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Dean’s Fireside Chat. October 16, 2013 Washington, D.C. Political polarization. History of modern deregulation. Deregulation gained momentum in the 1970s Brokerage house-securities firms were officially deregulated in 1975 Railroad Revitalization and Regulatory Reform Act in 1976 - PowerPoint PPT Presentation

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Deans Fireside ChatOctober 16, 2013Washington, D.C.1

Political polarization

Polarization declined in both chambers from roughly the beginning of the 20th Century until World War II. It was then fairly stable until the late 1970s and has been increasing steadily over the past 25 years. Since roughly 1980, the political system has polarized with the ideological gap between Democrats and Republicans widening while moderates vanish from Congress.

Polarization is measured as the distance between the average ideal point of Republican legislators and that of Democrats. Poole and Rosenthal developed a statistical measure that estimates the ideological positions of members of Congress based on their voting records. This measure functions like a road map, giving us a way of visualizing the political character of legislature. (Keith Poole, Graphic Picture of a Polarized Congress, UGA Research, the research magazine of the University of Georgia, 2012.) As Figure 1 shows, most of the polarization for the House of Representatives has been produced by a rightward movement of Republicans. The pattern for the Senate is similar.

Polarization in the House and Senate is now at the highest level since the end of Reconstruction.2

Polarization declined in both chambers from roughly the beginning of the 20th Century until World War II. It was then fairly stable until the late 1970s and has been increasing steadily over the past 25 years. Since roughly 1980, the political system has polarized with the ideological gap between Democrats and Republicans widening while moderates vanish from Congress.

Polarization is measured as the distance between the average ideal point of Republican legislators and that of Democrats. Poole and Rosenthal developed a statistical measure that estimates the ideological positions of members of Congress based on their voting records. This measure functions like a road map, giving us a way of visualizing the political character of legislature. (Keith Poole, Graphic Picture of a Polarized Congress, UGA Research, the research magazine of the University of Georgia, 2012.) As Figure 1 shows, most of the polarization for the House of Representatives has been produced by a rightward movement of Republicans. The pattern for the Senate is similar.

Polarization in the House and Senate is now at the highest level since the end of Reconstruction.3

History of modern deregulationDeregulation gained momentum in the 1970sBrokerage house-securities firms were officially deregulated in 1975Railroad Revitalization and Regulatory Reform Act in 1976Airline Deregulation Act in 1978 Trucking in 1980Railroad deregulation occurred under the Staggers Act in 1980The Garn-St. Germain Depository Institutions Act in 1982Bus, freight, aviation, and shipping regulations from 1982-1998 Telecommunications Act in 1996The Gramm-Leach-Bliley Act in 1999Key points in modern deregulation in the U.S.

Progressive Era (18902-1920) saw Presidents Roosevelt, Taft, and Wilson institute regulations on parts of the American economy, most notably big business and industry Trust-busting.

President Franklin Roosevelt implemented many economic regulations following the Great Depression. In the 1970s, deregulation gained momentum.

Brokerage house-securities firms were officially deregulated in 1975.

Railroad Revitalization and Regulatory Reform Act passed by Gerald Ford in 1976.

Jimmy Carter deregulated transportation Airline Deregulation Act in 1978 which phased out the Civil Aeronautics Board (fully abolished by 1985). The board had regulated the airline industry, preserving routes and setting fares.

Trucking deregulation was signed into law in 1980 by President Carter. This opened the trucking market to independent truckers.

Railroad deregulation occurred under the Staggers Act signed into law in 1980. It minimized regulations to allow competition and demand for services to determine reasonable rail rates.

President Reagan promoted the deregulation of finance, agriculture, and transportation. He established the Presidential Task Force on Regulatory Relief in order to evaluate if federal agencies regulations were cost-effective and beneficial to society.

The Garn-St. Germain Depository Institutions Act was signed into law in 1982. The act deregulated the entire banking system, including commercial banks and savings and loan institutions. It freed up the liquidity to invest higher rates (40%) of assets into commercial real estate, and S&Ls could invest-lend up to 30% of their assets into consumer loans.

