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June 17, 2018 

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DISINTERMEDIATION: A general deterioration in the profitability of a bank because it pays high interest rates on short-term borrowing, but earns relatively low interest rates on long-term lending. This was a big, BIG problem for savings and loans (S&Ls) during the 1970s and ultimately caused many of them to fail in the 1980s. S&Ls were designed (by law) to make long-term (30-year) home loans to consumers, but to get the funds for these loans using standard savings accounts. When inflation and interest rates shot up in the 1970s, S&Ls found it necessary to pay savers higher rates to get the funds. But, they still had a bunch of home loans--with low interest rates--that were 15, 20, or 25 years from being repaid. For several years, S&Ls received 6 percent on many of their loans, but paid out something like 12 percent. This gradually eroded their profitability until many were forced to close their doors.

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EXPLICIT LOGROLLING:

The straightforward, unambigous trading of votes to ensure a favorable outcome for two or more separate decisions. Commonly practiced in legislative bodies, explicit logrolling occurs when each of two voters agree to cast separate votes for two separate programs. The contrast is with implicit logrolling in which two separate programs or policies are combined into a single package, which is then subject to a single vote. Whether explicit or implicit, logrolling is generally used when neither decision is able to obtain the necessary majority of the votes needed for passage on their own accord.
Explicit logrolling is one of two types of "vote trading" practiced among voting government legislators to ensure the passage of specific laws; laws that would not necessarily be passed independently. With explicit logrolling, each of two or more legislators agree to cast separate votes on separate issues. For example, legislator A agrees to vote for legislator B's pet project as long as legislator B agrees to vote for legislator A's favorite program. The basic presumption of logrolling is that neither program would obtain the necessary majority of the votes needed for passage on their own accord.

The second type of political vote trading is implicit logrolling. In this case, two or more decisions are combined into a single piece of legislation. To vote for their own project, each legislator must vote for the entire package, thus implicitly supporting the other projects.

How it Works

To see how explicit logrolling works, consider the actions of two hypothetical state legislators. Adam Zweller is an ardent environmentalist who favors alternative uses of solar energy and wants funding to finance research into solar powered bicycles. Ben Yurgen is a long-time critique of outdoor physical exercise and feels that a tax on running shoes would limit the number of joggers who pass him when he's walking his pet poodle.

Each of these proposed pieces of legislation would have limited chances of passage by the state legislature on their own merits. Representative Adam actually enjoys jogging and does not necessarily favor a tax on running shoes. Representative Ben thinks solar energy is a hoax perpetrated on the public by the swimsuit industry and wants all bicycles banned, whether solar powered or not.

However, if Representative Adam agrees to vote for legislation that places a tax on running shoes, which is favored by Representative Ben, and Representative Ben agrees to vote for legislation that finances research into solar powered bicycles, with is supported by Representative Adam, then both proposals have a chance of passing. This logrolling is explicit because each proposal is contained in a separate piece of legislation. Each legislator is then required to cast a separate. explicit vote on each piece of legislation.

An Implicit Alternative

Elected representatives are often reluctant to "go on record" when trading votes. If so, they tend to use implicit logrolling. Implicit logrolling form occurs when two separate programs or policies are combined into a single package, which is then subject to a single vote.

Representatives Adam and Ben can do a bit of implicit logrolling if they combine the running shoe tax and solar bicycle financing into a single piece of legislation. Each legislator is then "forced" to vote for his favored project only by voting for the entire package. Each can tell their constituency that they didn't really want to vote for the other project, but had no choice. They can trade votes without actually "trading votes."

<= EXPLICIT COSTEXPLOITATION =>


Recommended Citation:

EXPLICIT LOGROLLING, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: June 17, 2018].


Check Out These Related Terms...

     | public choice | logrolling | implicit logrolling | median voter principle | voting problems | voting paradox | government failures | rational ignorance | rational abstention | voting rules | special interest groups |


Or For A Little Background...

     | market failures | government functions | public finance | efficiency | public sector | private sector | utility maximization | market efficiency | fifth rule of imperfection | seven economic rules | political game |


And For Further Study...

     | political entrepreneurs | capture theory of regulation | rent seeking | Tiebout hypothesis | principal-agent problem | government bureaucracies | public choice politics |


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