350LEC3

The Role of Government in a Free Society: 

The Role of Government in a Free Society Center on the Shortfalls of the Free Enterprise System Public Sector Tools Taxation Spending Regulation Provision of Services

Legal Foundations - Establishing the Rules to Conduct Business: 

Legal Foundations - Establishing the Rules to Conduct Business Legal Status of Business Standards of Weights and Measures Establishes “Rules of the Game” Shortfalls of Free Enterprise System Excessive Concentration of Some Industries Anti-Trust Laws

Externalities: 

Externalities A cost or benefit of an activity which falls on others not directly involved “Third Party Effects” Can Free Enterprise System Take These into Account? Role for Government

Public Goods: 

Public Goods What is a Public Good?

Public Goods: 

Public Goods A good which we enjoy in common and which left to its own, the free enterprise system would not provide in socially desirable amounts Example?

Characteristics of Public Goods: 

Characteristics of Public Goods Non-exclusion Difficult to exclude individuals from consumption if do not pay - Free Rider Problem Joint Supply Consumption by one individual does not reduce amount available for others MC of adding an additional consumer is zero or very low

Why Should Government Get Involved?: 

Why Should Government Get Involved? Non-exclusion - Free rider problem - Private provision difficult Joint Supply - P=MC=0 Good is produced in less than optimal amounts

Income Inequality: 

Income Inequality Incentives of free enterprise system result in income inequality Public sector takes on role of adjusting distribution of income Income inequality Vs Inequality of economic opportunity

Stabilization and Promotion of Economic Growth: 

Stabilization and Promotion of Economic Growth Problem - Cyclical fluctuations in output and employment Goals of government Promote economic growth Stabilize prices Reduce unemployment Fiscal Policy Monetary Policy

Problems of Government Involvement in the Economy: 

Problems of Government Involvement in the Economy Unintended Effects - Third Party Effects of Government Special Interests Large gains to a few Small losses to many Bureaucrats - jobs, power, money Politicians - re-election

Problems of Government Involvement in the Economy: 

Problems of Government Involvement in the Economy Benefits First - Cost Later Programs Short time horizon - next election Inefficiency in the Public Sector Incentives to be efficient indirect Hard to measure output Bureaucratic budget maximization Bureaucrats - special interest

Problems of Government Involvement in the Economy: 

Problems of Government Involvement in the Economy One Size Fits All Programs Win - Win Vs Win-Lose Voluntary Exchange Vs Coercion Blunt Instrument

Cal Marsella: 

Cal Marsella General Manager, Denver Regional Transportation District Interview in Mass Transit, Sept/Oct, 1999

Slide14: 

“Quite honestly, I think the preservation of the organization emasculates the real mission, which is moving people. You know, the feeling seems to be, if we get around to transit services, that's okay. But really, we're going to protect the organization, protect the jobs, protect the infrastructure. The mission of what we are supposed to do -- provide transportation solutions for people -- becomes an afterthought."  

Public Sector Vs Private Sector: 

Public Sector Vs Private Sector Private Sector - Problems - Need for government Public Sector - Problems of Government Involvement Do we need more government or less? What do you think?

Structure of Government In the US: 

Structure of Government In the US http//www.uic.edu/~amp Chapter 3 Executive Legislative Judicial

State and Local Government: 

State and Local Government Fiscal federalism - Federal grants in aid Unfunded Mandates Overlapping Jurisdictions Consolidation Vs “Voting With Your Feet” Devolution Movement

The Public Policy Process: 

The Public Policy Process Where Public Sector Programs are Formulated, Evaluated and Implemented Political Process Policy Formulation Process Public Sector Response

Political Process: 

Political Process Fact Gathering and Issue Shaping Interest Groups and Lobbying Public Opinion and Pressure Political Parties

Policy Formulation Process: 

Policy Formulation Process Agenda Setting Legislative Process Pressure Points Implementation

Public Sector Response: 

Public Sector Response Regulation Spending Taxation Provision of Public Services

Public Policy: 

Public Policy Does the results of the public policy process lead to the “Will of the People” being expressed in public policy?

Strategies for Business to Impact the Political Process: 

Strategies for Business to Impact the Political Process Should Business be involved in influencing the political process? Is this a legitimate role for business?

