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COMM 394 Final
Steven Minns Summer Section
| Term | Definition |
|---|---|
| The Burning Man Festival | An event mentioned closest to anarchy meaning no government, few rules, and entirely peaceful. DIFFERENCES from real life: little to no resource scarcity, only offered for a limited and short amount of time, attended by like-minded people, non-diverse. |
| What does government do for citizens? | Provides, benefits, structures, jobs, programs, rebates, protection. Provides a stable trading environment. MAXIMIZES SOCIAL WELFARE |
| What does government do for business? | Regulations, environmental restrictions, balance, liability, laws. |
| Rule of Law | Prevents theft and enables enforcement of contract, responsible for things like personal security, property rights, civil rights, contract law, labor laws |
| Macroeconomic Policy | Setting interest rates and making spending decisions. |
| Monetary Policy (interest rates) | dictates inflows and outflows within the economy by increasing interest rates during a recession, and decreasing them in a depression. |
| Fiscal Policy | How a government spends its money, while also providing a stable trading environment. Subsidies as well. |
| Competition Law | Maintains competition in industries and reduces unfair trading practices. |
| Subsidies | Used to incentivize production, or anything to encourage firms to do beneficial things (for example innovation) |
| Tax | Way for government to raise capital to put forth into new projects. Reduce unwanted behavior by taxing things like alcohol, vapes, etc. |
| Welfare | An example of the redistribution of wealth, providing for the under-privileges using the progressive tax system. |
| Costs of wealth distribution | 1. Administrative costs, 2. Losses to those that are taxed, 3. Incentives to tax more to make more money. |
| Economically rational agent | Selfishly maximizing own anticipated utility |
| Surplus | The difference between the utility of having the good and the utility of the transaction price |
| Social welfare | The SUM of everyone's utility. Increased through trade, redistribution, |
| Free market | Transactions are entirely voluntary. |
| How can social welfare be increased? | Through redistribution as the marginal utility of wealth decreases with the amount of wealth an individual has |
| Policy | Set of rules created and enforced by a governing body. |
| Normative Analysis | Analysis of policy based on what it SHOULD do or ought to be implemented as policy. |
| Positive Analysis | Considers which policies are ACTUALLY adopted and tries to explain actual behaviors' and policies |
| Cost-Benefit Analysis | Making a trade-off between gaining additional social welfare against the costs of implementing the policy |
| Incentives | linking an agent's utility to some action or outcomes (commissions). People do more of something that is rewarded and less of something that is penalized. |
| Opportunity Cost | The utility an agent gets by doing the best of something else with their time/effort (value of next best alternative). EXCLUDE SUNK COSTS. |
| Willingness-to-pay | The total utility an agent gets from a good, expressed in dollars. |
| Transfer seeking | Any activity that tries to increase one's share of wealth without creating new wealth (insurance claims) |
| Sunk Cost | A cost expensed in the past that no longer has a bearing on the decision making. |
| Marginalist Principle | Any policy should be carried out as long as the overall benefit exceeds the costs. The amount spent on the policy should be such that the benefit from the last dollar spent should be equal to the cost of raising that dollar (MB=MC). Scarcity fuels high MB |
| The demand curve | As something gets more expensive people buy less of it. |
| The Laffer Curve | Outlines the increasing marginal costs of taxation |
| Peltzman Effect | Arises when people adjust their behavior's to a regulation in ways that counteract the intended effect of the regulation. |
| The Law of Unintended Consequences | Policies often fail to help their intended beneficiaries because of "perverse incentives." EX: Making it more difficult to evict renters can lower the number of properties offered. |
| Streisand Effect | By saying not to share information, ends up having the opposite effects. |
| Limitations of financial incentives | Might undermine people's own motivation. EX By adding a late fee, people just paid that and showed up late picking their kid for daycare, opposite effect. |
| Adam Smith | "It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from the regard for their own self-interest" |
