Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Lectures 18 to 20 Chapter 10 THE NEED FOR GOVERNMENT N.B. very different coverage to that in book; following EC2020 much more closely 1 Rationale or Functions (covered in whole EC3060 course) • Rule setter and referee: football analogy (Rule of Law, 3.1) 1 • Infrastructure (Chapter 4) • Establishing market: competition and information (several chapters) • Efficiency: public goods (Chapter 4) • Externalities and regulation (Chapter 5) • Distribution (1.2 and Chapters 7 and 8) 2 Levels (EU, G20, WTO) of Government (not covered at all in book) Global: Why? • Rules of ‘engagement’ for trade • Rules of engagement for international banking and investment • Safety/health standards: infections, viruses, airlines, food 2 • Externalities global in nature, for example, climate change • Migration, economic and political • Security and defence • Inequality: otherwise instability, migration • Who polices oceans and space? 3 • No world government though to enforce and regulate. • Only peer pressure • Legal force though at EU level 3 Public Expenditure (Table 10.3) Consumption (e.g. education, health) Legal system and police/army) • Education: socialization, equality, failure capital markets • Health: externalities (e.g. infectious diseases or costs to others), equity, informational failures 4 Transfers, Subsidies and Interest payments (e.g. pensions, sickness and unemployment benefits) • Distributional effects and security Investment (e.g. roads, energy, internet broadband, etc) • Effective cost-benefit analysis needed (see earlier) 4 Actual Size of Government: Economic and Political Factors (10.1A) 5 Trends and International Comparisons • Measure = PSE/GDP (Table 10.3) • Transfers? All levels of Government? What Causes PSE/GDP to vary? • Long-term historical picture (see 10.1.A, especially Table 10.1)) • Growth in last 40 Years ‘Legitimate’ Causes • Changes in PSE AND changes in GDP • Wagner’s ‘law’ (pp 744 to 747): this arises from genuine demand factors. In other words voters want increase to take place • Baumol’s ‘disease’ (not covered in book) 6 • Demography/age distribution, female labour force participation • Trade (skip) ‘Political’/Manipulative • Down’s ‘paradox’: role of interest groups • Civil servants and bureaucracy • Electoral cycle • Fiscal illusion, partly arising from new revenue sources (book very confused on this) Checks (10.1D) • Constitutional • Overrides day to day electoral politics 7 • How is Constitution drawn up though: best if it applies only from several years after written? • Ulysses and sirens ‘story’ (p. 762). Applies also to hyperbolic discounting • Free press (FoI), Treasuries, Auditors • Fiscal Councils • In future, more EU/IMF surveillance. 5 Broad ‘Philosophical’ Approaches (10.1.C) • Hobbes on nature of people and government. A Leviathan or benevolent Dictator needed. • Power absolute, permanent and hereditary! • Driving concern security and peace 8 • Hobbes and Book of Samuel I (p. 758) • Relevant in Syria, Libya, Iraq? • Locke: emphasis on individual freedom here • People basically civilized rather than anarchic and murderous Section 10.2, and 10.3.A and 10.3.B: Skip as covered in earlier chapter • ‘Right’ v ‘Left’ Debate (10.3C) • How is each side defined? Is it relevant today though? Or does it matter? • Terms still used though. Do you find them helpful? 9 5 Conclusion • Is there an optimal size of Government? • Government a major ‘player’ in all societies, especially when a crisis • Government and competitiveness of nations • Different attitudes to role of state, both over time and between countries • Huge global interdependency implies need for global governance. Neglected in book mostly • Most advanced is at EU level. US in past a series of separate states also 10