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34 Cards in this Set
- Front
- Back
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Distributive Policy
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Grants and programs geared towards specific groups, communities, and/or industries.
• There are winners but no apparent losers |
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Redistributive Policy
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One (social class) gain’s from another’s loss
• Redistributes benefits across income classes • Examples. Income tax rates, social welfare programs |
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Regulatory Policy
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Government restriction of choice
• Social regulations – Ban on smoking, Alcohol Restrictions • Business Regulations – Protective and Competitive • The group who pays the closest attention to regulation is the who being regulated |
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Public Policy
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– Laws, Regulations, and other rules made by governments
• Many different definitions of public policy • All citizens are bound by it, Made for the collective good, and oriented toward a goal or desired state to • (correct a problem, restrict, influence, or control) |
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Public Policy Output vs. Outcome
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Output - Actual Policy
Outcome - Result of Policy |
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Government Policy as a Form of Coercion
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• Two main institutions determine “Who Gets What” in society
o The Market and The government - THe government is the only standing body that is able to perform coercion of citizens |
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Market Failures
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• The market fails to produce a certain commodity with an uneven supply and demand
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Monopoly (Market Failure)
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1) Monopoly – One seller
o Lack of Competitive market o Barriers to entry o Can set prices o Ex. Local Phone Service, Power Company, Cable TV o Government Intervention – Antitrust laws, Regulate the private monopolies, establish a public monopoly |
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Externality (Market Failure)
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Third Part Effect or Neighborhood Effect
o Transaction between buyer and seller effects a third party. Can include community, neighborhood, etc.) o Ex. Pollution by industries, Loud Bar, Driving on a congested Freeway o Positive Externalities - May merit government policy to encourage • Upgrading properties (Raise value of surrounding homes) • Scientific Research (Cure Diseases, Better Technology) |
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Lack of Information (Market Failure)
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o Perfect Competition in a market requires perfect information for both parties
o Information should be shared to the consumers and misinformation to the consumers is high o Some products and services might be too complex or difficult to understand for the average consumer o Government Intervention – Consumer Product Safety Laws, Disclosure of defects when selling homes, SEC (Regulating Financial Market), Surgeon General warning, Ingredient labeling on food |
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Public Good (Market Failure)
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o Two Characteristics
• Non-Excludable Ownership – not feasible to exclude others from using the good. (Ex. Police, Fire Department, Military) • Joint Consumption – One person’s consumption of the good doesn’t prevent or reduce someone ele’s o Private Market Cannot Provide Public Goods • Cannot put a price on certain goods (Ex. Police and Fire Department Help) • Government is needed to provide goods that are nonexcludable, nonrivalrous, and or both |
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Market Failure Justification of Government Intervention
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• Provides a consistent set of criteria for when government action should get involved
• Puts burden of proof on those who want government to act |
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Incentive-Based Policies
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• Set a goal and use incentives to entice people to move toward that goal with (Taxes, Fees, Rewards)
• Creates innovation and pressure to do more then the “norm” |
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Command-and-Control Policies
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• Traditional government regulation, where they tell what people and companies can and cannot do
• Set standards, fine violators • Ban Products • Establishes Government agencies to enforce laws • Restrict choice |
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Effluent Charges – for Polluters
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• Charge varies based on seriousness of effluent and degree of progress needed, ideally they will be able to charge actual externality charge
• Ex. Pollution Tax • Merits – Allows different choices by the different firms, Encourages technological innovation, charges are based on how much pollutant you produce |
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Cap and Trade or Emission Trading
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• Tradable emission permits
• Set a maximum amount of pollutants • Let a firm buy the “right to pollute” from other firms that are below their necessary level of reductions |
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Work-Place Safety Policies
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• Lasissez-Faire Approach – No Intervention
• Command and Control Approach – providing restrictions that specify what is safe and what is not • Incentive Approach – Tax on workplace injuries |
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Occupational Licensing
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• Doctors, Lawyers
• Established Traditional regulatory agencies • Issued by the government telling who is and is not allowed to practice a certain profession |
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Consumer Products Safety Commission
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• Regulates products to ensure their safety
• No Joint consumption but NON excludable |
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Paternalistic Policies – Thompson
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• Imposed by the political majority on itself for the common good
o Ex. Seat-belt Laws • Places restriction that prevents or averts harm to a consumer • Impairment as a Justification – protecting the consumers is the ultimate goal • Compulsory Medical Treatment – Does the government have to the right to administer drugs to citizens without their consent, and do citizens have the right to refuse unwanted medical treatment • Welfare-in-cash vs. Welfare-in-Kind – Does the government have the right to tell you what you should be buying even though they are administering government (taxpayer) money. |
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Food and Drug Administration or FDA (Paternalistic)?
