Welcome to our blog!
This is a class blog authored by student contributors and curated by their teacher, Dave Ostroff.
The posts on this blog are part of an ongoing assignment in our Government and Economics course at Parish Episcopal School (Dallas, TX). The major goal of our course is to prepare students for responsible citizenship in the 21st century. Students post reflection pieces on a rotating basis. We invite you to return often and read what we write!
Please read the specifics of our class blog assignment here.
View our class blogging and commenting guidelines here.
My grandfather, William Campbell (1927-2013), played a large roll in theorizing the Winner’s Curse by applying physics equations to economics. The winner’s curse, in simplest terms, is the idea that the winner of a common value auction tends to overpay. Within competitive bidding, the winner’s chances of overbidding increase as the number of bidders, or consumers demanding the item, increases (Investor words). Each bidder estimates a certain price; some overestimate and others underestimate. The one who overestimates usually wins, and therefore is “cursed” with an item that is not truly worth what he or she estimated for. Such a curse can occur in two similar, yet slightly different ways: the winning bid exceeds the value of the tract, so the firm loses money; or the value of the tract is less than the expert’s estimate so the winning firm is disappointed (Anomalies: The Winner’s Curse).
While working for the Atlantic Richfield Company, otherwise known as Arco, my grandfather was summoned to his boss’s office and asked a simple question with a complex answer: how can we save money? After strenuous research and collaboration, the team of engineers and physicists discovered that competition within bidding creates an atmosphere that does not usually allow the winner to truly win. In order to understand such a concept, consider an auction of a piece of land that has five million barrels of oil beneath it. No one actually knows the value of the land; so, some engineers will overestimate the value of the property and others will undervalue it. Most likely, the company that overrated the property will be willing to pay more and thus win the auction. So, we can conclude that within “competitive bidding, the winner tends to be the player who most overestimates the true tract value” (Competitive Bidding in High-Risk Situations). The variable cost of oil does fluctuate as supply and demand increase and decrease, which creates even more risk in an already dicey oil business.
At the same time, the winner’s curse does not necessarily apply to an auction marketplace like eBay. The winner’s curse only applies to competitive lease sales, or an auction with limited supply and excess demand. Marketplaces like eBay and Craig’s List have more supply than demand, allowing consumers to search for the lowest possible price before purchasing an item; thus, producers compete and lower prices. The prices approach equilibrium. Within competitive bidding for a single item, the price cannot approach equilibrium because excess demand disallows such a balance.
By no means is the winner’s curse a bid strategy; it is a mere analysis on what not to do. However, three simple rules can be followed to avoid being that guy who enthusiastically wins an auction only to watch his property slowly diminish in value: the less information one has compared with what his opponents have, the lower he ought to bid; the more uncertain one is about his value estimate, the lower he ought to bid; and the more bidders (above three) that show up on a given parcel, the lower one should bid.
Steps to Post:
1. Create New Post (top right gray ribbon);
2. Click on ‘Pop Out’ (bottom left);
3. Click ‘Photo’ – choose title, add photo (centered, please), and write analysis (2-3 sentences).
4. Add tags – select an ECON concept from our class list.
5. Add categories – 1) PhotoECON and 2) class section (A1, A3, B1, B2).
The Citizens United decision broke new ground in the realm of campaign finance. Gone were the restrictions on corporate political speech (as long as they didn’t donate funds directly) and vague disclosure laws.
The landmark 5-4 decision opened up the election process to an influx of funds the likes of which the political world has never seen. The question becomes whether or not that flood of money negatively impacts the election process.
In class we were asked to not only consider that central question, but dig a little deeper into the history of campaign finance.
Before Citizens United, campaign finance reform underwent a few drastic and landmark changes. Daniel M. Shea explains that the most significant judicial decision impacting campaign finance in the modern era is Buckley v. Valeo, in which the court ruled that money is akin to speech and is protected but the amount of money that can be directly given to a candidate is limited. The Bipartisan Campaign Reform Act (or BCRA) went further and forced candidates to gather funds from an increased number of small donors by banning “soft money” contributions.
Citizens United took things a step further after the huge uptick in campaign spending during the 2008 election cycle. The case dealt with a specific clause of BCRA that “outlawed explicit campaigning by nonpartisan groups within 30 days of a general election and 60 days prior to a primary” and was elevated to the supreme court after Citizens United, a non-profit organization, tried to air a movie that was highly critical of Hillary Clinton.The result changed the nature of elections forever. By uprooting the precedent set for campaign finance restrictions, Citizens United v. FEC effectively injected more money into politics.
Allegations that said funding is harmful have been prominent. The preponderance of negative ads funded by Super PAC’s are disparaged and have left many worrying about the effect that money can have on the campaign system. Fortunately, I strongly believe that the potential benefits of increased funding far outweigh the pitfalls.
Perhaps the largest benefit of an increase in funding due to citizens united is the greater competition we see in the election process.
