made availablefor expeditionary action in the Eastern Mediterranean; to face the possible loss of prestige which would have been involved in an acknowledgment of partial failure, and have fallen back on the original plan of abandoning the Naval attack on the Dardanelles, when once it became apparent that military operations on a large scale would be necessary. The other was to have boldly faced the risks which would have been involved elsewhere and once to have made a determined effort to force the passage of the Dardanelles by a rapid and well-organized combined attack in great strength. Unfortunately, the Government adopted neither of these courses..." Winston Churchill points out that indecision delayed the 29th Division by three weeks or more, as it would have arrived in better order.

So what happened to the Navy Plans Under Winston Churchill to force the straits with navy means: Thus it will be seen that never after March 22 were the Admiralty and the Naval-Commander-in-Chief able to come to a simultaneous resolve to attack. On the 21st all were eunited. Thereafter, when one was hot, the other was cold. On March 23 and 24 the Admiralty without issuing actual orders pressed strongly for the attack, and the Admiral on the spot said 'No." On May 10 the Admiral on the spot was willing, but the Admiralty said 'No.' On August 189th, under the impression of the disaster at Suvla Bay, the Admiralty raised the quesiton again and authorised the Admiral to use his old battleships to the fullest extent, and the Admiral met them by a reasoned but decisive refusal. Lastly, in the advent of the final evacuation Admiral Wemyss, who had succeeded to the command, armed with plans drawn up in the most complete detail by Commodore Keyes for forcing the Straits, made vehement appeals for saction to execute them: and this time the Admiralty refused.

A sad note, but not related to participatory democracy, was that Greece offered to send four divisions as well. The Russians were willing to aid, even though it ws surely pressed by Germany. But the Russians were unwilling to ally themselves with Greece and would not have the Greek King in Constanople. Churchill was hoping that the naval success in the Dardanelles would cause all of Eastern Europe to pile onto Turkey. But they could not bring themselves to ally themselves in the hope of great gains to be split.

Conclusion, and relating to our Blog

Our question for this blog is should the demos rely on leaders following things on war maps to make the decisions. And Winston Churhill described excellently how the war room worked in those days. Or are these so stupendous, involving so many political calculations, that there is a role for the demos, a right of the demos to have a say. Perhaps Winston Churchill as Lord Admiral should have been left alone, but the decisions above him, that were made by Lord Edward Grey as Foreign Minister, the Prime Minister and the Exchequer, be made by the Demos directly.

On Leadership Empathy

Winston Churchill had an opportunity to view an attack against the Germans in France (in Aubers Ridge against the Souchez position, April Ninth 1915).

I made every effort in my power without incurring unjustiable risks to view the battle. But neither far off from a lofty steeple nor close up on the fringe of the enemy's barrage was it possible to see anything except shells and smoke.Without actually taking part in the assault it was impossible to measure the real conditions. To see them you had to feel, and feeling them might well feel nothing more. To stand outside was to see nothing, to plunge in was to be dominated by personal experiences of an absorbing kind. This was one of the cruellest features of the war. Many of the generals in the higher commands did not know the conditions with which their troops were ordered to contend, nor were they in a position to devise the remedies which could have helped them.

On Vacillation

We saw above that Supreme War Commands and individual leaders and the combination of the commander on the ground and the command forces at home, all can suffer from vacillation, starting something but not really seeing it through.

And how can a demos avoid going back and forth, particularly when they might be polarized on a decision, with 48% strongly in favor of opposite directions and four percent undecided. (We certainly have seen that such situations can cause changes of government in conventional representational democracies.) We certainly could not have such in military matters, whether it be in major campaigns as we have seen above in the Dardanelles, or even a war. A Demos should not start a war, only to stop it a few months later, then to restart it...

In the latter case, the Constitution should specify that war should not be declared, or started unless two thirds (or more) approve. (The constitution could authorize a sortion jury to initiate a covert or surprise attack with an even greater supermajority requirement.) But there are peace time operations that should not be started and restarted. An example might be the massive undertaking to build electric recharging infrastructure for switching to electric cars to avoid dependency upon petroleum supplies. Thus, the Constitution or rules should allow a Demos to declare:

Before, we make a decision on the issue, whatever decision we make shall not be reversed except by a sixty percent supermajority
Now, we make a decision on this issue.

Lee Kuan Yew and Leadership in Development

From Third World to First, The Singapore Story: 1965 to 2000, Lee Kuan Yew, Harper Collins 2000

When can a leader change habits and development and personal decisions to help a country? When is it good? And can a Demos rise to the occassion itself to eliminate vices or develop itself?

In Singapore, Lee Kuan Yew: ("We would have been a grosser, ruder cruder society had we not made these efforts to pursuade our people to change their ways. We did not measure up as a cultivated, civilized society and were not ashamed to set about trying to become one in the shortest time possible... After we had pursuaded and won over the majority, we legislated to punish the willful minority.")

introduced a plan to build housing and have the individuals living in them own them, the HOusing Development Plans. He relocated some from "squatter huts with no water, power or modern sanitation" but no utility payments o rrent. into high rise apartments. These had rent and utilities. And this was a wrenching experience psychologically. Some tried to bring their pigs, ducks and chickens to the high rise apartments. Others continued to use kerosene lams, stairs instead of elevators, and selling sundry goods.
introduced an antispitting compaign
rounded up stray cattle in the 1960's that were eating grass in public areas
moved food vendors to special areas equipped with water, sewage, etc.
dealt with grey-market taxis
eliminated hog raising
banned public smoking and advertising for same. (That is, of course, an issue now in the United States and elsewhere.)
banned chewing gum--this was famous

There were other contentious examples of leadership--language being one of them. Do they teach students in Chinese, with which the majority had deep emotional ties, or English for the obvious trading advantages. Also, there was an issue of which dialect of Chinese to use, Hokkien which was the home language for most, or Mandarin to better communicate with those in Mainland China. "During our [Lee Yew and his family] walks in public parks and gardens, parens would be talking to their children in dialect until they noticed Cho and me, when they would like embarassed and switch to Mandarin, abashed for not heeding my advice. The switch was especially difficult for the grandparents, but most managed speaking to their grandchildren in dialect and understanding their replies in Mandarin."

As a different kind of development decision, several American cities are downsizing. Major Dave Bling of Detroit intends to constructively evict 20% of the area--leaving them without municipal services such as garbage pickup, police patrols, road repair and street lights.

Leadership Part Four, Thoughtful Thursday

2010-12-23T08:34:00.001-06:00

Leadership Behavior: Its Description and Measurement, by Ralph M. Stogdill and Alvin E. Coons

The Bureau of Businesss Resarch, College of Commerce and Administration The Ohio State University, Columbus 10, Ohio, 1957

Leadership behavior can be looked at in terms of two factors

consideration, such as doing personal favor for crew members, dealing with work-family balance issues on the family side, and being friendly. I read about an accounting manager atCaterpillar bring ing in "Bear Claws" whjen they worked hard to get a big report in
initiating structure. That would be assigning members to particular tasks or organizing a schedule. Such questions as "He plans his day's activities in detail." and "He has everything going according to schedule" By the way, both of these two questions had very high correlations with superior evaluation.

(See below for more details of these factors.)

They did several studies comparing how effective a manager or leader was with their scores from their employees or crew members. Some were done in the military, others in business and still others looked at educational leaders.

Navy Wing Commanders
1. They said that initiating structure activities were strongly correlated with success. Keeping things organized among your crew members earns points with your boss. And overall effectiveness ratings shows a -0.46 correlation with consideration and an equal correlation but in the opposite direction with structure! (Table 13, page 50)
2. When, they looked at the subordinates overall rating, their overall satisfaction were affected by the commanders who were considerate and who maintained the structure of the group.
3. However, when one looks at the combination of initiating structure and consideration, eight had high effective units and two had low. By comparison, where both were low, there were six below average. (It would be interested to do a Bayesian tree analysis. I taught the graduate software engineering course here at Western Illinois University for many years. These impressed me as much more effective in predicting project cost than traditional statistics.)
4. There was little correlation between what aircraft leaders said was important as far as both consideration and structuring behavior.
Educational Administrators When teachers described their leader there was a small correlation between ratings for initiating structure and consideration. When board members rated administrators, there was a much higher correlation. Halpin speculated that superintendents put on their best face when dealing with their board but did not do so in the day to day job of dealing with the teachers (their subordinates)--citing Halpin. (The Leadership Behavior of School Superintendents also from the Ohio Leadership group.)

Industrial Foreman Correlations with measures of effectiveness. The tests were categorized in those departments that had a direct production job versus those that did not : NP--in non-production department and P in production department. >accidents P

Rating	Consideration	initiating structure
foreman supervisior rating P	-0.31	0.47
foreman supervisor rating NP	0.28	-0.19
absenteeism P	-0.49	0.27
absenteeism NP	-0.49	0.27
-0.06	0.15
accidents NP	-0.42	0.18
formal grievances P	-0.07	0.45
formal grienances NP	0.15	0.23
turnove P	0.13	0.13
TURNOVER NP	0.04	0.51

For a test of ROTC students/cadets, rating by superiors were not correlated significantly with either consideration or initiating structure, but rating by pairs were.
When you ask leaders to rate themselves, they do so very differently from what their subordinates do so.
When groups spend a lot of time together, they are likely to lable their bosses with behavior that could be consider dominative as opposed to democratic or suggesting. But his could mean that they are just more sensitive to it rather than leaders are more dominating.

The Ohio State University Leadership Behabvior Questionaires and their Research

Ohio State University researched leadership in the 1950's. Ralph Stodgill published a series of monographs and books. And he developed the Leadership Behavior Questionaire of 150 questions. They were in ten categories. For example, Organization included:

He plans his day's activities in detail.
He has everything going according to schedule.
He meets with trhe group at regularly scheduled times.
He assigns members to particular tasks

"Recognizing Member performance" includes

He critizes members for small mistakes
He reacts favorably to anything members say
He expresses appreciation when a member does a good job

This basic 150 question test was categorized with factor analysis, a statistical technique. They got the four factors:

Consideration, discussed above
initiating structure, considered above
a Production Emphasis, "encouraging overtime work" "stresses being ahead of competing crews" "needling crew members for greater effort"
sensitivity social sidtuation

However, the latter two only accounted for sixteen percent of the variance--so aparently they did not consider them further. And looking at variance between members of the same crew and comapring it to the variance between crews, they found a difference for initiating structure and structure. There was greater agreement among crew memembers for initating structure.

A quote

Myrdal notes that "for all our our [USA] egalitarian emphasis, 'the idea of leadership pervades American thought and colelctive action.' 'Americans are in general quite unaware that the leadership idea is a particular characteristic of their culture' 'regularly show a marked reluctance to admit the fact even when it is pointed out by the observer'
For future Thoughtful Thursday, Myrdal, G. An American Dilemma New York: Harper and Brothers, 1944.

Thoughtful Thursday, Leadership part Three

2010-12-16T08:41:00.001-06:00

Haiman, Frankly, Group Leadership and Democratic Action Boston, Houghton Mifflin 1951.

Empiricial Evidence presented

Nine groups of five students were put in separate rooms and asked to come up with a recommendation on a specific issue. No leader was appinted. They observed the groups and noted when someone does something "that could be construed as leadership."

They then tried another set of nine groups on a similar problem. A leader was appointed. In the class, they asked the members to rate who was an effective discussion leader. But Dean Barnlund did not choose the best leader, he chose six who got poor ratings and three who were in the middle. After the second set of groups discussed the problems:

Then Dean Barnlund prepared a leraning exercise on "democratic leadership." Six of the leaders got the training. Three did not. The groups were reconstituted--they did not know who got the training. The ones who got the training did show dramatic improvent. (I will need to track down Barnlund's dissertation and subsequent work for a future Thoughtful Thursday.)

Dr. Benne at the National Training Laboratory in Group Development have used a series of facilities not only to train the leader to train the group to become "more alert to its own leadership needs."

Benne, Kenneth, "The Future of Work-Survey Conferences" Adult Education Bulletin XII (February 1948) page 93 to 96.

On the job training can convert leaders from an authoritarian style to one more democratic. A controlled study had two groups of Sumemr camp leaders. Six had a training exercise which included observation and discussion of other leaders in action. They were also observed on the job by the experimenters. Then their actions were assessed and arbitrary and authoritarian actions went down. The morale of both the Summer Camp leaders and the children improved. Observations showed authoritarian methods went from 70% to 10%. There was no change or an authoritarian change for the other leaders.

Bavelas and Lewin, "Training in Democratic Leadership" Journal of Abnormal and Social psychologyXXVII (January 1942) 115 to 119.

So training can make authoritarian leaders into those who adapat a democratic style. Precisely what one would want for sortition groups--if they have a leader at all.

Role playing including on-the-job training with role-playing worked to a person training scoutmasters. A "metamorphosis' was achieved

French, John R. Jr, "Retraining an Autocratic leader" Journal of Abnormal and Social PsychologyMXXXIX (April 1944) 224 to 237.

The Unpresident

So what is the role of leadership in particpatory democracy. I thought of the idea of an Un-president who says, "The buck stops with you." (the people). Who unlike "Bush" is not the "Decider" (I hear the second President Bush saying "I am the decideer" on the Political Junkee on NPR each week.)

The "UnPresident" might say, we have a crisis in Korea, should we send the fleet in a show of strength for the South Koreans. And then invite several academic and government experts to present the reasons to/from to do this as well as a fair evaluation of the pros and cons. Then, the "polls open tommorrow for three days, please vote what America should do."

I have heard "that military action" was not taken off the table in regards to Iran nuclear ambitions. Should not this decision be taken by the American People. I discussed earlier, how we could have handled the health care crisis.

Broader Discussion

As I mentioned in an earlier Thoughtful Thursday in the Leadership series, it is a contention whether democratic-type leadership, and hence participartory democracy, makes for happier people. In a controlled study, Dr. Lewin found that children in a group led democratically were happier. But others studies have found that groups that expect a "strong leader" on "horseback." are unhappy when presented with a democratic one. (I need to track these down.)

And he raises the issue, does the process of having and presenting an opinion, even if voted down, help an individual? And, if so, would a participatory democracy be more helpful than a conventional democracy. Or as Henry Thoreu asked, "how can a man be satisfied to entertain an opinion merely, and enjoy it?"

And Dr. Haiman raised the issue of rules, lines and policies very cogently:

A society may agree that disabled war veterans should receive aid, perhaps to prevent homelessness. But is a G.I. who lost his little finger opening a keg of beer at Fort Sheridan, Illinois, on V-J day count as a disabled veteran? A small lodge might agree to buying some paper at twenty-five dollars, but will they select the brand of paper, possibly at the stationary stand. And they may establish a poicy of no excessive drunkenness, but will a committee of the whole deal with each individual who might be considered excessively inebriated. And how do we make decisions quickly, particularly in emergency situations?

And where is the line between oppressing an individual and consensus--could individuals be slaves to the people in general. And he wisely quotes Bertrand Russell.

Those who believe that the voice of the people is the voice of God may infer that any unusual opinion or peculiar taste is almost a form of impiety, and is to be viewed as a culpable rebellion against the legitimate authority of the herd. This will only be avoided if liberty is as much valued as democracy, and it is realized that a society in which each is the slave of all is only a little better than one in which each is the slave of a despot. There is equality where all are slaves, as well as wehre all are free. This shows that equality, by itself, is not enough to make a good society.

One can certaintly imagine a participatory democracy, where each person's every move is directed by a sortition jury with no privacy or free will or the opportunity to let out a little steam at a party. But each person will also have the right to vote on other's freedoms, and will the problem resolve itself in that everyone will understand that they don't want a TV camera overhead all the time for themselves , and thus not do it to others. Will they understand that they want to be able to spend a little of their money foolishly from time to time, and thus let others do the the same? (I talked about financial privacy and referenced David Brin's Transparent Society in my Daily Kos section.) Or will some, e. g. those who might have committed an offense, or the rich in a paroxysm of anger about Wall Street bailouts and bonusses, be subjected to invasive control while the vast majority will be given reasonable freedom. It is really an empirical question, what is most likely to respect human rights: a participatory democracy, a Constitutional democracy which has the equivalent of the United States bill of right, a representative democracy, or a dictatorship, hopefully benevelent.

citing Lewisn, Kurt, "Experiments in Social Space" Resolving Social Conflict New York, Harpers 1948 and Bertrans Russell, Authority and the Individual

And, of course, we must deal with the "great man" theory of leadership. Others say it is the social interplay and an individual can rise to the occassion. As an example of the first is Thomas Carlyle who wrote in 1840:

This.. is an age that, as it were, denies the existenc eof great men... Show our critics a great man, a Luther for example, they begin to what they call "account" for him.. and bring him out to be a little kind of man. He was the 'creature of the time,' they say; the Time called him forth, the Time did everything, he nothing...This seems to me but melancholy work. The Time called forth? Alas, we have known times call loudly enough for their Great Man; but not find them when they call! he was not there; Providence had not sent him; theTime, calling its loudest, had to go down to confusion and wreck because he would not come when called.

Carlyle, hypothesizes a given time to be a collection of dry wood, but without the spark, it never would burn. But we know that a dry forest will eventually have its forest fire or wild fire, even from "spontaneous combusion." And similarly, an idea, a bill can bubble up, and get voted on, even without Speaker's of the House or Presidents.

Thougghtful Thursday: Leadership Part Two

2010-12-09T07:45:00.004-06:00

Jerome David White, "Autocratic and Democratic Leadership and their REspective Groups' Power, Hierarchies and Morale" Dissertition for a Ph.D. in Education at NYU in 1962

They gave a "dogmatism" test to Synagogue Presidents and identified the five most dogmatic and the five least dogmatic. They then gave a morale test, asking questions like recall events in which "they felt a special feeling of accomplishments" and those where "they held something back even though they worked." They also looked at who were considered second most influenctial, third most influential.

The most important result is that the range of morale score in the autocratic group was 47.7 to 61.2 and the democratic was 55.2 to 62.8. Although these differences were not statistically significant, I note that the autocratic group has the two lowest scores. Thus, a dogmatic autocratic leader can cause problems but does not have to. Of course, absence of significances does not mean significantly absent. Perhaps, a larger sample would have come up with a difference.

I have always felt that one of the advantages of participatory democracy is that it does not allow a particularly bad leader to really ruin things.

Dr. White also looked at the members of boards with high power leaders, and found with the democratic leaders, there were more likely to be two or three powerful board members. Perhaps, one of the advantages of a particpatory democracy is that it allows all those who might want to influence the group to do so, rather than the one who was appointed the "leader." But for the vast majority of the demos, they simply don't care. That is that maybe five percent of the American Politician would want to function as a Congress person. But now, rthey can't do so, but under particpatory democracy, everyone who wanted to vote in detail on policies could do so. So five percent would be happier under participatory democracy with the remaining 95% not affected one way or the other.

An important point is that in ALL synagouges, the boards made the decisions of budget, hiring the Rabbi and any building.

The dogmatism questions included

The United States and Russia have just about nothing in common. (Remember that this study was in 1962)
Even though freedom of speech for all groups is a worthwhile goal, it is unfortunately necessary to restric the freedom of cdrtain political groups.
Fundamentally, the world we live in is a pretty loneseome place
In a heated discussion, I generally become so absorbed in what I am gong to say that I forget to listen to what others are saying

Other quotes

Like many dissertations, I found the facts and quotes that the author brought to bring his study into context, very interesting if not more interesting than the work itself. This is no exception.

Some people thought that suburbs would become a new Toqueville democratic small town, Robert C. Wood, Suburbia But Mumford found that only one in three spend any time in civic affairs and they also were not involved in professional associations as well.) (Reminds me of Powell, Bowling Alone). That included that "every ten minutes of commuting reduces all forms of social capital by ten percent.
There is concern that those who lead autocratically will stifle others who could develop their leadership potential. (Albert I. Gordon, Jews in Suburbia Harold D. Lasswell, Power and Personality and Power and Personality and A. Liveright Strategies of Leadership But Haiman states "it is still impossible to demonstrate that either of the two styles (autocratic or democratic) promotes high productivity or high morale.
Other studies have shown that Autocratic Leaderhsip debilitates:
1. Ronald Lippitt, "An Experimental Study of the Effects Democratic and Authorities Group Atomospheres, in Studies in Topological and Vector Psychology I, edited by Kurt Lewin, University of Iowa Press, 1940 (This found that groups under one authoritarian leader were not frustrated when replaced second, and thus groups would eventually increase in morale after many autocratic leaders, even though they started from a lower level of morale.)
2. Kurt Lewin , "Patterns of Agreesive Behavior in Experimentally created 'Social Climates," Journal of Social Psychology 100 1939, pages 271 to 299
3. Ralph White and Ronald Lippitt, Leader Behaviro and Member Reaction in 'Three Social Cliamtes' in Group Dynamics Dorwin Cartrwiehg et. al White Plains, Russ Peterson and Comapny, 1953
4. Daniel Katz, Productivity Supervision and Morale in an Office Situation founded that high productive offices had more democratic supervisors than the others
While other studeies questioned this
1. R. C. Anderson "Learning in discussionsL A Resume of the Authoritarian-Democratic Studies" Harvard Educational Review 29 (1959) page 202
2. Lippit found that when an authoritarian leader replaced
3. Daniel Katz, An Overview of the Human Relation Programs in Groups, Leadership and Man
4. Katz, Daniel, Survey Research Center: "An Overiveiwof the Human Relations Program" pages 68 to 85 in Groups, Leadership and Man Harold Kuetzkow Editor, Carnegie
Going back to the synagogues, they observed that the annual meeting has one slate of members, have no opposition and the annual meeting.
Wood comented at length that in small towns and here in synagouges, thinge are done in an informal way ignoring rules of procedure, such as helping a "friend" with a ticket or getting closer holiday seats.
At the budget meeting, the citizens do not understand or pay attention to the budget. Most of the members who care are already on the board. (Wood, Suburbia)
And Dr. White quotes Richard E. Gordon, The Split Level Trap that people who rule or have leadership positions are often immoral and Lasswell that power-hungry leaders repress other's democratic leanings. Power and Society, 1950

Thoughtful Thursday: Leadership Part One

2010-12-02T17:18:00.001-06:00

As I believe you all saw, I am a Computer Science professor. We are in a College that has the business departments, as well as the Agriculture, Engineering Technology Departments. (It also has the new School of Engineering.) And universities and schools of business are accredited. And the accreditation agencies require "assessment." This simply is some check that the students are learning or gaining in other goals. So every two years College of Business asks a samples of its graduates to take an EFT multiple choice exam on various areas of business such as accounting, marketing, finance. We also have some of the faculty look at the case studies the Bachelors of Business students do for the Senior Capstone course -- do the students integrate all their other courses? do they use grammar properly.

a I serve on the Committee that handles all this. And one of the things we were trying to assess was "leadership." What does the leader on the case study team do? One way to do this was to simply ask the other students to rate the project team "captain." But was there a better way or a different survey? I volunteered to find out about this. In the course, I ran into several books, published many decades ago, on what leadership is, and the effects of different leadership styles.

And they helped answer questions about leadership, what makes a good leader, what affects do the The research involves surveys, and in a few cases interviews and observations, and comparing these to results. I will report in later submissions on the work of the Ohio State University Leadership Group, headed by Ralph M. Stogdill.

But in this submission, I cover some, probably random, selections.

setting the tone

An army group has both a Commanding OFFICER (CO) and high-ranking sergeans. If there was a Commanding Officer that was good, wouldn't the sergeants do well as well. Actually not. (In businesses, the leader chooses his subordinates. That is not true in the army.) Apparently, a CO can't "order" the other leaders to do a good job. A manager might choose good middle managers, but can't do anything to encourage them to do a good job. Selvin used a fifteen question test, which he found after factor analysis, broke up into three categories, positive emotions (I would follow this guy into combat), "tyranical" which I would interpret as authoritative "going to bat for men" but also included punishing at every opportunity and inducing fear. The last category was "vacillating " or inconsistency such as breaking promises and playing favorites. The latter two factors were themselves strongly correlated. Thus, there are four types of companies

Positive	Tyranicall and vacillating
high	high	paternal
high	low	PERSUASIVE or democratic
low	high	arbitrary, or just plain "bad"
low	low	weak

Affect on the men

Those in a good leadership situation, persuasive, and were older draftees were much less likely to get drunk (13%) than any other group. Yong draftees were 31% likely to get drunk regardless of the leadership climate. Similar but less intense were for having anger attcks, "blowing one's top." And the arbitrary leadership leads to aggressive behavior in those who did not graduate high school and high rates of visiting wives or girl friends, seeing the chaplain and short term AWOL. (Remember that this study was done during the Korean War in Basic Training.)

definition of leadership

Does a team need someone appointed or annointed "leader" or "President" or "Commanding Officer." And that leader might choose to give the team options on what to do.

Some leadership assessment looks at who becomes a leader in a group where no leader is appointed. On of the "gifts" in gifted education is leadership--who might become leader if a bunch of kids are put together and given a group task. Watch them--who becomes natural leader. NPR had the author of "Good Boss, Bad Boss" talk and he said that in any group of three or more people, whether peple or animals, a leader emerges.

Thus in a group, someone might become:

the formal leader
a person who everyone identifies with and whose personality is most associated with peoples perception of the group
If you survey the people and ask them who is the most influential-- determing what to do.
who does the most to advance the group
the person who sets the structure of how the group does things. (QUOTING from Gibb

Anecdote

Konrad Adenaur, a West German Chancellor was known for democratic leadership, but was very autocratic with his family.