| Invisible Hand (Adam's Version) | By directing industry in such a manner as its product may be of greatest value, the entrepreneur intends only his own personal gain, and he is in this aim... led as if by an ‘invisible hand’ to promote an end which was no part of his intention. |
| Invisible Hand Modernized | Steve Jobs made the iphone for money not for happy customers, he ended up making a lifechanging product as a result. |
| Perfect Competition | 1. Prices are set by the market (no one has price setting power). 2. Entry of new firms and exit of firms drives profit to zero. 3. Buyers and sellers have all relevant information. |
| Production (Management) Efficiency | Is a given level of output being produced at the lowest input usage (and therefore lowest cost)? If the answer is yes, then production efficiency. |
| Pareto (Allocational) Efficiency | Nobody can be made better off without making somebody worse off, if this is true then pareto efficient. Also defined as: "is the appropriate amount of each good being produced?" NO DWL |
| Management Inefficiency or X-inefficiency by Leibenstein | When management efficiency is not achieved for any particular reason. EX: Agency problems where management have different ideals than the stakeholders. |
| Pareto Improvement | Occurs when at least one person is made better off while no one is made worse off. |
| Potential Pareto-Improvement | Exists when re-allocation of resources allows those individuals who are net gainers to fully compensate the net losers, and still be better off. |
| Deadweight Loss (DWL) | When an alternative is not pareto efficient. DWL is wasteful bc means money was still left on the table. Usually triangular. |
| Price Ceiling | Government sets a maximum rent or price that firms can charge. |
| Price Floor | Government sets a minimum rent or price that firms can charge. |
| Benevolent Social Planners | These are people that try to maximize social welfare and Pareto optimal allocations. |
| Game: | Consists of players, actions, and pay-offs |
| Strategy | A complete contingent plan. For every action of another player, you know in advance what action you would take. |
| Outcome | Specified terms of the strategies of the players. |
| Nash Equilibrium | Each player chooses the action that maximizes his utility taking the other players action as given. Strategies are in equilibrium when every strategy is a best-response to every other strategy. |
| Prisoner's Dilemma | A game in the game theory where the nash equilibrium payouts or both players dominant strategies are worse than an optimal set of payouts that could have been achieved with cooperation. |
| Prisoner's Dilemma Solutions (TIT-FOR-TAT) | When the game is repeated, take turns deciding who will get the maximum solution, and if one defers, punish them in the next round. |
| Prisoner's Dilemma Solutions (GRIM) | When game is repeated, repeatedly pursue dominants strategy to punish the other player indefinitely |
| Prisoner's Dilemma Solutions (BANNING) | Institutions enforce the rules each round. |
| Prisoner's Dilemma Solutions (OUTSIDE INTERVENTION) | Threaten someone into acting in a certain way. |
| Prisoner's Dilemma Solutions (SIGNALLING) | Indicate your move prior to the game. |
| Prisoner's Dilemma Solutions (TRUST) | Build trust round after round to ensure both players maximize utility after each round. |
| Market Failures (IMPERFECT COMPETITION) | A market structure where the assumptions of perfect competition break down. Sellers/buyers control prices, and entry or exit is blocked. Fails because prices too high, quant too low. |
| Market Power | When a buyer or seller dictates the prices they pay, where they buy from, have unlimited information, exert power over the market. |
| Monopoly | Indicates a market where there is only one seller, EX Ticketmaster |
| Cartel | Multiple sellers who collude on price (set prices towards monopoly price then share profits), eventually collapses out of greed bc one firm will produce more at the higher price. |
| Oligopoly | A limited number of sellers compete recognizing that they are large enough to affect the price. |
| Monopolistic Competition | Large number of sellers of differentiated varieties of the same product. Entry/Exit costs are low, each firm has a mini monopoly on its own flavour or brand. |
| Vertical Differentiation | Different qualities, one is better than the other (new intel processor vs 10 y/o model) |
| Horizontal Differentiation | Different preferences but similar products. MARKETING is horizontal differentiation (EX MEC vs Patagonia) |
| Monopsony | Market where there is a single buyer. Inefficiently low prices. |
| Natural Monopoly | One firm naturally dominates. Based on its ability to produce cheaper (economies of scale=large firm), one firm just cheaper to do it, or subsidized by the government. |
