© Terrel Gallaway 2003 1 Logrolling Logrolling With simple majority voting, voters can’t register the strength of their (or their constituents’) preferences

© Terrel Gallaway 2003© Terrel Gallaway 2003 11

LogrollingLogrolling

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

Logrolling allows people to trade votes Logrolling allows people to trade votes thereby partially revealing the strength thereby partially revealing the strength of their preferences.of their preferences.– Vote for something to which you’re not Vote for something to which you’re not

strongly opposed in return for support for strongly opposed in return for support for your pet project.your pet project.


Logrolling Logrolling Pros Cons Pros Cons

Voluntary trade can Voluntary trade can lead to increased lead to increased efficiency and a stable efficiency and a stable equilibrium.equilibrium.– (You would expect a net (You would expect a net

gain for both traders.)gain for both traders.)

Compromise is an Compromise is an essential part of essential part of governinggoverning

May accomaodate May accomaodate pork.pork.

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

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


Improving General WelfareImproving General Welfare

Project Bill Ed SueTotal

Net. BenSchool: 40 -10 -11 19

Museum: -8 30 -6 16

Park: -24 -12 80 44


Lowering General WelfareLowering General Welfare

Project Bill Ed SueTotal

Net. BenSchool: 40 -22 -21 -3

Museum: -8 30 -24 -2

Park: -54 -28 80 -2


Arrows’ Impossibility TheoremArrows’ Impossibility Theorem

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

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

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


Arrow’s Criteria:Arrow’s Criteria:

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

2)2) Should rank all possible choices.Should rank all possible choices.

3)3) Should be responsive to individuals’ Should be responsive to individuals’ preferences.preferences.

4)4) Should be consistent (transitive).Should be consistent (transitive).

5)5) Choices should be independent from Choices should be independent from irrelevant alternatives.irrelevant alternatives.

6)6) There should be no dictatorship.There should be no dictatorship.


Representative DemocracyRepresentative Democracy

Economists’ models are based on maximizing.Economists’ models are based on maximizing.

Voters seek to maximize UtilityVoters seek to maximize Utility

Politicians seek to maximize votesPoliticians seek to maximize votes..– If voters’ preferences are signal-peaked and uni-If voters’ preferences are signal-peaked and uni-

dimensional, the vote-maximizing politician will adopt dimensional, the vote-maximizing politician will adopt the agenda of the median voter.the agenda of the median voter.

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

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


Public EmployeesPublic Employees

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

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

Results in an inefficiently large bureaucracy.Results in an inefficiently large bureaucracy.

Analogous to revenue maximizer vs. profit Analogous to revenue maximizer vs. profit maximizer.maximizer.


Special Interest GroupsSpecial Interest Groups

May be based on:May be based on:– capital versus labor interests, career fields, capital versus labor interests, career fields,

size of income, age, religion, race, gender, size of income, age, religion, race, gender, region, etc.region, etc.

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


Controlling Size of GovernmentControlling Size of Government

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

Balanced Budget Amendment?Balanced Budget Amendment?– Most economists, liberal and conservative, think its a Most economists, liberal and conservative, think its a

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

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

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

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

Documents

© Terrel Gallaway 2003 1 Logrolling Logrolling With simple majority voting, voters can’t register the strength of their (or their constituents’) preferences