How do Political Economists Think 1. Take trade-offs seriously – most people feel that if something is good overall, admitting any downside is strategically a bad idea. 2. Think of statistical people – move away from anecdotal stories about individual 3. Selfishness is a major principle of social organization and it often an effective principle

4. Interested in interactions between individuals and group – not interested in conspiracy theories (doesn’t mean that some people have much more power and influence) 5. incentives matter 6. non-decisions are also important and yield costs (forgone benefits) (opportunity costs) 7. Markets are powerful forces of nature, but they are not perfect. Market failures.

TOPDOWN POLICYMAKING I. Framework of the class: Democracy? We are going to be covering a lot of information in this class; We are going to talk about the constitution, voting, media, congress, courts, you name it. And how all these interact to form policy outcomes. In order to help us get through this material it would help if we had a sort of framework. The two textbooks (Bickers/Williams & Dye) that we’ve started to read have both started their stories of public policy by mentioning the term democracy. Perhaps this is a good framework frame the lectures around.

DEMOCRATIC GOVERNANCE &PUBLIC POLICY The Role of Government GOOD Instruments of Collective Action What does this mean: mobilize individuals and resources (labor, energy, money) To do what? BAD Infringe on individual liberties and freedom; attach other nations TRADE OFFS: GOOD&BAD Crime Policy: infringe on individual liberties in order to protect the public good. i.e. drug policy (leads to property crime/violence)

DEMOCRATIC THEORY: HOBBES, LOCKE, ROUSSEAU, AND RAWLS The relationship between man and State - Social Contract Tradition (17th century): countered the common notion of a “highly constrained, hierarchical systems of social relations into which all humans were born and stayed throughout their entire lives.” Where the authority to rule, it was claimed, came from God. Social contract tradition: government should be founded upon the choices and consent of the people.

Thomas Hobbes ( ): humans are greedy-need the state to protect us. We are willing to give up freedoms in order for protection, order, safety. We can see this after 9-11 and our willingness to give up certain rights.

John Locke ( ): Natural laws = rights from God. “Life, liberty, property” - T. Jefferson plagiarizes Locke in the Declaration of Independence. Most people respect these natural laws - of course there are a few bad apples. Yes we do need a govt. but only a limited one. The only legitimate govt. action is the action the public consents to.

Jean-Jacques Rousseau ( ) – the public holds preferences for government action that are reprehensible. “the general will is always right, but the judgment that guides it is not always enlightened.” What does right mean? Are public preferences legitimate, legal, moral? Rousseau somewhat suggests that we set up institutions that people ought to have and then teach them what they ought to want. (is this elite theory?). Democratic theory presumes that preferences should determine public policies, assuming that public opinion/preferences are generally socially acceptable.

What happens in a democracy when people act in socially unacceptable or selfish ways? Suppression of minorities? Inefficient policies? Solutions?

Rawls: Veil of Ignorance We don’t know anything about our characteristics, man woman, child, college student, etc. and then assess the fairness of a policy. Can we really be that objective. Even if we can this still assumes that we are able to assess all of the positive and negative externalities that come from the interactions in society, assess the long term benefits.

Thomas Dye: Policymaking from the Top Down “The Discovery that in all large-scale societies the decisions at any given time are typically in the hands of a small number of people confirms a basic fact: Government is always government by the few, whether in the name of the few, the one, or the many.” Harold Lasswell “Public policy in America, as in all nations, reflects the values, interests, and preferences of the governing elite. The assertion that public policy reflects the “demands of the people” expresses the myth rather than the reality of democracy.” Thomas Dye

How do we make our democracy work better?: Institutions

Examples of these institutions may include election rules on who and when people can vote or rules that are placed on judges’ discretion in sentencing. Some studies assume that certain political mechanisms are designed to link citizen demands with policy actions (Downs 1957; Barrilleaux and Miller 1988),

What is a political institution? A Political Institution is a web of relationships lasting over time, and an established structure of power. A vague term that can apply to almost anything (the institution of the family, etc.)

Institutional setting that might promote representation Federalism Elections every two years State Initiatives Judicial Elections Term limits

Institutional settings/rules that might reduce representation Non-elected Bureaucracies Legislative Committees Life tenure for judicial officials FED Staggered elections Term limits Registration requirements

NeoInstitutionalism v. the Limits of Institutions Much of the political science literature holds institutions as important, if not the primary, factors in politics and political behavior. But institutions are only as good as the people who made them. And even the best laid out plans have limitations. (Yugoslavia, Hiati, Lebanon, Iraq, the US Constitution)

Kenneth Arrow’s Possibility Theorem: Arrow showed that it is impossible to produce a social choice mechanism that doesn’t violate the basic conditions of democratic choice: Universal admissibility of individual preference orderings: All policy alternatives are on the table/agenda Citizen’s Sovereignty: citizen preferences matter Unanimity: Unanimous choices always win Independence of Irrelevant Alternatives: the introduction of a third alternative doesn’t effect the preference ordering of a set of two choices. Nondictatorship: no single group should be able to determine a social choice outcome.

A simple example of the limitation of institutions in solving collective action problems (policy disagreements) Three Legislators: with differing preferences on whether a bridge should be built, a road or neither (status quo) Official 1: BpRpS Official 2: RpSpB Official 3: SpBpR

Need a two stage voting process because if we have a one stage process it ends in a three way tie

One possible outcome Agenda 1 vote 1: B vs R: B wins vote 2: B vs S: S wins Remember: Official 1: BpRpS Official 2: RpSpB Official 3: SpBpR

Agenda 2 vote 1: B vs S: S wins vote 2: S vs R: R wins Remember: Official 1: BpRpS Official 2: RpSpB Official 3: SpBpR

Agenda 3 vote 1: R vs S: R wins vote 2: R vs B: B wins Remember: Official 1: BpRpS Official 2: RpSpB Official 3: SpBpR