lecture3b - Political Economy 1 How do government decisions...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Political Economy 1. How do government decisions actually get made? a. Stiglitz (Four Fallacies) points out that the government has powers that private firms do not have. b. One interpretation is that we collectively give them these powers so that we can achieve collective goals like social insurance. i. This is a normative interpretation. It describes how the world should be. Lo, we find that it is that way. c. Another interpretation is that a bunch of people in society gang up on everybody else through the instrument of the state. i. This is a positive interpretation. It describes how the world is, without necessarily describing its goodness or badness. d. In public economics, we try to be careful to distinguish descriptions of how the world should be (normative statements) from statements of how the world is (positive statements). e. The question of how government decisions actually get made is a question of positive economics. 2. Democracy and the Median voter a. The median of a distribution is the point in a distribution where half the weight is above the point and half the weight is below. b.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/13/2009 for the course ECONOMICS econ 104 taught by Professor Krishnapendakur during the Spring '09 term at Simon Fraser.

Page1 / 2

lecture3b - Political Economy 1 How do government decisions...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online