L21 Economic Policy - Changes to the Calendar March 26...

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Changes to the Calendar March 26 Economic Policy March 28 Final group meeting March 31 Social Policy April 2 Foreign Policy April 4 Issues Group #1
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Economic Policy Lecture 21 March 26, 2008 Pol 1101
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Enron Why is the biggest corporate bankruptcy in American history a “non-story”? What went wrong? What should the role of government be in regulating economic affairs? Are economic affairs separate from social or political considerations?
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Public Policy Techniques Public policies ~ efforts to shape individual’s goals by rules that provide incentives and disincentives for different types of behavior. Promotional policies seek to promote desirable behaviors 1. They provide incentives—“carrots”—for private actors to engage in those behaviors. 2. Examples are licenses, grants, and contracts. Regulatory policies seek to dissuade individuals from engaging in undesirable behaviors 1. Regulatory policies provide punishments—“sticks”—to increase the costs to individuals engaging in those undesirable behaviors. 2. Examples include criminal and civil law, administrative regulation, and “sin” or excise taxes. Redistributive , or macroeconomic, techniques try to change individual behavior by changing overall economic context in which they act 1. Redistributive policies redistribute the economic resources of a society 2. The progressive income tax* is a key component in policies of redistribution * people with more disposable income pay a higher percentage in tax than those with less
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A Theory of Policy Conflict In the mid-1960s, Theodore Lowi argued that a proposed policy affects the political coalitions that will form to support and oppose it. A. Individuals calculate how they might be affected by a proposed policy, and the more they feel they will be affected, the more likely they are to get involved politically. 1. Individual perceptions of how a policy will affect them are crucial in determining extent of involvement 2. To the extent that you can predict how people will perceive they will be affected by a policy, you can predict who will get involved B. Different types of policy lead to different kinds of political conflict. 1. Because promotional policies highlight policy “winners” but not “losers,” they tend to have little or no apparent conflict 2. Because regulatory policies affect a relative small number of individuals, they tend to be dominated by interest group conflict 3. Redistributive policies , because they affect almost everyone, excite widespread conflicts between the “haves” and the “have-nots”
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Party politics and economic policy Disagreements over appropriate role of government in the economy are key differences between Democrats and Republicans today 1. Following Roosevelt , Democrats believe that federal government should play a significant role in the economy 2. Typified by Reagan , Republicans argue that the best economic policy is to limit governmental involvement in the market Republicans and Democrats have tried to change terms of debate on
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This note was uploaded on 04/07/2008 for the course POL 1101 taught by Professor White during the Spring '07 term at Georgia Institute of Technology.

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L21 Economic Policy - Changes to the Calendar March 26...

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