Saturday, April 5, 2014

Modular Representation vs Monolithic Representation

Not only that, but elected politicians can honestly say that a large group of people chose them as a representative. The Kochs can't say that. - Noah Smith, How should Charles Koch use his power?
Wow.  The Kochs can't honestly say that a large group of people chose them as their representatives?  Seriously?  Is it really possible that Noah Smith, an economist, isn't familiar with the concept of dollar voting?  Or maybe he's familiar with the concept, but he thinks it's hogwash?

Personally, I think it's one of the most important economic concepts.  That's why I've written quite a few blog entries on the topic of representative economics...

...but clearly some people still haven't gotten the memo.  There are certainly exceptions though...
Koch industries and its subsidiaries are expansive—their holdings include everything from gas stations to pipelines, paper products for everyday use, greeting cards, chemicals used to make materials, and the fabric that makes your clothing. 
With an interest in almost everything and status as the number two privately held company in the country–behind Cargill—Koch industries is a behemoth that is hard to avoid. 
But knowledge is power and your dollar is your vote. We can become informed purchasers and refuse to support their political agenda by refusing to purchase their wares. - Rachel Colyer, Sign the pledge: Don't buy these Koch products
Perhaps it might help Smith if we compared the Koch brothers to one of my "favorite" politicians...Elizabeth Warren.

In 2012...1,696,346 people in Massachusetts voted for Elizabeth Warren.  They wanted her to be their representative.  And that's exactly what occurred because Warren's opponent...Scott Brown...only received a measly 1,458,048 votes.

As you might have guessed...not everybody voted.  In 2012...the population size of Massachusetts was 6,645,303 people.  This means that 3,490,909 people didn't vote.  Some of them are were too young to vote (21%) which leaves us with 2,757,819 people who didn't think it was worth it to vote.

Let's break it down...

  • 2,757,819 people didn't want either Elizabeth Warren or Scott Brown to be their representative
  • 1,696,346 people wanted Elizabeth Warren to be their representative
  • 1,458,048 people really didn't want Elizabeth Warren to be their representative
  • 733,090 people were too young to have their voices count

In terms of dollar votes...Elizabeth Warren received $42 million of them.

Now let's take a look at the Kochs...

In many people dollar voted for the Koch brothers?  I don't know.   But we do know how many dollar votes they received... $115 billion.  That's a lot of dollar votes.  It makes sense because they supply quite a few products that serve the interests of many people...

Koch Industry Gasoline: 
Union 76
Koch Industry/Georgia-Pacific Products: 
Angel Soft toilet paper
Brawny paper towels
Dixie plates, bowls, napkins and cups
Mardi Gras napkins and towels
Quilted Northern toilet paper
Soft ‘n Gentle toilet paper
Sparkle napkins
Vanity fair napkins
Zee napkins
Georgia Pacific Building products: 
Dense Armor Drywall and Decking
ToughArmor Gypsum board
Georgia pacific Plytanium Plywood
Densglass sheathing
G/P Industrial plasters (some products used by a lot of crafters)-
Agricultural Plaster
Arts & Crafts Plaster
Dental Plaster
General Purpose Plaster
Glass-reinforced Gypsum (GRG),etc.
Koch Industry/Invista Products: 
COMFOREL® fiberfill
COOLMAX® fabric
CORDURA® fabric
DACRON® fiber
SOLARMAX® fabric
SOMERELLE® bedding products
SUPPLEX® fabric
TACTEL® fiber
TACTESSE® carpet fiber
TERATE® polyols
TERATHANE® polyether glycol
PHENREZ® resin
POLARGUARD® fiber and
LYCRA® fiber
Koch Fertilizer Company's AGROTAIN® nitrogen stabilizer fertilizer products are used around the world to improve nitrogen efficiency and enhance crop productions.

It turns out that I've dollar voted for the Koch brothers.  Therefore, they represent my interests...and the interests of millions and millions of other people.  How awesome would it be to know the actual number of people that dollar voted for the Kochs in 2012?

What's great about the private system of representation is that people don't have to dollar vote for the Koch brothers if they don't want to.  They can boycott them to their heart's content.  For example, Rachel Colyer can engage in ethical consumerism by putting her money where her heart is.  Clearly she doesn't want the Koch brothers to have her she doesn't give it to them.  How absurd would it be if they could spend her money anyways?  Yet, that's exactly what Elizabeth Warren does.

Let's take a look at Massachusetts again.  Out of 6,645,303 people, 1,696,346 people wanted Elizabeth Warren to spend their money.  This leaves 4,948,957 who didn't want Warren to spend their money.  Yet, how many of these people dollar voted on a regular basis?  Nearly all of them.  The problem with our system is that it diverts a large portion of those dollar votes to Elizabeth Warren...despite the fact that most people didn't want her to have them.  How crazy is that?

