Lecture 2 Thursday August 29 2013 In the weird news o Kim Jong Un s ex lover executed by firing squad o NY post reports Anthony Weiner paid supporters to show up at events Paid 15 per hour What is politics o Harold Lasswell Politics is the struggle of who gets what when and how o Politics is all about conflict resolving conflict in a peaceful way o Politics consists of negotiation bargaining and compromise War resolves conflict by other means the use of force o It exists when people are interdependent and have to make collective decisions Examples of collective decisions o Presidential election Commonalities o Can t have 2 policies simultaneously o Have to decide what the policy is going to be for everybody o Choices about alternatives conflicts Political conflict o Conflict isn t bad its human nature o We all have different Histories Traditions Experiences o Different backgrounds different opinions o Sometimes easy to resolve o Other times its more complex What are political institutions o Rules by which conflict is resolved o Examples of political institutions Electoral laws Congress Presidency Bureaucracy Judicial system Requires and elaborate set of institutions to resolve the conflict o Definition of government collective set of political institutions Deals with a lot of complex decisions Political Institutions o Goal is to channel and resolve conflict through an established set of procedures o Increase in complexity of conflict means and increase of complexity of institutions How can government resolve conflict through the use of institutions o Government has coercive power o Government has a monopoly on the legitimate use of force o If you break the law you go to jail o Government can enforce collective agreements because of its coercive power Simulation o Illustration of rational choice theory costs benefits possibilities of an outcome o 5 widget manufacturing firms o Each is his own company in competition with each other o Goal is to make most money o Can produce up to 20 widgets a month Take home points o Illustration of Hobbesian world Without government life would be solitary poor nasty brutish and short Do what s best for them even if it hurts the collectivity Thomas hobbes author of leviathan People are self interested o Each producer has incentives to produce as much as possible because that increases profits o But you also have incentives as a group to restrict your output o Sometimes individual incentives and group incentives come into conflict with each other o Individuals incentives undermine group s interests o Illustration of the collective action problem o Individual rationality leads to collective irrationality Leads to suboptimal outcome Restricting output is better for the group But individual firms have an incentive to produce as much as possible to maximize profit for themselves o Its hard for individuals to coordinate for the betterment of the group because of selfish interests Its hard for individuals to form a cartel and restrict output Is cartel behavior good o What s good for one group may not be good for others o Example if you re a consumer restricted supply is bad because it drives up prices o What s collectively good or bad depends on who you are In the face of a cartel what s a consumer to do o Boycott Easier to boycott a luxury than a necessity Tend to not be successful Another example of a collective action problem Boycotts won t work for all the same reasons why the widget cartel fell apart Consumers might agree that widgets cost too much and that they should reduce their demand Boycotting requires that individuals forego using widgets an inconvenience Can t trust that other group members are honoring the boycott Individual contributions to the boycott are small Boycotts like cartels will fail Collective action problems occur whenever o Compliance with the group s goal costs the individual something o Can t trust that other members of the group will cooperate o Since you can t trust others in the group then you re better off pursuing your own interest even if it hurts the collectivity o Especially true when each individual s contribution to the group s goal is small o Individual and group incentives conflict Lecture 3 Tuesday September 03 2013 In the news o President postpones Syrian strike Asks for congressional authorization for the use of force Is he required to do this NO What happens next Does he have the support of Congress o Some MCs remained unconvinced that air strikes are necessary o Others think air strikes don t go far enough o Fractions in the GOP o Fraction in the democratic party What happens if congress votes no and he strikes anyways o Potentially sets up constitutional crisis o Loses the confidence of congress What happens if congress votes no and he doesn t strike o Internationally undermines the credibility of the presidency o The world is watching especially rogue states Syrian crisis illustrates dangers of going public drawing the red line What s the end game Will air strikes resolve or escalate the crisis in Syria Will it end our involvement or just be the beginning Implications cont from Collective action problems occur whenever o Even when people agree with the group s goal they can t achieve it o Government exists to reduce collective action problems Individuals will rarely cooperate unless they are compelled to punished for non compliance o Question is What s best for the collectivity Recall that what s good or bad depends on whose perspective your considering Should government work to prevent collective action problems for businesses or consumers Who should government work for Ways to reduce the collective action problem in absence of government o Characteristics of the group Small Repeated interaction o Characteristics of the situation Non necessities Availability of substitutes o Sense of duty purposive benefit Believe in the goal o Provide selective benefits that can be withheld from non contributors Material benefits t shirt Solidary benefits friendship Purposive benefits something you believe in Massive collective action failure Housing crisis o Plenty of blame to go around o Common thread can be traced the logic of collective action irrational Exuberance Robert Shiller Housing Crisis How did it start o 911 hit and federal reserve bank lowers interest rates to stimulate an economic recovery Individuals but kept them too low for too long o Low interest rates increased purchasing power for buyers 100 000 8
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