Strategies for Impacting the Political Process: 

Strategies for Impacting the Political Process Fact Gathering and Issue Shaping Form Political Coalitions Washington Representatives Lobbying Public Opinion and Pressure Advocacy Advertising Form Political Action Committee

Political Action Committees: 

Political Action Committees Outgrowth of Watergate and other scandals Federal Election Campaign Act of 1971 and later amendments Corporations - prohibited from contributing to an individual candidate Corporations can setup and administer PAC’s

PAC’s: 

PAC’s First PAC - COPE -AFL-CIO 1955 Have proliferated after Campaign Reform

PAC Limits: 

PAC Limits $5,000 per election per candidate Individual can contribute max of $5,000 to a PAC per election Individual can contribute a max of $2,000 per election to each candidate for federal office

Campaign Contribution Loopholes: 

Campaign Contribution Loopholes Independent Expenditures - Independent of the candidate’s campaign Can be made by PAC’s, individuals, or other groups Ads cannot be made with cooperation or consent of candidate or campaign

Loopholes: 

Loopholes Bundling - collect donations from many individuals or groups - can exceed $5,000 Soft money - party building activities Not spent for a particular candidate No limit Corporate Contributions Easily abused - Clinton 1996 Campaign Wealthy Candidates - Ross Perot

Issue Advocacy: 

Issue Advocacy Buckley v. Valeo Magic words “vote for”, “elect”, “support”, “vote against”, “reject”, “defeat”, “cast your ballot for”, “Smith for Congress” Without magic words - add becomes issue ad No limit on issue ads

Are Campaign Contributions Bribes?: 

Are Campaign Contributions Bribes? What is the difference between a campaign contribution and a bribe?

Campaign Contributions Vs Bribes: 

Campaign Contributions Vs Bribes Quid Pro Quo Money before the activity

Proposals for Reform: 

Proposals for Reform Federal Financing of Elections Campaign Spending Limitations Spending Limitations on Radio & TV or Free TV Time Deregulation

Bipartisan Campaign Reform Act of 2002: 

Bipartisan Campaign Reform Act of 2002 McCain - Fiengold bill in Senate McCain – Republican from Arizona Fiengold – Democrat from Wisconson Shays –Meehan in House Shays – Republican, Meehan Democrat Major Provisions upheld by US Supreme Court in Dec 2003

BCRA of 2002Soft Money: 

BCRA of 2002 Soft Money Prohibits National parties from spending, soliciting, receiving or directing soft money to others State and Local Party Committees- Cannot use soft money to engage in “federal election activities”

BCRA of 2002Issue Ads: 

BCRA of 2002 Issue Ads Do not say “Vote For”, “Vote Against” etc. Call Senator ***** and tell him he is wrong” If ad occurs 60 days before general election or 30 days before primary – Electioneering Communication

Electioneering Communications: 

Electioneering Communications Any broadcast, cable or satellite communication Refers to a clearly identified candidate for federal office Occurs 60 days before general election or 30 days before primary

Electioneering Communications: 

Electioneering Communications Corporations and Unions cannot pay for such ads Can only be paid for with contributions from individual citizens or PACS (hard money)

Millionaire Opponent Provisions: 

Millionaire Opponent Provisions Increases contribution limits for candidates facing self-financed opponents spending large amounts of personal wealth

Foreign Money Ban Strengthened: 

Foreign Money Ban Strengthened Oversees Contributions - No contributions from those not eligible to vote in US elections Applies to any committee of a national or state political party, any expenditure for state, federal or local election, including electioneering communications

Sponsors of Ads Must Identify Themselves: 

Sponsors of Ads Must Identify Themselves Requires candidate to include statement that he or she has approved communication Requires address, telephone number, internet address, of persons other than candidates who purchase political advertising

Campaign Finance Today: 

Campaign Finance Today Federal Election Commission http://www.fec.gov/

American Trucking Associations and the Motor Carrier Act of 1980: 

American Trucking Associations and the Motor Carrier Act of 1980 Government Regulation Prior to Motor Carrier Act Legalized price fixing Entry and exit regulated

Carter Administration: 

Carter Administration Appointed supporters of deregulation to the ICC - creeping deregulation Eased Entry Restrictions

What is the ATA?: 

What is the ATA? National Conglomeration of 50 States, DC and 12 independent conferences 135 member executive committee 450 member board of directors

ATA Actions: 

ATA Actions Challenged “Creeping Deregulation” in court Tried to prevent any type of deregulation from being introduced in Congress

Events: 

Events Deregulation Movement Growing in Congress 180 degree turn - Introduced own bill 1979 Carter - Kennedy Bill Introduced

Events: 

Events Senate Hearings - Head of Committee, Sen Howard Cannon - bribed by Teamsters ATA Opposed Bill ATA Argued for continuation of anti-trust exemption for “Collective Ratemaking”

ATA Actions: 

ATA Actions Film “If it works why fix it” Reports “The Bare Facts About Rate Bureaus” “Countdown to Crisis: The Threat to the Motor Carrier Rate Making System” Politics - Support for John Connally for president

ATA Actions: 

ATA Actions Split in Ranks - Several Conferences Advocated Deregulation Lobbied for Commission to study Collective Ratemaking 180 degree turn - supported bill in House Motor Carrier Act of 1980 passed into law

Post Motor Carrier Act Developments: 

Post Motor Carrier Act Developments Motor Carrier Ratemaking Commission voted against anti-trust immunity Congress passed heavy increases in truck taxes ATA held in low regard

Why did the ATA Fail?: 

Why did the ATA Fail?