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.
– Vote for something to which you’re not
strongly opposed in return for support for
your pet project.
© Terrel Gallaway 2003
1
Logrolling
Pros
Cons
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.
© Terrel Gallaway 2003
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Improving General Welfare
Project
School:
Total
Sue Net. Ben
-11
19
Bill
40
Ed
-10
Museum:
-8
30
-6
16
Park:
-24
-12
80
44
© Terrel Gallaway 2003
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Lowering General Welfare
Bill
40
Ed
-22
Total
Sue Net. Ben
-21
-3
Museum:
-8
30
-24
-2
Park:
-54
-28
80
-2
Project
School:
© Terrel Gallaway 2003
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Arrows’ Impossibility Theorem
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
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Arrow’s Criteria:
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
6
Representative Democracy
Economists’ models are based on maximizing.
Voters seek to maximize Utility
Politicians seek to maximize votes.
– If voters’ preferences are signal-peaked and unidimensional, 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
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Public Employees
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
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Special Interest Groups
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
9
Controlling Size of Government
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
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