Before Citizens United, incumbents had a huge advantage in the election process. James Campbell, in a study from the State University of New York at Buffalo, analyzed 100 years of elections and came to the conclusion that incumbents have an edge for a couple of reasons.
- Incumbents have access to more funds, usually outspending their opponents by 3:1
- They have name-brand recognition after having held office
Now, after the Citizens United ruling, competition can come to the forefront because the incumbent advantages are significantly degraded nullified. Bradley Smith of US News explains that “In 2010 Democratic candidates and party committees outspent Republicans by approximately $200 million, but super PACs offset approximately $100 million of that.” Super PAC’s disproportionately support challengers and at the very least force incumbents to campaign hard to retain their spot.
The Republican presidential primary is a great example of this increase in competition. Usually, even the most competitive primary elections don’t have multiple candidates receive large amounts of media attention. The 2008 democratic primary was the most publicized in the pre-Citizens United era, and even there, the candidates were whittled down to two almost immediately. However, this election cycle, it seemed as though a new candidate was leading the Republican primary race each week. The only reason we knew who Herman Cain was, or the reason that Gingrich was able to break in late and challenge Romney is because inflows of funding made the process more competitive than it would have been otherwise.Ultimately, the passage of Citizens United has added money into elections. Although that addition is hotly debated, its ability to raise the competitive nature of elections creates a net increase in the information for American voters and stimulates interest to get people involved in elections.
The Boy Scouts of America (BSA) is an Irving-based private organization that was founded over a hundred years ago. While the organization has been praised for its focus on training youth to be responsible and self-sufficient Americans, it has also endured scrutiny for its strict membership policies. The BSA has recently been under fire for its ban on gay troop leaders and members, a policy that in today’s world seems relatively outdated. The proposal to drop the ban would not require every troop to welcome gay members and leaders, but simply allow troop leaders to “determine how to address this issue” according to group officials. (Dallas Morning News) Furthermore, the BSA’s official policy does not inquire about the sexual orientation of its members or leaders but prohibits the participation of openly gay individuals. With Barack Obama being the first president to publicly support gay marriage, the BSA’s received more pressure than ever to reverse their policy.
In our post civil rights era world, the BSA’s exclusion of gays seems, in my opinion, obsolete. In a society where the president has voiced support for same sex marriage, it is almost inevitable that people will take action against a policy as discriminatory as this one. While people have the right to voice their opposition to the BSA’s ban on gays, the fact of the matter remains: the BSA is a private organization and therefore has the right to form its own regulations. The case of Boy Scouts of America v. Dale established the BSA’s constitutional right to exclude an individual, in this case homosexuals, when “the presence of that person affects in a significant way the group’s ability to advocate public or private viewpoints.” In the BSA’s case, it declares that homosexuality conflicts with the organization’s ideals. This claim is protected by freedom of association, which is outlined in the First Amendment, and allows for private organizations such as the BSA to choose who they allow to become members.
Grassroots mobilization has played a significant part in civil rights activism and this situation seems no different. The pressure being put on the BSA to change their policy is coming in large part from individuals who have been rejected by the organization, including Ryan Anderson, who was stripped of his Eagle Scout title for being openly gay. (Forbes) Another former boy scout named Eddie Kurtz has started a petition “urging California lawmakers to pass SB 323, which would end tax breaks for youth groups which discriminate against members based on their sexual orientation.” (Huffington Post) If passed, this bill would serve as a precedent and an example of the power legislators have over private organizations. By threatening to remove the BSA’s tax exemption, the California government has placed further pressure on the organization to reconsider its policy on gay members.
I think that what I have learned about the constitution in class has allowed for me to see this situation in a broader light. Without an understanding of the constitution, I think it would be easy to assert that the BSA’s policy should be illegal. Although I think the exclusion of gays is unjust, I realize that as a private organization the BSA has the right to establish its own policies based on the ideals of the group. On the other hand, a look at the big picture seems to suggest that the BSA should reconsider its policy. With more and more states passing legislation to allow same sex marriage, the nation seems to be moving away from more conservative thinking about homosexuality. Apart from the nation as a whole, two troops in Minnesota have already rejected the policy banning gay individuals according to the Dallas Morning News. While the BSA has the constitutional right to uphold whichever policies it sees fit, I think that the organization should give in to some of the pressure it is being placed under and reevaluate its stance on openly gay members and troop leaders.
Immigration reform in the United States is quickly coming to a head. As the dust from the Presidential election settles and the nation collectively exhales after our near miss with the fiscal cliff, legislators have refocused on issues that drastically impact constituents of certain key demographics.
The Washington Post explains that the driving factor that has brought the GOP to the negotiating table has been the inability of the party to capture the Latino vote. Politico argues that the concerted interest by the Republicans combined with a push by the Democrats has made reform of American Immigration policy a top legislative priority on capitol hill this year. Minorities have successfully utilized the voting pathway of political action to force some measured level of political reform.
