Nothing I say here should discourage
anyone from voting.
However flawed,
we should do our best
with the system we have.
No such thing as not voting.
Those who do not cast a ballot vote
to let others decide.
If you seek to protest the system, cast
a blank ballot rather than no ballot.
Why we should vote, wisely:
1) Moral duty, if you think so.
2) Sympathy for society:
compassion, conscience.
3) Enjoy your moment of
individual sovereignty.
4) Minor party vote: moral
absolution - freedom from guilt.
Not being responsible for bad
outcomes.
How does democracy fail?
Democracy fails its purposes,
its functions:
1) Social peace: to choose
leaders and resolve disputes
peacefully and sustainably.
2) To implement the will of the
people, or the majority.
3) To implement optimal policy
for social well being.
Public choice problem #1:
there is no general social will.
The Condorcet voting paradox.
Marquis de Condorcet (1793-94)
Suppose 3 outcomes: A, B, C
Group
1
%
35%
1st choice A
2nd choice B
rd
3 choice C
2
45%
B
C
A
3
20%
C
A
B
A > B, B > C, C > A
Not transitive, not consistent
There is no single outcome
desired by the majority.
Those who set the agenda can
shape the outcome.
The agenda:
the choices presented to voters.
Voting can cycle from one
outcome to another to another.
Public choice problem #2:
an arrow shot through the heart
of democracy. Kenneth Arrow.
Arrow=s impossibility theorem.
Rules for a good democracy:
1. If all want X, we get X.
2. Transitivity.
3. Independence from irrelevant
elements.
(A > B independent of C.)
4. No dictator.
Arrow: no voting system can
satisfy all these criteria.
Public choice problem #3:
Optimal ignorance of voters:
it=s not worth knowing better.
In an election with millions or
many thousands of voters,
the probability of one vote
determining the outcome is
almost zero.
Informed voting is a big
positive externality.
Ignorance breeds apathy, and
apathy breeds ignorance.
Public choice problem #4:
Tyranny of the majority.
Tyranny of medianocracy.
The rule of the median voter.
Those on the
tails get
beaten.
Minority
interests and
values are
suppressed.
The two-party system caters to
the median, reducing political
diversity, dampening debate.
The median voter is ignorant,
so ignorance sets policy.
Deep ignorance: not only of
candidates and issues, but of
economics, ethics, governance.
Public choice problem #4:
The tyranny of the minorities.
Special interests with clout.
Caused by:
concentrated interests,
spread out costs.
Example: sugar growers.
Subsidy: high benefits for the
few big growers.
Cost: higher price for sugar.
But per-capita cost is low.
Policy: sugar quotas.
Too costly to oppose.
Losers: consumers, workers.
Lifesavers moved to Canada.
Taxpayers pay for subsidies.
Society pays the deadweight
losses, waste,
inefficient use of resources.
Special interests get:
 subsidies
 protection from competition
 special privileges
Deadweight losses > $1 trillion.
Optimal policy: blocked.
http://www.opensecrets.org
House:
Candidate
Party
All
s
1285
Dems 677
Total Cashon
Total Raised
Total Spent
Hand
Totalfrom PACs Totalfrom Indivs
$714,962,536 $553,626,388 $313,687,594 $246,062,960
$397,143,035
$330,180,617 $257,184,500 $140,890,558
$106,633,600
$196,778,966
$382,227,191 $294,132,966 $172,509,075
$139,386,866
$198,416,699
Repub
s
540
Senate:
Candidate
Party s
All
159
Dems 63
Total Raised
Total Spent
Total Cashon
Totalfrom
Hand
PACs
Totalfrom Indivs
$463,958,512 $374,037,243
$142,087,085 $61,777,354
$324,313,690
$236,956,934 $190,263,224
$73,339,221 $26,211,507
$175,068,731
$206,319,165 $167,662,700
$61,150,336 $33,077,662
$132,600,064
Repub
s
71
Public choice problem #5:
Incumbent Advantage
2006
Senate
Type
Total Raised
Incumbent
$318,615,165
Number
Avg Raised
31
$10,277,90
9
Challenger $141,290,839
96
$
1,471,780
Open Seat $ 80,312,338
32
$
2,509,761
Grand Total $540,218,342
159
$ 3,397,600
House
Type
Total Raised
Number
Avg Raised
Incumbent
$460,140,185
424
$1,085,236
Challenger $131,928,472
604
$
218,425
Open Seat $122,949,896
259
$
474,710
Grand Total $715,018,553
1,287
$
555,570
Who is paying?
Rank Contributor
Total
1 National Realtors
$2,675,755
2 Goldman Sachs
$2,623,483
3 Electrical Workers
$2,183,578
4 AT&T Inc
$2,178,785
5 Wholesalers Assn
$2,167,250
6 Trial Lawyers
$2,110,765
7 Credit Union Assn
$1,950,874
8 American Bankers
$1,900,500
9 United Parcel Service $1,889,670
10 National Builders
$1,829,500
11 Engineers Union
$1,823,805
12 Auto Dealers Assn $1,809,100
13 General Electric
$1,739,911
14 Citigroup Inc
$1,719,629
15 EMILY's List
$1,679,633
16 Deloitte Touche
$1,647,165
17 Laborers Union
$1,611,750
18 Teamsters Union
$1,609,931
19 Bank of America
$1,595,524
20 Carpenters Union
$1,594,890
21 Government Unions $1,594,221
Dems Repubs
47% 53%
61% 38%
97% 3%
33% 67%
29% 70%
95% 4%
43% 56%
32% 68%
30% 69%
26% 74%
77% 22%
31% 69%
39% 61%
51% 46%
100% 0%
27% 72%
83% 16%
89% 10%
41% 58%
69% 30%
97% 2%
Campaign costs increasing
Presidential Candidates
Total Receipts
Year
2004
2000
1996
1992
1988
1984
1980
Total (current, millions)
$880.5 (up 66%)
$528.9 (up 24%)
$425.7 (up 29%)
$331.1 (up 2%)
$324.4 (up 61%)
$202.0 (up 25%)
$161.9
California 2005-2006
http://cal-access.ss.ca.gov/
Prop 89
Governmental financing of
political campaigns.
