Econ 130 Public Policy

Econ 130 Public Policy - Econ 130 8/15/07 Test on Wed Bring...

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Econ 130 8/15/07 Test on Wed Bring blue book Bill O’reily Urged president of Virginia Tech to cancel a charity concert featuring Nas. He wanted to show that the marginal cost of holding this concert cost way more then to cancel it. He made his voice heard and increased the cost by garnering public attention Bombing in Northern Iraq Benefit to suicide bomber is meeting the virgins. The surge of bombings increased the cost of doing it in Baghdad. This decreased the cost of doing this outside of the country, since all attention is focused on Baghdad. Wall in Mexico Proposition to build a bigger wall to keep out immigrants. Santa Barbara Big problem with drunk driving. School started funding a drunk bus in order for students to get back safely. Taxis did not like this idea so they lobbied the city council to ban this. Problem with homelessness. Built a huge bathroom to attract homeless people away from residential areas. Tragedy of the Commons Common-pool problem : Private resource that gets held by a collective group of people (common-pool resource). Ex is the Beverly hill billies. Socially efficient income would be to exhaust this resource efficiently, to an essence maximize total maximum profit. Incentive for each person is to over-use the resource. Ex. Land in Ireland that animals grazed on was common property, the resource wasn’t used efficiently because everyone had the incentive to overuse it. Property rights ensure that a resource is used efficiently. Water is an example of this. Elected officials Why do we elect officials to make decision for us. Because it reduces the cost of making decisions. To make all decisions it would take an incredible amount of effort. The problem is that. An example of this is stocks. When companies go public they borrow money. Even though you own part of the company you still don’t have a say in the decisions. Classical principle agent problem . The board of directors act as agents to the principal (shareholders). Same thing happens in politics. The incentives between the agents and the principal are different.
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We have a marginal benefit of letting agents make decisions for us. We respond to how much we like the agents by voting. Ethics Reform Bill: due to earmarks. Plan is to decrease special interest for the agent. Fiscal Federalism : how do localities relate to states and how do states relate to the federal government. Inter- governmental loans is when the government gives money to the state. 2 ways to do this: o Block Grants : Money for a general purpose. o Earmarks : grants that are given for specific purposes. Used to be a case where earmarks where attached to bills with the use of a rider. People would get things passed by attaching a rider into a bill that would surely get passed. Ear mark vs. Block Grant.
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This note was uploaded on 04/14/2008 for the course ECON 130 taught by Professor Staff during the Spring '08 term at UCSD.

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Econ 130 Public Policy - Econ 130 8/15/07 Test on Wed Bring...

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