That theme of that reform has boiled down to one word: compromise.
Individuals on both sides of the aisle have realized that passing any comprehensive immigration reform package will require bipartisan support. CNN argues that the realization of a need for bipartisan cooperation (specifically by key congressional powers such as Democratic Senator Schumer) has given way to the formation of what political pundits are calling the ‘gang of 8.’ The Washington post explains that the committee, consisting of 8 key senators (4 Democrats and 4 Republicans) have hammered out a package (of which a preliminary transcript is posted here) that rests on a couple of key planks. The first is increased border control, a non-negotiable issue for members of the GOP. The second is slightly more unconventional. In an effort to reach a true compromise, GOP members allowed for the inclusion of a path to citizenship in their reform package. The path, though long and arduous (it contains a number of key steps, the most notable of which is a requirement to pay fines and back taxes), is a key plank of the package that gives the Democratic senators on the committee something to back.
In addition to those key overarching planks, the National Review explains that the plan also demonstrates a concerted effort to improve the system of legal immigration to attract high skilled workers as well to improve employment verification and secure working rights for potential immigrants and existing illegal aliens already in the nation.
The president, in an effort to assume the role of chief legislator, has waded in and out of the immigration debate. The Washington Post explains that he most recently proposed a solution in Las Vegas as he “put the weight of his administration behind efforts to pass legislation” on Immigration Reform. Although his plan has been deemed unfeasible by Rubio (a key republican senator who is part of the ‘gang of 8’) he has brought immigration reform to the forefront. The National Journal explains that Obama’s proposal was repeatedly been blasted as “dead on arrival,” but it sends a clear message: that immigration reform will become (and already is) a key legislative issue in the foreseeable future.
Ultimately, I am of the opinion that we will soon see some sort of deal on the issue of illegal immigration. With 11 million undocumented individuals already in our country’s borders and the immense political might of the Latino community, the stakes are simply too high for the issue to remain unresolved. Though the two groups may seem resolute, with the democrats refusing to budge on a path to citizenship and the republicans intent on blocking that very path without significant border control, progress on immigration reform is inevitable. The issue is simply far too important economically, socially, and politically for gridlock to continue.
The recent decision to initiate the end of restrictions and limitations of female duties in the military has sparked controversy and conversation over the difference between men and women and what makes women have the same eligibility to perform the same duties men can. The Pentagon recently announced that they have lifted, “a 1994 Defense Department ruling that restricted service opportunities for women in the military, particularly “physically demanding tasks that would exclude the vast majority of women.” (Waltonian) The idea that women are less capable of performing the same tasks as men comes from this speculation that females are less physically and mentally capable then men. Researchers have indicated that women are reportedly more susceptible to pain than men, which may be the cause of such controversy over what women are capable of doing physically. Men’s Fitness says, “The differences found between men and women may result from a variety of causes, such as hormones, psychological factors, genetics, or even the simple fact that men feel more cultural pressure to report less pain.” (Men’s Fitness). Studies like these may prove a point that women are different than men but I believe it does not give the government a right to ban all women from performing military duties. If a woman enlists into the military for a specific duty, and they perform up the same standard as men do, then shouldn’t that woman be eligible for the job? I believe it should be up to the person, female or male, to decide whether they are willing and capable to execute certain military obligations. Isn’t this one of the values this country was founded on? The freedom to choose your path and future applies to all citizens of the United States. My studies of the Constitution in my government class have taught me that the dilemma with women in the military should not be debated over.
Based on the freedom this country provides and emphasizes, women should, without a doubt, be able to enlist and apply for any military function. Although the Constitution does give Congress the right to “make Rules for the Government and Regulation
of the land and naval Forces” (Article 1 Section 7 of the U.S. Constitution) the decision to ban women from performing certain combat duties does not support the ideals this country embraces. To me this discrimination against women is not different then discrimination against a certain religion or race. This issue has given me a better understanding of the national thought on
what policies regarding different sexes should be. I believe that all people should have the chance to pursue their desires and not be restricted in any way. This event has given me a more vivid perspective on what we have studied in class. The answer to the question of whether women should be allowed to enlist for certain jobs in the military is given better thought and comprehension by me after my studies in government class of the Constitution and Bill of Rights. Congress’ decision in 1994 to ban all women from certain military duties is not supported by anything other than studies indicating the differences between men and women. Ellen Lainez, the DOD Spokeswoman says that the reason for these restrictions is that “there are practical barriers”. (News.Discovery)
These ‘practical barriers’ defy the rights given to men (and women) by God! This so-called “glass ceiling” preventing women to excel in military duties is without a doubt labeling our country hypocritical in a sense that we hinder the potential of women to excel and make great accomplishments for themselves and their country. My opinion is that lifting this ban is the ethical and right thing to do based on the freedom to pursue certain paths that our country emphasizes and endorses.