Committees formed to support or oppose the ballot
measure.
1286190 taxpayers for fair elections, sponsored by the
California chamber of commerce oppose
1287451 Californians for fair elections: yes on 89, major
funding by California nurses association and California
nurses association initiative pac, with support from
concerned citizens and businesspeople support
1288245 clean money now - yes on 89 support
1288982 citizens for responsible elections
Transfer seeking (rent seeking)
The market for legislation.
Seeking privileges (economic
rent) from government.
How legislation gets passed.
Special interests influence only
some legislators,
and then the legislators trade
votes: a.k.a. logrolling.
The typical voter lacks the time
and knowledge and motivation
to monitor these votes.
Public choice problem #5:
One-man one-vote fails
cost-benefit optimality.
Voting Ayes@ or Ano@ does not
take into account the intensity
of preferences.
The voter does not pay the
social cost of his decision.
Basic problem: mass democracy
1) Millions of voters choose
among many candidates they
don=t personally know, or
issues they have little
knowledge of.
2) Candidates must spend much
to reach the voters.
 huge demand for campaign
funds. Special interests supply
them in exchange for favors (or
to avoid damage).
The problem is inherent in mass
democracy.
Attempts to limit campaign
finance treat symptoms and
effects. They do not eliminate
the cause. Money will flow
through the cracks and around
the dams. Limits free speech.
APublic@ governmental
financing of campaigns?
1) Forces taxpayers to pay for
negative, misleading ads.
2) Entrenches major parties.
3) Does not stop private money.
4) Treats the effects; does not
confront the cause.
Mass democracy has failed to
achieve its purposes.
1) Often, mass democracy fails
to achieve social peace.
Examples: Iraq, Palestine,
U.S. Civil War; disputed results
(U.S., Mexico, Ukraine).
2) Often, mass democracy falls
to dictatorship. Examples:
German Weimar Republic,
1919-1933, fell to Nazis.
Coups d=etat: Latin America,
Thailand, Russia 1917, Greece
3) Special interests thwart the
median voter.
4) The median voters stifle
minorities.
5) Neither special interests nor
median voters promote optimal
policies. Constitutional
constrains failed to prevent a
large expansion of government.
6) Grafting mass democracy in
unstable countries can create
more conflict, elect interests
with an agenda of supremacy.
Groups fight over spoils.
The remedy:
eliminate the cause,
replace mass democracy.
Opposite of mass democracy:
small-group democracy.
Voting only in small groups.
Neighborhoods of 1000.
Divide the body politic into
cells: cellular democracy.
Jurisdiction are composed of
neighborhood cells.
Each neighborhood elects a
council. Any voter may run.
Contrast with mass democracy:
 Little money needed.
 Meetings are easy.
 Voters know the candidates
 Moneyed interests can be
offset by personal contact.
Then, each neighborhood
council selects one of its
members to a higher-level board
of some 25 neighborhood
councils. That is level 2.
Some 25 level-2 boards then
form a level-3 body.
This continues to the highest
level, the Congress or
parliament. Congress would be
elected by state legislatures, like
the Senate used to be.
Each level is monitored by the
next lower level.
Any representative may be
recalled at any time.
 Bottom-up multi-level
elections give voters leverage.
Multi-Level structure
Benefits:
1) The demand for campaign
funding is greatly reduced.
2) The system promotes
decentralized government.
3) Power is bottom-up.
4) Top officials can be recalled
by any jurisdiction.
5) There is less voter ignorance,
due to smaller numbers,
personal knowledge, sympathy.
Small-group, bottom-up
democracy is especially suited
to countries which lack civil
society and democratic heritage.
In Iraq, village and
neighborhood councils would
be seen as legitimate, not
puppets. Anybody may run.
Cellular democracy: necessary,
not sufficient, for social peace.
Condorcet and Arrow still
apply, though with less damage.
Thus, limit democracy:
1) decentralize
2) privatize (but not monopoly)
3) liberalize (more liberty)
4) use demand revelation:
Each says how much he would
pay, but pays a pre-determined
amount. Those who change the
outcome pay that social cost.
We still also need constitutional
rights, constraints on power.
Also needed:
economic equity, e.g. equal
benefits from oil revenue.
Henry George: Progress &
Poverty, (ch25) AHow modern
civilization may decline@:
Awhile rotten democracy may
not in itself be worse than rotten
autocracy, its effects upon
national character will be
worse.
ATo give the suffrage to tramps,
to paupers, to men to whom the
chance to labor is a boon,
to men who must beg, or steal,
or starve, is to invoke
destruction.
ATo put political power in the
hands of men embittered and
degraded by poverty is to tie
firebrands [burning wood] to
foxes and turn them loose amid
the standing corn; it is to put out
the eyes of a Samson and to
twine his arms around the
pillars of national life.@
My claim:
Cellular democracy can remedy
many of the failures of mass
democracy, since it cures the
cause.
Without eliminating the cause,
the problems will continue and
may get worse.
The problems of equity and
constitutional constraints will
themselves be more solvable
with more effective democracy.
The end.
Questions?