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Drug companies are pressured to make profit which can lead too rushing to put out drugs
• It might be seen as paternalistic because it takes approaches to ensure the safety of the consumers • Market Failures (Lack of Information) |
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Direct-to-Consumer Drug Advertising
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• Set of rules administered by the FDA to regulate what is needed to placed in advertisements of drugs
• Chan – o Ads are harmful . .. Led to lack of information, over medication, raises the cost of healthcare without benefits and can lead to false advertising o However, can inform consumers about serious medical conditions, provide different consumer options |
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Market-Based Approach
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by providing incentives to companies for abiding by government regulations, drives for competition, lower prices, and innovation
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Who Protects the Consumers in a Market-Based Approach?
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The Private Sector
o Companies want to protect their reputation o Private Regulatory agencies o Voluntary Regulatory Agencies |
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Milton Friedman
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• Libertarian – Liberty
• Free market allows for us to express preference without conformity • Voluntary and cooperative action is better then coercion by government • View of Government o Maintain order o Define property rights o Enforce contracts o Settle Disputes o Punish Violators o Establish monetary system |
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The Advantage of the market is that “it permits unanimity without conformity” (Friedman)
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• The role of the market is that it is a system pf proportional representation
• The market permits freedom of choice without coercion |
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Barking Cat Theory of government regulatory agencies (Friedman)
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• That reformers often fail to recognize social, political, and economic pressures on the Men in charge of the FDA and other government agencies
• That it is extremely rare to find someone who works in those agencies that are not effected by those pressures, rare as a “Barking Cat” |
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“Leave us free to choose what chances we want to take with our own lives” (Friedman)
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• Friedman wants the government to allow them to makes choices on their own with the government involvement left to inform us of the dangers that might ensue
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“The real problem is not eliminating pollution, but trying to establish arrangements that will yield the right amount of pollution” (Friedman)
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• We sacrifice more then we can by trying to eliminate pollution
• What we see as pollution can be pleasure to someone else |
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“The Market is a Prison” (Charles Lindblom)
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of Policy!
• The market is an inducement system, and we cannot expect change in companies without them being induced • That the market imprisons the policy-making process because it regulates the growth and direction on the country • Many kinds of reforms automatically negatively effect the market. o EX. Raising minimum wage can ultimately lead to more unemployment |
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“Automatic punishing recoil” (Lindblom)
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• There are no automatic policies to hinder or curtail change
• That reform ultimately hinders profitability and business expansion |
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“What is often overlooked…is the degree to which the powers of governing need to be deployed to restrain private sector threats to well-being” (Neiman)
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• Private sector has the same ability to oppress consumers. They are profit driven and can fall victim to rushing products, misinforming consumers, just to obtain a quick profit instead of looking at long term effects
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“Hitler did not become the supreme ruler of the Nazi State by first taking over the health department” (Neiman)
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• Dictatorships do not stem from social reform, rather from seizing control from their opposition and gaining control over the military and police
• That by placing immense fear in change is a conservative tactic to maintain the status quo and make government action harder |
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• “What’s responsible for the new fear of eating? . . . I blame Milton Friedman” (Krugman)
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o Krugman does not directly blame Friedman for a tainted and corrupt food regulation system, but argues that the ideology that detests any form of government regulation is dangerous and counterproductive. That food market wants to be regulated to ensure the safety of their products to consumers
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