Churchill, Truman and Roosevelt in World War II

As the Allied Armies and Eisenhower in particular were advancing into Germany, what would we (the U.S.) do with the Germans. The ideas were going around the White House. Roosevelt was telling exagerated stories about the Winston Churchill and Roosevelt would talk nonsense and reminisce. Mr. Hopkins, a Roosevelt advisor, would tell the two "leaders" to focus on that which their men were fighting and dying. (From Haiman, Group Leadership and Democratic Action page 119 quoting Robert Sherwood's Roosevelt and Hopkins.)

Morgenthau as Treasury Secretary lobbied first for something to be done to save the Jews in Europe during World War II--Roosevelt was inclined to emphasize winning the war--he did have information about the atrocities. And then Morgenthau was determined to have a relatively punitive peace against the Germans--which is what the emphasis of the book Conquerors Yet Morgenthau was unqualified to be Treasury Secretary, the "Brownie" of his time, a gentleman farmer.

As of August 25th, there was little planning on what do when the US won in Germany--like there was little before the Iraq invasion. Morgenthau was calling for Germany to be reduced to a 'land of small farms.' And while Americans were fighting and dieing, Secretary of War Stimson, Assistant Secretary of War McCloy and Morgenthau flew to Saranac club for an August holiday. And later the President were in their home at Hyde Park and motored to have "tea" with the Morgenthaus at their home.

And Morgenthau wanted to close down the Ruhr and sell all the machinery that could be moved and wreck the rest--damn the unemployed Germans. Secretary of War Stimson on the other hand was pushing Christian kindness towards the Germans and ensuring due process before shooting anyone--Stalin wanted 50,000 to die after "drumhead court martials."

Page 193 of Beschloss' book has James Dunn, third in the State Department, sneaked a document past his boss and Roosevelt taking advantage of Roosevelt getting sick. He said, 'I can't remember if I signed it. I have no idea what I signed.' A battle of documents over a dying President.

When told that Europe needed coal from Germany, the President suggested appointing three German businessmen to supervise the mines and if they didn't succeed, simply "shoot them." Morgenthau handed him a document revoking it.

References

Hanan C. Selvin, The Effects of Leadership The Free Press of Glencoe, Illinois, 1960
Michael Beschloss, The Conquerors, Simon and Shuster, 2002

For Future Thoughtful Thursdays

Malcolm G. Preston and Roy K. Heintz, "Effects of Participatory vs. Supervisory Leadership on Group Judgment" Journal of Abnormal and Social Psychology XLIV, 1949, 345 to 3355
Cecil A. Gibb "Leadership" in Gardner Lindzey (ed) Handbook of Social Psychology Addison Wesley, 1954.
Morris L. Cogan "Theory and Design of a Study of Teacher-Pupil Interaction" Harvard Educational Review 26, 1956, 315 to 342.
A. Paul Hare, "Small Group Discussions with Particpatory and Supervisory Leadership" Journal of Abnormal and Social Psychology XLVIII, 1953, 273 to 275
reprinted n A. Paul Here et al. eds. Smalll Groups
Michael Argyle , Godfrey Gardner and Frank Cioffi, "The Measurement of Supervisory Methods" human Relations X 1957 295 to 313
Robert F. Bales and Philip E. Slater "Role Differentiation in Small Decison-Making Groups" in Talcott Parsons and Robert F. Bales Family, Socialization and Interaction Process Glencoe ILL The Free Press, 1955
Robert L. Kahn and Daniel Katz, "Leadership Practices in Relation to Productivity and Morale" in Cartwright and Alvin Zander, Group Dynamics, Evanston ILL, Row, Pearson and Company

Thanksgiving Thoughtful Thursday, More on Wally Smith and Voting Systems

2010-11-25T07:59:00.002-06:00

I had some more thoughts on Dr. Smith's work on Range Voting, or more precisely:

As this is the first Thoughtful Thursday that will be on Thanksgiving, I close with a thanks to some of the wonderful people have explored the ideas of democracy. Political scientists study Locke but do not study Rosseua. I greatly enjoyed Dr. Smith's observations on the probabilities that face a single voter in an election, even a simple binary choice.

One goes into a voting booth. What are the odds that your vote will make a difference--that A would have won except for your vote for B. It is 3/sqrt(8*pi*V) where V is the number of voters. If there are a million voters, it one out 1671. Not bad. But this assumes that the poll says the election is a virtual dead heat. That every other voter is as likely to prefer A to B as the other way around, or it is simply "too close to call."
But many elections are that close. If the pollsters are saying that people are 60% for A and 40% for B, then the chances that your vote for B will make a difference are vanishingly small. (Even for a 51% to 49% case, the chances are about 10⁹⁰)
If we did not have any idea what other people thought--your electiont ou was too small to attract the interest of pollsters, then the odds that your vote would have an effect would be 1/V or (1/2V), depending upon whether V is even or odd. Thus, in our small-town Alderman election with a 1000 people, we would have about a one in 1500 chance of who votes.

Dr. Smith, with his wonderful wry humor, points out that in most elections it is not worth the voter's time to vote as their vote will never matter. And in spite of the hand-wringing of people complaining about voter apathy and lack of turn out, lots of people do vote. But on the other hand, people generally don't "waste their vote" on third party candidates that have even less of a chance than A or B. I can understand people not voting for Nader in the election of Bush vs. Gore, where it was close. But in the election of McCain vs. Obama, where it was clear who was going to win the Presidency, why did we not see more small party voters. As Dr. Smith pointed out that "rational voter" arguments should be given as much credit as most economists talking about a rational homo economicus.

The latter is the key assumption in Dr. Smith's work on Range Voting. Each voter looks at the poll data, and looks at the winner and closest runner up. Then,the voter decides which vote under the voting system, will he be most likely to affect.

And he gets the following algorithms for the Borda vote (a voter ranks the candidates adn the winner gets the sum of the ranks) and range voting.

Borda:: Look at the top two candidates in the polls. Award c votes to your favore. Award 0 votes to your second favorite. Now look at the third most likely to win (from poll data), if you think they are better than the average of the two previous candidates, give them c-2 votes. Otherwise give them 2 votes.

Range: Assume the maximum range you can assign is +1 and the minimum is -1 in this election. Go to the top two candidates, most likely to win--call them A and B. Decide which one you like the best out of those two, the lesser of two evils. Give them +1 to your favorite candidate and -1 to the worse of the two evils. Consult the poll data again and go to the third most likely to win. Call them C Give +1 if that candidates is better than the the average of candidates A and B, -1 otherwise. Then in deciding among the fourth most likely to win, if you like them better than the average of A, B and C, give them +1 , otherwise -1. Dr. Smith calls this generalization the Moving Average Strategy

Dr. Smith tries thirty voting system/strategy pairs. but all the strategic voting possibilities are individual strategies.

Let's say seven percent of the population follows the edicts of Demagogue C. the demagouge has considerable resources and hires computer boffins to determine the best strategic choice. Demagouge says give the vector <0.3,0.2, 0.8, 0.1> In a game theory setting, there might be another demagouge or interest group followed by five per cent that say give the vector< 0.6, 0.2,0.3,0.7> The other 88% are honest. Dr. Smith mentions the issue of allowing the honest voters to be honest which range voting does, and even ten percent honest voters will give better results for society than if everyone is strategic.

Coalitions are important. The wonderful paper of Vinent Conitzy, Tuomas Sandholm and Jerome Lang in Journal of Acm, volume 54, Issue Three discusses these--a topic for another Thoughtful Thursday. And as Dr. Conitzy pointed out, coalitions are weighted electoins. We may have these in shareholder elections where each vote is weighted by the number of shares that one has.

Thus, we should simulate it as a game. This means that each voter considers more possibilities than that given by the affine space and whether it makes sense to only look at the top two candidates in the polls.

I raise a possibility for elections to bodies like the house or Senate. The election is for m candidates over the n fielded. Each of the m winners are weighted by the number of votes they get. So in the Senatorial electon for State S, assume the Republican candiate, R gets 73% of the vote and the DemocratD gets 23% of the vote. There are two possibilities. Unlike the United States current system, the senators from each State are elected at the same time. R gets 1.46 votes and D gets 0.46 votes in the Sentate. The State loses 0.08 votes (for the minor parties). An alternative system which would be kinder to those voting for minor parties would be dividing by the number of votes for the top two candidates. Thus, here R would get 1.52 votes and B would get 0.48 votes so S would not lose a vote.

We should be thankful for the power of simulatoins to look at how large number of voters behavior under various models, and various possible voting systems. Dr. Smith is one such example. We should be thankful for the theoretical models that tells us that it is impossible to create elections and designing systeems that have certain properties. We should be thankful that there have been some trials of particapatory approaches, most notably Switzerland for referenda and cantonal democracy, Participatory Budgeting most notably in Brazil and to a lesser extent in south America, and Athenian Democracy And we should be thankful that somebody has asked in a survey-kind of way about participatory and direct democracy.

http://www.blogger.com/post-create.g?blogID=1223917131662253173#

A link to Dr. Krugman's blog

2010-11-20T07:51:00.001-06:00

Dr. Krugman is looking at the Minsky moment when "everyone has decided that debt is too high." Here is a link to his blog post with the links to the real analysis. http://krugman.blogs.nytimes.com/2010/11/18/debt-deleveraging-and-the-liquidity-trap/

Facts and Factoids about Civil Wars, Thoughtful Thursday

2010-11-18T08:23:00.002-06:00

Thoughtful Thursday James Fearon, "Iraq's Civil War" in Foreign Affairs March April 2007, Volume 86 Issue Two and the Wikipedia article on Civil wars.

There have been 125 civil wars since the end of World War II--as defined as those leading to over a thousand dead.
Another 104 civil wars occurred between 1816 and 1997.
Ninety of the Post World War II civil wars killed more than one thousand per year.
Nine Civil wars since World War II have killed sixty-thousand or more. These include Iraq. They also include Algeria, Colombia, Guatemala, Peru and Sri LAnka.
Twenty civl wars were ongoing as of 2007.
According to Fearon, the average civil war has been ten years with a median of seven years. Wikipedia has the number at four years.
From 1900 to 1944, civil wars only lasted 1.5 years. They occurred just as frequently as after 1944, just lasted less time.
Since 1945, civil wars killed 25 million people.
55 of these civil wars were fought to control a central government.
The remainder were fought for secession (like Biafra or the United States) or regional autonomy.
Of the civil wars fought to control a government, 40% of the time the government crushed the rebels. 35% of the time the rebels won. Sixteen percent ended up in a pwer sharing agreement.
Most civil wars are fought in a guerilla fashion and are rural. Thus, the United States model of organized armies fielded by states is unusual.
Paul Collier and Anke Hoeffler, for the World Bank, argued that civil wars are primarily motivated by economic desires rather than identity issues. However identity issues did become important, and were a source to restart the conflict. I will report more on their work in a later Thoughtful Thursday.
Having commodity exports dramatically increases the chance of civil war. A country with one-third of its gross product being commodities has a twenty percent chance of getting a civil war in a five-year period. Those countries lacking exportable commodities are spared the risk of civil war. (The tendency to create conflicts is part, but not all, of the resource course)
And if there is a national diaspora, that dramatically increases (up to six times) the chance of a civil war. The diaspora finances the war. They are also likely to cause a flare up of the civil war, as the diaspora would often be nursing a grievance. (I had pointed out the possibility of giving the diaspora an explicit vote and say in my article on participatory-style Palestinian-Israeli Peace settlement.)
If there is a ethnic group which has a majority with minority ethnic groups, then there is more chance of a civil war as the minority might feel oppressed.

James Fearon argues that power sharing requires that both sides be cohesive and that there is a group or set of leaders which truly speak for the side, rather than there being a group of militias or war lords.

The purpose of Mr. Fearon's article is to discuss Iraq situation in particular. But the wonderful statistics on the civil war phenomena and tragedy are why I am reviewing it here. Some of the data comes from the Wikipedia article.

Several weeks ago, I proposed a Constitution Construction Kit. The ratification procedure takes into account ethnic identity, so each group is and feels protected. Votes can use a similar principle--to pass legislation, one needs a certain percentage of the votes from each ethnic group. Or where there are several choices, the winner will be the choice that has the largest minima over all ethnic groups. Fact Sixteen shows this is sometimes a problem, but by no means the dominant factor in predicting ethnic conflicts. Forming a world government has much of the same problem as the world certainly has point-source resources unequally distributed.

Israel Palestinian Peace Talk Participatory Style

2010-11-14T12:26:00.002-06:00

Let's not rely on negotiations between one pair of leaders or negotiating teams. Different pairs of people, groups of both Israeli and Palestinians randomly selected, sets of academics all make proposals. And then both Palestinians and Israelis vote on which proposal they like the most. The one that gets the max of the minima of the Israeli votes and the vote. Of course, if no proposal gets 50% of the votes from both the Israelis and the Palestinians, then nothing happens. (A null proposal also can be added to explicitly see if either side just prefers to do nothing. )

proposal	Israeli approval percentage	Palestinian Approval percentqage
a	54	58
b	57	51
c	52	62
d	61	53

Here proposal a win's. It's minimum is 54 and that is more than the minima of b, c, d respectively (51, 52 and 53) respectively.

Following in the spirit of the X-Prize, the individuals making the proposal that wins, gets a few million dollars.

Of course, there are questions should there be three separate votes, the Gaza groups, the West bank and the Israeli's. Do those Palestinians who fled in 1949 and who are now living far away get to vote? If then, perhaps Israelis might say the Jewish diaspora, including those who may be several-generations American-citizens and residents, get to vote. There is certainly no reason that one could not do this with five or more groups.

proposal	Israeli Approval Percentage	Gaza Approval percentage	West Bank Approval Percentage	Jewish Diaspora	Palestinian Diaspora
a	54	58	57	49	52
b	57	51	60	48	56
c	52	62	63	55	57
d	61	53	55	60	48
e	72	51	55	63	54

a, c and d could not win since they have one percentage below fifty percent. Thsat leave c with a min of 52% and e with a minima of 51. So c wins!

The proposals would include of course several two-state solutions as well as one-state solutions. The Constitution Construction Kit would be used to allow the Palestinian voters and the Jewish voters to construct and try to see if they could live as one country.

Simulated Annealing or Hill Climbing

We can assume that there might be several proposals that might attract close to 50%, or better, of each group. Can we tweak them to get a better proposal. We can allow slight variations in a few items, for example, swapping a little bit of land here for a little bit of land there. And see if the amended proposal does better than the proposal. In the spirit of simulated annealing, big changes, and new proposals are allowed at first. Those proposals that have good agreement from parties, get tweaked. Then, these get tweaked by a lesser amount. We only take the tweaks that give a better min max than the base proposal.

The X-Prize Approach

Of course, simulated annealing conflicts with the X-Prize approach. Does a a party making a proposal that gets tweaked quite a bit entitled to the prize? A participatory democracy approach would be that the Quartet would put $25,000,000 in escrow. If and when a proposal passes, the people would then have another election to decide who gets the prize. In the spirit of Wait 'til we really know what you are worth, the first partition would be for two million of the $25,000,000.00. The remainder should be awarded twenty years later when we see that the peace really was stable!

The Literature on Civil Wars

The literature on civil wars shows that sometimes or often both sides have to exhaust each other more before one or both sides is willing to concede... (Foreign Affairs, 2007, Volume 86, Issue Two, Page Two, James D. Fearon, "Iraq's Civil War"--which has some great statistics information on civil wars in general and I will make a Thoughtful Thursday.)

A closing note based on a wonderful NPR Story

A conventionally-negotiated peace deal requires on the leaders having the courage to "take it back to their people and see if they can sell it." The participatory-democracy approach means that there are many proposals and the people can vote on the ones they want. Mr. Miller, who was at the Camp David talks, says don't go to a high level summit if both sides are not ready.

Wally Smith on Range Voting, Thoughtful Thursday

2010-11-11T20:04:00.003-06:00

Range Votting by Warren D. Smith (2004)

Dr Smith identified a class of voting systems where each voter is asked to send back a vector (one number per candidate). The vectors are summed. The candidate whose corresponding number is largest wins.

Many of the voting systems others have discussed are of this category. They each restrict what kind of vector get sent back. Assume, there are three candidates, B, N and G

In conventional voting, each voter simply sends back a one for a single candidate. That is each person has to vote for either B, N and G. thus, we may have the votes

	B	N	G
	1	0	0
	1	0	0
	0	1	0
	0	0	1
	0	0	1
	1	0	0
SUM	3	1	2

Here the winner is B with three votes. Conventional voting allows a vote to be split. There have been several elections where write-in candidates won or split the vote, not just the recent Alaska Senatorial election. IN 1836, the Whigs ran two candidates including Benjamin Harrison for President in a bald-faced but unsuccessful attempt to split the vote. Of course Benjamin Harrison was elected President in 1840 but was to die shortly thereafter.

Then, there is approval voting. Here, each vector is still limited to zeros and ones. However, we allow the voter to enter as many one's as they care to. In the above election, we might have.

	B	N	G
	1	0	0
	1	1	0
	0	1	0
	0	0	1
	0	1	1
	1	1	0
SUM	3	4	2

Here N might have been the second choice of many voters. The approval voting system seems to give a better result. There was a book on approval voting by Dr. Steven Brams and Peter Fishburn, which I will review in a later Thoughtful Thursday.

Then, there is the Borda voting, where each person gives a rank ordering. And we count a first place as one more than a second-place vote. In a three-way election, we will have the numbers zero, one and two with two going to our first choice.;

	B	N	G
	2	0	1
	0	1	2
	0	1	2
	2	1	0
	2	1	1
	0	1	2
SUM	6	5	7

Here, G wins, even though N is practically everybody's second choice.

Range voting gives everybody the most expressiveness. Everyone can put any number between zero and one. (Actually, one can set up range voting with any defined range, say zero to ten like in the Olympics.) Question for the reader--why don't we allow to the voter to put any number without restricting them to a range.

There are other voting systems that one can use. However, they have the disadvantage as the algorithm has to store all the votes. The above types of systems which Dr. Smith calls COAF total, can just work with the totals. I wrote about some of them earlier. Some of them take exponential computer time just to find out who won. Also, each voting machine has to send all the votes to the main office so it can find out the winner. COAF systems are better, the voting machine can send the totals for each candidate to the central machine. That would add the subtotals to find out who won.

Range voting gets out of a lot of the paradoxes and problems in voting theorems. Both Arrow and Gibbard assumed that voters have to give a ranking. In range-voting, each voter provides real numbers.

I have seen several descriptions of Arrow's famous impossibility theorem. I like Dr. Smith's explanation the best (which he attributes to Dr. Fishburn). Each voter gives a ranking of all the voters. My job as a programmer is to write a program that takes the set of ranks and generates a ranking of the candidates. (Of course, in an election for a single senator or governor, we only need to know who won, we don't need to know who the first loser is.) I can write the program anyway I want, but I have to obey the following rules. Arrow also assumed that I have a finite number of voters. (Of course, I question whether the thing might go away with a huge number of voters and) where the probability of a manipulation goes down with the cube of the number of voters.)

In any event, I cannot write an algorithm that fulfills all of these conditions.

There is a finite number of voters--obviously. in an election with three (or more) candidates.
If all voters agree than one candidate is better than the other will that candidate come out ahead
Let there be two sets of V voters each and we run the algorithm in (two parallel universities). Only one voter differs between the two universes. However, they both rank candidates B more than G but rearrange their choices for other candiates. The algorithm should both rank B more than G (or the other way around). This is that the final result should not be affected by how voters behave on irrelevant alternatives. Thus if B wins, if everyone rearranged their choices ranked beledow B, it shouldn't change the fact that B has won. (I have seen some argue that this is not an important criteria.)
We also don't allow me to write a dictator solution. That is, I can't just copy one person's choices and ignore everyone else's choices.

Dr. Smith programmed what I would consider the obvious simulation. Some voters are honest. That is they simply send in their utility. Others try to game the system. Dr. Smith calls them rational. They are simply the people who will vote the lesser of two evils. That is those who would prefer N to win but who look at the polls would vote for B or G.

He generated random sets of preferences for candidates. Then he simulates each of them and see how preferred the candidates for each voting system. The honest voters vote their preference. The dishonest (or "rational") voters look at the polling data and vote the way that they think will give them the best possible candidate. (Dr. Smith also includes some nice results for the probability that one's vote will affect the outcome for various models.)

Dr. Smith tried 144 scenarios and in all of them range voting was the one that selected a candidate that made people, on average, the happiest. (I should add that Dr. Smith's papers on voting system are full of wonderful details and arguments and are a joy to read. I urge all to go to his home page and read his political science papers--he also writes papers on a wide variety of topics unrelated to politics.)

State Clawbacks; dealing with high pensions and salaries

2010-11-07T18:34:00.003-06:00

New York State is suffering from a ten-billion budget short fall out of 130 billion total budget. Yet its retirement funds are bleeding money to those most New Yorkers would consider unworthy of their pension. On the top of that list are corrupt officials (*):

The Former state Comptroller Alan Hevesi bringing home $105,221
Joseph Bruno, $96,085.00, convicted of eight counts of corruption. He was New York Sate Senate majority leader.
Guy Velella, $75,012, pleaded guilty of bribery, indicted for twenty-five counts. He was a state repres. and state senator to over thirty years.

But there are many others who earn outrageous pensions.

a firefighter receives $74,624 in disability pension money and is a fighter in martial arts championshps. 84% of New York city firefighters who retire do so as a disability. One problem is that any firefighter who worked at the 9/11 sight and who has a heart or lung problem is legally presumed related. (I have observed many disabled, whether a military disability, mental illnesses, an individual who worked as an executive chef who contracted emphesema . We have had interesting political discussions. Certainly, even if a firefighter might no longer be able to go into burning buildings, he could work in a participatory democracy sortition jury to help supervise firefighters.)

In New York City, eight thousand employees of the transit system earn over one hundred thousand dollarz per year. Twenty Five percent of the The Long Island RailRoad and the Metro North that serves the Northern suburbs of New York earn six figures. Another problem is the payout of unused sick leave upon retirement. The State of Illinois eliminated this give back but the the faculty and other employees who started last century still have a payout, sometimes hefty, coming to them. Sixty percent of the transportation expenditures are payroll as compared to the eighty percent in the social service and education fields.

Our Mayor, Michael Bloomberg, said that he would handle the budget crisis by freezing salaries--the alternative being lay offs. At my University, the Union agreed to a salary freeze and many other cities. So far, fortunately, there has not been one lay off. But the New York City teachers, and I believe our faculty, will still get promotion raises and other uch raises as specified in the contract. In New York City, that is still 3.3 increase in salaries.

Chicago's Commuter Railroad, Metra, has G. Richard Tidwell earning 1.25 million in salary, bonus and benefits, a deputy executive director. And 18.4 percent of the work force made more than $100,000 dollars last year. Note that in New York City, the average pension for police and fire fighters is $62,208 and the average for all others is $25,947.00.

But these are contractual agreements--is there anything that can be done? More importantly we should not pick on government workers. I think most would agree that some teachers, transit workers, and government employees of all stripes have been hard working and definitely deserve every dollar of their pension. And there are political issues in attacking government workers who quite reasonably have strong lobbies and political action groups (both capital and lower case letters).

But we all realize there are lazy doctors, financial advisors who earned a lot of money and did not achieve much of substance. They are retired well whether from savings or pensions without earning that retirement.

Similar to handling executives and financial entrepreneurs, the answer is a clawback. The State go after those who arned over a million dollars total or who worked for the State's citizens for over thirty years. This could be those who worked for the State, a government agencies, or who worked in a position where there primary responsibility was serving those living in the State. A State does not want to go after executives who live or work in the state but primarily serve others. Thus, New York State does not want to tax Wall Street Investment Bankers--they would just leave, and the money to pay their salaries comes mostly from outside the State, and it would put New York's financial sector at a competitive disadvantage.. However, there is no reason not to tax the New York City area Distribution Manager for the beer company.

A person who purposefully does business in a State like working there or having a position such as head of distribution for that State for many years has met the "minimum contacts test" as required by the Constitution. (International Shoe Co. vs. Washington 326 U. S. 310 (1945))

States cannot reduce pensions as these are a contract and cutting them would involve the Contracts clause in the Constitution. However, that can be avoided by the tax proposed.

Michael M. Grynbaum, "239,00 conductor Among M.T.A's 8000 Six figure Workers" The New York Times page A 30, June Third 2010
Jennifer Medina, "Mayor to Cancel Teacher's Raises, Averting Layoffs" The New York Times June Third 2010,CLIX No 55,060, Page A1 and A30.
(*) AM New York June 17th 2010, Page Four
"finally cracking down" New York Post Page 20, august 7 2010, (editorial)

Miscellaneous

2010-11-02T17:30:00.000-05:00

A concern is who drafts the law, whether in a conventional democracy or a particpatory one. The American Legislative Exchange Council (ALEc), has corporations and state legislators as members. The corporations pay a total of six million dollars a year. They hold three annual conferences wehre companies present 'model bills' to the legilators. ALEC gives "scholarships" to the legislators to attend. The recent Arizona Immigration law was put together by corporations including Correction Corporation of America. NPR questioned whether ALEC should be treated as non-profit or a lobbying organization. Wikipedia, as usual, has a good article on ALEC. However, one should compare organizations such aas the National Conference of Commisions on Uniform State Laws that among other things is responsible for the Uniform Commercial Code, passed in all fifty states.

