Daily Archives: July 31, 2015

Fascinating case of failed Coasian bargaining

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How much would you pay in order not to listen to loud street music while working in your office?

The Washington Post (our new hometown paper) has an interesting story on this:

The band’s brassy riffs at 15th Street and New York Avenue NW always delight the hordes of tourists heading toward the White House. But the very spot that’s proved so profitable for Spread Love to pull in tips has also earned it the enmity of employees at two major Washington institutions: the Treasury Department and the law firm of Skadden, Arps, Slate, Meagher & Flom.

Apparently, the economists in charge of our nation’s financial stability and the attorneys who represent many of our country’s corporate high-rollers and white-collar criminal defendants are struggling to focus inside their offices because the band is so loud. They are hearing Spread Love spreading its love too much.

So the office workers offered to pay the band $200 a week. The band members declined, saying that they typically make that amount in an hour (unverified) from tourists.

The band’s director insists that they can sell the office workers a little quiet, if the price is right (just how much do the office workers value a little quiet while working? And what’s the band members’ opportunity cost of not spreading love?)

Apparently the band’s act is totally legal, as DC’s noise regulations are subordinate to individuals’ first amendment rights.

Also, notice how in certain instances government policies can create value for specific subsets of citizens by simply allocating “property” rights.

On the failure of constitutional engineering in Burundi

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Burundi’s post-conflict constitution provides a robust array of formal checks to personal rule. Article 164 mandates a 60-40 Hutu-Tutsi split in National Assembly and 50-50 split in the Senate in order to ensure that the majority Hutu (85%) do not violate the rights of the minority Tutsi (14%). The Batwa (1%) are also guaranteed representation in Parliament through special nomination. Burundi also has a proportional representation (PR) system with a closed list that requires political parties to nominate no more than two thirds of candidates from the same ethnic group. Article 257 of the constitution reinforces the principle of ethnic balance by mandating a 50-50 split in the military. Furthermore, according to Article 300 any amendment to the constitution requires an 80% super-majority in the National Assembly and two thirds of the Senate (this is why Nkurunziza failed in an attempt to amend the constitution in early 2014).

So how did Nkurunziza manage to overcome all these formal institutional checks on his power and engineer a technical third term in office? For answers see here.

Hint: elite consensus on acceptable bounds of political behavior matters a great deal. Looking back, the framers of the Burundian constitution probably should have focused on intra-Hutu balance of power as much as they did on the Hutu-Tutsi balance. Nkurunziza succeeded because not enough Hutu elites (within his own divided party) were willing to punish his blatant contravention of term limits on a questionable technicality. Perhaps they will stand up to him if he tries again in 2020.