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A Political Mystery . . . U.S . senator from a Northwestern state votes for a bill that will increase the price of lumber grown in the United States. Lumber is used to build new homes . Experts agree that passing this bill will increase the price of new homes .
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A Political Mystery . . . • U.S. senator from a Northwestern state votes for a bill that will increase the price of lumber grown in the United States. • Lumber is used to build new homes. • Experts agree that passing this bill will increase the price of new homes. • 1,000 timber producers • 1,000,000 potential new home buyers • Bill would add about $100 to cost of each new home.
A Political Mystery . . . • Senators from the Midwest oppose the billbut it passes eventually. • Why would a senator from the Northwest— along with a majority of the Senate—knowingly pass a bill that will increase the price of new homes?
A Political Mystery . . . • Who would benefit from this law? • Who would be harmed?
Public Choice Theory 101 • Elected officials • Most elected officials are responsible individuals who want to serve their constituents. • Most elected officials also want to be re-elected—so that they may continue to serve their constituents. • Voters • Most voters are busy with their private lives. They do not choose to spend much time and energy following the daily work of elected officials or government administrators and employees. • Voters are often uninterested in government policies and uninformed about candidates or propositions in an election.
Public Choice Theory 101 • Campaigns • The cost of running for office is too high for most elected officials to pay personally. • People seeking elected office rely on contributions from voters and groups with special interests in particular government policies. • Many voters join special-interest groups to support people seeking elected office who are in line with their special concerns. Examples of special-interest groups: the elderly; business, labor, and agricultural groups; teachers and educational organizations; environmental groups; religious groups; and people receiving various kinds of assistance payments or programs from government agencies.
Government Failure • Occurs when the costs of a government intervention outweigh the benefits of the government intervention. • Example of special-interest effect: • Lobbying by sugar manufacturers might result in a subsidy for the production of sugar that raises the price paid by consumers. • The cost of this policy, shared by all citizens, is barely noticed by individuals. • Benefits are shared by the special-interest group (sugar manufacturers) who have a strong incentive to perpetuate the policy by further lobbying.
Costs and Benefits of Voting: Election 1 What are total benefits of Option A? What are total benefits of Option B? If all five groups have equal numbers of voters, will Option A or B be chosen?
Costs and Benefits of Voting:Election 2 Why did Option B defeatOption A? Did Election 2 result in the most social (overall) benefit?
Costs and Benefits of Voting: Optional Election Why did Option A defeat Option B? Did this election result in the most social (overall) benefit?
Logrolling • Logrolling is the trading of favors, such as reciprocal voting among legislative members to ensure action on issues of interest to them and their constituents • A vote trade is like a legislative IOU. When a legislator needs a few more votes to pass a bill, she may give another legislator an IOU: she will vote for another piece of legislation in return for a vote on her own bill.
