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Logrolling - PowerPoint PPT Presentation

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Logrolling. With simple majority voting, voters can’t register the strength of their (or their constituents’) preferences. Logrolling allows people to trade votes thereby partially revealing the strength of their preferences.

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Presentation Transcript
Logrolling l.jpg

  • With simple majority voting, voters can’t register the strength of their (or their constituents’) preferences.

  • Logrolling allows people to trade votes thereby partially revealing the strength of their preferences.

    • Vote for something to which you’re not strongly opposed in return for support for your pet project.

© Terrel Gallaway 2003

Logrolling pros cons l.jpg

Voluntary trade can lead to increased efficiency and a stable equilibrium.

(You would expect a net gain for both traders.)

Compromise is an essential part of governing

May accomaodate pork.

The gains to powerful special-interest groups might not ballance the loss to others.

Vote trading may reflect relative power and not just strength of preferences.

Logrolling Pros Cons

© Terrel Gallaway 2003

Improving general welfare l.jpg
Improving General Welfare stable equilibrium.

© Terrel Gallaway 2003

Lowering general welfare l.jpg
Lowering General Welfare stable equilibrium.

© Terrel Gallaway 2003

Arrows impossibility theorem l.jpg
Arrows’ Impossibility Theorem stable equilibrium.

  • Is there any acceptable way of translating individual preferences into social preferences?

  • Arrow suggested six criteria which a social decision-making rule should satisfy.

  • Turns out that there is no guarantee any decision-making rule can satisfy these criteria.

© Terrel Gallaway 2003

Arrow s criteria l.jpg
Arrow’s Criteria: stable equilibrium.

  • 1) Should produce a decision whatever voters’ preferences.

  • 2) Should rank all possible choices.

  • 3) Should be responsive to individuals’ preferences.

  • 4) Should be consistent (transitive).

  • 5) Choices should be independent from irrelevant alternatives.

  • 6) There should be no dictatorship.

© Terrel Gallaway 2003

Representative democracy l.jpg
Representative Democracy stable equilibrium.

  • Economists’ models are based on maximizing.

  • Voters seek to maximize Utility

  • Politicians seek to maximize votes.

    • If voters’ preferences are signal-peaked and uni-dimensional, the vote-maximizing politician will adopt the agenda of the median voter.

      • Two-party systems will be stable near the center.

      • Direct referenda and a representative system will yield the same results.

© Terrel Gallaway 2003

Public employees l.jpg
Public Employees stable equilibrium.

  • The salaries, prestige, office size, etc. of bureaucrats may depend on the size of their bureaucracies.

  • Maximize size of bureaucracy where TB = TC, rather than maximizing net benefits where MB = MC.

  • Results in an inefficiently large bureaucracy.

  • Analogous to revenue maximizer vs. profit maximizer.

© Terrel Gallaway 2003

Special interest groups l.jpg
Special Interest Groups stable equilibrium.

  • May be based on:

    • capital versus labor interests, career fields, size of income, age, religion, race, gender, region, etc.

  • Like Bureaucrats, they may have disproportionate power because they are well organized and armed with information. (there are no organizations like the Non-Truckers of America.)

© Terrel Gallaway 2003

Controlling size of government l.jpg
Controlling Size of Government stable equilibrium.

  • Large size of government does not necessarily mean it is too large.

  • Balanced Budget Amendment?

    • Most economists, liberal and conservative, think its a bad idea.

      • More politically acceptable than cutting spending or raising taxes; but in itself, does nothing.

      • Would have to be based on forecasts which might be wrong.

      • Doesn’t define outlays and receipts. Creative accounting could be used to circumvent the law.

      • Would we throw congress in jail ? Let the courts determine the budget?

© Terrel Gallaway 2003