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December 15, 2019 

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PRICE DISCRIMINATION: Charging different prices to different buyers for the same good. This is an age old practice for suppliers who have achieved some degree of market control, especially those with a monopoly. The reason for price discrimination, of course, is higher profit. To be a successful price discriminator you must be able to do three things--(1) have market control and be a price maker, (2) identify two or more groups that are willing to pay different prices, and (3) keep the buyers in one group from reselling the good to another group. In this way, you will be able to charge each group what they, and they alone, are willing to pay.

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POLITICAL GAME:

The political system can be thought of as a game, a contest between two groups of players. Rulers are the ones who set the rules. Rulees are the ones who must abide by the rules. The political game, of course, has serious consequences, with winners and losers. The distribution, either concentrated or dispersed, of these consequences can have a profound effect on the game. The study of public choice provides insight into the economic efficiency with which the political game is played.
The political system can be analyzed as a game between competitors. And like any game, some win and some lose. The interesting thing about this political game is that the participants can change the rules only the way. The consequences of the game are also real, tangible and potentially life changing.

Let's take a look at the political game.

Rulers and Rulees

The political game includes two groups of players -- those who set and enforce the rules (the rulers or leaders) and those who are forced to abide by the rules (the rulees or followers). In some political systems there is almost no overlap between the two groups. A few lead and all others follow. In other political systems a great deal of overlap exists. Leaders are also followers and followers can become leaders. And generally speaking, leaders and followers abide by the same rules.

Two political systems illustrate the extremes in the ruler/rulee mix. At one extreme lies a pure democracy in which every member of society has an equal voice/vote in establishing and enforcing the rules. At the other extreme is a pure dictatorship with a single ruler who establishes and enforces the rules that must be followed by everyone else.

The disconnect between rulers and rulees, between leaders and followers, gives rise to much of the government imperfection studied in public choice. If leaders and followers are one and the same, then government can better achieve the desires of society. Government and society can be one and the same. But when not, problems arise.

The U.S. Game

The United States, as a representative democracy, falls between these two extremes of pure democracy and dictatorship, with a modest degree of overlap between rulers and rulees.
  • Rules for All?: In the United States, followers and leaders are generally subject to the same rules. For the most part. Then again, at times it seems as though leaders abide by a different set of rules or no rules at all.

  • Are Rulees Rulers?: In the United States, followers can and do become leaders. City councils, state legislators, governorships, Congress, even the Presidency, has been occupied by the occasional follower turned leader. Then again, most followers never make this rare transition to leadership and many leaders spend their adult lives never leaving the comfortable confines of government.

Political Consequences

The political game is all about consequences, about making things happen. Governments intervene in society for the purpose of changing things, fixing problems, taking action. Those actions have consequences.
  • Winners and Losers: The consequences of political actions are both good and bad, good for some, bad for others. That is, the political game has winners and losers. Suppose, for example, that the Shady Valley City Government imposes a tax on the sale of jogging shoes. This action has winners and losers. The winners are those who receive the goods or services provided by the tax revenue. The losers are those who pay the tax when purchasing jogging shoes.

  • Concentrated and Dispersed: The consequences of political actions are also concentrated or dispersed, concentrated among some, dispersed among others. In particular, the benefits of political action might be concentrated among a few while the costs of the actions might be dispersed among many. A few winners and many losers. Or the costs of political action might be concentrated among a few while the benefits of the actions might be dispersed among many. A few losers and many winners. The Shady Valley jogging shoe tax, for example, might be paid by thousands of consumers who purchase jogging shoes while the tax revenue is used to remodel the meeting room used exclusively by the ten members of the Shady Valley Committee for the Historical Preservation of Footwear.
While the mix of winners and losers can be concentrated and dispersed in any number of ways, more often that not, the benefits of government actions are concentrated among the few and the cost are dispersed among the many. A few win, many lose.

This is just the sort of observation that makes many players in the political game salivate as they ponder rent-seeking possibilities. Some players successfully convince government to provide concentrated benefits to a select few while dispersing the costs across a larger number. A small sales tax on jogging shoes used to remodel a city hall meeting room provides an example.

This is also just the sort of thing that sets the stage for inefficiency.

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Recommended Citation:

POLITICAL GAME, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2019. [Accessed: December 15, 2019].


Check Out These Related Terms...

     | government failures | voting problems | voting rules | median voter principle | logrolling | voting paradox | public choice politics |


Or For A Little Background...

     | market failures | government functions | public finance | efficiency | public sector | private sector | utility maximization | market efficiency | fifth rule of imperfection |


And For Further Study...

     | rational ignorance | rational abstention | principal-agent problem | capture theory of regulation | rent seeking | Tiebout hypothesis | political entrepreneurs |


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