California Proposition 23 would suspend its greenhouse gas emissions law until the jobless rate falls to 5.5 per cen Valero Oil and owns several refineries in California and has contriubted five million dollars. Tesoro Energy is also contributing. However, in spite of the business money going to support the measure, Polls say that the greenhouse law will remain and the proposition to delay it will not pass. Of course, we know that the solution to the problem is a consumption and sortition based tax. They don't form pollution havens where all businesses relocate to the country with the least environmental restrictions.

In Brazil, voters can vote at age sixteen, a rarity. Fewer than half now choose to vote--when the youth first got the vote early, they were very excited.. On the subject of Brazil, Planet Money had a wonderful piece on how they solved their inflation of eighty per cent. Four College students were called in by the Minister of Finance to help control Inflation. They developed a "Unit of Real Value" It was parallel with the prices in the currency that was inflating. So everyone saw that each day widget was one URV. What changed was that one day a URL was ten cruzeiro's, the next twenty. Eventually, the government just declared that the URV was the real currency. A psychological trick, that worked and enabled the many accomplishemnts of which Brazil can be most proud.

Of course, could one get the same psychological affect by freezing and numbering the money supply.

We talked about Brazil and some other countrie's programs of participatory budgeting where the voters get to choose how some of the money is spent. My home state Illinois has a candidate for Governor on the "Independent" party. He is calling for particpatory democracy for part of the State budget.

My Chinese teacher was giving us the word for finance. (I have just started taking Chinese.) It contains the character for "bug" or "worm." I have blogged extensively about the financial system and whether we need one.

An educational toy and products company is having problems with its rock collection. Some of the minerals contain some lead. He is part of the set of business owners that are turning against the democrats--and an example of the complaints against stupid regulations. One of the ones I heard was about the requirements for having accessible drinking fountains. The plumbing code has rules about this. One might say these are too detailed. And they are ambiguous. And eHow has a somewhat different set. If one should inadvertently install a drinking fountain a little too high or a little too low, should one have to reinstall it? Oh and New York City Council voted to require all water fountains to be set up to fill up a water bottle; this is to give less money to the bottled water industry. I recall somebody complained that he inadvertently made his water fountains one inch too low for the Americans Disabilities Act regulations. He had to pay to have them all raised one inch. I wasn't able to find it by searching for it.
(Wall Street Journal October 12th 2010, CCLVII, NO 87., Elizabeth Williamson, "Business Backlash Grows"

Peter Elkan, Adjustment of Sectors to stop pay-cost inflation, thoughtful thursday

2010-10-28T20:15:00.001-05:00

The New Model Economy: Economic Inventions for the Rest of the Century, by Peter G. Elkan, pergamon Press, Oxford, New York, etc. 1982, HD82 E485 1982

(I promised a review of this when I wrote up Kenneth Boulding's review of this book.)

To prevent pay-cost inflation, the salaries negotiated by unions and management and individuals and management should be adjusted. They would be adjusted to equal the amount agreed upon. Thus, each union would negotiate a pay increase in the normal manner. The total pay would be added up and compared with the target figure. Then, each pay would be adjusted to the following. This can be done by the total pay, which means that some people might receive a decrease in total pay.

And it can be done by the increase, which Dr. Elkan suggests is more politically feasible. Here is a simple example. Society agrees that the average pay increase is two per cent. Half of the population (group A) negotiates a 2.5 percent increase.. Other half of the population (group B) negotiates a 3.0 increase. The adjustment factor is 4/5.5. Group A gets an increase of 1.81% and group B gets an increase of 2.11.

In the United States and Britain, union agreements are made throughout the year. Dr. Elkan is concerned that unions should not wait until the end of the year to find out what increase they would get with thei ncrease delayed-- int he same manner that a worker with high deductions on their income tax would have to wait until the following April for their tax refund. Thus, he proposes that all pay go through a central computer and the adjustment made on a running basis. (That might not have been practical in 1980 when he proposed it but it is with modern computers.)

He was concerned about pay-cost inflation, when each union tries to leapfrog other unions in negotiating a salary. And trade unions are so used to insisting upon regular increases, that they do so past the point of productivity growth. When this causes inflation, the unions try to leapfrog the inflation by asking for a cost of living increase that includes what they fear will be a runup in prices. (NPR Planet Money talked on another approach to dealing with the psychological factor in inflation on the price side that worked in Brazil which I will cover in another blog post.) And of course, there is the Share Economy solution--on the pay side, suggested by Dr. Weitzman and expanded by myself.

Certainly, one could organize an economy and political system where the voters vote on the amount transferred frmo each major sector to another, corporations to investors, corporations to labor, etc.

However, the same thing can be effected by tax policies. The increases that Dr. Elkan is trying to control are less than the tax bill. The people could vote ont he amount of taxes paid by each sector. This could be adjusted, at least in part, by the increase of that sector relative to desires. There is an empirical question. Would the voters best think about the magnitude of each flow in the macr economy. In my Intermediate macroeconomics course, we started with a circulation model showing the flows from economy part to economy part. Or, would the voters just say this sector is too big, this sector is too small, adjust the taxes higher in the big sectors, adjust the taxes lower in the smaller sectors. (If needed, one could have modify the reverse flow, payments to corporations that provide services to the federal government, if it was desired to send more money to the corporations.) Dr. Elkan cited Sir Roy Harrod in 1965 for using the taxes to adjust the distribution to sectors.

And whether we structure the adjustment by the sector-to-sector flow or by taxes, the demos can vote using median voting for the adjustment. That is everyone would say that the total amount payed out by corporations to their investors should be x1, x2, x3, etc. And the median is the amount that would be used.

Constitution Construction Kit, Harel State Chart, Yunker Federal World Government, Thoughtful Thursday

2010-10-21T20:19:00.007-05:00

Fairly frequently, countries try to change their constitution. A committee drafts a constitution and the people have two choices, to ratify it or not.

Examples include:

Italy presented to its voters a complicated constitution that was rejected.
The European Union presented a new constitution that would increase the Union but it was rejected by the voters in Denmark.
The Iraqi's voted on a Constitution in 2005. But again, it was a take-it or leave-it proposition. Thus, many Iraqi voters felt that they really did not like the one offered, but voted on it because it was better than not having any Constitution.
And more recently, Turkey and Kenya had Constitutional referenda.

And there have been proposals for unions, all that would require a Constitution:

a United States of East Africa as reported very ably by the Economist.
And a board game entrepreneur promoting a vision of a United States of Africa.
And lastly, uniting the entire world.

I proposed a Constitution Construction Kit, more later, which brings in the idea of workflows, nesting workflows. Lastly, the ontology for legal affairs, or computer representations of legal knowledge, help a constitutional court or a Supreme Court deciding whether an act obeys the Constitution. And it helps us simulate.

WorkFlow

An insurance company claim system exemplifies a business work flow. The insurance company decides that a claim under $1000.00 is handled and decided by a type A employee. Those above that amount are preprocessed by the type B employee. But a committee of seven makes the final decision and five out of the seven of these employees are needed to approve the claim. In either case, the claim is escallated to the president in three days if a decision is not made.

The workflow diagram is shown below.

The workflow starts when someone submits a form. In the example, the policy holder submits a claim. And one might have a workflow starting at a certain time, ensuring that a person execute a backup and that someone verify the backup was successful. Different individuals might fill out forms in a certain order. That is the electrical engineer reviews the plan and then the mechanical engineer reviews the form containing the plan. And in business, small groups might approve or vote on an activity. For example, an investment committee might have to approve a major capital project. Thus, the work flow system would have to count the number of positive and negative votes. And as we see above, based upon the results at each step, or the contents of a form, the system wil determine which new state go into. Thus, whether we go into State A or State B is determined by the amount of the claim. Whether a commitee votes in one way or another determines what happens to the large claim. And time passing will cause us to go into an "escalation" state.

Some workflows, based on a Petri net model allow parallel activities. Thus, the Electrical Engineer and the mechanical Engineer can review the document at the same time. When both give their approval, it goes on to the next state

The workflow system will have things happen as we transition from state to state. An email might go out, a credit card might be charged, or a letter might be printed and sent via conventional postal mail. It is not difficult to conceive of a workflow system activating a solenoid controlling a valve in our chemical plant at a certain state.

There are commercial workflow systems, where a computer professional enters the equivalent of the dataflow in some language or in XML, perhaps to be discussed in a future thoughtful Thursday.

Political Work Flows

The passing of a bill shows how workflows can model something in a Constitution. At the risk of being chauvanistic, I will use the United States Constitution, specifically the passing of a money bill, which our Constitution specifies must start with the House of Representatives.

We start with the House, which from the Constitution itself, simply emits the bill with no explanation or specification of how (more about that later). From there, as many readers will know the bill has to approved by the Senate and then on to the President, who may sign, vetoe or do neither.

Awaiting Senate Approval, after the House approves the bill
Awaiting the President's Signature, after the Senate approves the Bill
Depending upon what the president does, it may go to a termination state. One of these is obviously Law Passed. If the President does nothing, in ten days, and Congress is in Session, the bill is considered passed. (I recall reading that Cypress Semiconductor set up work flows where if someone who was supposed to approve something simply failed to do something about, it went on as if they did approval. This prevented someone from having to go chase a document that was on a procrastinator's desk.)
However, should Congress ahve adjourned, then the bill is considered failed-- a pocket vetoe.
The rest of the flow is an override steps, going back to the House of Representatives, where the bill originated and then to the Senate if 2/3 override.

Nested workflows and Harel's State Charts

Simply, at any transition, there can be a whole workflow embedded. The Constitution has a simple transition from the start of a bill to it passing the house and awaiting the Senate to approve it. But that is a whole workflow of a Representative bsumbmitting the bill and being assigned to a Committee and being scheduled for debate and being ammended and finally have a vote of the full house.

At any point in that time, the House could adjourn to be reelected in its two year cycle, in which case the bill would fail. At any point in the process of the Senate reviewing and voting for a a Bill, the Congress could adjourn for a new session after new elections.

An additional feature is that one can model a flow from the superstate. Thus, when the HOUSE or SENATE adjourns that kills any bills in process. We can show that as a single arrow. The alternative would be draw an arrow from every substate of the HOUSE or SENATE to the dead state for adjournment as below.

One could also think of the boxes as a dataflow diagram--and I will have to consider this later in the discussion of the Constitutional Construction Kit, below.

State charts add to a simple state diagram, the ability to group states into logical superstates. Sometimes these are called HIGRAPH's for Hierarchical Graphs. State tables are often used in modelling computer software embedded in device. In avionics software, "in all airborne states, when yellow handle is pulled, seat will be ejected." And these need to handle several things going on at the same times. In a modern electronic wristwatch, the stopwatch might be in a state, the date setting might be in another state, and the normal watch itself is in a state. If one is in the process of setting the stopwatch or using the stopwatch, one might hit the button to go to the regular display state. When the owner then clicks a button to go back to the stopwatch, we may want to leave them wherever they were, perhaps in the process of setting the stop watch or the stopwatch is clicking off times, rather than going back to a start state. Dr. Harel did a masterful writing in his article using his own Citizen's electronic wristwatch as the example.

These features are not as relevant in political state tables. However, I can think of one example. In some states in some circumstances, one can appeal an order in the lower court to the upper court, even if the lower court has not finished with the case. Let's say one is getting ready to try one's case. The Judge rules that your star witness cannot testify because you made a spelling error in sending his name in. You could then request the appeals court to review that decision and if whatever happened, the case would go back to the lower court in same place as it was left off, perhaps with allowing that person to testify.

The Constitutional Construction Kit (CCK)

Every couple of decades, the United States engages in Regime Change with the nation somehow selecting a new Constitution. We saw it in Philipines in the 1900's, Roosevelt writing a new Constitution for Haiti new Constitutions for Germany and Japan after World War II, and of course much later, a new Constitution for IRAQ. Whether the United States will do this again is a subject ripe for speculation, but not in this blog.

In simulating a Constitution, unlike working with a business, one has to allow the particpatnts or members of a body to create a new workflow.

In the United States Constitution, Article One, Section Five, "Each House may determine the Rule of its Proceedings." We also have to allow various ways for individuals to be come members of bodies. That is we have to provide for elections appointments and random selections. The latter is only used today for juries., It is a very viable way of doing participatory democracy, sortion. Thus, if one were modelling the United States Constitution, we would see a workflow from each of the House and Senate to create or modify the workflow for creating and passing bills.

This concept is in other countrie's constitutions. For example, the Iraqi Constitution has the Council of Representatives cratings its bylaw for its rule. And article 93 designates that the Council chooses how the courts will be run and how judges and other officials are selected. Bahama Constitution Article 55, provides that each House of its legislature can regulates its procedure and make rules of procedures. in the Iranian Constitution, Article 62(2) specifies that the law will set how their legislature is elected. And like the United States, in Iraq and the Bahamas, the legislatures determines their own procedure.

And if there is an election, we need to provide for the rules of that election. And who resolves disputes. And in Secton Four, both State Legislatures and Congress can change the Workflow for the election of representatives.

A workflow has roles. For example, one specifies that an Insurance Adjustor of Rank Two or Higher can prepare a claim of over $1000.00 for Committee Decision. And we have a role called Member of Claim Approval Process. In a business workflow, one generally assumes this process is outside the workflow diagram. That is, one does not have a workflow to hire or promote a person to Insurance Adjustor Rank Two. And we certainly don't have the computer program handle those people authorized to change that procedure approving the decision to change it. (The appropriate manager would simply tell the computer professional to go change it ....) But in a Constitution Construction Kit we need all these roles. The people who elected to the House or Senate can change these workflows, as can the State legislatures. And our CCK must model these.

Approval Process

Our Constitution Construction Kit (CCK) will allow multiple parametric Constitutions to be prepared, and a vote to be conducted. Thus before the process starts, there has to be an optimized funcction. This will be a natural generalization of the requirement for ratification. For example, our constitution required nine out of thirteen states to vote. The Iraqi Constitution required n-2 out of the n provinces to approve by a majority vote. There are two obvious extensions. One can find the constitution that can get the majority vote in the most states or provinces. Or one can find the constitution that maximizes the vote in the province or state that gave the nth lowest approval percentage. Thus, if constitution A got votes in provinces:

33, 45 , 47, 49, 57, 58, 62

and constitution B got these votes:

22, 43, 49, 60, 62, 68, 70

If n were three, Constitution B would win as its third lowest vote were 49. But if n were only two, Constitution A would win. (Thus, one can see the importance of specifying the ratification procedure in advance.)

And if we had chosen in advance to look for the Constitution that had the most provinces with a majority in favor, Constitution Two would win as four states had a majority.

An ontology for constitutions

An ontology is a way of organizing knowledge, where there are links between various concepts. Several groups, notably in the Netherlands, are developing ontologies for legal concepts. One of these is the LKIF-Core Ontology, funded by the European Union.

Organizations, Artifacts, and the Purposes they serve. More specific to law, might be Statement, Declarations and Assertions and Document, as a bearer of Statements. The LKIF also has NORMATIVE statements such as prohibitions. They include obligations, allowance, obligations. Thus, a penal code might be defined as a Document containing prohibitions. Our group will also include classifications, so we can say that all persons who meet a condition are permitted to or required to do.

Thus the United States First Amendment giving freedom of speech would state that a particular ORGANIZATION (congress), could not contain a PROHIBITION of a particular SPEECH ACT. (The capitalized things are core concepts in the LKIF).

An ontology for constitutions would allow the parties to propose and vote on the following:

How are people chosen for officer positions or to be a member of a named ORGANIZATION? I identified three of these: election, appointment and sortition.
I deal with elections first; these are so much in the mind of the average person about the purpose of the typical constitution. Which ORGANIZATION if any can provide further clarification? Are there conditional rules if the above fail or have controversy? The United States Constitution specifies these three of these in its Article Two on choosing the President. We see that the legislature sets the rules for appointing electors. It provides that a majority vote is selecting. It also provides for a default ROLE for the House of Representatives and Senate if there is a controversy over the election of a member.
The classifications of permissible persons must be specified for both those doing the voting or electing. Usually a constitution will state the CLASSIFICATION. For example, the United States Constitution specifies the familiar (to Americans) requirement that president be thirty five years old and a natural-born citizen. It also specifies requirements for the "Electors:" they are not a Senator, Representative or a person holding"an office of trust or profit under the United States."
Or it may delegate it as in Article 47, Third section of the Iraq Constitution It states, "A law shall regulate the requirement for the candidate [for Council of Representatives, the voter and all that is connected with elections."
As mentioned earlier, representatives can be specify that other organizations are chosen randomly from certain groups. The only example of this in the United States Constitution is juries, and even here the choosing process is not specified. However, many have written about Sortition. Ernest Callenbach and Michael Phillips proposed that the United States House of Representatives be chosen randomly from the people. Brian Martin proposes a network of decision making groups, which he terms demarchy. He does not propose a specific "constitution" for this network or a method of developing one, mentioning "second order" bodies to "adjudicate on how demarchy is supposed to be work." Paul Woodruff discusses how the Greeks implemented this idea. They had several mechanisms include a "Council of 500," "judges" and the election of experts for particular purposes.
Most constitutions also provide procedure for the appointment of specific officers. (See Section Two, Clause Two of the United States Constitution which provides for the appointment of officials such as ambassadors, judges and others with "advice and consent" of two thirds of the Senate.)
prohibitions or grants of specific powers. E. G. Congress can pass a law on any of the following subjects, as given in Section Eight of Article One.
Certain acts require certain percentages or other functions of one or more groups. An example from the United States Constitution are that 66% of the ORGANIZATION, Senate, must approve a treaty, a type of DOCUMENT.
Obviously, one needs the mechanics for A Constitutional PROHIBITION. The Constitutional Court could be a workflow as a step on a law before it is approved. Or it could be as part of a workflow for resolving "CASES AND CONTROVERSIE's."
I note that the Estrella project has put its ontology onto the World Wide Web under the GNU Open Source license. Thus, I will be able to build upon it.

References

Boer, A. Winkels, R., Hoekstra, R and Van Engles, “Knowledge management for Legislative Drafting in an International Setting” In Legal Knowledge and Information Systems. Jurix 2003: The Sixteenth Annual Conference (Amsterdam) IOS Press 91-100
Boer, A., Di Bello, M., van den Berg, K., Estrella, European Project for Standardised Transparent Representations in order to Extend Legal Accessability, Deliverable 1.1, Specificfication of the Legal Knowledge Interchange Format, IST 2004 027655
Harel, David, "StateCharts: A Visual Formalism for Complex Systems" Science of Computer Programming Volume Eight, 1987, 231 to 274. See http://www.wisdom.weizmann.ac.il/~dharel/SCANNED.PAPERS/Statecharts.pdf
Sanminiatelli, M. \fIItalians Vote in Massive Reform Referendum\fR Yahoo News, Associated Press can be found at http://abcnews.go.com/International/wireStory?id=2114939
Yunker, James, A New Vision of Federal World Government, University Press of America, 2007

Thoughtful Thursday, Slater and Kemeny Voting Systems

2010-09-15T19:10:00.002-05:00

Computing Slater Rankings Using Similarities Among Candidates

by Vincent Conitzer, Electroic Commerce 2006 (Search google.com or citeseerx.ist.psu.edu or scholar.google.com to find the full text of this article.)

As Dr. Connitzer wisely reminds us, the Slater index and Kemeny index are different but related. Let's say every voter gives us their preferences or rankings. Maybe the faculty in a department gives us their ranking of preferences for incoming graduate students. How do we get a ranking for every alternative. A Slater index gives us a ranking for the set where the least number of pairwise elections would be wrong.

We know from Arrow theory that one cannot find a reasonable algorithm to combine the rankings. One of the problems is that a mechanism might be disturbed by an irrelevant alternative. Assume that A wins an election against B, we throw in a candidate Q which everyone dislikes compared to A and B. Then, adding Q or deleting to the list of alternatives should not change whether A or B would win.

20%	20%	40%	20%
C	A	D	A
A	B	B	V
B	D	A	w
Q	Q	Q	B
V	V	V	Q

If A and B had a pairwise election, in the above example, A would win. Any ranking should hopefully have A above B but with Condorcet Paradox conditions, that may not be true. That is the final ranking might have B above A.

The Slater index just adds that ranking a blech factor of negative one with 40% preferring that to the more preferred A above B. If it rated V above Q, that would also be a blech factor negative one, even though only twenty percent would like that bad ranking. A Kemeny index looks at how many people dislike a combination. In the above case, the ranking would get a blech factor of 60% and the second a blech factor of 80%. The goal of both the Slater or Kemeny methods is to reduce the "blech" factor for the number of bad comparisons.

Unfortunately, finding the best ranking in either categorization is NP complete to evaluate. That is they are NP complete to find out what the best ranking would be.

Dr. Connitzer found a good way to compute the best ranking, by finding groups of candidates that can be treated the same for all other candidates, "similar" candidates. Example: A B C D E F G H I J are running.

A defeats E
A defeats F
B defeats E
B defeats F
C defeats E
C defeats F
D defeats E
D defeats F

E defeats G
F defeats G
E defeats H
F defeats H
E defeats I
F defeats I
E defeats J
F defeats J

Dr. Conitzer's would find that E and F are similar. He finds a hierarchy structure of sets and subsets thereof where each level in the hierarchy is a similarity set.

So what? If we have thirty candidates--they could be alternatives in a referendum, with ten issues and 191 voters, his algorithm can find the ranking instantaneously, while other algorithms take fourty seconds or so. And it finds a solution when other cannot.

Now this doesn't handle millions of voters--should we use some sort of approximation?

Improved Bounds for Computing Kemeny Rankings

Vincent Conitzer, Andrew Davenport, Jayant Kalagnanam.

Assume there is an election between two alternatives, A and B. The voters can only tell which is better or more correct with a probability of slightly above 50%. Each voter votes for the one that seems the best to them. We saw that if one simply takes the majority, there is a very high likelihood--in reasonable sized electorates, of getting the correct answer or best alternative. This is Condorcet's theorem.

But what if there are dozens of alternatives. It turns out that the Kemeny method would give us the best answer, and each voter had an imperfect idea of what was the best decision. And other voting systems correspond to other models, which is a different paper and a later Thoughtful Thursday.

Of course, there is no reliable way to solve large instances of these. Dr. Connitzer raised the issue of approximations to the Kemeny method--but is that what people were promised. We have seen very close elections, and certainly to have the result be an approximation that could be wrong. Dr. Connitzer developed algorithms to compute the Kemeny method. I won't give the detailed description because I doubt that the readers are interested and if they are, his article describes it far better than I could. But three idea of operations research/computer science are important

Many other techniques in social choice theory represent elections as a graph. The nodes are the candidates and the edges represent the number of votes in a pairwise election. If A would beat b by 32 votes, then Dr. Connitzer's graph would have an arrow from A to B with a 32 on it. The linear programming relaxation has less than a one percent deviation from optimality which is measured by optiamlity. And if most people agree on an order, e. g., the Nazi Party candidate is not wanted, that improves dramatically the ability to find a good ranking. That seems good, but what if an electorate is highly polarized, say between socialized medicine and no government intervention. One interesting study would be to look at a population where there are two consensuses on very different formulations.

An interesting idea would be that after an election, one could have a competition to determine the optimal Kemeny ranking. Different groups of computing scientists could produce a ranking and its Kemeny distance. (It is very easy to verify the Kemeny distance of a given ranking.) The ranking with the minimum Kemeny distance would be the winner. Thus, an agrieved group who narrily lost an election could pay for supercomputer time to try and find a better ranking that hopefully would get what they wanted. One could have some sort of prize for the team of operations researchers and programmers that found a winner.

As I believe I mentioned, if there are thousands of alternatives, e. g. tax codes with slightly different structures, each voter would vote on a subset of alternatives. Drs. Kenyon-Mathieu and Schudy spoke about this in their article on "How to Rank with Few Errors" where they said "In statistics and psychology, one motivation is ranking by paired comparisons: here, you wish to sort some set by some objective but you do not have access to the objective, only a way to compare a pair and see which is better; for example, determining people's preferences for types of food" or perhaps preference for tax code. (I will Thoughtful Thursday this material here.) These would be combined in the same manner and described here as if each voter gave a full preference order.

NPR presentation on the sociology of the Tea Party Movement

2010-09-15T17:31:00.000-05:00

I am sure most of the readers have heard of the American Tea Party movement. Seventeen million are sympathetic to that group, and several supported by them won major nominations in the Republican primary. But what is of interest to this blog is their structure, or lack thereof. is that they have no central hierarchy. They rely on social media to organize networks. The recognize, like Brian Martin did, that if one fights in one elections, one has to keep fighting every two years to keep one's gains.

Sociologists said that it is very difficult to have a national impact and be radically decentralized and not have a leader. Let's look at a example they raised. A member or pseudo-member makes a statement, perhaps a racist one. A news organization calls for a quote. If there is an office and a leader, the chief executive disowns the member and racism. Without an organization, there is noone to say they or are not a member or to expel them. However, with just a coordinator, she or he would summon a sortition jury who could prepare a statement. Of course, those who deal with an organization like a quick decision from the front office. But a randomly choosen group selected from those who made themselves available at a given time and contacted by cell phones can still respond quickly. My University is starting a Presidential Search as Dr. Alvin Goldfarb announced his retirement next June. I asked, "why do we need a Presdent." The issue of someone to be a spokesperson was raised.

deflation, bring it on

2010-09-12T15:59:00.002-05:00

Fix the money supply--this causes at least a mild deflation, as technology improves and population increases. It causes a rally in your currency, To be both specific and chauvinistic I will speak in terms of dollars. Mr. Kessler talked in terms of reducing leverage to one in five instead of one in ten giving oil back down to fifty dollars a barrell. My proposal might see oil dropping back to the single digits.

