Month: June 2012

Why You Should Always, Always Vote (and arguments to the contrary are totally wrong.)

George LondonLeave a comment

For a while, I’ve noticed a growing trend (especially among my more liberal friends) to argue either that voting doesn’t matter or even directly against voting.  None of these positions hold water, and today an incredibly erroneous anti-voting blog post by my (usually) very reasonable friend Travis Mushett has convinced me that it’s time to finally put these arguments to bed.

We have two claims to refute:

1)   Electoral margins of victory are always so large that one vote (effectively) never matters.

2)   By not voting, constituents can threaten their candidate into adopting more desirable policies.

These claims may seem rather different but they’re vulnerable to the same counter-argument, which runs as follows:

Voting doesn’t just select a winner in a single election. It is also reliably registers the preferences of the electorate.

Remember that we live in representative republic (not a democracy) wherein the voters select a set of broad goals reflecting their “desired state of the world” and then elect officeholders who they think are most likely to achieve those goals.

Our representatives are highly sensitive to the preferences of the people who elect them (i.e. they represent us). And as such, their policy positions are highly malleable and shift as the preferences of the electoral shift.

How do politicians know which way the winds are blowing? They’re pragmatic enough to know better than to listen to the talking heads on TV or in the blogosphere, who for a variety of reasons almost always advocate more radical positions than the general electorate supports. Instead, they watch the voting data.

When politicians win with large margins, they move toward the median of their party. When they win by narrow margins, they move toward the center. If they don’t move, primary challenges will smell blood in the voting results and knock off the incumbent. The rare politician who fights a pyrrhic battle is quickly replaced.

It’s really that simple.

If you don’t vote, the politicians who do win (and someone always wins) will govern as if you don’t exist. Even if you do vote, they still won’t give much weight to your individual opinion. But given that we live in a nation of 300,000,000-some people, there are 299,999,999 people who’d feel rather cheated if the president started taking your calls. 

If you want more influence, go convince other people to vote for what you want. There is no other way.

Future of the Economy #2(a) – Rich Hypothetical Society, Poor Hypothetical Society

George LondonLeave a comment

Earlier today, I was on a plane without wifi. Trading one type of cloud for another freed me to continue my gradual explication of our economic future.

Last time, I argued that “the economy” is the total sum of everything useful to human life, and that “prosperity” is the sum of all those resources divided by the number of people enjoying them.

Today, I’ll cover why and how the prosperity of a society changes through time.

We’ll need three more concepts:

1) Production

2) Consumption

3) Wasting (e.g. rotting of fruit)

Tautologically, everything man-made was produced at some point. So:

Total amount of stuff we have (i.e. “Wealth”)

equals

( Natural Resources plus Everything Ever Produced )

minus

( Everything Ever Consumed plus Everything Ever Wasted )

Prosperity changes because of relative changes in the rate of production vs. consumption. Societies get richer when they produce more than they consume, and get poorer when the consume more than they produce. This may seem obvious, but all the crucial parts of macroeconomics spring from this notion.

Why do these rates change? Three reasons:

1) Exogenous

2) Cyclical

3) Secular

Exogenous reasons are usually-random, usually-one-off events like wars or gold strikes. Cleary, being sacked by Mongol hordes makes you poorer, and I won’t cover these types of events here.

Cyclical reasons are what underlie normal recessions and expansions, and (by-and-large) are caused by changes in the amount of money people borrow to consume or invest. When people borrow and buy a lot, we have an expansion. When they borrow less, we get a recession. The most important factor in consumer borrowing is the interest rate (how much do I have to pay tomorrow for the $10,000 car I bought today?) People who can explain exactly what determines the prevailing interest rate tend to spend more time on mega-yachts than in coach class on US Air, but basically: the interest rate is set by the Federal Reserve based on (a much more complicated version of) an equation called “the Taylor Rule”. Cyclical factors get a lot of attention because their effects are easily and immediately noticeable (and crucial to trading financial markets), but ironically, cyclical factors usually matter very little to long-term prosperity (for the same reason that most waves don’t affect the sea level.)

I’ve hit my self-imposed word limit, but next time I’ll discuss secular reasons, which – forgive the pun – are where the money is.