If those 5 million people in Massachusetts wanted Warren to spend a good portion of their money...then why didn't they vote for her?  Why did they dollar vote for private representatives like the Koch brothers instead?

If the goal is for people's interests to be protected...then the private system of representation provides infinitely better coverage.  At any time, for any reason, you can replace any of your private representatives.  If you're not happy with how the Koch brothers are spending your money...then you can give your money to other representatives without having to convince millions of other people to make the same decision.  If you want to stop buying Brawny...then you stop buying Brawny.   If you want to stop buying every single product produced by the Kochs...then you have that option.

Our private system of representation is modular.  From the Wikipedia entry on modular programming...
This makes modular designed systems, if built correctly, far more reusable than a traditional monolithic design, since all (or many) of these modules may then be reused (without change) in other projects. This also facilitates the "breaking down" of projects into several smaller projects. Theoretically, a modularized software project will be more easily assembled by large teams, since no team members are creating the whole system, or even need to know about the system as a whole. They can focus just on the assigned smaller task (this, it is claimed, counters the key assumption of The Mythical Man Month—making it actually possible to add more developers to a late software project—without making it later still).
Modular representation facilitates marginal improvements.  Brawny can be replaced by Bounty...and paper towels can be replaced by alternative products.  Inferior components can be replaced with superior components.  A multitude of little improvements all add up to far greater progress than occurs with monolithic representation...
Since these policies are bundled together and voters cannot evaluate them individually, the election margin cannot reveal which of these interpretations is correct, nor can the election reveal the specific amount of resources voters want to devote to each of the three policy areas. Yet for political parties to allocate resources to satisfy social preferences, parties must determine which interpretation accurately describes voters’ preferences. For if a party were elected to power because voters wanted the party to alter foreign policy—but not any of the other policies—and the party did not realize this, the party could allocate resources in ways that did not reflect social preferences. - Samuel DeCanio, Democracy, the Market, and the Logic of Social Choice    
Who is more likely to allocate resources in ways that do not reflect social preferences...Warren or the Kochs?  Consider this bit from Warren's famous speech...
There is nobody in this country who got rich on his own. Nobody.  You built a factory out there—good for you! But I want to be clear.  You moved your goods to market on the roads the rest of us paid for.  You hired workers the rest of us paid to educate.  You were safe in your factory because of police forces and fire forces that the rest of us paid for.  You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. - Elizabeth Warren
Now consider this passage by Adam Smith...
When high roads, bridges, canals, &c. are in this manner made and supported by the commerce which is carried on by means of them, they can be made only where that commerce requires them, and consequently where it is proper to make them. Their expences too, their grandeur and magnificence, must be suited to what that commerce can afford to pay. They must be made consequently as it is proper to make them. A magnificent high road cannot be made through a desert country where there is little or no commerce, or merely because it happens to lead to the country villa of the intendant of the province, or to that of some great lord to whom the intendant finds it convenient to make his court. A great bridge cannot be thrown over a river at a place where nobody passes, or merely to embellish the view from the windows of a neighbouring palace: things which sometimes happen in countries where works of this kind are carried on by any other revenue than that which they themselves are capable of affording. - Adam Smith, Wealth of Nations
Who is more likely to spend our money on a bridge to nowhere...Warren or the Kochs?  Who is more likely to spend our money on supplying workers with the wrong education...Warren or the Kochs?  Who is more likely to spend our money on more police than is really necessary...Warren or the Kochs?

Who transports more goods...Warren or the Kochs?  Who employs more workers...Warren or the Kochs?  Who has more to lose from theft...Warren or the Kochs?

It stands to reason that the Kochs should be able to choose where their taxes go.  Compared to Warren... they have far more knowledge and incentive to try and ensure that the public sector supplies the balance of public goods that will maximize the number of dollar votes that consumers give to them.  If the Kochs get the balance of public inputs wrong...then it will be no different than if they get the balance of private inputs wrong.  Whether they misallocate their private dollars or their public dollars (taxes)...consumers will be able to easily replace the Kochs with better representatives.

In are some more passages on the topic...
What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. - Adam Smith, The Wealth of Nations
The man who employs either his labour or his stock in a greater variety of ways than his situation renders necessary can never hurt his neighbour by underselling him. He may hurt himself, and he generally does so. Jack of all trades will never be rich, says the proverb. But the law ought always to trust people with the care of their own interest, as in their local situations they must generally be able to judge better of it than the legislator can do. - Adam Smith, Wealth of Nations
It is thus that every system which endeavours, either by extraordinary encouragements to draw towards a particular species of industry a greater share of the capital of the society than what would naturally go to it, or, by extraordinary restraints, force from a particular species of industry some share of the capital which would otherwise be employed in it, is in reality subversive of the great purpose which it means to promote. It retards, instead of accelerating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labour. - Adam Smith Wealth of Nations
All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society. - Adam Smith, Wealth of Nations

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