By fixing the money supply, that means each dollar is numbered and tracked in the global electronic fund transfer scomputer system. Thus, it cannot be created by people or individuals or the computer system itself, as done in Heinlein's Moon is a Harsh Mistress. I talked about a global XML EContracting and fund tracking system in my DailyKos blog.

What does this have to do with this blog:

Deflation is bad for those who owe debts denominated in a fixed amount of money per month or year and which have to be paid back. Thus, don't do that! When one "borrows" morrow, one gives back a share of income, whether one is an individual or a corporation. If all prices go down, the amount given back to the lender goes down but it would have the same purchasing power. Of course, Dr. Weitzman proposed that workers be paid as a share of the companies gross reenues. Thus, we don't have to worry about the problem that it is hard to cut nominal wages.
There are many people who wish to save, particularly for a short term goal. They don't want to be an investor, determining which individuals and business enterprises would succeed. Now we have a financial services industry to put these two together, so people can put their money in a bank, earn a modest short term return, e.g. money market account, and then spend the money. I propose they would simply hold the money as cash. (Not as dollar bills under the mattress, but a computer record that they owned dollars serial-numbered 123463412, 1345632345, 13423455, and 7824563124.)

If there is a real problem with people holding on to cash, simply give sortition juries the right to require individuals or businesses with cash balances to either spend the money or invest the money. (since all money is in one system, one can't hide one's dollars in one bank account or another or in one's mattress--if the dollar is not on the system, it simply does not exist.) They could consider if one's goals or reasons for holding on to the cash for a short term goal are legitimate. If the person refuses, the sortition jury would have the right to simply do it for them--perhaps considering social impact of the investment more than the person would.

Would it not be great if fifty years from now, when senior citizens are talking -- "when I was a youth, a subway ride was two dollars, now I pay twenty cents."

Thoughtful Thursday, more foreign policy

2010-09-09T09:16:00.001-05:00

This week we have another paper on international organizations from Democracy's Edges which was the subject for last week's Thoughtful Thursday. ("Citizenship in an era of globalization" of Will Kymlicka)

International organization. Should the individuals participate in its activities, like adding power to the European Parliament at the expense of the Council of Ministers, appointed by the governments. But the people are not pushing this increase. As usual, Wikipedia has an excellent article on European Parliament; it still does not have the formal power to introduce a bill, even though it does have considerable power.

How can people speaking different languages deliberate? The European parliament employs 350 full time interpreters and spends 118,000 Euros per day on interpreters. Would the people of a country prefer to vote on a referendum on how to vote on a Kyoto greenhouse warming treaty, or would the citizens of each country prefer to participate in some gran palaver?

What language? Google is well on the way to allow real-time voice-to-voice translation and it already has text-translation Auto-translation speculated to preserve small languages as there is less pressure on peoples of people who speak a language spoken by a few thousand people. Xiha Life shows that many people who speak different languages can converse.

Some have argued that the bond markets and internatational treaties such as the WTO restrict people's deomcratic options. Dr. Kymlicka is obviously Canadian and he points out how restricted their parliamentary system is. There is strict party discipline and most MP's have little power, just doing some constituent service. Reminds me of the New York State legislature and Three Men in a room.

Miscellaneous from NPR

2010-09-08T19:46:00.005-05:00

Buchanan identified studies that most taxpayers don't know how much tax they truly are paying. Here is an estimate. Payroll taxes are 18.7% of income and other taxes such as the add-on to one's telephone bill work out to be 5.4% income. Thus, taxes are about a quarter of one's bill.

________________

I have long believed that college student loans should be replaced by a share of the income after college. A group is doing just that. Although I don't understand why they end after ten years, an arbitary period. If the graduate goes into teaching for the first ten years and then becomes an investment banker versus the reverse. I more see a middle-aged person paying for, or contributing to, a young person's college education. They would pay ten percent of their income for as long as that person lived, funding their retirement. The Tell Me More scenario was someone who started teaching in Mississippi at $31,000.00, who would then pay ten percent of their income for ten years.

___________

Sadly, although Egyptians are often blogging and tweeting about the problems in the country and fifteen million out of seventy-eight million have access to the web, the government remains autocratic. Some cases, they have helped and gotten international attention, in many cases other wise.

_______________________

I blogged about the role of share holders in a modern corporation, sadly often none. Companies would send out a proxy ballot with just one candidate for each position. Now, big share holders who have held three percent of the company for three years will have access. Of course, that is far short of what I advocated.

Miscellaneous

2010-09-06T18:57:00.001-05:00

The Wall Street Journal February 4, 2010, A19 CCLV Number 28 "A Short History of American Populism"

Andrew Jackson -- libertarianism as populism. Government programs gave money to the rich. He is of course known for killing the Central Bank. In 1835, was the last time that the United States was debt free. And he opposed road/canal projects. After the Civil war, the Republicans sponsored aid to railroads. As I wrote earlier, the 1850's to 1890's where United States government sponsored the corporate form. The 1890's populism, William Jenning Bryan gave his Cross of Gold speech, because of the rampant deflation which was giving farmers who owed money a problem. But William Jenning Bryan ran several times for president, never winning and getting smaller and smaller percentages of the vote.

Andy Kessler, "Bernanke's Exit Strategy, Tighter Reserve Requirements" same issue

I wrote a lot about the system where banks can loan more money than their deposits. Currently, banks can loan ten dollars for every dollar they have on deposit. And in some cases more Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns all loaned out twenty times their capital. No wonder they have so much money for bonuses. Should the depositors all run on the bank, the FDIC is there to back the bank.

My Intermediate macroeconomics professor explained how this works, including how having multiple banks has the same effect as having one big bank. I asked him a simple question. Do the banks make profit on the difference between the interest on the deposits and the interest they change to the lender or the interest on all their loans. He said the latter. So if a bank charges an average of ten percent and pays five per cent to its depositors (a rate structure similar to the eighty's), it is earning 75% interest on every dollar deposited. No wonder, they are so willing to give away a free toaster to those who deposit in their accounts or bear the costs of processing checks for the free checking account with $1,000 minimum balance.

Mr. Kessler said this system caused all sixteen panics since 1812. The gold standard is neither necessary nor sufficient--Elizabeth gold smiths would write more gold receipts than gold they received. And in the first half of the 1800's, American State banks would do the same thing. I recall from Galbraith's Money that the Medici's did the same thing.

Stephen Greenhouse, "More Workers Face Pay Cuts, Not Furloughs" The New York Times New York Wednesday August Fourth 2010 Page A1 and A3

L. Weitzman's share economy is based upon the idea of avoiding layoffs by having one's salary be the gross revenue divided by the number of workers. A corrolary of that is a firm cutting pay during a recession or having a policy of no lay-offs. State and local governments are cutting salaries, in some case with agreement from Union. One report says that 22 percent of municipalities cut "some pay and benefits." On the business side, we have: Westin Hotel cutting wages twenty per cent, Sub-Zero, a Refrigerator Manufacturer, is asking for the same thing, threatening to move to another state, ABF Freight Systems asking Teamsters to agree to a fifteen percent cut and St. Louis Post-dispatch, Seattle Symphony and Newsday making about five percent cuts. Reed Smith, a large law firm, lowered first-year associate salaries to $130,000 from $160,000.

From NPR, on the Mortgage Crisis

I blogged several times about using the share economy idea to make mortgages payments a share of one's income. As I assume most know Freddie and Fannie have a major role in the mortgage market. They own or guarantee half of Federal mortgages 5.5 trilliion worth of mortgages. Our Federal Government guarantees them, at first implicitly , now explicitly but does not put this on the budget. Raj Date said that Fannie and Freddie accelerated the sub-prime meltdown by guaranteeing mortgages for lower-priced houses thus causing their value to inflate to bubble-proportions. These government sponsored entities represent a subsidy to "middle and upper middle income home owners." And, perhaps, we should go away from home ownership. Individuals move around much more than in the 1950's, so one has the problem of selling the house when one has to relocate for job reasons. Or in telling words, Americans should not buy an "illiquid, very large, concentrated, leveraged asset."

One of the problems is that a renter has no guarantee of being able to stay in the property long term. Personally, I was fortunate enough to negotiate a permanent lease in 1994, until either I changed jobs, had my parents come join me and we bought a house together, or on their side they remoddelled the place into something not compatible with residential living. It ended up in court when the landlord sold at a fire-sale basis. I tried to negotiate a similar deal with businesses and landlords in the area but was unsuccessful. More on that in a different blog.

Also, of course, there is also status in owning a home.

Happiness

NPR has had two series on happiness. Jiangyin in China is actively trying to make itself conducive to happiness. Xu Dongqing, the Communist party Committee's head of propaganda, said "they are trying to further use people's wisdom and suggestions to help the government do better," not provide "Western multiparty democracy." Research in the United States found that daily mood improves as one's income goes up to $75,000 per year. It does not go up as people increase their income. The famous Marmot Whitehall study found that people at the top of a hierarchy have a better health than those at the bottom, and it is a strict does-response. And those at the top of the hierarchy generally make more.

Thoughtful Thursday: Foreign Policy and International Organizations

2010-09-02T22:59:00.002-05:00

Robert A. Dahl, "Can International Organizations be Democratic? A Skeptic's View" and James Tobin's comments that follow (pages 19 to 40).

in Democracy's Edges edited by Ian Shapiro and Casiano Hacker-Cordon

A familiar theme is the public does not have knowledge to exercise a meaningful vote on a plebiscite. These errors in understanding the factual basis for foreign policy issues goes back to the 1930's--and they are not unique to America. The Economist complained that Europeans were not prepared to discuss the European Monetary Union meaningfully when that was coming in.

Ceding sovereignty is an issue for countries with natural resources. Mexico's Constitution does not allow foreign companies to extract oil. At the age of eight, Mexico's children learned about the 1938 decision not to allow foreigners to extract oil. Mexico's oil field production is declining and it is not possible to have foreign invest on a joint-production basis. And it is a political hot potatoes. Could the people vote to approve a joint venture agreement. And in order to keep greedy politicians from restricting the agenda, any foreign oil company can submit a proposal to the populace for approval. (1) But other deeloping countries have had problems with ceding resources. (2) Paul Romer proposed to Madagascar, and others, a Hanseatic league Charter City modelled after Lubeck. A swath of land would be open to investors on an investor-friendly (low-taxes, rule-of-law, etc.) administration. But Madagascar populace was annoyed at leasing land and the president was deposed in a riots and a Fiji lesed mahogany forests to a British non-profit--and a demagogue ceized up against this, even though he supported a rival proposal.

Jimmy Carter, in an autobiographical book Keeping Faith, pointed out the treaty that returned the Panama Canal Zone to Panama at the turn of the Century. He praised the Senators who approved the treaty in spite of American public sentiment against it. He said bad things would have happened had we not been so gracious. As I recall the turnover--I watched discussions of it in 1999 on CSPAN--it passed uneventfully and without riots in the streets :-)

European countries used referenda in sovereignty issues--should all countries do so?

In an international organization, issue is how to weigh the votes. Many international organizations have one vote per country. Others argue that each countries vote should be weighted by population. China and India should have more of a voice in a world-organization than Nauru and Tonga. And Professor Yunker suggested a federal system for the world where one chamber has votes proportional to population as does the United States of America house of Representatives and with the other chamber proportional to wealth or GDP. He also proposed that countries should have the right to exit whenever they want as does Dr. Tobin.

What is the role of participatory democracy in respecting treaty obligations? Most countries do generally keep to their treaty, but dictators certainly have thrown them to the ground and trampled them under their feet. Should the demos be able to vote to abrogate a treaty with a 50.0001% vote, and just rely on people's natural desire to keep their word, or at least recognize the consequences of being unreliable?

Obviously, there are intercultural issues in negotiation between nations. He suggested that negotiators be trained to put themselves in the other shoes and not expect other countrie's negotiators to want to act And I read the, probably familiar, comments that the United States is oriented towards business, the literal content of letters and phone calls, and want to get things done quickly and not take time for socialization. While other nations want more of a time for the business people or negotiators to establish a personal relationship. How would this affect two sortition juries meeting to discuss a proposal to be brought to a plebiscite in both countries, or a sortition jury. Could Paul Kimmel better train a sortition jury than a top negotiator. The latter would have more background and experience and be "better educated." The randomly sselected citizens might be less arrogant and willing to learn.

References

Adam Thomson, "National Attitudes Put Break on Reforms" Financial Times London (UK) September 23, 2009, page four and The Economist "The Americas: How many Mexicans does it take to drill an oil well? Mexico's troubled Oil Industry
Atlantic Magazine July August 2010 "The Politically Incorrect Guide to Ending Poverty" by Sebastian Mallaby
Paul B. Kimmel "Cultural Perspectives on International Negotiations" Journal of Social Issues Volume 50 Number One 994 pae 179 to 196.

THoughtful Thursday, Voting Systems

2010-08-26T08:59:00.003-05:00

Assume there are several candidates or alternative health reform plans on the table. Assume candidate A would win a one-on-one election with any other candidate. Candidate A is the Condorcet winner. If we have a binary tournament, candidate A will win. It does not matter what order they are paired up. Unfortunately, there may be no Condorcet winner, a cycle. Example with three voters, assume the preferences below:

G	B	N
B	N	G
N	G	B

In this case, the order matters. In the tree below where G runs against B and the winner of that race runs against N, N would win. If we had a different pair up for the first challenge, some other candidate would ultimately win. This is in game theory terms (Page 219, Osborne, A Course in Game Theory) Condorcet cycles are considered the first mathematical social choice theory. The Game Theory book goes on to identify top cycles, candidates that can beat every alternative directly or indirectly (A beats B beats C) one of these will win in any binary voting tree but we don't know which of these "top candidates" will win the election--it depends upon the binary decision tree.

Preference Systems

In conventional voting, the voters vote for one choice. That is people cast a vote either for B, G or N. I am sure everyone here recognizes the problem. The third person prefers N but whose second choice is G would be better off voting for G so as to ensure that the hated B does not wins, especially if the second column represented 34% of the vote. This is known in the social choice literature as "strategic voting."

Many voting systems ask us not to just give our "first choice" but simply to list our preferences. We need a voting system which decides who wins. The well-known Arrow Impossibility Theorem says that one can't find an ideal one. Any algorithm that takes as input everyone's preference order will have one or more of a list of certain undesirable properties. I will save that for another Thoughtful Thursday.

Referenda

The Swiss system allows the legislature to respond to a initiative by the people, by proposing an alternative. Thus, when voting occurs on the initiative, the ballot has three choices:

Whatever the people sending the initiative proposed
the counteroffer from the legislature
the status quo. The most voters vote for neither of the two proposed laws and the people are left with whatever was there before, e. g., if the subject was health and we did a plurality voting between possible health systems, the votes of everyone who wanted health reform would be split among the different health reform proposals. Thus, the votes of everyone who liked the health system just fine would be the highest plurality.

Unfortunately, in Switzerland, the legislature sometimes deliberately puts out an alternative. This is to split the vote for change. The people with nothing but status quo, which is what the legislature wanted in the first place.

(I read this online and I definitely recall printing it; but I cannot find it; and my attempts to search for the article again have failed.)

In the insurance wars of California, the Californians were very tired of high auto-insurance rates. Several proposals got the signature need to qualify to be on the ballot for a referendum. California handled it by approval voting, everyone got to vote for as many proposals as they liked or of which they "approved." The one with the most votes won. The one that got the most votes was a simple proposal to limit the percentage of money the insurance companies could charge over and above the cost of claims. That is, the insurance companies had to pay out a certain fraction of every dollar of premium.

I introduce the idea of parametric referenda. Each referendum might have one or more numbers. A tax law would have the tax rate. We know from Duncan Black's work that if there are a series of binary votes, we would end up with the median voter response. And we saw that with candidates and the "Left-Right" continuum in Hotelling's work. In the United States, on the "left-right" continuum, the country is at the median position of its voters.

One possibility is that there is a big vote for the structure, followed by a vote for the parameter. I wrote about this in one of the first articles on the health care system reform; there would be a big plebiscite with options such as the status quo, single-payer and perhaps the structure that was since enacted into law. Then once one of these won the approval voting, there would be an oportunity to choose the parameters by median. Assume the current structure was passed into law with a penalty for choosing not to be insured. In a second election, each voter would enter the amount that they felt the penalty should be and the median of those numbers would be the penalty amount enacted into law.

Each voter would decide which health structure to choose and would have an opportunity to engage in strategic voting. If they could accurately judge, say by polls, what the median would be for that system, each voter would decide which one they wanted. Another possible mechanism: The voters would enter preference orders conditional on parameters. That is a voter would say they prefer the current structure as long as the penalty is under $1000.00. And they would prefer single-payer as long as the taxes were less than $1000.00. How could the combinations of a vote plus an interval for a parameter be combined to choose a system and a parameter?

Voting Schemes for Which It Can be Difficult to Tell Who Won the Election, J. Bartholdi III, C. A. Tovey and M. A. Trick, Social Choice and Welfare (1989) Volume 6, pages 157 to 165.

If there are several alternatives for the referendum, then there is a very good chance that there is no Condorcet winner. That means if referendum opportunity one is paired against referendum opportunity two, the second might win. Then, if that were paired against referendum opportunity three, then three might win. Had referendum one been pitted against referendum opportunity three and then the winner of that wrestled with referendum opportunity two, there would be a different outcome. Dodgson proposed taking the preference orders, and seeing how one could change them so that there would be a Condorcet winner. Depending upon how one rearranged the orders of each voter, one would get a different winner. If we arranged the table with N, B and G by flipping the middle column , we would get a Condorcet winner of N

G	N	N
B	B	G
N	G	B

For the millions of votes and preference orders, how could we achieve a Condorcet winner with the fewest swaps?

Kemeny suggested that we find a consensus order closest to voters preference orders as possible.

Unfortunately, both of these are NP-complete! This means there is no algorithm that will find the solution in less than polynomial time, or in general, it is intractable. (This is a bastardized and oversimplified view of this concept. I will talk about NP-complete in a future Thoughtful Thursday.) In other words, everybody could submit their preference sheets. And the computers would be grinding "forever," apparently in an infinite loop, not to end until well past the entire Universe has decayed into a soup of positrons. I briefly mentioned work on good approximations for Kemeny method?

Elections Can be Manipulated Often, by Ehud Friedgut, Gil Kalia and Noam Nissan

Looking back at voters voting for three candidates,such as the infamous B-N-G election, the three doctors found that the sum of the probabilities that a voter could manipulate the election is greater than C e ². Manipulation sounds evil, but it simply means that voter might give a preference that isn't true. For example, saying G is their first choice when they really like N. This does not mean that every voter can do manipulation. Only that some can! So out of the United States 200 million voters, maybe only a few thousand might have the opportunity to manipulates.

Oh, and what is e. That is the percentage of times the social choice function differs from a dictatorship. If the rule is that the king makes the decision, then noone can manipulate the election as either their choice does not matter or for the king, whatever they want will be the result.

The good doctors were only able to extend the first two steps of the proof to the case where there were more than three candidates. They speculated that the bound would "decrease polynomially in " the number of alternatives.

It is also important to remember that the probability of manipulation is one that might land on only a few voter's laps, who might not be sophisticated or too high-minded enough to manipulate.

Marcus Isaksson, Guy Kindler and Elchanan Mossel, "The Geometry of Manipuation -- A Quantitative Proof of the Gibbard Satterthwaite Theorem"

The three researchers show that a social choice function has a probability of being maniulable of at least
0.0000001 e ² / (n ³ q ³²)
They define a manipulatin point that a particular voter x can report a preference set that isnot their true preference set but get a result they prefer. They show the probability that any given voter could manipulate the election is
e ²/ ( 2 n ³ q ⁶ (q factorial) ²)
Now as a practical sense this is a negligable probability. Even the main result that someone can manipulate the election decreases as the thirty-second power of the number of alternatives. It increases as the cube of the number of voters. 100,000,000³ steps is way beyond the time frame of moedern computers.

One should be concerned with coalitions of voters, voters all willing to follow a "guru" whether religious or political who presumably can also spend for the computer time to search millions of possibilities to find the best strategy.

Also, these results are for "neutral functions" where each voter has the same power. In other words, voter A voting a preference order v , voter B voting a preference order w or voter C voting a preference order z shold give the exact same result as voter A voting a preference order z, voter B voting preference order w and voter C voting prefernce order v. However, imagine a country of three ethnic groups forming a constitution. They might specify a mechanism to give equal power to the ethnic groups so a voter in one ethnic group effectively might have more power than a voter in another. Similarly, a system comparable to the United States Senate that counted voters by state , The alternative passed by a majority in the ost states wins, even though the states have different populations. This would not be a neutral election system!

The Computational Difficulty of Manipulating an Election, J. J. Bartholdi III, C.A. Tovey and M. A. Trick, Social choice and Welfare (1989) Volume Six 227 to 241

We know from Gibbard and Satterthwaite that every social choice system is manipulable. The above two articles discussed before suggest that sometimes it makes sense to simply search linearly through all the possible strategies for a manipulation strategy.

We know from Computer Science two things. Sometimes when one is trying to optimize, there are ways to accomplish this without searching all possibilities. For example, if one has a table of all the highways and one wants a computer program to find tte he best way to get from the proverbial A to B. There would be an exponential number of possible paths that one can take. But one does not have to search all the pathways. One can apply Dijkstra's algorithm. The computer would take steps proportional to the square of the number of highway segments. And there are proven techniques to simplify even that; one of these is A Star.

We also know that many problems are NP complete. For example, if one wants the best path that visits every city, a Hamiltonian path, there is no polynomial algorithm to find the shortest one. (There are caveats--for another thoughtful Thursday or a quick clink on the Wikipedia Article). There are also approximations.

The same is true for the strategic voter wanting to know what they should enter at the voting machine, or internet voting computer. There is a polynomial time greedy algorithm for any voting system that is monotone. That simply means that the voting system is more likely to report candidate j is the winner of the election than candidate i if a particular voter indicates J higher in preference. And the conventional plurality voting system such as in our famous N, B G election. That means that assume a person prefers N to G to B, and also knows every other voters' preferences, they can consult their computer program to find out whether to vote for N ior G. It is also true for some other schemes:

Positional or Borda count. Each voter sends a list in rank order, and these ranks are added. The one with the highest is voted.
the winner is the candidate who is preferred in the most pairwise elections
the winner is the candidate who would have the most victories - the most defeats in pairwise elections-- Copeland's method.

I will prepare a table of all the proposed voting systems and their properties for a future Thoughtful Thursday.

But a minor variation of Copeland method, which by the way the United States and International Chess Federation works, is NP-complete. It deals with ties by looking at the candidate who defeated the highest scoring candidates. That IS NP-complete. And as seen from the "Future Thoughtful Thursday List" there are many others.

Conclusion

The participatory methods I proposed earlier take advantage that large numbers of alternatives are our friend. If the alternatives are every conceivable combination of factors and penalties for a gun code. If the alternative for a tax code are every combination of rate tables and factors such as number of children and amount of one's mortgage, then we can overwhelm the above results in an exponential or even infinite number of alternatives.

That means we don't have a few proposals from the legislature or for which somebody bothered or paid to get 100,000 signatures. the voter can select their preferences from every logical combination! This lowers or eliminates the probability that someone can find a way to vote strategically!

For Future Thoughtful Thursdays

Arrow's Impossibility Theorem
The California Insurance Wars.
Mark Allen Satterthwaite, "Strategy-proofness and Arrow's Condition: Existence and Correspondence Theorems for Voting Procedures and Social Welfare Functions Journal of Economic Theory Pages 187 to 217, 1975
G. Kalia, "A Fourier-Theoretic Perspective for the Condorcet Paradox and Arrow's Theorem" Advances in Applied Math 29 42 to 426, 20002
Allan Gibbard, "Manipulation of Voting Schems: A General Result" Econometric 41 587 to 601 1973
V. Conitzer and T. Sandholm,"Universal Voting Protocol Tweaks to Make Manipualtion Hard" in IJCAI 781788 2003, 781 to 788.
V. Conitzer and T. Sandholm , "nonexistence of Voting rules that Are Usual Hard to Manipulate" AAAI 2006.
V. Conitzer and T. Sandholm, Journal of the ACM, August 2007.
Ariel D. Procaccia and Jeffrey S. Rosenchien. Junta Distributions and the Average-Case Complexity of Manipulating Elections In Hideyuki Nakashima, Micahel P. Wellman, Gerhard Weiss and Peter Stone. Fifth International Joint Conference on Autonomnus Agents and MultiAgent Systems (AAMAS 2006)
J. S. Kelly, "Almost all social choice rules are highly manipulable, but a few aren't. Social Choice and Welfare 10, 1993.

Thoughtful Thursday: Review Peter Elkan "New Model Economy"

2010-08-19T09:00:00.001-05:00

Review of The new Model Economy: Economic Inventions for the Rest of the Century by Peter G. Elkan, review by Kenneth E. Boulding. in Journal of Economic Literature, September 1984, Volume XXII, Number Three

Peter Elkan says there are two current approaches to a government regulating the economy. They are setting legal rules like the new Financial Reform bill. The other are various macroeconomic effects such as the Fed setting the interest rate. But Peter Elkan proposed a "grand palever" among all the other interest group to divide the economic pie. Kenneth Boulding proposed a macroeconmic mechanism: wages are paid in yellow money, we buy goods in green money. The Fed sets the conversion rate between the two to control inflation. I proposed a system of two types of money. Type A was to allocate scarcity to buy goods and Type B was to express satisfaction with goods and services One received Type A money in proportion to the amount of type A money one received. My goal was to deal with goods whose marginal costs were small or zero--the empty seat in the Amtrak or the music one downloaded.