Several other deregulatory acts related to transportation were passed: Bus Regulatory Reform Act of 1982, Surface Freight Forwarder Deregulation Act of 1986, Federal Aviation Administration Authorization Act of 1994, Ocean Shipping Act of 1984, and the Ocean Shipping Reform Act of 1998.

Clinton signed the Telecommunications Act in 1996. This act changed limits on radio and television ownership.

The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, repealed the Glass-Steagall Act of 1933, removing barriers in the market among banking companies, securities companies and insurance companies, allowing commercial banks, investment banks, securities firms, and insurance companies to consolidate.4

US price controls would lower US and EU longevityWhat if the US adopted European-style price controls?

Generation of 57 year-olds alive in 2030 would lose about 4 months of life expectancy. This effect gets bigger over time 57 year-olds in 2060 would lose about 8 months of life expectancy.

Europeans also live shorter lives as a result of this US policy, losing about 6 months of life expectancy.

Summarize: US price controls would mean my children would die 8 months earlier than they otherwise would. This might seem small, but spread across an entire generation, these are big effects. For example, the cost to my childrens generation 8 months less to live is bigger than what would happen if every surgeon in the US forgot how to do heart bypass surgery. 5

US price controls would cost consumers more than would be savedAdding up the longevity effects across the entire population reveals just how big an issue this is.

For example, the generation of near-elderly Americans in 2060 would be worse off to the tune of $8 trillion dollars, when we add up the cost of all their lost life expectancy, net of the money they save from cheaper medicines.

Europeans lose nearly as much as Americans do.

Summarize: US price controls would cost my childrens generation nearly $9 trillion.6

But expanding US prescription drug insurance would create more value than cost for US and EU consumersA much more successful approach is the expansion of prescription drug insurance. Suppose we were to lower OOP prices by 20%, by expanding public subsidies for prescription drug insurance.

This has the virtue of lowering the out-of-pocket costs for patients, and thus making new drugs more affordable. But it also preserves revenues and profits for innovators and continues to stimulate new discoveries.7

Miscount rates before and after Optical Scanning with In-precinct TabulationPunch Card SystemPunch Card SystemPunch Card SystemOptical Scanning with In-precinct TabulationJurisdiction1988199219962000DeKalb County2.231.812.500.34Douglas County3.693.603.310.98Franklin County3.732.163.671.07Jasper County4.392.583.300.89Madison County2.241.551.570.55McDonough County3.191.712.600.66McHenry County1.921.161.440.32Schuyler County3.211.752.370.84City of Rockford2.271.770.301.43Average2.992.012.340.79Paul J. Quirk, James H. Kuklinski, and Philip Habel. The Machinery of Democracy: Voting Systems and Ballot Miscounts in Illinois. Institute of Government and Public Affairs, University of Illinois, 2002.)

Illinois has a high rate of miscounted ballots nearly 3%. In the 2000 election, almost 4% of all ballots were miscounted in the state. Voting equipment is a large part of the problem. The study focused on the nine jurisdictions that adopted optical scanning with kickback and examined their miscount rates before and after they adopted this system.

The table shows that under the punch card system, the average miscount rate in the nine jurisdictions for all years was 2.45 percent, close to the statewide average. After the adoption of optical scanning with kickback, miscounts fell dramatically, to the 0.79 percent figure mentioned earlier, a difference of 1.66 percentage points. In other words, more than two-thirds of the miscount was eliminated.

Social disadvantage also plays an important role in miscounts with jurisdictions with large numbers of poor, black, and Hispanic residents bearing a disproportionate burden of ballot miscounts. The main source for this burden is evidently their disadvantage in education, that is, the punch card system causes difficulty primarily for people with low levels of education.

Their findings make a strong case for statewide adoption of the optical scan voting system with the kickback mechanism or some comparable system. Furthermore, the incidence of miscounts is not even-handed with higher levels of occurrence with those who are already disadvantaged in various respects poor, racial minorities, and less education. It is inconsistent with American political values to have the machinery of democracy tilted in favor of more privileged citizens.

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Polarization declined in both chambers from roughly the beginning of the 20th Century until World War II. It was then fairly stable until the late 1970s and has been increasing steadily over the past 25 years. Since roughly 1980, the political system has polarized with the ideologica