Politics

by Yue and Anna

One Saturday afternoon in Amherst: One group of people assembled shouting, “We are the 99%” while the other group holding the boards as shown in the picture.  Two groups were standing beside each other protesting for the exactly opposite petitions.

These are America’s founding fathers – Washington, Jefferson, Adams and Franklin; Not these guys – Marx, Lenin, Stalin or Mao

Indeed, how many people in the United States truly care about politics?  In my opinion, more people prefer to discuss rather than participate. Like myself, the majority of people stay indifferent about trivial changes between “capitalism” and “egalitarianism” in society. In fact, most people don’t notice if the percentage of total societal wealth goes to the top 1% (richest) has increased since last month or not. 

However, in general, the majority of people prefer things to be average and moderate. Admittedly, there are ones who prefer more egalitarianism if they are suffering from nonsufficient health care or housing provision while others who work for Wall Street may believe that they deserve what they earn and societal wealth should be distributed based on individual’s productivity.  When things go beyond certain limit and when one group feels that they are now worse off and they can no longer bear this change, people will try to express their discontent hoping to change things back to what they expected. Does it remind you about the second assumption of Indifference Curve which decides the convexity of IC curves -- “Average is always better than extreme”?

But what happens when two parties are trying to win more votes? Suppose that it is a duopoly game with two parties – Democrats and Republicans competing for votes.

            

According to the “median voter theorem”, suppose people vote for the candidate who commits a policy position closest to his or her preference and there are only two parties competing, in order to get more votes, either Democrats or Republicans will tend to advocate their policy the closest to the one preferred by the median voters. Therefore, the Nash Equilibrium is where two parties both end up with receiving half of the votes. At this point, voters are indifferent between voting for either party.

             

Based on this theory, both Democrats and Republicans will tend to claim their policy proposal to be in the middle of the axis between Egalitarianism and Capitalism.  Although we do find that for example, presidential candidates tend to convey their policy in a moderate way during pre-electoral debates and speeches so that they can win votes from different groups, things are far more complicated in reality.  First, it is usually not a duopoly game given that there are often more than two parties competing and even though some small parties do not have a high likelihood to win, their positions may have an impact on other parties’ wining of votes. Secondly, it is nearly impossible to find the exact “median position” of the public toward certain issues. In this case, the median position for social distribution of wealth may not be the exact average of “egalitarianism” and “pure capitalism”.  It is reasonable to believe that more people now prefer a more equal distribution of income given the current economic condition and from the fact that so many people participated in the “Occupy Wall-street” protest. Furthermore, people’s preferences change by exogenous shocks and may even be manipulated by certain “propagandas.”