But Elkan became more complicated, regulating imports with some sort of forward contract. And he proposed identifying "utility" goods. The British did this in World War II. Thus, they would produce a large amount of functional but unfashionable glass frames so everyone who needed glasses could have them. The sortition jury would give these a low or zero excise tax.

I was impressed by another point that Kenneth Boulding made. In 1932 and 1933, real rates of interest were three percent but companies were losing three percent. He was surprised the economy held together as well as it did instead of totally collapsing. He claimed that businesses kept going hoping things would get better and from "benign force of habit." I wondered whether business might have lost more money shutting down completely due to the sunk costs for their factories, for which they presumably would still owe interest on debt or at least the costs to mothball and pay property taxes.

Obviously, I will get the book by Peter Elkan for another Thoughtful Thursday.

Miscellaneous from Recent Periodicals

2010-08-15T13:59:00.002-05:00

I blogged reports of China's Real Estate Boom and land buggle. Many Chinese State owned companies are winning auctions for land on which they are building luxury residences and retail outlets. In 2008, 59% of land auctions was won by state-owned companies -- up to 82%. 90 of 125 state-owned firms have real estate divisions. Land prices jumped 750 per cent. State owned banks made 1.4 trillion loans, double the previuos numbers. Municipalities are part of the problem. They are forbidden from buying real estate directly. But they do borrow money to build infrastructure on land they already own. They hope to sell the land at greatly increased prices. (Page A1, A5, "State-Owned Bidders Fuel China's Land Boom", David Barboza) New York Times, Monday August Second 2010 Volume CLIX NO 55,120

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Paul Krugman has advocated in his blog increasing the money supply, monetary stimulus to overcome the inflatiohn. One in six Americans rates are v are unemployed or underemployed and the average length of joblessness is thirty-five weeks. Apparently, policy makers are defining our expectations downard accepting that. Foreign investors are still buying foreign bonds and federal interest. And he said that we should increase inflation to stimulate the economy. He suggests that we might allow inflation to reduce unemloyments. Dr. Krugman is concerned that in the near future, the government will declare the high unemployment structural, the long-term unemployed will lose their skills and social capital, making a self-fulfulling prophesy. An alternative is targetting spending.

Paul Krugman, "Defining Prosperity Down" Page A15 New York Times, Monday August Second 2010 Volume CLIX NO 55,120

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I reported earlier the Marmot study of WhiteHall employees, as people rose up the hierarchy, they had better health, even though all enjoyed job security and the same National Health Service. This argued against hierarchies, and possibly reporting to sortition juries rather than "a boss" is better for one's health. Wired reported that hierarchies in baboon's led to increased stress hormones and bad health. Dr. Elizabeth Gould showed that stresses reduces dramatically the birth of new neurons in the brain. Epidemiologic studies with humans, that showed that having control over one's job demands improves health, but having to follow orders is detrimental.

"Under Pressure" by Jonah Lehrer Wired, August 2010, 18.08, page 130 to 146.

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Factoid: The Average American House is 2,438 square feet. Page 074, Wired, August 2010, 18.08

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A Wired reader suggested that passengers in an airplane might collectively brainstorm to solve the world's problems as "they all just sitting there." They should collectively serve as the sortition jury, say on taxes that a person or business should pay or help choose a tax code. And the real source for crowdsourcing should be mass transit; mass transit takes longer than driving with starts and stops and not being able to take the most direct route. Of course, there is enough time outside travelling time and Participatory democracy can occupy the unemployed.

Wired, August 2010, 18.08 , Page 017

Thoughtful Thursday: General Equilibrium Models

2010-08-12T09:35:00.003-05:00

Journal of Economic Literature, John B. Shoven and John Whalley "Applied General Equilibrium Models of Taxation and International Trade" September 1984, Volume XXII, Number Three, Page 1007 to 1051

The demos is voting on the tax structure and its parameters. They need to know what their preferences for a tax code will do for the budget deficit and to the broader economy. We tax income 30%. Will revenue go up or down? This is the famous Laffer curve, beautifally explained by Dr. Krugman Equilibrium Models solve non-linear equations representing demand and supply, production curves, how much will people work if taxes go up? how much will they save? Drs. Shoven and Whalley give as example: simple model with a manufacturing sector and a nonmanufacturing sector, labor and capital and those who live primarily off their investments and those who live off their wages. Assume the demos decided to tax the rich, that is the income they get from dividends and interest, at fifty percent. This would reduce manufacturing output. And thus this tax would get less revenue than expected as people would consume more nonmanufactured goods.

Also, we sometimes hear that a trade or tax policy has a cost to the economy of so many billions of dollars. The general equilibrium model says how much of each good each group would receive after the change. These are converted to a single money amount in two ways. We use the new equilibrium incomes and prices and ask how money would we have to give or take away from each household to return them to their previous utility level. This is called compensating variation (CV). Or we could take the old equilibrium prices before the tax or trade change, and say how much do we have to add or take away from each household to make them "whole." The demos can look at this summary statistic for the whole economy or look at how each group in the economy does. Probably, some want to "soak" the rich and do not care about their happiness. Others may have similar feelings about those who receive welfare or who work for the government.

In the simple model with which the article started, the tax caused a welfare loss of 0.66% of the whole economy, but the tax revenue was only a few percent, so the deadweight loss from the tax by giving people less manufactured goods than they wanted was one quarter of the revenues earned. However, rich households that were living off their savings suffered all of the decline while the average Joe was better off. So whoever is making a policy decision can think in a more reasoned way.

Some tax codes say that the income from certain investments is taxed at a lower rate. A sophisticated model found that these that they reduced the interest rate for those vehicles. Thus, the tax code was more progressive than it might appear. And at the margin, one estimate says that the deadweight loss from a marginal change in the tax code is 100%. Or the cost for an extra dollar of government revenue to the economy is two dollars.

Of course, economists simulate with lots of parameters. One used thirty-three products. They used 100 different categories of households. Joseph Pechman and Benjamin Okner looked at 87000 different categories to see "Who bears the tax burden?" And as the article, but more importantly, a Cato Institute review, it matters whether we look over a lifetime or single year. A student in a high-end business school or medical school obviously has a low income but just as obviously expects a high income soon. But can we simulate or get information from the demos on this number of categories? If the tax code were a decision tree, people would try to move themselves to a more favorable branch of the tax tree.

This reminds me of the Simulation and its Discontents" of which I read a review in the Chronicle of Higher Education. One can put in one's simulation an equation making rioting likelihood an increasing function of taxes, income, or inequality. People playing with the simulation will learn "taxes causes rioting" regardless of whether there was there was empirical basis for the equation.

These modules depend upon "elasticity estimates" and input-output tables. If the prices of manufactured goods go up by ten percent, will people consume ten percent less, twelve percent less, eight percent less. And we simply don't know these numbers. An economist illustrates these issues, bacic micro economics. Similarly, there is a basic engineering question: how much steel does it take to build one windmill, how many doctors or nurses does it take to provide a certain quantity and type of health care. The latter is an input-output matrix. We only know what the prices are today and the amount consumed today. Yes economists can make estimates by looking over time, but although prices were different ten years ago and demand was different ten years ago, lots of other things were different then such as tastes and family structure, and even technology such as how long a car lasted.

Thus as each voter enters in their preference for what the taxes should be, they must also be asked to put in their estimates for all these parameters, how do each worker and invester respond to taxes. Of course, the web site would have estimates from the best economists a click away. But if the economists disagreed, the voter must choose.

And these estimates vary. Drs. Bruegger and Loertscher showed that even in a simple model, voters could be stuck in a local optimum. This was particularly if there are large external shocks to the economy so that they can't tell what changes are do to the policies for which they vote and which changes come from the external shock. For example, basic intermediate macroeconomics says that if interest rates increase, people will save more. But some economists said that the elasticity would be close to zero. My mother said that those who had a temperment for spending would rationalize not putting away for a rainy day and those who were by nature thrifty, would find a rationalization for saving. If interest rates are higher, they may save less, as a lower retirement nest egg would grow sufficiently to meet their retirement needs. These are the kind of debates of which voters must confront or resolve in their own minds, as they input their votes about the economy and taxes.

The second part of the article concerns trade effects and trade policies. This is not as relevant to the theme of this blog, but one thing that struck me is for large countries at least, the effect of free trade is very small. One estimate was that forming the European Economic Community only improved cost-benefit by the equivalent of 0.05 percent.

Thoughtful Thursday, Corporations and Corporate Democracy

2010-08-05T09:07:00.002-05:00

Dodge Versus Ford Motor Company 1780 N.W. 668
Joel Bakan, The Corporation:The pathological Pursuit of Profit and Power

History

In 1776, Adam Smith warned in Wealth of Nations, corporations inevitably would be victims of insider fraud. Managers could not be trusted to "steward 'other people's' Money."
England repealed what was known as the Bubble Act in 1825, bringing back the corporate form.
In 1853, Edinburgh Journal called for workmen to have a share of the ownership of the firm so they understand the concerns that now only a manager/owner understands.
Gilbert and Sullivan satirized the corporation in Utopia Limited Though a Rothchild you may be, in your own capacity, As a Company you've come to utter sorrow, But the liquidators say "Never mind--you needn't pay" So you start another company tommorrow
England limited Corporate liability in 1856
In the 1890's states competed to have corporations incorporate in their state and made their corporate laws most friendly. As we know, Delaware was very successful in this regard, which effort to this day brings in money to the state.

Corporation Purpose

I am sure everyone here has heard that corporations goal is to make profit, improve the bottom line and increase shareholder wealth, generally by increasing the stock price. John and Horace Dodge invested $10,500 in Ford at 1906. Ford, famously, paid his workers more than the going rate. He also halved the price for his Model T. Bakan quoted him as saying 'I do not believe that we should make such awful profits on our cars. A reasonable profit is right but not too much.' And in this case, the Dodges sued Ford and this established the legal principle that managers and directors have a legal duty to increase profit. Robert F. Kennedy Junior recently gave a talk at our University to a packed Western Hall, our largest venue. He said that a corporation must maximize its value. He used the example of Walmart donating supplies after Katrina. It could do to that to make people feel good about the company. But it could not donate because there were people who really needed help. That would be spoliation of assets and it should be illegal. Thus, we must regulate corporations. Bakan cited Hutton versus West Cork Railway Company allowed this saying 'a company which always treated its employees with Draconian severity' would have bad employee relations but that 'charity has no business to sit at boards of directors qua charity.'

But according to Wikipedia that is not the case. The real problems was that the Dodges wanted a big dividend to start a competing car manufacturing company! Ford did not want this. And the court awarded a special dividend to the Dodges with which they started the famous Dodge company. And the case was much concerned with minority rights in a corporation as henry Ford owned fifty-eight percent of the shares. And it was about the argument of gaining market share versus profit. 'My amibition' declared Mr. Ford, 'is to employ still more men; to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes. To do this, we are putting the greatest share of our profits back into the business." And in fact the complaint said asked that Ford restrained from taking money that would be given out as dividend and from building "fixed capital assets" including possibly an iron smelting plant versus distributing a cash surplus of sixty million dollars. At the time the shareholders were receiving a return from their original investment of sixty per cent per year!

In the share economy, we have similar problems with an individual, A loaning to another individual, B. B as a sovereign indivdual would have the right to vary his income, e. g., stopping work, going to medical school, etc. or vice versa. B might work for share of future income, from building a house where they would both receive money as it was rented out. Or B might work for a startup biotech firm--in exchange for the revenue if their drug succeeds. A is at the mercy of B's decisions, except where they represented waste. Thus A might take action if B decided to sit on the meadow and watch the grass grow, particularly, if A was living in B's house and agreed to pay a 20% of their income in exchange. In a share economy, people would not rent an apartment for a fixed amount of money; they exchange a share of their income for the right to live there. If there was no corporate form, we boil down to that in Ford vs. Dodge, because Ford still retained majority ownership even though Dodges contributed to Ford's business.

In reading the decision, I find, "The difference between incidental humanitarian expenditure of corporate funds for the benefit of the empoyees, like the building of a hospital for their use and the employment of agencies for the betterment of their condition, and a general purpose and plan to benefit mankind at the expense of others, is obvious...A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself..."

Fiduciary Duty

Many of the problems with corporate decisions are a director or manager self-dealing. Voting to approve the big purchase to the company they or their relative own. The manager reveals his conflict of interest. A group of disinterested directors or a majority of the shareholders approves the decision. I see no reason that a sortition jury could not do this. Thus a firm can hire the managers' wife when she really is qualified.

Governance

By contrast to my proposal, the shareholders have no power. In 1913, A Congressional Committee found that that not only had the shareholders never overthrown the existing management in any large corporation, they had not even started an investigation. The management is "virtually self-perpetuating."

I contrast a sistuation where randomly selected groups of shareholders, and shareholders would include the employees who receive a share in lieu of salary, make the decisions. As I outlined in that proposal, a certain percentage of each group could escalate a decision to a larger group or even force a vote of all members.

In the 1930's, AT&T advertised a picture of an older women looping at her AT&T Share Certificates with her children in the background and pronounced in another advertisement 'a new democracy of public service ownership' that is 'owned directly by the people--conrolled nto by one, but controled by all.' Now, we would have that same mother, sitting at her computer participating in the decisions, big and little, teaching her children, looking over her shoulder, about the company that they would one day inherit--I don't believe in stocks being sold.

Limited Liability

Now the corporate form by limited liability did allow middle class to contribute capital to large enterprises. And the idea was this middle class investor who may have invested a few thousand dollars should not lose their house and all their other savings should the aiport or railway go bankrupt with more liabilities than assets. Let's look at Ms. Jones from my earlier post. Should she lose all her assets if the doctor she financed commits malpractice during a delivery and a child is born with severe cerebral palsy. What if the plumber that the apartment complex hired causes a gas explosion killing dozens?

I distinguish contract and tort liability. In our current system, an enterprise can promise more than 100% of its incomes. This usually does not happen deliberately--I hope. It promises fixed payments totalling a million dollars a month at a time that its revenue may be several million a month. However, if the economy sours.... This is what happened to General Motors whose revenue halved and Pittsburgh whose population halved (reference, IssuesPA.net, 7811 which disappeared from the net in a few days), but which still has large pension and debt service obligations. But in a share economy, no enterprise can promise more than 100 percent of its revenues. Thus, unless it commits a tort offense, there is no problem with the business going bankrupt. As I mentioned in that post, the owners might liquidate if the revenue cannot cover the current variable costs.

But what about a BP spilling oil, Massey Coal having a mine accident, or an Arthur Anderson not auditing Enron properly resulting in many investors losing money. Or a small businesses delivery driver crashing into someone.

I propose the sortition juries in dealing with a tort case would have to decide how to allocate the costs. one seventh of Britain's total dividend income came from BP. These individuals certainly had no control over the decisions that led to the blowout and spill! Is it fair they lose their retirement?

In a sortition system, ordinary stockholders would have the authority to contribute to the day to day decisions of the enterprise. In the rig control room, the partners and employers could call in a sortition jury to make an important decision. What if there is another big spill like Macondo? The share holders would be individually judged as to what share if any they should bear. Computers keep good records. The sortition jury in the tort case could look at each juror: What did you know and when did you know it? What did you say? Did you try to bring the problem to other shareowner's attention. What did you vote? The Corporate Bylaws would have a mechanism where any shareholder or employee or even an outsider could bring the matter to the attention to a randomly chosen set of the shareowners. They could vote, don't worry about it--it's just a gadfly. Or they could say this is a real concern and escalate it further.

And, sortition jury would look at the general climate in a corporation. Bakan described (page 81) how BP was negligent in handling its Prudhoe Bay facilties. Massey's Upper Big Branch coal mine had five times violations than the national origin. In 2005, BP's big rig Thunder Horse had many problems, bad underwater welding and a valve installed backwards. JoulesBurn documented many other near misses in the Gulf of Mexico. The Texas City refinery disaster in 2005 was similar with 300 safety violations 21 million in fines. Workers were working twelve hours per day--reminds me of the concern about medical residents working twenty-four hour shifts. Occupational Safety and Health Administration revisited them in 2009 and found 700 safety violations and $87.4 million in fines--most because BP did not live up to its agreement after the 2005 disaster.

In the United States and Australia uses a mind and will test in corporate criminal liability. If it is run by a series of decisons sortition jury, it could look at the decisions as a whole. Do they give a wink and nod at safety violations? Or do we see 987 of the 1032 situations where sortition juries had the opportunity to act on safety situations being decided on the safety/conservative side.

Revocation of Corporate Charters

State governments can revoke corporate charters. And Elliot Spitzer and Robert Benson proposed that corporations that repeatedly release toxic waste or otherwise endanger the public can have their charter revoked. But, there are many small investors in any of these large corporation, and should they suffer for offenses they did not do, had no knowledge of, and had no way of stopping. I propose that a corporation would lose its governance to a sortition jury, forever if it is convicted of murder, a capital offense. It would be under the control of a sortition jury. The sortition jury would run the corporation as the board of directors, considering whatever stakeholders it wished to including investors. The sortition juror would command every move of the corporation just as a jailor controls the minute-by-minute activities of a prisoner.

Similarly, a corporation convicted of a lesser charge, that would be punishable by a few years in jail if done by a natural person, would find their affairs controlled by a sortition jury for the same length of time. They would have to avoid not wasting assets in the same manner that a conventional jail could not work a person to death, even thought the thirteenth ammendment specifically allows involuntary servitude as due punishment for a crime.

The Corporate Purpose

A corporation, by law's, sole duty is to increase shareholder wealth. in the opinion of Milton Friedman of Peter Drucker, that is as it should be. This creates a psychopath. It has no empathy for anyone else and have superficial relationships crafted by Public Relations types.

A true shareholder democracy, would allow the Walmart share holders to genuinely feel for the Katrina victims and put the full power of Walmart's distribution to get them things they need. One may argue that the role of a corporation is simply to make money for the share holders. The share holders could then give to whatever charitable enterprise they wish. If they all donated to the Red Cross, the Red Cross should simply contract with Walmart to buy at the market value whatever Katrina victims needed. To some extent, that is the Coase's work on the nature of the firm--is it more efficient to have several entities interacting or do everything within one organization. It depends upon the relative transaction costs. There are empirical sociological issues of group identity as well, would people get a better feeling, be more likely to contribute, as part of the identity: Walmart shareholder.

And it is a broader issue of Rule-Based utilitarianism vs. Original utilitarianism, which is of course beyond the scope of this blog. But we hear stories of top executives, top lawyers or partners in big accounting firms, deciding to leave those organizations and help a non-profit or become teachers in inner school districts. Utilitarianism would tell a public spirited individual with the talent and luck to be a partner in an accounting firm: stay in that job that brings to you hundreds of thousands of dollars. Spend only what you need to be socially acceptable there--I know that a partner at Big Four accounting firm must dress a certain way, and probably could not get away with living in a slum. Give the remainder to that cause. Would an individual who was fortunate to be a big tobacco lawyer do more for the anti-smoking cause by staying in that job--after all someone would take it anyway who probably would be at least almost as an effective litigator for the tobacco company for you. Secretly contribute money to the anti-smoking cause!

For Future Thoughtful Thursdays

Corporate Criminal Liability -- a good bibliography is in the Wikipedia article on this subject.

Rights of Minority ShareHolders and the fiduciary duty of one share holder to another.

Share Economy--how it might work.

2010-08-03T15:30:00.000-05:00

The third posting here, I proposed share economy. A firm or enterprise or government does not have debts. When it does not have enough cash or fungible product to purchase something it needs, it grants a share of its income. (In this article, I limit myself to discussing shares that last forever.)

It is now 2060. Nurse Joan Smith owns a one percent share in an apartment building. She is free, so she marked on her mobile device that she is available for her investments. She's a night owl--she is up. There is a leak in one of the line B apartments in that building. It is starting to create a flood. The tenant calls the super who is in the apartment now and he video's the situation and clicks the button to contact all share owners for approval. He wants to call the plumber, $200.00 for an emergency house call. Joan along with five other investors gets the call. Their mobile's calculate the cost of this expense based on their share. In Joan's case, it is two dollars. She certainly feels comfortable. Since, it was marked an emergency and not everyone would have an opportunity to weigh in, 80% consent is required under the bylaws. However, Janet, a plumber living 500 miles aways, asks about shutting off the water to the entire line. They discuss that this means that the six tenants in the line won't have water in the morning. However, they decide to do that since Janet won't consent to her share of the expense on an emergency basis. The alternative would be for fourty percent of the group to vote to bother everyone and wake them up, as well as have approval of one employee, in this case the super. (This is all programmed into the bylaws of the corporation and those procedures are automatically enabled.) They all the hold the line while the super makes sure that he really can shut the water off. He does so, and the group do vote to give the plumber fourty dollars for going quickly, shutting the water and helping the tenant mop it up. They also set up the procedure for everyone to be contacted for an eight AM meeting to decide the permanent fix for the leak.

A few days later, unrelatedly, Apartment 2C became vacant. A young medical student presents wanting to rent the apartment. He had no current income but he did offer a one percernt life time share of his medical income in exchange for his rent. He presented his grades from Undergraduate School and recommendations, as well as video record of his study time during his undergraduate days for their perusal. He estimated his medical income from the Bureau of Labor Statistics data, and it certainly would have been attractive. But they won't get any money until he starts practicing, seven or eight years away--depending upon what residency he picks. This was not an emergency, so a random sample of share owners was convened. They each got votes proportional to their share; some on the call to discuss this thus have a higher percentage and some had a lower percentage. Based on the estimate, the bylaw computer estimated for Ms. Jones would get thirteen dollars every year he practiced. However, the others wanted more current income and she was outvoted.

However, Ms. Jones found his prospects attractive, and maybe him as well, so he send him a message that she would talk to some of her friends at the hospital. Several of the other nurses reviewed the records, they all had a surplus of income over expenses that needed to be invested. So they sponsored him, authorizing a share of their current income in exchange for his share of his medical income. With that, he went to an apartment complex down the street and the owners there took a share of the nurses income while he was in medical school and he signed over at the e-notary, one percent of his medical income. (A comment on any subsequent romantic involvement between Ms. Jones and the future doctor is beyond the scope of this posting!)

After the second "Great Recession" in 2025, the United States shifted to a share economy. Ms. Jones' grandfather, a construction worker, joined the team to build the apartment complex above and he got a six percent share but no money since the apartment complex was built on spec. He had rented a house to live in on 1/3 share of his income. So two percent of the apartment complex income went to the original owner of that house. When he passed on, each of his four grand children got one quarter of his assets, he had accumulated several other shares over the years. And so that is how Ms. Jones ended up with one share of the apartment complex.

And as our young doctor went off and practiced, he remembered the help that he got that day and many others. And sometimes a young college student would need medical care, and they would exchange a 0.1 share of their income for his professional practice. And each of our six nurses then ended up with a 0.002% percent share in each of their life incomes.

I talk about corporations and how larger corporations would run in the share economy in August Fifth's Thoughtful Thursday.

Sovereign debt defaults

2010-08-01T15:27:00.001-05:00

GMO has a wonderfully written piece on sovereign debt, an issue I touched upon here. Both I and other bloggers say his paper is a must read.

For those who don't have time to find it ont he net, here are the points that caught my eye. Many people point to debt to GNP ratio in their concerns

Russia defaulted in 1998 when goernment debt was 12.5 percent of GDP.
Japan has a debt of twice its GDP and its government bonds yield from 0.13 percent to 1.81 percent depending whether one looks at three months or three decades.
Adam Smith and David Hume were very concerned about the real growth of English debt after the Napoleanic wars. Here debt was 250 percent of GNP and the percentage was similar in the interwar years and after woerld war II. During the first run up, the electorate, which was a small percentage of the demos, voted for deflation so their government debt holdings increased in value. And the debt went down from Napoleonic levels.
In the depression, there were major defaults; 90% of foreign bonds sold in 1929 subsequently defaulted.
There have been cycles of international ledning and default goign back to the 1820's. Often a bank panic in London or New York precipitates the wave of defaults.
In 1820's, Greogor MacGregor posed as the rule of a fictitious Latin American country and got a loan from a London bank.
Latin American countries defaulted several times. This started in 1820--shortly after their independence.j
In 1557, Emperor Philip II of Spain defaulted--and they still had their colonies producing gold. The "first international credit crisis" Short-dated debt was 3.5 times revenues. Just before this default, he was paying fifty percent annual interest.
Dudley Baxter in the 1800's said that governments in sourthern Europe were spendthrift. Spain defaulted thirteen times since 1800. Portugal defaulted five times.
When countries were able to reduce their debt to GDP ratio, they did it by strong real growth as England did with the industrial revolution and its empire and the Scandinavians did.
Public finance is a Ponzi scheme--people keep buying the debt of these countries, which money is used to roll over (i. e. payoff) earlier purchases of debt.

Henry T. C. Hu talked about GMO in his article in Business Lawyer. Richard Cheney, Senator John Kerrey and Harvard University use Gratham, Mayo, Van Otterloo and Company for asset allocaton and it regularly posts history and predictions thereto.

I will talk about this article later on portfolio asset class returns, "The New Portfolio Society, SEC Mutual Fund Disclosure, and the Public Corporation Model, August 2005, 60(4), page 1303.

