PPOLS 206 1st Edition Lecture 4 Outline I Current Events a President postpones the Syrian strike Are there political consequences i House members might say no since they are facing immediate reelection ii Congress maybe yes because only 1 3 of them have to deal with reelection iii Dangers of going public so impulsively what is the end game Would it help end it all quickly or will it just be the beginning II Collective Action Problems Recap a Where people are trying to achieve a group goal at the price of the individual III Ways to Reduce Collective Action without Government Involvement a Characteristics of the group characteristics of the situation IV Housing Crisis Collective Action Failure a Irrational Exuberance b 9 11 hit and Federal Reserve Bank lowers interest rates to stimulate economic recovery c Real estate agents and lenders were also to blame d Wall street and ratings agencies i Wall street did not care if they were using regression models to minimize risk found international investors e Politicians Lecture 4 Outline I Current Events II Summary of Housing Crisis a When this crashed homeowners owed way more than what their home was worth and were underwater since they had liquidated those assets i Neighbors have stopped paying causing other neighbors to do b Rational Choice Theory i Statement of how the world works and how people behave III Goods a Commodities things or assets that we all get even if we didn t help in its creation Not everyone pays taxes IV Major Role of Government a Private sector wont produce because it is very expensive to fund a toll road or something that others have had no part in Why should I share it mentality V Privatization i Roads and prisons are good examples ii Need to make incentive so that private firms see a profit in it for themselves iii It can compromise other qualities that we value though VI Problems with the Rules of Government VII Colonial Experience a Declaration of Independence i Act of political persuasion b Articles of Confederation 1 There was an inherent distrust of a strong central government Lecture 4 Notes I Current Events a Senate Foreign Relations Committee authorizes use of force in Syria i However there is a 60 day limit and prohibits ground forces Support in the Senate is split ii President still faces opposition in the house II Summary of Housing Crisis a During the period before the crisis people cashed in equity on homes by refinancing b When this crashed homeowners owed way more than what their home was worth and were underwater since they had liquidated those assets i Neighbors have stopped paying causing other neighbors to do the same depreciating the value of the whole neighborhood ii Trickled down everywhere and affected everyone c Rational Choice Theory i Statement of how the world works and how people behave 1 Individuals have goals 2 Options evaluated based on goals 3 Choose the option with the most benefit and least costs 4 Utility maximizers ii Problem Public Goods shared 1 In other words with a pubic good everyone gets to benefit whether they played a part in its funding or creation or not III Goods a Commodities things or assets that we all get even if we didn t help in its creation Not everyone pays taxes b Roads bridges damns security police IV V VI VII VIII c Pollution crime terrorism war economic recession d Private goods consumption of the good costs the individual something Something like eating out at restaurants private education cell phones and laptops Major Role of Government a Supply of public goods b Because of the collective action program public goods will always be under produced i These are scarce c Private sector wont produce because it is very expensive to fund a toll road or something that others have had no part in Why should I share it mentality Government Can a Produce public goods b Impose certain rules so public good is realized c Contracts and argument enforcement i Coercive power Privatization a Sometimes the government is inefficient in getting things done so there are private firms who are given an incentive to get something done quickly and more cheaply i Roads and prisons are good examples ii Need to make incentive so that private firms see a profit in it for themselves iii It can compromise other qualities that we value though b Blackwater USA i Who was in charge Problems with the Rules of Government a Rules are created by people and people are imperfect thereby making rules falliable too b Rules control the outcome of the situation we can see this clearly in the constitution of the United States Colonial Experience a Each colony had a charter working with England Provide for direct rule by king but allowed for self governing b Property owning males were elected as representatives c Govenors appointed by the King d There became a need for a confederacy by 18th century i French and Indian War ii British taxation iii Colonists began to revolt e Declaration of Independence i Act of political persuasion ii Promotes 3 powerful principles f 1 Life liberty and the pursuit of happiness 2 Power comes from the consent of the governed 3 Possess the right to form a revolution Articles of Confederation i All national power in unicameral congress ii Commander in chief with limited power iii Super majority required 1 There was an inherent distrust of a strong central government 2 Government could ask for money but could not compel people to do so 3 Could raise an army navy and enter into treaties 4 Could not regulate interstate commerce and raise taxes iv No national currency v Economic depression Shay s Rebellion and people were afraid of a Civil War