POSC 100 midterm 1

"This is important because..."

1.An economic system where the government owns the means of production
2.No private ownership of any means of production. Land, tools, raw materials, laborers, all working for/owned by the government.
3.A goal of socialism is to evenly distribute everything. The government will manage the distribution.
4.The issues:
a.Incentives to work and innovate are removed
b.Economic decisions subordinated to political considerations
i.Loyalty over merit for the citizenry
ii.Central planning decisions
c.Elimination of the most productive elements of society
d.Inequality not unique to capitalism

a.Never talking about the complete and total collection of the private sphere.
b.You are essentially talking about capitalism, but of a different flavor. That flavor: Very high tax over the wealth of the means of production and the benefits of that production. That tax money provides collective goods
i.“Sometimes cited as examples of successful socialism- are not actually socialist at all, because they do not feature government ownership of the means of production, and in many ways have freer markets than most other western nations.”

1.An economic system where the means of production are owned by private, non-governmental entities.
2.Everything is privately owned, not by the government.
a.Means of production:
i.Raw materials
ii.Wood, oil,
iii.Tools
iv.Labor
3.Capitalism requires government intervention in the economy
a.Not the absence of government, just because the absence of government in means of production does mean there is none. We need a government to do the robust work of capitalism. We need government of a particular sort, but that doesn’t mean there is none.

1."The fine tuned liberal democracy hypothesis: as a tribal primates, human beings are unsuited for life in large, diverse secular democracies, unless you get certain settings finely adjusted to make possible the development of stable political life. This seems to be what the founding fathers believed. Jefferson, Madison and the rest of those eighteenth-century deists clearly did think that designing a constitution was like designing a giant clock, a clock that might run forever if they chose the right springs and gears."
a.The idea that we enjoy liberal democracy is based on things that were once
constant are now variable. If we accept this, then of course there will be
instability
b.Certain things must be true for this technology to work
c.“The past is a foreign country; they do things differently there.” - L.P. Hartley

i.The Cause
1.Collective goods
a.A class of objects or services with an interesting set of characteristics:
i.It’s a good
ii.It is collective (We cannot produce by ourselves. There must be collaboration and collective action)
iii.The issues come up because of this one. Collective goods are difficult to produce and we cannot produce alone. The problem: Non-Excludability. Collective goods make us all better off, but once they exist and are part of the world, everybody gets to consume it. Even if they did not take part in the production of it.
b.Examples: Clean air, drinking water, national defense.
c.Each one of these things requires sacrifice. We pay the cost (usually tax money). The problem is people don’t want to pay costs. People are rational. If you don’t pay taxes the government won’t exclude you specifically from national defense. The question: Why pay the cost when we get the benefit?
ii.Solutions
1.Selective incentives (carrots)
a.Government will say if you do your part, we’ll give you something good, something selective (if you do what they want). Ex: Tax break on electric vehicle. The problem with this approach: its expensive. The other approach is to give punishment.
2.Punishments (sticks)
a.“Pay your taxes or go to jail.” The government has a monopoly on punishment.
iii.We have the government to help us solve a class of problems when we live collectively.

The principal–agent problem refers to the conflict in interests and priorities that arises when one person or entity (the "agent") take actions on behalf of another person or entity (the "principal").[1] The problem worsens in situations when there is a greater discrepancy of interests and information asymmetry between the principal and agent, as well as when the principal lacks the means to punish the agent.[2] The deviation from the principal's interest by the agent is called "agency costs".[3]

1.Types
a.Representative
i.Principle-agent problem
1.You are the person who is vested with the responsibility and authority. We often times choose to delegate this to some sort of agency. This is like a restaurant. One person can’t do everything so you make a choice as a principle and trust people to take out those functions on your behalf (waiters, cooks, etc).
2.Your problem: How can you make sure the people you trust with those responsibilities are doing that job well.
3.Principle = citizen
4.Agent = representative
5.Solution?
a.Elections
i.These people do what we want them to, otherwise we’ll fire them. These elections are the democratic solution to solving the principle agent problem.
ii.This forces the elected officials to always think about doing well otherwise they lose their position.
b.Direct
i.What we have in CA where we can vote directly on laws and constitutional amendments (ca constitution).

a.Proposition 1
i.On the 2018 ballot. Most people read the title (Housing programs and Veterans’ loans bonds) and did not read into it any further. Nobody in class knew if it passed or not.
ii.We need to ask who these entities that are getting this money. There’s a lot the state is asking from us. We need to know a lot.