For Future Thoughtful Thursdays

Walter Bagetot The Danger of Lending to Semi-civilized Countries 1867
Max Winkler foreign bonds: An Autopsy 1933
Ilse Mintz, Deterioration in the Quality of Foreign Bonds Issued in the United States 1820 to 1830, 1951.
Carmen Reinhart and Ken Rogoff, This Time is Different 2009.

Advantages and Disadvantages of Majority Vote and Super Majorities, thoughtful Thursday

2010-07-29T09:45:00.003-05:00

James M. Buchanan and Gordon Tullock, The Calculus of Consent Ann Arbor Paperbacks
Kenneth O. May, "A Set of Independent Necessary and Sufficient Conditions for Simple Majority Decision" Econometrica Volume Twenty, Number Four, October 1952 , pages 680 to 684.
Dean Lacy and Emerson M. S. Niou, "A Problem with Referendums" May Tenth 1998. (online, but appears to be a copy of "A Problem with Referencums" Journal of Theoretical Politics 12 (1, January) 5,31.
Hannu Nurmi, "Referendum Design: An Exercise in Applied Social Choice" Scandinavian Political Studies Volume Twenty Number One 1997.
Anthony McGainn, the Tyranny of the Super Majoirty: Howe Majority Rule Protects Minorities

Majority Rule--all decisions should require 50% + one to pass, whether it is an election, in a legislature or on a referendum. Dr. Buchanan says that in an ideal world, if we could only overcome the costs of reaching a decision, we should require unanimity. Assuming that person X is voting on the referendum to select a constitution. He should want one where decisions must be unanimous. He would never be taxed for programs he did not like. He would never be required to obey regulations, say to limit his use of the land in certain ways to protect endangered species.

It would take time to bargain to get people to protect environmental treasures that he cared about or accept taxation for things he felt important whether they be the traditional right-wing roads, courts and armies or other programs such as an opera house. Under either a Lindahl Equilibrium or with side payments, it should be possible to find some combination of taxes and expenditures to which everyone would agree. It just takes time and haggling, as people engage in "strategic behavior" by mispecifying their Lindahl taxes.

But even the assumptiont that we could deal with these problems, there would still be a few obstinate souls. Jeannette Pickering Ranking voted against the first declaration of the war United States entering World War II (as well as War I). (She voted present on declaring war against Italy and Germany after they declared war against the U. S.) And those countries that have home-grown terrorists could expect that they would refuse to vote for the most basic measures, even under the most severe threats.

The equivalence of majority vote and some conditions

But the familiar 50% plus one has some strong theoretical support from 1952, Dr. May said any way of deciding, a "group decision function" taking as input everybody's yea, nay or don't care, should obey the following properties. The set of inputs, which he postulated as a list of -1, 0, 1 for every voters, I will call I for shorthand

It should give an answer for every possible I It should not say I don't know. I postulated some cases where I don't know might be appropriate. If two candidates for president were very close, perhaps both should win, and should they conflict on a particular decision, that decision be sent to a sortition jury or even a full plebiscite.
If we swap a -1 vote from voter x with a 1 vote from voter y, it should not matter. In other words, the votes should count equally. Dr. Dahl's specified this in his definition of procedural democracy.
The decision function should be unbiased. If all the 1's were replaced with 0's, and all the 0's replaced with 1's, the decision function should give the opposite result. A supermajority would favors the status quo.
The decision system should be monotonic. If everyone who voted for first of the two alternatives continued to do so and then some who voted for the second switched their vote, one should not find that the function was more likely to report the second. In other words, as people switched their vote, it should make it more likely that the new alternative succeeded.

Dr. May proved that having this conditions means that the only decision is the familiary majority vote system, and of course, the majority rule fulfills these conditions.

But this only helps when there is one alternative to be decided. If there are multiple candidates, we have all the problems of voting rules and Arrow's Paradox.

One by one or multiple times

Dean Lacy and Dr. Emerson Niou have not read the combinatorial auction literature--this was Dr. Lacy's Ph.D. Dissertaion. They pointed out that when a group care about a combination of things, you cannot just have them vote one-by-one. Assume everybody in a town wants to pass two out of three bond issues. They all feel that this is what the town can afford. However, they all disagree as to which two of the three the town should construct.

In fact it is very bad. If there is one combination of bonds that everyone agrees is better than every other one, voting one by one may lead to a different result. And, voting for several issues may lead to a combination that every single voter would say was worse than some other combination! However, if each election is held separately, ... IN other words, they vote on one bond, let everyone know whether it succeeded, then vote on the next bond, etc. does help. (Kadane reported on nine states that sent several changes to their state consitution to voters. Five states that just had one proposition with all the changes had them all defeated. Four states divided the changes into individual changes and either all passed or all but one passed.)

If the votes are done sequentially, it does help a little. The combination that wins will not be a Condorcet loser that would lose to each other combinations and will not be considered the worst of the combinations by every single voter.

Dr. Lacy points out that the population could vote by set, how many want YYY? How many want YYN? How many want YNY? How many want NYN? etc. However, if there were 2000 alternatives, there would be 2²⁰⁰⁰ sets. No voter, or even computer, could specify that many. Dr. Nisan discussed "languages" or ways that a bidder in an auction could give all their preferences without having to specify something for every conceivable combination of issues? Are these applicable to choices in a political system? Dr. Lacy says that a representative deomocracy can vote trade and do sophisticated voting--but a series of referendums for participatory democracy cannot. A statement he did not support.

His table six listed the results for different combinations.

Do the voters do better than a leader, or small group of representatives. If the voters are .50001 right and .49999 wrong, then taking a majority will be more likely right than a few leaders even if they are more expert. But, I am sure you read in history of a farsighted leader who would make peace when the population was still angry. And if everyone is probably wrong, a majority of the population will definitely be wrong. So those who say we should have wise representatives and a wise president decide things rather than the ignorant masses believe that the individuals are each more likely wrong than right. Dr. Nurmi shows this from the Condorcet voter theory or more basically, probability theory. And he shows similarly, that if people are more likely to vote their true interests than incorrectly, they are better off in a participatory democracy, than in another system. Most of the errors cancel. This is related to Dr. Surowieckis argument that people's misinformation on each side of the issue cancels, leaving the correct information in the majority determining the voting. the correct information in the majority. I mentioned that a supermajority is appropriate for the judicial rule. More precisely when some appointed group of people is in charge to make sure that every law respects individual rights, obeys the religious beliefs under which the country was founded, or is logical or budget-balanced, then when that group disagrees among itself, then the decision should go to plebiscite. Thus, a five-to-four or six-to-three supreme Court Decision on Constitutionality should go to plebiscite.

Dr. Buchanan believes that super-majorities help favor minorities, otherwise two thirds (or less) can simply vote to tax the minority without giving them any benefits in return (July 22nd Thoughtful Thursday). On January 27th, 2010, another Nobel Prize Winner, Paul Krugman, said that unless the United States removes the requirement of 60 percent to stop fillibusters in the Senate, "we're headed for full banana-republic status." But some of the comments were negative - saying that Bush, who is the enemy in his blog, could have done anything. And Mr. Randall said the Republicans win a majority in a few years, they could undo health care reform. Nine states of U.S. require a supermajority to pass a budget under certain conditions, often if the budget is not passed in time.. California requires a supermajority for all but education and Rhode Island requires a supermajority to appropriate money for local or private purposes. But the National Conference of State Legislatures say that it is not sure what the end result of this is. I suspect that most readers are familiar with the problems California has had with its budget, some of which has been blamed on the supermajority requirement.

Anthony McGann points out that use core/coalition/game theory/Rawlians concepts, that under majority ruling, one is most likely to be able to form a coalition to defeat some policy that one would not like. My game theory course did not cover it saw that in E. M. Barron's book.) (Dr. McGann discusses checks and balances and the writings and beliefs of Madison and John Calhoun on how these may help protect minorities. I will cover them in a future Thoughtful Thursday.) But he had some powerful diagrams of how voters or legislators might decide an issue that had two parameters. These could be a budget with the amount of spending and the amount of taxes--the difference would be the deficit or borrowing. Assume that eight voters cluster as follows at three positions (forming a triangle)

Name	Number of Voters
a	3
b	3
C	2

Under majority voting, there is no core, so that all could bargain for a proposal that they would like. However, if six are needed to pass a proosal, then c becomes disenfrancharged. Dr. McGann shows even more pathological cases; a status quo can remain that is nowhere near the center of the majority voters, opinions. Lani Guinier, a noted fighter for civil rights, argued that super-majorities protect minorities as well as a variety of voting rules. Yet, it was the filibuster that slowed down civil rights legislation.

But majority rule is subject to cycles when there are three or more alternatives, A would B in a single contest, B would beat C in a single contest and but C would beat A. And Dr. Buchanan I believe from the citations I have read that Riker--he is on the list for a Thoughtful Thursday, argues that representative democracy is less likely to have cycling than a participatory democracy system and Miller (1993)was cited for the same thing.

Obviously, the status quo is favored in super majority systems, whatever law was passed last year or last century. But as technology changes, this may not be the people, or their children, who voted for it wanted. Union rights were not important when ninety percent of us were farmers. Our fourth Amendment rights may become more important as spying technology allows a more intrusive state or more of a problem if terrorists gain the potential of genetically engineering a superbug. Or as Brunel-Petron put it, the status quo is a set of legal formalisms, not a set of outcomes. And the executives, bureaucrats and judiciary gain more power if the legislature or participatory democracy needs more votes to do something about it. An example. The Environment Protection Administration is coming out with regulations limiting carbon dioxide emissions as a pollutant. (The Supreme Court ruled that they could.) Congress persons have several proposals to block these EPA regulations, probably for two years.)

At the end, Dr. McCann sites several articles. Voting cycles help minorities have a voice. But that better be another Thoughtful Thursday.

for Future Thoughtful Thursdays

Davis, Otto A , M. H. DeGroot and Melvin J. Hinich 1972 "Social preference orderings and Majority Rule" Econometrica 40 147 to 57
Denzau Arthur T. and Robet P. Parks 1977, "A Problem with Public Sector Preferences" Journal of Economic Theory 14 454 to 457
Denzau, Arthur T and Robert P. Parks 1983, "Existence of Voting-Market Equilibria" Journal of Economic Theory 30 243 to 265
Diba Behzad and Allan M. Feldman, 1984, Utility Functions for Public Outputs and Majority Voting" Volume 24 1984, 1 to 2, 235 to 243, Journal of Public Economics
De Donder, Philippe, Le Breton, Eugenio Peluso, "Majority Voting in Multidimensional Policy Spaces: Kramer-Shelpsle versus Stacklberg"
Farquharson, Robin, 1969, Theory of Voting
Kadane, Joseph, 1972, "On Division of the Question" Public Choice 13 47 to 54
Kramer, Gerald H. 1972, "Sophisticated Voting Over Multidimensional Choice Spaces" Journal of Mathematical Sociology 2: 165 to 180.
Koehler David H. 1975 "Vote Trading and the Voting Paradox: A Proof of Logical Equivalence" American Political Science Review 69 954 to 960.
Gibbard, A. 1973 "Manipuation of Voting Schems" Econometrica 41 587 to 601
Satterthwaite M. (1975) Strategy Proofness and Arrow's Conditions: Exitence and Correspondence Theorems for voting Procedures and Social Choice Functions Journal of Economic Theory 10: 187 to 217
Saari D. G. (1989) A Dictionary of Voting Paradoxes, Journal of Economic Theory 48 443 to 475
Saari D. G. (1994) Geometry of Voting New York
Saari D. G. (2000) Mathematical Structure of Voting Paradoxes Economic Theory 15 1 to 53, 55 to 102
Feld, S. L. and Grofman B. (1992) Who is afraid of the big bad cycle? Evidence from 36 elections Journal of Theoretical Politics 4 231 to 237
Miller, N. R. 1980 "A new Solution Set for Tournaments and Majority Voting" American Jouranl of Political Science 24 68 to 96
Miller N. 1983 "Social Choice and Pluralism" American Political Science Review 77.3 734 to 747
Nakamura K. 1979 "The Vetoers in a Simple Game with Ordinal Preferences" International Journal of Game Theory 8, 55 to 61
Gibbard, A. 1973, "Manipulation of Voting Schems" Econometrica 41 587 to 601.
Riker, W, 1982, Liberalism versus Populism: A Confrontation Between the Theory of Democracy and the Theory of Social Chocice San Francisco: Freeman
Greenberg, J. 1979, "Consistent Majority Rules and Compact Sets of Alternatives" Econometrica 47.3 627 to 63
Lijphart, A. 1977, Democracy in Plural Societies Yale University Press
Lijphart A. 1999 Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries New Haven, Yale University
McKelvey R. 1976 "Intransivities in Multidimensional Voting Models and Some Implications for Agenda Control" Journal of Economic Theory 16:472-82
McKelvey R. 1979 "General Conditions for Global Intransitivities in Formal Voting Models" Econometrica 1085 to 1112
Enelow J. and Hinich M. Advances in the Spatial Theory of Voting
Guinier, Lani, 1994 The Tyranny of the Majority: Fundamental Fairness in Representative Democracy New York: The Free Press.

Government Secrets

2010-07-26T12:10:00.001-05:00

United States vs. Reynolds established the state secret privelege. A routine negligence claim in a B-29 on a secret mission. Three civilian were on board when it crashed in 1948 due to an engine crashed. The United States government said that revealing the accident report would reveal the state secrets. The lower courts wanted an in camera inspection of the accident report. The Supreme Court said to just believe the government when they utter the words "national security at risk." In 1990 when it was finally released, the daughter found that there was no secret information in the report or information.

The lawyers at the time lied when they said there was secret information. (The Supreme Court declined to look into the matter fifty years later.) And the report acknowledged that there was a major record of negligence on the B-29 and a history of trouble. And United States vs. Reynolds has been used many times to throw out negligence cases.

Now, I think most people believe that the government does have information that had better be kept secret. We could rely on in camera inspections by judges. But who says that judges are the best people to do this. Are they most likely to weigh well the publics right to know vs. legitimate secrets. Are judges the most likely to not leak important information. Dr. Bailey talked about the problems from the Gulf of Tonkin and dishonesty by the government. The State Secrets Protection Act in Congress was introduced twice with no result to require in camera inspections by the judge. The judge coudl require that the plaintiff would have an attorney with appropriate security clearance appointed.

The other possibility is that people be selected whose integrity is impeccable. Individuals like just retiring general McChrystal, Norman Schwartkopf, Congressional Medal of Honor winners. They would review documents and decide which ones should be released or perhaps be the sortition jury to decide to such cases. What a wonderful way of using these individual's talents, integrity and credibility!

Financial System Posts (with no comment)

2010-07-26T12:06:00.002-05:00

http://seekingalpha.com/article/216461-the-global-financial-system-things-fall-apart

http://www.ritholtz.com/blog/2010/07/do-deficits-matter-not-to-us/

Buchanan, On Majority Voting and Budgets, Thoughtful Thursday

2010-07-22T09:42:00.001-05:00

James M. Buchanan and Gordon Tullock, The Calculus of Consent Ann Arbor Paperbooks, the University of Michigan Press, 1965.

A majority voting system can lead to wasteful expenditure. It does so because a majority can vote not to give the minority its fair share. A population has money to spend on education. It can even come from a higher government or from the petroleum that the country owns. Assume, there are three ethnic groups, A, B and C. Each are equal size and are as likely to exercise their franchise. A and B can vote together to spend all the money on educating their children and not appropriate any money for the schools that C uses. Assuming that the constitution or their morality did not prevent it, the coalition of A and B could vote that C pays all taxes and get none of the benefit. Of course, there is some question of the stability of a coalition, because the next year, Cand B could team up to shaft group A. In game theory terms, any of these voting patterns dominates A, B and C voting equal amounts of money to each group's schools. But nothing in game theory says which coalition will form and how long it will stay together.

But let us assume now that all three groups do have good schools and the question is whether to build a brand new school. As before, assume that groups A and B form a coalition to shaft C. They can spend ten million dollars on schools, but this will give only nine million dollars pleasure or utility total to A and B. And we will assume that A and B are not so crass as to simply take the cash out right from taxes and distribute as a cash grant to themselves. It is to their advantage to vote for the school buildings, since they get $4.5 million each of utility but only pay $3.33 million in taxes--part of their schools are paid by the hapless C. This is why one says that the democratic process leads to waste.

There is an apocryphal quote, A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that democracy always collapses over loose fiscal policy." But as Loren Collins showed, it is not clear where this came from.

But representative democracy is even worse. Assume that there are fourty-nine people divided into seven districts. On a bill, their opposing and aye'ing is as follows.

www

Four Aye, Three Naye

Seven Naye

Assume that we are fortunate enough to have representatives that alwaus vote what the majority of their districts want. Then, in Congress there will be four Aye's and three Naye's. This is even though of the population only sixteen aye's out of fourty-nine in favor. And it gets worse with larger populations, Dr. Buchanan and Turlock have an example of 39601 voters in 199 districts--only 10,000 voters would be noted to get an aye.

And the good doctors give an example of bicameral systems under total arrangement diversity. Here fourty-nine voters are arranged as follows:

S₁	A	H	O	V	CC	II	PP
S₂	B	I	P	W	DD	JJ	QQ
S₃	C	J	Q	X	EE	KK	RR
S₄	D	K	R	Y	FF	LL	SS
S₅	E	L	S	Z	GG	MM	TT
S₆	F	M	T	AA	HH	NN	UU
S₇	G	N	U	BB	HH	OO	VV

Here sixteen of the voters can get a measure passed or defeated--again assuming that our representatives simply vote what the majority of their constituents want. But assume one of the red voters, Q defect. Then two others are needed to replace them, e. g. the purple ones. In a logrolling situation, this would allow the two purple voters to command more money to change their vote than the other electors (black).

A lot of these problems are solved by a proportional list system, a subject for a future Thoughtful Thursday.

As even they admit, they came out strongly in favor of logrolling and point out that side payments among voters are beneficial. Let's go back to the school example. Assume that A and B groups would like a new school system but group C really needs one--either they have more children or their school is crumbling or they just love their children more. Group C can give A or B--whoever wants a school least some money to vote against a school upgrade for their school. In fact, the good doctors say that many of the disorders of majority voting can be solved with side payments or "logrolling." Specifically, those who feel strongly on a particular issue can pay money to those voters who care little one way or the other. On the other hand it does give the wealthy more say so. (This is in contrast to the popular view. Dr. Hansen says that buying is illegal in every state as well as federal elections and refers to the "almost universal condemnation."

For Future Thoughtful Thursdays

Richard L. Hasen, "Vote Buying" California Law Review October 2000, 88 Calif. L. Rev. 1323

feinberg gulf coast claims

2010-07-20T19:37:00.000-05:00

Last night, CSPAN had an interview with Ken Feinberg who administered the 9/11 reimbursement fund, the Virginia Shooting fund, the pay for the top twenty-five people for seven institutions that received extensive bail outs under TARP. He is now beginning administering his payment of the escrow funds for the BP oil disaster. Earlier, he acted as Special Master for Agent Orange and asbestos litigation.

He began his speech by saying that every so often, government has a problem that calls for out-of-the-box thinking--where we have to try something new and conventional thinking won't get the job done. He has awarded the funding. He is designing a plan for the BP oil disaster. He is setting rules and procedures for common classes of victims: shrimpers, crabbers, motel owners, restaurant owners on the Gulf. He has exclusive authority to design the plan. Thus, he does not have to individually decide each claim.

(I was intrigued that people can receive an emergency payment representing six months without giving up their right to sue. Some time in the next thirty months, they can file for an extensive payment. They can decide whether to accept the amount after it has been calculated or can then decided to leave that amount and sue. If they do accept the funds, it WILL close off their right to sue, and they can weight until they know what the damages will be. Mr. Feinberg said that with the oil gusher finally stopped, people can assess what it cost them. And Mr. Feinberg said that BP promised that they would pay additional funds if the claims added up to more than twenty billion dollars. That is just what is in escrow.

Could the same thing happen in a participatory democracy? Is this the new thing that would work. The claimants would still come. Since jurors are cheap, it would not be necessary to have a lump sum payment. People can come each month with their business losses for that month. As long as the money is there, or BP keeps paying, they can charge. The same problem was with the 9/11 respiratory claims. Some people did know how severely their lungs were injured and how much it would cost for their medical treatment. Courts are geared to closing cases, making a final settlement even if it is a structured settlement. Thus people are caught between the Scylla of not getting enough for their reasonable expenses or the Charybdis of getting money for possible health problems that may simply never occur. Particpatory democracies would take the companie's income each month or year and allocate it to tort victims as they have medical bills, etc. The challenge is drawing lines of what will fund. What about a restaurant owner in boston that features Gulf Coast Shrimp? What about a golf course fifty miles from the gulf that can document a decline in their users compared to last year? Can the participatory democracy juror do a better job than Mr. Feinberg? And what about the person who had a cash business but was not reporting same to the Internal Revenue Service? I wrote on handling immigration decisions with participatory democracy. I wrote on handling taxes with participatory democracy. In both cases, the demos has an option. Assign a variety of cases to each jury, or specialize jury panels. In the Gulf Coast claims, one could have one jury panel for shrimpers, one for crabbers, one for restaurants. Or one juror could be dealing with a mix.

One of the problems that Mr. Feinberg had with the 9/11 was the speed that Congress passed the legislation and he got started. "Mr. Feinberg, you are coming here to offer me two million dollars and my husband has not even been recovered from the 9/11 disaster."

Citibank and Citibank Financial borrowed money to repay the taxpayer "to get out from under my thumb" (Mr. Feinberg on pay.) Mr. Feinberg said that other parts of administration are concerned with executive pay across the board.

Unemployment, Participatory Democracy is Counter Cyclical

2010-07-18T15:00:00.000-05:00

Our nation and the world are not doing a good job of utilizing the time of those who lost their job. On average, Americans sleep eight hours and fourty minutes and are watching TV another twelve minutes. They are not volunteering more. On average an American over fifteen is only working three hours and thirty two minutes. That is down seventeen minutes from 2007. The article proposes that unemployed Americans might spend more time doing household chores and the like rather than paying for a service. That is not happening. Household chores stayed constant at one hour and fourty-eight minutes. (The Federal Government runs a time-use study every two years. This compared 2007 and 2009.) (1)

Participatory democracy is uniquely counter-cyclical. Sortiton juries could distribute money on the "Wait Til We See Whether You Truly Are Worth it?" plan. This would be a time to review how individual doctors did. Those just laid off would report to a sortiotion jury reviewing the work of physicians and the like. Those who id well could be given a huge chunk of money. They would be told to go out buy a nice house and all the furnishings--you deserve it and we need to stimulate the economy. And those who invested in well-performing health-care companies would get a nice sum of money. Sortition juries would review the claims of those who were victims of malpractice at this time. Certainly, those who are victims of accidents or other torts at the beginning of a boom should not wait seven years for a recession to receive compensation. However, law suits generally take a few years to go through te system. There is no reason that this can't be dramatically accelerated when recession hits, and giving a reasonable compensation to the sortition jurors.

States run the unemployment system. Employers in each state pay a payroll tax to put money into the funds--and the states pay the benefits. Many are in a hole as one expect during unemployment--The Federal Government lends the difference. New York owes 3.2 billion for this purpose.

Certainly, participatory democracy is not the only way that we can absorb the time of our unemployed. We can plan for unemployment by giving all individuals in high school training for something public-service oriented that they can do when inevitable job loss hits. That could be Certified Nurse Assistant training so they can help those who need help with the Physical Activities for Daily Living. Thus, during a recession, those eligible for a home health aid for three hours a week might get six hours a week--a care givers for a spouse or parent with Alzheimer's who might get a few hours per week of respite care might have that doubled to twice per week. Individuals could get training on being a police officer. The minimal training is only four hundred hours or the unemployed could report for some basic training. Although they might not enlist then, we would be better prepared should the nation have to mobilize for a major conflict like World War II.

Our nation has a shortage of nurses and teachers. These are obviously not roles that one can take on with a few hundred hours of training. But they could use assistance. Instead of giving teachers a few thousand dollar raise--during the recession, municipalities are cutting back on raises. But they could be assigned twenty hours per week of house-hold care or child care from the unemployed, with assignments based upon quality. Mr. Excellent Teacher, we don't have money for a raise. But we do award you twenty hours per week of help. You have your choice of the following ten individuals who just got pink slips. (Participatory democracy sortition jurors could decide which teachers earned this merit.) And teachers could get a phalynx of graders and tutors. In high school, a good algebra student could be selected to help the following year. (The American Educator, the magazine for my union, had an article on the struggle that teachers have to keep up with their grading. A high school teacher might have ninety to one-hundred twenty students. If they decide to give each class one assignment per week that needs ten minutes apiece to grade, that adds up to twenty hours per week. And one assignment per week is far from ideal--perhaps that is why high school students aren't spending enough time on homework.) Should they lose their job ten years later, they could be assigned to an algebra teacher to give them a hand with grading and individual assistance.

Of course, we must recognize that many unemployed need time from nine to five for interviews. But the things I proposed can be scheduled for evenings and weekends.

Unemployment is a happiness killer. Dr Diener, a.k.a Dr. Happiness, gave a talk at my University. He talked a permenant notch in happiness experienced by those who lose their jobs. An econometric regression showed that unemployment has a negative effect of -2.8 percent on happiness as compared to -1.2% for inflation That means that a one percent increase in unemployment decreases satisfaction by 2.8 units on a one to four scale. We do want to provide flexibility for structural changes in the workforce. And it will take time for a well educated, well trained and person with specialized experience to find a job that utilizes his needs--society should engineer itself so that these people are usefully employed, instead of their time "squandered," that verb used in 1.

