Market Failure and Government Failure - Assignment Example

Market failure and government failure 1a) Market failure according to the definition of an economist and government failure from the perspective of a political scientist This can be referred to as an economic term that entails the quantity of product in demand in the market by consumers that are not proportional to quantity being supplied by the suppliers. On the other hand, government failure emanates from two factors, which include active government failure and passive government failure. Active failure results from the states action, which gives worse results than if they had just not responded in any way.Similarly, passive failure is failure of state to intervene in any way in an attempt to correct failure in the market (Coase 23-27). i) The governance failure under this circumstances best describes the law studied for my policy. This is based on the fact that the government is destined to always respond in two ways to market failure and that can be through action or inaction. Both the two approaches can always succeed or fail. Market failure as identified with negative externalities b) Negative externalities occur when the action from one player in the market is harmful to the other. For instance, the factory owners in most instances concentrate on their production than the likely harm that the emissions from their plants is causing to the general public. The pollution secondary thus become secondary to them at the expense of the environment and health of the people. c) Public good and its framing within market failure Public goods have two outstanding features: nonrivalrous and non-excludability consumption. Under non-excludability, it amounts to being prohibitive the cost of non-payers enjoying benefits of certain goods or services. For example, in the case of show of fireworks, other people are likely to watch this show from either their backyards or windows. For this reason and on the basis that the one staging the show is not in a position to charge rates for consumption by the observers, then the show is likely to be dismissed. This would happen no matter how strong the demand aspect of the show. The underlying factor therefore is that there exists an assumption of free markets determining prices, which prevents market failures. This is entirely false in the sense that situations may arise where those who pollute the environment do not pay for whatever they produce and this already is a market failure. On the same precept, the failures can emanate from the government through actions such as distortion of market prices like when they subsidize production. This has been particularly witnessed in the aerospace as done by most states in Europe. The various policies and the theories dictating market failure and government failure are blended in such a way that the two are interdependent on one another. Failure of the government to come up with working regulations for some goods and how they are produced may eventually lead to its failure. The failure is felt when the general population including non-consumers are affected by the inaction of their government or action that end up with dire negative effects to them. Social contract Q3 a) How the vision of Thomas Hobbes and John Locke differ on the social contract theory T he visions of John Locke and Thomas Hobbes though appearing closely knight has some recognizable differences that can be derived from them. Whereas Hobbes pays much attention to the social accountability of the leaders that are elected, Lock focuses on how structures that are formed through the people would give them freedom. Lock portrays a strong conviction through establishment of strong institution that abuse oppression can be defeated. Hobbes on the other hand blames the suffering of the people on a life trend already predetermined and that, which must be faced. i) The American policy domain derives its impetus from coming up with effective control systems to act as guidelines to several spheres. These include governance, trade contacts among other engagements. The social contract law does not entirely capture the American domain policy. Those elected do not end up honoring all their election pledges to the electorate (Coase 91-94). Social contract hypothesis requires that elected leaders should be removed from office if they fail to meet expectations of the voters as promised mostly during the electioneering period. b) i) How the Federalist papers influenced constitutional ratification The Federalist papers leveraged on the various loopholes that characterized the original American constition.The quest for ratification was motivated by various unique interests in regard to the position of the elected leaders and the United States standing as State during that time. If angels were to govern men portrays the aspect of failure of leaders to meet the demands of the electorate as required in the social contract theory. This originates from the fact, the leaders too are driven by their own interest then the varying choices, and demands of electorate are almost impossible to satisfy. ii) The United States balances power through spreading various functions to various institutions, for example, the senate, the congress and the Judiciary. All these ensure that the executive does not operate beyond the required limits as stipulated by the constitution. iii) A bill becomes law after it has been deliberated and voted by the members of the congress. A bill becomes law through the popular vote system by the members of the congress. If more than half of the members vote in favor of the bill, then it becomes law. iv) The law is implemented various institutions set up by the constitution. The government has several officials in various capacities that ensure that the law is implemented. Those working for the government play a major role in ensuring implementation of the law. v) Constitutionality of the law must always have some structures for it to be affirmed. The judiciary bears the responsibility of affirming the law. Anybody who breaks law is taken to the court of law where interpretation is done and appropriate punishment given proportional to the offence committed and as found in constitution. Work cited Coase, Ronald. The Firm, the Market and the Law. Chicago: Chicago University Press, 1988. Print. Read More