Political Science 08 27 2013 In the news 8 27 2013 Country faces a number of challenges Growing national debt Mounting debt 17 Trillion Proposals to solve debt o Decrease spending o Increase taxes Partisan bickering o Republicans and democrats arguing Political Scandals o Sex scandals o National security Snowden Persistent unemployment Foreclosures o Owe more money than how much houses are actually worth Ongoing military operations o Afghanistan o Iraq o Syria using nerve gas on own people US stepping in Russia and China on Syria s side Environmental concerns o Pollution o What going to do if anything at all People think badly about government Media reports bad news High expectations presidential candidates make promises Separation of Powers checks and balances Federalism state laws and national laws inconsistent Good things the government does Common defense o Army and navy Free education system o Education free and paid for by government from K 12th grade Center for disease control o Monitor threats Social services o School lunch programs o Social security o Highway o Police Fire department o Monitoring water air food USDA FDA Invest in new technology o GPS o Computers o Microchip o Internet How to make a difference where government falls shorts Voting Get involved Join interest group In the news 8 29 2013 President lays groundwork for US military strike against Syria Obama Syria s chemical weapons requires clear and decisive but limited action Unclear who ordered chemical attack Rebels or dictators or others US trying to assemble international support o UN Security Council and Arab League do not support US o British and French were supporting US and o MC call on President that congress seeks authorization Russia and China not supportive Politics struggle between who gets what when and how Resolving conflict in a peaceful way Negotiating bargaining and compromise similar to war Exists when you have to make collective decisions interdependent Collective decisions Commonality cant have two policies simultaneously Choices about alternatives conflict Political institutions rules by which conflict is resolved Electoral Laws Congress Presidency Bureaucracy Judicial System Channel and resolve conflict Increases of complexity of conflict leads to increases in complexity of institutions Government collective set of political institutions o Government has coercive power o Has monopoly on legitimate use of force o Enforce collective agreements because of power Hobbesian world in absence of government life would be solitary poor nasty brutish and short Restricting is better for the group Consumer restricted supply drives up prices Cartel o Consumer boycott whether something is a necessity or not o Collective action people think their individual impact won t matter people end up cheating Collective action fails when groups goals costs the individual Can t trust others in group Individual and group incentives conflict In the news 9 03 2013 President postpones Syrian strike Asks for congressional authorization for the use of force Not required to ask for authorization Within 48 hours has to notify congress 60 days to keep troops after has to seek congressional authorization President wants to share the blame Congress If congress says no and he attacks still then he could be impeached useless to have congress authorize Constitutional debate Implications Group s goal fails even when people agree Government helps overcome collective action problems o Individuals will rarely cooperate with each other even if they agree Unless punished Who should government work for Reduce collective action problem Small group hold each other accountable Repeated interaction Substitutes available necessity or luxury Purposive benefit sense of duty o Material benefit get an award touch or feel money o Solidary benefit friendship or status Housing crisis Worst economic crisis since depression Plenty to blame o Clinton Bush administration started here Common thread o Irrational Exuberance people excited people disconnected from fundamental housing o Case Shiller home price home prices kept going up Suddenly prices drop How did it start o 911 hit Federal reserve bank lowers interest rates to stimulate an economic recovery Caused recession Kept interests rates too low for too long increased inflation Interest rates go up prices go down Individual o Low interest rates increase purchasing power for buyers o Drives prices up higher o Observe friends and family making money without doing anything o Afraid they would lose opportunity to get into housing market Real estate agents lenders o Wanted to sell as many houses as possible didn t care if they foreclosed on people at end o Mortgage lenders incentives to underwrite risky loans to boost profits Didn t care if borrower defaulted Wanted to sell mortgage to wall street More exotic loan options Subprime low credit rating still get good interest rate Option ARMs people pick how to pay mortgage Alternative A people could get a loan without any documentation Wall Street ratings agencies o Wall street didn t care about quality of loan because they were using elaborate regression models designed to minimize risk International investors had investments in US but made them go bankrupt Insured by Credit Default Swap CDS didn t have money to pay for insurance Rating agencies grade CDO were paid for rating Politicians o Repealed laws which would prevent banks from collateralizing debt Repeal of Glass Steagall created that were too big to fail o Prevented regulators from overseeing insurance policies o Politicians promoted the American dream everyone owns a home Everyone is doing what is rational for themselves Now everyone has to pay 09 05 2013 In the news Senate Foreign Relations committee authorizes use of force in Syria Resolution sets 60 day time limit and prohibits ground force 50 50 in Senate support House of Representatives only small minority in favor Differences between house and senate House has more republicans o All up for reelection Senate more democratic o Longer term Six years Foreclosures People would cash in and refinance homes Underwater on mortgage o People owe more money than the house is worth So many people make foreclosures that banks are backed up o Banks couldn t process foreclosures fast enough o Losses value of house Rational Choice Theory Individuals have goals Evaluate options based on goals Choose option that increases benefits and minimizes cost