Justin Lahart and Emmeline Zhao, "What would you do with an Extra Hour?" Wall Street Journal June 23rd 2010, Pages D1 and D3 Volume CCLV NO 145
Jacob Gershman, "Fund Debt Fans Fears of Spike in Taxes" Wall Street Journal June 23rd 2010, Pages A19 and A23, Volume CCLV, NO 145
Di Tella, Rafael, MacCulloch, Robert and Oswald, Andrew J. "Preferences Over Inflation and Unemployment: Evidence from Surveys of Happiness" The American Economic Review Volume 91, No 1, March 2001 pages 335 to 341

New Financial Regulations Too Complicated

2010-07-15T20:05:00.002-05:00

The 2300 pages of the new financial reform system will require 243 formal rule-makings.

Game Theory Thoughtful Thursday

2010-07-15T09:53:00.002-05:00

I just completed at Columbia a game theory course. Of course, I won't try and reproduce all I learned, let a lone all of game theory. There are plenty of good explanations such as Wikipedia, the first two chapters of our textbook by Osborne, and the entire text of A Course in Game Theory. But a basic problem is Prisoner's Dilemma, about which many of you have heard. For us, Dr Clarke reworded the problem as a public goods problem 1. Two neighbors share a yard. It costs $150.00 a year to plant and maintain a nice garden in the yard. Each would get $100.00 worth of enjoyment should the garden be planted. Each neighbor has a choice of contributing to what is a public good or reneging. The payoff matrix is

	Do Not Contribute	Contribute
Do not Contribute	0,0	$100,-$50.00
Contribute	-$50,$100	+$25.00,+$25.00

We assume that a person will continue planting once they started, even if the other person was not contributing their share. In a classic Nash equilibria, the parties would be stuck at both do not contribute. They just don't see the optimal solution Some look at it as a min-max solution or as Stahl put it, a no-regrets solution. I see it as both parties stuck at a local equilibrium. We studied the "Stag-Hare" problem. Here k out of n hunters can cooperate to get a Stag that they would share. It could just as easily be k people in a community building a community center or paying a share of any public good. Or they could all just do their own thing, hunt a "hare." The two Nash equilibria are everyone does their own thing or k people hunt a Stag. If everyone does their own thing, then one person isn't going to go off and hunt a Stag. They just won't catch it. Similarly if k hunters are happily searching for their Stag, there is reason for one to go off and do their own thing as they lose their chance to catch the Stag. The Nash equilibria theory simply does not provide for k people agreeing to hunt the Stag and does not say which equilibrium they would end up at. It just says they will get stuck at one like a hill climbing algorithm. (I asked my professor, aren't you just saying that the people will be stuck at a local equilibrium. She said yes.)

The mathematical theory says that the same thing would happen if both of our two homeowners knew they would share the yard for fifty years. The Subgame Perfect Equilibria of the finitely repeated game gives the same result. However, if the game is repeated indefintely, then both parties would contribute yielding the net benefit for both of them. The assumption is there is a discount factor that determines how much a garden in the future is worth compared to a garden this syear. If both parties are infinitely patient then the lower right result of both parties contributing to the garden prevails-- exactly opposite the Nash Equilibrium approach! If Party A decides to welch, not contributing while allowing the other party plant the garden, the other party welches the next time--the famous tit-for-tat. If Party A is somewhat impatient, it might take a few more seasons of "punishment" to get Party B to cooperate. The Nash Folk Theorem says that we can get the parties cooperating if the parties are sufficiently patient.

Hotelling used game theory to show that in a two-way election like we have with the two-party system, the parties will say about the same thing. If Candidate A is off to one side of the median position, then Candidate B will go to the median and win the election. And as Theiss-Morse showed, the American people on average think the government is at the right place on the left-right spectrum. (As many people think the government should be further to the left as further to the right.) But they would like to see more participatory democracy.

Reference

1. Clarke, Demand Revelation and the Provision of Public Goods Ballinger Press, Cambridge, 1980.

Backfire

2010-07-14T13:19:00.001-05:00

Political scientists have discovered that many individuals will dig in their heels when presented with facts contradicting their opinions. They call this backfire. That is when those who have entrenched beliefes and are given facts that say their beliefs are "objectively, provably false" they will entrench themselves even deeper. NPR Talk of the Nation just discussed this last Tuesday on 2011 and discussed various conspiracy theories and "Voodoo History" such as 9/11 or OBama was not legally born in the United States as is required for the United States Presidency.

Now, the question for this blog is whether backfire creates more of a problem for representative democracy or participatory democracy. Mr. Milbank suggests that many voters view democracy as a team sport--they want their team to win regardless of the facts. This is different from buying a refrigerator. If Mr. Milbank is correct, perhaps people will not think that they want the health reform to succeed or fail because they are democrats or republicans, they just want America to have the best health plan. That would mean that putting the health care plans up for referendum would do better than letting the representatives hash it out. Although backfire was a problem for both self-identified liberals and conservatives, the conservatives had more problems adjusting their beliefs after a correction.

Mr. Milbank pointed out that we have wonderful services like FactCheck and PolitFact, but people who are shown up by one of these services just attack the service.

For future Thoughtful Thursdays:

Brendan Nyhan, "When Corrections Fail: The Persistence of Political Misperceptions" June 2010 issue of Journal of Political Behavior

Iraq Assassinations

2010-07-12T15:20:00.000-05:00

Iraq has been a victim of assassinations aimed at high level officials, particularly representatives of the Iraquiya party which has the most seats in the recent elections. This is in contrast to a relatively low level of violence in Iraq. One advantage of a participatory democracy system is the deemphasis or zero high-level targets for this type of rage and evil. a Participatory Democracy system would have to spend less money on Secret Service (or the equivalent) protection.

Source: "Killers Stalk Politicians as Iraq Seeks Government" New York Times Thursday July First 2010, Page A4,

Switzerland Direct Democracy

2010-07-11T14:36:00.003-05:00

I assume everyone here has heard of Switzerland's Practice of using Referenda. I found a very well written very information and concise explanation of the options Swiss Citizens have to practice Direct Democracy. from Switzerland.com. And I suspect that we all know that Switzerland has banking secrecy adn Washington was trying to get the names of people who had swiss bank accounts but did not pay their taxes, tax cheats and evaders. I just learned that there was concern that this would go before the Swiss people in a referendum.

Rich Strategic mortgage defaulters

2010-07-09T14:53:00.002-05:00

Seeking Alpha documented that the wealthy are most likely to Welch on their mortgage when they could in fact pay their mortgage. Twenty Three Percent of luxury home mortgages are over three months overdue! This is much more than conventional homes.

And eight percent of current mortgages are no-documentation or "liar" loans.

Robert Dahl, Procedural Democracy, Thoughtful Thursday

2010-07-08T09:00:00.000-05:00

"Procedural Democracy" by Dr. Robert Dahl which appeared in Democracy, Liberty and Equality and Contemporary Political Philosophy--the latter which shows up in Google Books.

What procedures are necessary for democracy and who must have a vote or right to particpate?

Certainly, we need decisions to be made! But there are two types of decisions, rules and individuals. In the doctrine of rule by law, everything is a law. We have a tax code? In rule by sortition, each case is decided independently and we rely on the law of large numbers to remove the arbitrariness and to achieve some measure of consistency? If we always take a random sample of 1000 people and we present them with similar individuals This also resolves Dr. Dahl's claim that "equally valid claims justify equal shares." This is a tautology--Dr. Dahl admits it is close to one. we should not automatically decide cases in favor of a particular ethnic group. We claim that each person's claim is equally valid even though one person is from ethnic group A and the other from ethnic group Q. A bigot would say that group A is inferior to group Q and therefore, their claims are not equally valid and it is perfectly fine to rule against the first person solely because they are of ethnic group A.

And the binding decisions should be made by the members, directly or indirectly. And the members can delegate the rights to make decisons. Most of the times this is for convenience. That is the justification for representative democracy rather than having all decisions made by referendum. It is also the justification for administrative boards such as the Environmental Protection Administration at the Federal level or a planning board in a municipatlity. Many nations have generated certain powers to their constitutional court. This allows certain principles to be preserved, typically human or civil rights issues.

And Dr. Dahl said that citizens should have the right to set the agenda as well as vote. That is a major limitation in current systems, and one on which invention, research and implementation should be done to allow individuals together to create complicated legal codes. And of course, a sortition-based approach resolves this problem, as each case rather than a set of cases as defined by a law is brought individually.

Now who gets to vote, or from what pool do we choose the sortition jurors, or otherwise participate in the decison process. Should everyone affected by the decisions of an organization have a right to vote on them. We certainly have voluntary associations. They either invite and admit their own members--some cooperatives work that way. Before one can buy a share and live there, the coop board must screen you. Other organizations have non-discretionary admission process--if you pay the fee, you are a member and have a vote or professional organizations like the American Society of Mechanical Engineers or Institute of Electrical Engineers require a degree of other indicia that you are an engineer. They have associate members who pay dues but have limited voting rights (IEEE Constitution, online). The American Society of Mechanical Engineers (ASME) has a similar arrangement where members must have eight years of experience as an engineer. This lack of democracy is not a major concern, an associate member aggrieved simply does not renew the folowing year.

Schumpeter suggested that every "demos" can define itself. Thus ethnic group A can govern and simply define that members of ethnic group B have no right to vote. That is what happened to the Cherokee Nation. John Marshall said that the Cherokee were in "a state of pupilage" and the relation "resembles that of a ward to his guardian" and he remarked that should a foreign prince attack the Cherokee, it would be considered as would any other invasion of the United States. Alexander Tocqueville watched one of the Choctaw removals-- he asked one of the Native Americans why they were leaving. He said to be free of American laws. So here is an example of a demos defining itself to affect those who got no vote. (Many Native Americans became United States Citizen by assimilating or by serving in the armed forces. And even after the 1924 law granting citizenship, it was not until 1948 that all had the right to vote.)

Related is the right of the conqueror to set up courts and the like. This was establidged in Hefferman vs. Porter which said that a Union military commander could set up a court in Tennessee. And these decisions would be binding.

Locke and Rosseau said that the Constitution must be approved unanimously, but then laws could be passed by only an approval. But unanimously by whom?

and of course, there is a question of Children. And there are others who might sufficiently developmentally disabled as to not understand the voting process. One might argue that all such wards would vote as their guardians or caregivers directed. But effectively that happens now. Each State is given representation in the House of Representatives proportional to their population. Thus the votes of those groups who have lots of children have more power in Congress than those groups that choose to practice more birth control. Would there thus be any harm in allowing young children or developmentally-disabled adults to vote, knowing full well that their parents would be pulling the lever "on their behalf."

And if we allow exclusion of the incompetents, is that a slippery slope to literacy tests for voting or to become a citizen?

And what about tourists? They are subject to the laws--but do not get a vote. Obviously in conventional elections, where the election is for a four year term, it is not fair to allow a person who just happens to be in the country that week to vote. And in a participatory democracy, it is in appropriate to allow a one-week tourist to vote on a plan to build a nuclear power plant whose construction would start well after they left and would exist for many years afterward. However, for continuous expenditures, there is no problem. Each person gets to cast their vote for the public expenditures on entitlement programs, the police department, etc. they prefer. They also enter their preference of tax rates. They enter all manners of preferences as to numbers, how many minutes busses can idle, the number of years in jail a burglar should receive, etc. All these nubmers are combined by a median to determine the rate. As new voters become competent, e. g., when they reach eighteen eyars of age, their number is included in the median calculation. When they die or lose their voting rights as a felon, their numbers are subtracted. There is no problem for the tourist. They could enter their numbers upon entry to the country and it gets subtracted when they leave at the end of their one-week vacation. If medians are used, if the tourists are very far from the "real citizens," then their numbers would not have much of an effect.

And there is a local question. Non-residents pay property tax. Non-residents pay income tax. New York City has a non-resident income tax. Yet these people do not have a vote. The owner of a business in a state is subject to the laws of that state--yet they certainly have no vote in that State And the blog raised the question, should a person possessing property in multiple states or cities have a vote in each, while a person ownly owning one home only get to vote in one locality. Dr. Bailey proposed many mechanisms in his proposed constitution for a future country that helps address these issues. A person possessing property or a business owner could file a Lindahl tax or a Thompson insurance to express their concerns. Yet since this costs them money, and would cost more money to do it inn three cities than one, it does not give unfair advantage to them.

And states and countries base their residency upon address or abode. This can be a permanent location to which one intends to return, even though one never set foot there. Thus, assume A is working in New York State. A's family moves from Nevada to Tennessee. A never was in Tennessee. But A does intend to join his loving family upon completin of his work project. A is a resident of Tennessee and can vote absentee out of Tennessee. And does a person who is in a state for several years to complete a project a resident? And we hear about countries setting up special polling places in the United States for their citizens who are displaced here.

And immigration is an issue. I proposed a system of panels and allocating of quota by median. A simple rule that might be added is, Noone is admitted into the country as an immigrant who does not receive fifty percent vote from a sortition panel.

Dahl mentioned that Rosseau considered Geneva and Venice as "true republics" but the demos was only a minority. In Venice it was 0.1% of the population.

For Future Thoughtful Thursdays:

"In the Courts of the Conqueror: The Ten Worst Indian Law Cases Ever Decided" by Walter R. Echo-Hawk.

Casino Economics

2010-07-06T15:10:00.007-05:00

Cantor Fitzgerald, a famous bond and derivatives house, just set up a casino in Las Vegas. They are applying the same techniques that are used in setting up derivatives. It allows people to bet on sports results while the game is being played. This is different where people had to place their bets before the event started. I heard of the Casino Economics. Business Week had a famous article on Casino Society, that says that much of modern finance is nothing more than a game devoid of economic substance.

Initiatives, Thoughtful Thursday

2010-07-01T09:00:00.001-05:00

Shaun Bowler, Todd Donovan, "Measuring the Effect of Direct Democracy on State Policy: Not All Initiatives Are Created Equal" State Politics and Policy Quarterly Volume Four, Number Three, Fall 2004, pages 345 to 363.

States vary in

how difficult it is to get an initiative on the ballot.
1. Some states simply need more signatures
2. there is little time to get the signatures. I. E. the people have to collect the signatures, e. g. between March Seventh and April Fourteenth
3. One needs a specific number of signatures in each county. In other words, it is not enough just to get 100,000 signatures. For example, one must get at least 2000 in at least half the counties.
4. Some states don't accept initiatives in all areas.
And the Legislature may have some power:
1. Worse in some states, the legislature can simply repeal the initiave by voting against it, sometimes immediately.
2. States restrict initiatives to one item
3. States limit the substance of the initiative
4. some states only allow the people to vote on ordinary statues and not amend their constitution

As one would expect, these affect the number of initiatives per year. 1.58 versus 0.50. And the second set of restrictions is correlated highly (0.74) with the first set. And the states that added an initiative in the 1900's have initiatives easy to get on the ballot; the legislature cannot undo these. Other states added initiatives later but here the legislature can easily reverse the effect and worse, and they are hard to get on the ballot in the first place.

Drs. Bowler and Donovan looked at how closely the State abortion policy matched public opinion. The states that made it easier to get an initiative on the ballot had a policy that closer matched public opinion on this controversial question.

States that frequently used the initiative and states that made it easier to enact initiative and keep them in place, had stronger campaign finance policies.

And states that had a progressive initiative policy were more likely to have term limits on their state legislatures and to have stricter ones. Twenty-one states have legislative term limits. Twenty of these hd initiative policies! (I note that the Federal Government has no initiative and no legislative term limits.)

The point of this article is that making the initiative easy and not restricting it will have real effects on how it is used and will make the laws of the state reflect what the citizens want and not what the legislators want. Drs. Bowler and Donovan criticize earlier studies for simply looking at the initiative as an either-or proposition (a dummy variable in regression terms)--that is the point of the article.

Jury Pay

2010-06-27T09:12:00.000-05:00

Due to the recession, people are requesting an excuse for jury duty for extreme financial hard ship. That's because the fee is often ten or twenty-two dollars a day and if the person is self-employed, they cannot afford to lose a days work.

The ancient Athenians paid common citizens the equivalent of half a days wages for an ordinary laborer. They had to use rope to keep people away when too many came.

RBefore I became interested in participatory democracy issues, I always thought there should be two shifts of juries and courts. One would be the conventional nine to five. The other should be four hours a night during the week night plus eight to ten hours a day on the weekend--for those working conventional jobs that they could not afford to miss.

Private Equity sitting on half a trillion dollars, about to be wasted

2010-06-25T09:10:00.000-05:00

Five Hundred Billion Dollars in Cash has been given to Global Leveraged Buyout Funds. It is sitting waiting for a good deal, buy an existing company at a hopefully low price. This money will not go to make one new windmills. It will not go to research new medicines. It will not build reliable electric distribution systems or water treatment plants for the developing world. The buyout companies are under pressure--if they don't buy something soon, the investors will feel, rightly, that their money isn't earning anything and walk away. If they under presure, overpay or buy a lemon...

Much of these funds are from Pension Funds and insurance companies. Others are from wealthy individuals. (I have not been able to get a percentage break down of the source.)

Source: The New York Times Thursday June 24th 2010, Page A1 and A3, CLIX, No 55081.

For a future Thoughtful Thursday, "The Economics of Private Equity Funds" Andrew Metrick, Review of Financial Studies Ayako Yasudo, 23(6), 2303 to 2341.

Icelandic Crisis

2010-06-24T17:03:00.003-05:00

Icelandic banks gave out a whole lot of loans in Kronurs that were in fact a currency speculation. Apparently, the Icelandic Court has ruled that the balance due is based on the amount in Kronurs. Iceland voters in an initiative rejected paying back their bail out. I since found a detailed article that showed that this was a rejection of a deal at one point and since the referendum was put on the table, another better deal was offered to Iceland. Thus the no was a foregone conclusion since the voters would not accept a deal when they were already offered a better one.

Thoughtful Thursday, a second Review of Constitution for a Future Country by Dr. Martin Bailey

2010-06-24T14:43:00.002-05:00

Martin J. Bailey, Constitution for a Future Country, part Two

In Chapter Four, Dr. Baylor pointed out--as I have long felt--that when a new government was forming, the leaders were only given the U. S. Constitutions or the parliamentary system to serve as a guide. There has been no improvement in government for two hundred years. He recognizes that a country does not throw out its old Constitution and put in a new one just because logic or economic theory or public choice theory says this one is better. But when there is a situation like the collapse of the Soviet system in Eastern Europe or Afghanistan forming a new government, the leaders of the transition might ask for help looking for a better way.

Dr. Baylor wrote this book in his dying days to provide that help. It is my goal to provide this help also, but in the form of computer programs. We simulate things on the computer before we build them, whether it be the finite element analysis of a bridge resisting the forces of winds and the trucks riding upon them or the robustness of a electric grid as loads change and generators or alternative power sources upon them. The people who must ratify a constitution should be able to simulate it. Just as a pilot practices emergency moves such as an engine stall in a simulator, the people must practice dealing with budgeting during a depression, handling a natural disaster like Katrina. And the judicial system must be practiced as well. How would a one-state solution to the Palestinians and Jews in the Middle East deal with a Palestian Police Officer shooting an Orthodox Jew or the other way? A Law Enforcement class might enact a trial to learn criminal procedure. The people will first vote on a judicial code under a trial constitution. Then, they will have whatever election process that would include for judges. Then the judges and the jury, if their constitution so provides, will try moot cases. This would definitely include staged charged situation of one ethnic group shooting a member of the other. If they can't do it in a mock trial--is there any reason to believe they could accept the results when it happens for real. And we should do it in the more quotidian cases such as those that one might see in Judge Wapner's People's Court.)

As an economist, Dr. Bailey is very concerned that government expenditures are handled efficiently. And he starts with Lindahl taxes. Each possible group, doctors living in Wyoming, wealthy financiers living in tony Connecticut towns, coal miners in Apalachia, single people, married families, will be represented by random samples from their numbers. These will be chosen randomly, what Dr. Bailey refers to as a stratified sample. They will each propose a tax to fall on their group proportional to their marginal benefit. Dr. Bailey that each group can be divided into other groups. But each division would be based on some objective criteria, such as gender, race, occupation group, income or the like.

And taxes would be either based upon property or income and have a tax schedule. The taxes would be categorized by budget category. Thus, there might be a property tax on automobiles to fund the highway system. The goal is to get a near unanomous vote. Also, every two years, there should be the opportunity to vote for a minimal budget for basic public safety needs--equivalent to the partial shutdown of the government that were used during budget stalemates in some states.

As each funding proposal comes through, citizens vote their uninsured harm (VCG taxes) and also can purchase Thompson Insurance for monetary losses. Dr. Bailey proposes limits of about ten to twenty percent of income for these. This means there is no way for a citizen to express extreme concern-- for example a pro-lifer expressing extreme concern about legalized abortion, or a Native American expressing extreme concern about a mine on a sacred burial ground.

And Dr. Bailey proposes a complicated formula for legislative pay which includes a variety of incentives. (See below.) The first is at the start of the public good chain. If their estimate of Lindahl Dr. Bailey believes that legislators should be sequestered like juries in major cases. They should only get information in an organized way through formal hearings and not emotional impacts. More importantly, there would be no way to lobby legislators. Legislator's wealth would be replaced by a mutual fund weighted like theinvestments of their demographic groups. Thus, a physician representing his fellow physicians would sell their investments and be given a set of investments that matches what an average physician has. Cumulanis' Constitution (that's what Dr. Bailey calls his hypothetical State) specifies that legislators shall vote the amount of money they and their family would pay to put through or stop a certain legislature.

And Dr. Bailey believes in referenda, anyone including corporatins can put a referendum on the ballot if they pay the costss including evaluation. Dr. Bailey calls for impartial statisticians to estimate the possibility of referenda passing--I guess after polling. If the odds are ten percent ormore Obviously, there are various technical correction bills that are not controversial. The statistical groupo could find which ones have a 95% chance of passing and these could be grouped in a single up or down vote. He furthermore proposes that referenda be voted on twice, with the first vote just to see if there is interest and requires 25 per cent of the vote. If a legislature makes a proposal rejected by 75 per cent of the people shall have the costs of the ballot deducted from their incentive pay.

Of course legislators have important roles, including determining the size of ebverybody's taxes--although with his mechanisms less of a role than currently. But many other jobs including the election commissioners that administer the non-trivial software systems, the statisticians are critical. And, what about those making decisions about deep oil drilling equipment. Or those administering large contracts for the government.

Dr. Bailey realizes that the VCG mechanism although a Nash equilibrium is not immune to collusion. Cumulanis' constitution simply says that attempt to organize voters to misrepresent their harms that would defeat the nice economic properties of VCG taxes is a felony! Dr. Bailey notes that under the bill of Rights, it is perfectly legal to encourage voters to vote strategically, e. g. a citizen could take out adds encouraging Republicans to cross over and vote in the Democratic Party and vote to nominate an extremely liberal candidate so the Republican party candidate wins.

Dr. Bailey believes legislatures should be paid on a contractual basis with the voters who are sovereign. Thus, every bill should have measures of success. The education bill should state that 70% of the children shall read at grade level for example. The legislature making the education proposal would be responsible for contracting out the education function and monitoring it. If the education system got only 65%--then any citizen can sue them. "The criteria for standing admissibility of suits shall be identical to those for suits against private parties as specified by the laws of torts and contracts." Now, who would have the right to sue here. Would I as a taxpayer or simply a citizen who cared that kids get a good education or a professor who felt that I want students who know how to read and write in my class have the right to institute a suit? (The Supreme Court has restricted this right. Taxpayers do not have the right to pursue a generalized claim that their funds are being mispent. Parents of a particular ethnic group could not sue regarding giving tax exempt treatment to schools that discriminated against their children. And lastly individuals could not sue on behalf of animals under the Endangered Species Act. A generalized claim that the person might not see the animal when they are traveling is not sufficient.)

In the same article, Dr. Bailey proposes mechanisms to make budget estimates more accurate and realistic. Each tax schedule shall have an estimate of how much revenue it will bring in. (And he provides for macroeconomic downturns that are not the estimator's fault.) Legislators cold be sued when their budget estimates were simply incorrect--presumably discouraging the budget shenanigans we say at the state and federal level in the United States. (I have pointed out that there are ways of organizing the budgeting structure constitutionally without budget estimates. One specifies the tax schedule and whatever it brings in is what that government has. Also, one can specify an expense and the people who shall bear it. They compete on a goodness or badness basis before sortition jurors to determine who should pay it. For example, the car owners shall be required to pay for the highway expenses. Each goes before a tax sortition juror and pays a tax based upon how safe they drive, how much they needed to drive (those who lived on a farm out in the boonies might have no choice but to use their vehicle and the sortition jury would assign them a small share of the highway taxes. But someone who might use their vehicle when the Greyhound bus went where they needed to or who drived for vacations.)

One can also use approval voting to determine expenditures. That which 100% vote for gets funded first, then what 99% vote for, etc. The tax schedule brings in whatever it brings in. The things wanted by the most people gets funded first.

