ch. 14_Notes - Since 29 people expect the gov. to...

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Since ’29 people expect the gov. to intervene. After 9/11 feds implemented safety airlines were afraid to due to cost. Public policy creates incentives to follow certain behavior. Pre-reqs for market economy: 1. Establishing law and order. 2. Defining rules of property (can’t enjoy property if not enforced). Enforce contracts, some things can’t be sold, set market standards and measurements, public goods help business but none would do it on its own. Create a labor market through education and low welfare, punish undesireable externalities, allow competition not monopolies. Gov. solves market failures like incomplete information. Politicans sometimes intervene for their own purposes. (608) West Virginia example may share same end but not same means. Gov. encourages private property through eminent domain payments and homesteading allowing squatters who bettered land to keep it. (611) below market interest rates for loans. Throuh 1800’s federal gov. big subsidizer of business. Before govt. subsidized roads but now mass transit. (612) subsidies can be used to buy off opposition. Business is promoted through prok barrel spending too. Logrolling lets everyone bring pork to their district. 1800s some
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ch. 14_Notes - Since 29 people expect the gov. to...

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