Thompson Insurance

A street project would improve the value of some people's property. It would lower the value of others. Every proposal would be associated with a Thompson insurance. The first parties could take out insurance against the proposal failing. The other parties would take out insurance against it passing. A neutral government body must offer this. Dr. Bailey cited work in the law and economics literature that insurance really doesn't work for intangibles such as pain and suffering. And a majority could keep proposing the same thing, bankrupting a minority. That is if the majority might keep proposing the mine on the ethnic group's grave field. The ethnic group would take out insurance against the bill passing, defeating it. However, they would eventually run out of money.

Thus, this really does not deal with the pro-life individual concerned about legalizing abortions or the pro-choice concerned about a proposal to restrict abortion. Dr. Bailey's constitution would have would have limits that would not allow a person to declare the severe harm for their ethical sensibilities. Dr. Bailey realizes this and he says that his mechanisms could not handle it. He says, "The performance of a country with our proposed constitution could be almost an arbitrary and capricious on this issue as the ... United States has been. That is a pity, and if the reader can think of a constitutional order that would arrive at sound policy on such issues more reliably than that proposed, please publish it." I have an idea--and will be posting it shortly here. I should also mention Dr. Bailey's concern about entry into war on spurious grounds. He mentioned the Gulf-of-Tonkin resolution that got the United States escalated in the Vietnam war and the less-disastrous Spanish American war. This book was published and Dr. Bailey passed away before the entry into IRAQ, a situation that has been compared. And Dr. Woodruff discussed the problem in the Greek invasion of Syracuse. system. (I proposed a solution of waiting to reward our statespeople and military leaders.)

Appendix -- Incentives for Legisltuares

Section Eleven includes detail for all legislators. Here are some of the formulas to give a flavor: "0.1 percent of the budget amount contained int he proposal plus thirty percent of the total declared insured and uninsured harm from non-adoption, net of the declared harm from adoption, relative to the next most valuable distinct and differeent proposed by another legilature, less five percent of the net inferiority of these proposals, relative to distinct and different alternatives of the ballot, for each population that on net would have supported an alternative proposal int he group, under the legislature's proposed taxes and accurate taxes for the alternative."

Thoughtful Thursday, Robert A Dahl, Democracy, Liberty and Equality

2010-06-17T09:00:00.001-05:00

Robert A. Dahl, Democracy, Liberty and Equality, Norwegian University Press, 1986

Worker Democracy

Worker democracy can work. Would workers take all revenue as pay or would they invest as needed The Mondragon cooperative was owned by workers--increased at 8.5 percent year and improved market share from one to ten percent. They invested four times the average rate for firms and cooperatives voted to increase their capital contributions. Mondragon also educated its own employees so they could become managers. Each cooperative decides on the ratio of pay between executives and workers. And Dahl observed that the worker-managed cooperatives of Yugloslavia. But in contrast producer cooperatives were short lived in the late nineteenth century, giving this idea a bad name.

Our proposal here is not socialism, but that workers and investors share revenue and control. Organizations such as library and universities spend eighty percent of their income or government funds on the employee salaries and benefits. (I just read in Queens Gazette that the Queens Public Library spends eighty per cent on employees. My University is a little bit more than eighty percent.) On the other hand, chemical processing plants pay only ten to fifteen percent in wages. Midway, Neogenomics that tests for Cancer has fifty percent of its revenue going to workers. Capital intensive industries would of course have most of the revenue going to the investors on a share basis, so it is neither socialist nor on the other hand advocate firm owner control. (This is an issue raised by Benjamin Ward in his book on Socialism and article on "Illyria" loosely based upon Yugoslavian experience. I recall he was concerned that a worker-managed firm wasting the capital. I will put out a Thoughtful Thursday when I get some books out of storage after I was forced to move.)

And the socialists in Denmark proposed a payroll tax was invested back into the employee's firm giving them a vote but limited to fifty percent to protect he conventional owner. He reports that worker-managed firms are more productive than conventional managed firms.

But not all socialists believe in workers. There is a contrast between the Fabian socialists and the old Labor Party of Britain and the Syndicalist. In the 1920s, the webbs said that each nationalized firm should be appointed by a mixture of workers, the administrators and the consumer community. But by 1932, the British Trade Union Congress called for business to be run by Government appointees. Advisory Boards would represents interests of both consumers.

federalism

True federalism is different from delegation. A political subunit or school district may have total autonomy to handle education matters with the larger commonweal having upper categories. If this is in the constitution and considered a right like free speech, then it is true federalism as opposed to administrative convenience of delegating responsibility. Citizens are represented in all fields, at the local level for education, at the national level for everything else.

What Dr. Dahl ignores is that federalism is not clear cut. Yes the Constitution might declare local control for education? And national or federal control for such things as foreign policy. What happens if the National Government signs a treaty that limits educational autonomy? The United States has concern over Madrasah's in Pakistan and Pakistan created an education board--so this is not far fetched. And, of course, the United States Federal Government has forcefully integrated American schools.

So, in setting up a government, what rights should individuals or schools or states be given? This is a difficult problem for constitutional courts, and one that might be abused either way. I propose a 100% rule. A law that affects a local area requires approval by x%+y% = 100 where x is the pass rate at the local level and y% is the pass rate at the federal government. When there is a conflict between the federal and state or local aegis, the percentage at the higher level voting down the law as repugnant, e. g. the federal government saying this "education" is religious indoctrination must be larger than the percentage that passed it. Thus if a locality votes 99% that its education should do t would need at least a 99% vote at the national level, or the sortition jury hearing the case in the national court, to overturn it.

Note

This is another book I borrowed from the Columbia University Library. Dr. Dahl proposed at the descriptive level that there are many elites that control government rather than just a narrow one at the top. Wikipedia article on him used the term "dean of American political scientists"

Rooting out Marriage Fraud for Immigration

2010-06-16T14:30:00.004-05:00

As is well known, a person who marries a U. S. citizen can get citizenship. (There are a couple of restrictions such as criminal background checks and the like.) But the most important is to make sure that it is not a sham marriage. The United States Citizenship and Immigration Services interviews couples separately. I wrote a letter that I worked with a student in their apartment. (I am known for helping my students extensively. Most of the time I work wit the students in the University-provided computer labs but occasionally it is convenient for me to make a house call.) And I wrote observed that appeared to be two people living there, him and his wife. In some areas, the immigration office might randomly and unexpectedly arrive in the morning to see if the partners are obviously living together or not obviously together.

The United States citizenship and Immigration Services interviews couples separately, creating what the New York Times described as a Kafkaesque procedure reminiscent of TV quiz games to see if the couple knew what color toothbrush each partner had. There is a special procedure for those where the first interview raised an issue of the marriage being a fraud. THis office employs twenty-two officers, and they don't have any specific rules, expertise, or statistical evidence to determine which marriages were fraudulent or not. Just interesting phrases like, I should not be able to know more about your husband in fourty-five minutes than you do.

I wrote earlier about Using sortition juries for all aspects of immigration. And I don't see how twelve randomly selected citizens could be any less logical or scientific in making these important decisions, both for the nation and the couples involved.

Taleb on debt and risk and short termism

2010-06-15T14:46:00.005-05:00

I wrote about Dr. Taleb and his hatred of debt, the author of Black Swan. He is in the news for two new video interviews. He would seem to be sympathetic with the ideas and proposals here. Replace debt with equity--although I give a share to the workers We want to be in a society where it protects against adverse events--again the share economy. And we are rewarding short-termism. Let's hold up people's pay and reward and incentives for a long time to see if they are truly acting in the long term best interest of whomever they are supposed to be working for, the students, the nation, the stakeholders or shareholders in the broad sense of the firm.

Constitutional Convention Campaign Finance

2010-06-14T15:45:00.002-05:00

Rhode Island is considering calling a Constitutional convention, a procedure in the United States Constitution, but never exercised. Their concern is campaign finance.

There is a question of whether such a convention would only consider that issue or any or everything. The Rhode Island Resolution said they should only consider amendments referenced by forty percent of the states. Two thirds of the states are needed.

Martin J. Bailey, Constitution for a Future Country, Thoughtful Thursday,

2010-06-10T09:00:00.005-05:00

I am reading Martin J. Bailey, Constitution for a Future Country, Palgrave-McMillian, 2001 JC 330.15 B35 2001. It is available at Columbia University library at which I am taking a game theory course--more on that later post. I only have read the first two chapters-but the ideas are there. (I have not been able to get it at my usual discount I am hesitant to spring for it until I am sure it was worth it, which it is.)

He proposes a finely crafted construction of the best that public choice/game theory can provide and sortition/direct democracy.

The legislature is elected by sortition.
All things passed by the legislature are approved by the referendum.
Start with Congress, I will refer to as the legislature, estimate of Lindahl taxes
Use the Vickrey Clarke Groves Tax, about which I need to blog later, for each proposal. People can offer a payment to have a proposal pass or not pass. Thus gunowners can offer a payment to not pass a gun law. Similarly, those in crime-ridden neighborhoods might offer a payment to get the bill passed. The Vickrey Clarke Groves tax only registers if one needs a little bit of money to pass or not pass the item. Thus many people might offer a payment and it not be taken. For large populations, many people would pay a small additional payment and even larger amount would not pay anything out as they pay nothing.
Citizens can pay for insurance for or against the passing of a new referendum. E. G., stock holders of power plants could purchase insurance Dr. Baylor states that although sortition for legislatures has been "proposed from time to time," one should combine it with the above-mentioned strategies.
He argues that legislatures could compete. Several legislatures could propose proposals and may the best one win. (He didn't mention but approval voting comes into play here!) In my second post in May 2009, I proposed this idea for health care plans. Forty percent of either house as well as the President directly could propose a plan.
He argues that payments to the destitute should be mandated by the constitution with other payments by the VCG mechanism. He points out that payments to the needy can create perverse incentives. Payments to those who lost their house in a hurricane encourages people to build to close to the beach. And Malthus argues that payments to the poor encouraged them to have more children and not to move as needed to find work. (People are still saying that. I recall reading that some historian found such arguments in Italy eight hundred years ago but unfortunately I can't find it right now.)
Dr. Baylor argues that such arguments poison our commonweal and argument and should be settled one and for all. I proposed that such matters can be handled by sortition juries on a non-entitlement individual basis in the health care field. Yes, your house went down. Could you have done something about it? Should you reasonably have bought private insurance? Are you more needy than others who also lost their house, whether due to a hurricane or just an "ordinary" fire.? (I need to blog more on sortition juries for charity as opposed to bureaucratic rules.) He argues that there should be one Commander in Chief of the Armed Forces. I have argued here for multiple chief executives..
He also argues that there is no reason for a supreme court for statutory. That is the role of the elected legislature or as I have argued elsewhere, a referendum when the justices disagree. Dr. Bailey argues that a statute which is vague enough to be interpreted or where the legislature left a case not considered, means the law should be patched up. I have always wondered if there is a need for a separate court for interpreting statutes. However, the court does have a role to preserve enduring values of the republic and civilization--in the United States these would be individual rights.
In civil cases, the parties could hopefully agree on arbitrators. If so, that would be the arbitrary and the private arbitrator earns a fee. If the parties do not choose an arbitrator together, or one is simply obstinate and refuses to even appear, then a magistrate chooses one randomly. (He calls them magistrates. The term clerk or ministerial action come to my mind.)
He argues for contracting stuff out. Legislatures would be judged and paid on the success of their proposals and would have an incentive to find good firms to implement the programs they proposed and were voted on by referendum.

He talks about how his proposed constitution comes to pass. The Vickrey-Clarke-Groves mechanism, The Thompson insurance plan, are not easy to explain. In fact, I suspect that many reading these do not understand them. However, Dr. Bailey points out that once the Constitution is approved, it is not hard for the voter to understand what to do and how to make their preferences heard. The hard part is at the beginning. I propose, we have nationwide simulations of these mechanisms-- in fact all proposed mechanisms in a constitution.

He realized that the best time to propose this new idea for how to govern a country is when the country is in in transition. The change to the Post-Soviet regimes in Eastern Europe or post-Saddam Iraq. Does it depend upon an enlightened statements or by a process of simulation by the whole population and then voting.

I did not see in the first two chapters or the index, federalism. How do some groups maintain their integrity in a Constitution, such as in a one state or two state solution.

A Deeply Sad Note

Martin Bailey passed away in 2001 from a brain tumor. I knew about this book for some time, and thought/fantasized that perhaps Martin Bailey could work on a project to simulate his ideas, and maybe I could modestly help with this programming.

Neo Mercantalism?

2010-06-09T15:03:00.008-05:00

We all know what mercantalism is--accumulate gold. Just as there are neoclassiscists--I studied about them in Intermediate MacroEconomics course, there was bound to be neo-mercantalism. Are these people who push financial wizardry above all--ignoring what money is for to buy or spend on needed for a better day. Or is those who push exporting, saving above consumption so the country can be stronger and more self-reliant.

And that free trade has take into account difference of environmental standards.

Volcker Again

2010-06-09T14:48:00.002-05:00

I posted before Dr. Volker's statement that an economic Nobel prize Winner for aspects of financial engineering admitted that financial engineering does not help the economy. He has an article in the New York Review of Books quoted himself give years ago predicting the problems of the 2008 Financial Crisis in 2008.

American Spending

2010-06-07T12:17:00.002-05:00

Although not relevant to participatory democracy, Ritholz had a wonderful graph of how Americans spend their money including entertainment

Cadmium Solar panels-- the green vs. green theme

2010-06-02T14:29:00.001-05:00

Another example of the conflict between environmental aims is cadmium telluride solar panels. solar panels are green as a renewable resource, but Cadmium is a toxin and is not good to get in landfills.

Comparative Social spending

2010-05-27T10:14:00.002-05:00

This article has a new take on who spends more on welfare, health, education and depending upon how one measures it, the United States is comparable to the Scandinavian countries that are stereotyped for spending lots of money on social spending.

IRAQI parliamentary election and a wrinkle on proportional list voting.

2010-05-26T10:25:00.000-05:00

The Fair Vote list had a very good discussion of proportional list voting in IRAQ. In particular, IRAQ allows voters to vote for a party and each party gets candidates proportional to their party vote totals. Within that list, they can provide a preference for the candidates. And this will determine which candidates become MP's. However, what happens if one selects a candidate and that candidate is disqualified. It turns out one might lose one's vote which would not have happened had one just gave a party preference.

A Systems Approach to Public Decisions

2010-05-25T13:12:00.004-05:00

One thing I have felt for many years is that we should look at the entire system in dealing with energy and other problems. How can a nation particularly United States convert from a petroleum based personal automobile transportation to mass transit and electric vehicles. We always hear that it would cost XYZ billion dollars to convert our infrastructure from gasoline stations to rechargable batteries. For example, if all automobiles had interchangeable batteries, one could have the whole battery assembly swapped out if one runs out of juice on a long trip. This is part of a Better Place infrastructure, which is a challenge to collaborative process.

To build anything takes resources and if we ramp up too fast, we would hit capacity limitations. I. E. would we run out of steel making capacity? This requires a system capacity and systems approach and a linear programming approach, looking at the different resources needed. Do we use steel capacity to build new rails so that the different components of a new energy infrastructure can be shipped at a greater efficiency or is it better to use that capacity to construct the windmills, etc. first.

We have to figure out what is feasible before we can vote on it, and a dollar approach isn't the first one. The price of lithium or antimony only tells you what is available for a marginal or small change, not a big one. (Admittedly, this concept is relevant to decision making about moving a nation in a grand sense, whether for war or military accomplishments, whether participatory democracy, conventional democracy or a dictatorship.) The cost of a teacher doesn't tell you whether there are enough teachers to halve class size.

Hedge Fund Taxation Loop Hole

2010-05-24T15:35:00.002-05:00

Many hedge funds earning a BILLION dollars in a year pay fifteen per cent as their gains are considered capital gains rather than salaries. Our proposal is restricting the consumption of those earning one MILLION dollars in a single year.

Participatory Democracy for Eliminating uneeded or wasteful government programs

2010-05-23T16:10:00.000-05:00

Dr. Peixoto proposed a fix my street model for participatory budgeting to priorize such things as pothole repair. Here is another one-cutting University programs. At most Universities, a quarter of the programs graduate seven or few students per year! (83% in baccalaureate institutions) and (74% of Masters level institutions) (Chronicle of Higher Education, April 2 2010, Volume LVI, Number 29) And many University or planning cuts and some of these reviews start with the programs who graduate with five (or so) bachelors degree students per year over the last five years.

Could we have the citizens vote on which ones to eliminate-- But we need to consider combinatorial effects. Killing an engineering school also eliminates the need for advanced math classes and math professors. And the citizens of a state may want to drop one program but not all of them, or may only want to leave one instance of a very specialized major.

Many Military Bases were closed by an independent commission. Congress could have vetoed the entire list. This way allowed many bases to close which could not happen if each Congressperson that had a base in their district could fight them individually. So there are ways to close things down in a representative democracy.

"Over Confident Dumb People" or the Dunning-Kruger Effect

2010-05-20T10:38:00.008-05:00

They found that people who are less experienced or skilled are overconfident, are more likely to overestimate the chances that they are correct. Those who truly know tend to downplay their ability. This is called the Dunning-Kruger effect.

My thanks to Bob Ritholz for the pointer who had a great quote from the scientists:

"Overestimation occurs, in part, because people who are unskilled in these doLmains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it."

They provided the citation to the original paper:

Psychology, 2009, 1, 30 to 46, www.scirp.org "unskilled and Unaware of It: How Difficilties in recognizing one's incompetence Leads to Inflated Self Assessments" by Justin Kruger and David Dunning. The introduction to the article is a gold mine of citations that support the conclusion that those who do poorly are less likely to realize it.

However, there are apparently other papers that show the effect is less significant, according to one comment on the blog. I have back at home a paper on uncertainty in estimation for estimating the time and effort for software engineering projects. (I am travelling this Summer, probably for about seven weeks.) So I will put these on queue for a future Thoughtful Thursday.)

Obviously, decisions have to be made with the help of expert opinions and whether participatory democracy or not, information on assessing the reliability of such estimates would seem useful to the decision maker. Paul Woodruff gave a wondrous example from Athenian Democracy of interpreting the opinions of generals on the invasion of Syracuse. They also found that people not only could not determine their own ability they were less like to assess competence in others. Can these kinds of social science form a modern piadaia ?

Energy, Growth and Sustainability, Thoughtful Thursday

2010-05-20T09:00:00.001-05:00

SPRU Electronic Working Paper Number 185, ENERGY, GROWTH AND SUSTAINABILITY: FIVE PROPOSITIONS, Steve Sorrell, March 2010

The modern financial system means that most of the money supply is interest-bearing debt. This article cites several references, which I list below for follow up where people proposed one hundred percent reserve banking. It is a theme that Anne Pettifor spoke in her book. And it would also re resolved under a share economy. Because of the reserve-banking-based economy, the developed world cannot shift to a low-consumption pattern without financial crises. This issue was taken up in several comments to Gail the Actuaries post in the Oil Drum this May Eigth about the debt rate, where one comment said if "wipe out all debt" would "wipe all money" if we ever have a jubilee. In the old days, whoever possesed the money at the time of the jubilee would keep it and would then have purchasing power to reprime the pump. Is this true when so much of the money is based upon the fractional reserves banking system?. It seems that if one has lots of bankruptcies or a Jubilee-approach or liquidations of companies, a participatory-democracy case-by-case approach needs to be taken to ensure that the person who lied about their income on their mortgage application, engaged in unproductive financial engineering, does not get left with a totally unfair share of the purchasing poewr. And we protect the person who worked hard for a pension or the person of modest income who scrimped and saved a million dollars over a life time, a la Millionaire Next Door.

One would think when our engineers develop better ways to use energy, efficiency, our economy will use less energy. That is, if an automobile has better miles per gallon, less gasoline is consumed. However, some indivdiuals may find more money in their pocket, which will lead to more spending. A little bit of it is a direct rebound effect--it costs less to drive so we drive more, but probably, this is not elastic. But the global effects are different. The Bessmer Steel process used less energy than the alternative--more rails and more transportation and all the economic goods that come from economic productivity. Similar things happened with motors, the steam energy making it more efficient to mine coal, which meant that more coal was available. The latter was observed in 1865 by Jevons--hence the name, Jevons paradox.

California sets energy efficiency requirements for new television sets. But it does not do anything to get consumers to purchase a smaller Television and save energy that way. Their web site says "Consumers will always have the freedom to buy any size or style TV they like." Compare and contrast the sortition-based consumption-based badness tax.

And this article confirmed something I cited earlier in the United States. Britain reduced its carbon emissions at home, but this at the same time that it imported products that were made by burning lots of coal elsewhere.

To follow up on future Thoughtful Thursdays

Fisher I (1936) 100% Money New York Adelphi
Fisher I The debt-deflation theory of great depressions" Econometrica October 1933
Friedman M. (1960) A Programme for Monetary Stability New York, Fordham University Press
Jackson T. (2000() "Prosperity without growth? The transition to a sustainable economy" Sustainable Development Commission
Douthwaite, R. The Ecology of Money Dublin Ireland: Theo Foundation of Economics of Stability (FEASTA)
Simons H. (1948) Economic Policy for a Free Society Chicago: Univerity of Chicago Press
Soddy F, 1926, Wealth, Virtual Wealth and Debt London George Aleln and UNW

On the rebound effect and energy efficiency:

Rosenberg N. (1989) Energy Efficient Technologyies: Past, Present and Future Perspectives How Far can the World Get on Energy Efiicnecy Alone Oak Ridge National Labs.
Sanne C. (2000) "Dealing with Environmental Savings in a Dynamical Economy How to Stop Chasiong YOur Tail in the Pursuit of Sutainability" Energy Policy 28 6 to 7 487 to 95
Sanne C. (2002) Willing Consumers or Locked in? Policies for Sustainable Consumption" Ecological Ecoomics 47 273 to 287.
Saunders H. D. (2000) "A view from the Macro Side: Rebound, backfire, and Khazzoom-Brookes." Energy Poicy 286 t to 7 439 to 49, 2000
Sorrell S. (2007) "The Rebound Effect: An Assessment of the Evidence for Economy-Wide Energy Saviongs from Improved Energy Efficiency"
Sorrell, S. and J. Dimitropoulous (2007a) "The Rebound effect: Definitions, Limitations and Extensions" Ecological Economics 65 to 3 636 to 649
Victor, P. A. (2008) Managing without Growth: Slower by Design, Not Disaster Edward Elgar

2010-05-15T17:58:00.003-05:00

The Congressional Budgeting Office said they were off by one hundred billion dollars on the cost of the Health Reform Some companies apparently will drop their health coverage for their employees since there was something already available-- Walmart was accused of relying on medicaid for its employees, but it shows that it has a greater percentage of full time workers on medical coverage than other retail firms and large firms and net it is removing people from the Medicaid rolls.

This shows the importance of two things:

Firms should compete on the way they treat their workers to avoid taxation and that it is difficult to evaluate the numbers fairly.
The only way to fix the costs is to fix the expenditures and let the providers compete to earn them on the basis of their accomplishments.

Participatory Democracy

miscellaneous (H)

Immigration Discretion

The Federal Reserve

Irrational Verbal Exuberance

Green

Romney

Similarity to the United States Constitution

Miscellaneous (G)

European Bank Stress Tests

Arab Unemployment

The Bond Market

More on the Financial Crisis

patents and patent trolls

ExpertLens

Weird Results

Safety First

Predictions

Miscellaneous

Referendum News

Health Care

Another pork barrel project

Thoughtful Thursday, Construction Construction Kit Two and the ACE

nth smallest voting

Electoral systems

Minority Protection

Referendum News

Miscellaneous

Hack for Egypt

Climate Change

United States Health Insurance Mandate

Bronte Capital Management Blog

Benefits Schemes

State Income Taxes

Referendum on how to elect United Kingdom House of Commons

Iceland Referendum rejects bailout repayment

Leadership Part Five, Thoughtful Thursday

Winston Churchill, First and Second Volume of the Five Volume Set on World War I

The Tank

Energy

Vacillation

Conclusion, and relating to our Blog

On Leadership Empathy

On Vacillation

Lee Kuan Yew and Leadership in Development

Leadership Part Four, Thoughtful Thursday

Leadership Behavior: Its Description and Measurement, by Ralph M. Stogdill and Alvin E. Coons

The Ohio State University Leadership Behabvior Questionaires and their Research

A quote

Thoughtful Thursday, Leadership part Three

Empiricial Evidence presented

The Unpresident

Broader Discussion

Thougghtful Thursday: Leadership Part Two

Other quotes

Thoughtful Thursday: Leadership Part One

setting the tone

Affect on the men

definition of leadership

Anecdote

Churchill, Truman and Roosevelt in World War II

References

For Future Thoughtful Thursdays

Thanksgiving Thoughtful Thursday, More on Wally Smith and Voting Systems

A link to Dr. Krugman's blog

Facts and Factoids about Civil Wars, Thoughtful Thursday

Thoughtful Thursday James Fearon, "Iraq's Civil War" in Foreign Affairs March April 2007, Volume 86 Issue Two and the Wikipedia article on Civil wars.

Israel Palestinian Peace Talk Participatory Style

Simulated Annealing or Hill Climbing

The X-Prize Approach

The Literature on Civil Wars

A closing note based on a wonderful NPR Story

Wally Smith on Range Voting, Thoughtful Thursday

Range Votting by Warren D. Smith (2004)

State Clawbacks; dealing with high pensions and salaries

Miscellaneous

Peter Elkan, Adjustment of Sectors to stop pay-cost inflation, thoughtful thursday

Constitution Construction Kit, Harel State Chart, Yunker Federal World Government, Thoughtful Thursday

WorkFlow

Political Work Flows