| Policy responses to natural monopolies | 1. Make it a public corporation / crown corporation like BC Hydro, or regulate the private sector provider like Fortis |
| Policy response to Monopsony | Because they charge prices lower than competitive equilibrium, can dictate their labour prices etc. To combat this, issue a minimum wage, fair trade agreement etc. |
| Public Goods & Defining Characteristics | 1. Non-Rival: The benefits obtained by one "consumer" are not subtracted from benefits available to others. 2. Non-excludable: it is costly to prevent people from using good, |
| Rival Goods | If you eat an apple, somebody else can't. What you do takes away from someone else. |
| Policy Responses to Public Goods | private and club goods are mainly left to the market, public goods are often provided by government. |
| Two-Way Market | Where both parties on each end of an exchange are making a success. IE Superbowl is public, cant charge the viewers but they can charge the advertisers, advertisers want eyes on product so they are happy. |
| Externalities (General Definition) | Activity by-products that generate "non-priced" costs or benefits affecting 3rd parties. |
| A third party | Anyone, any individual or organization that is not the buyer or seller. |
| Pecuniary Externalities | Are those where the externality is incorporated into the price. EX Carbon emission offsets. |
| Positive Externalities | Carrying out a policy had unintended good results for society. EX Education. |
| Negative Externalities | Carrying out a policy had unintended bad results for society. EX Pollution. |
| Imperfect Information (Market Failure) | Arises when there is asymmetric information, mainly when the seller knows product characteristics that the buyer does not know. |
| Expected Value | Sum of the probability X the payout for each occurrence. If the offer is below your expected value, it makes sense to take the deal. |
| Adverse Selection | Occurs when the seller doesn't know the buyer's type and is unable to correctly screen the types so that it is much more likely to select the bad types. Occurs before a contract, arises from asymmetric information. |
| Risk averse | if the expected values between two alternatives are the same, wants the option that minimizes risk. |
| Moral Hazard | Occurs when an agent's behavior's changes because they dont bear all the costs of their actions. In many cases agents take more risk than they would do otherwise. EX bankers may take extra risky investments if the bank will bail them out |
| The meaning of fairness | Everchanging depending on the scenario, equality doesn't necessarily mean fairness. |
| Distributive Fairness | The final allocation of benefits (or goods) across individuals (or groups) is just (or morally acceptable) |
| Procedural Fairness | The "rules of the game" are just (morally defensible) regardless of the final allocation that results. Non Coercion: no individual forced to take an action he or she doesn't want to take. Equality of opportunity is required. |
| Rent Seeking | Aim to get a bigger slice of the pie without growing the pie itself. |
| Policy Responses (assuming capital and labor are inputs) | Direct Redistribution: AKA increasing wages, but don't want to because it makes it mor expensive, Fiscal Redistribution (tax on capital): rather invest in capital like robots to avoid paying higher labour fees, substitute between whatever is cheaper. |
| Fiscal Fedralism by Thomas Piketty | A progressive global tax on wealth. |
| Public Bad | These are economic items that are bad for EVERYONE. If wealth inequalities grow too big they risk generating public bads. EX labour shortages, crime, revolutions etc. |
| Veil of Ignorance by Rawls | Point in time by conception, forget that you are you and analyze a perspective from someone else's shoes. |
| Maximin Principle | Preference for the welfare of the least advantaged. |
| Individual Sovereignty | Individual sovereignty encompasses the inherent right of individuals to autonomously govern their lives, make choices aligned with their values, and act without excessive external interference or control, safeguarding personal freedom and rights. |
| Paternalism | Paternalism involves an authority imposing restrictions or controls on individuals' choices and actions in an attempt to promote well-being or prevent harm, potentially infringing on personal autonomy and decision-making. |
| Economic Freedom | The freedom to enter into voluntary economic agreements. |
| Consumer Sovereignty | The rights to ones own tastes and preferences. dictates what will be made and sold and consumed by the consumer. |
| Relativism | here is no absolute right or wrong but we can say acts are morally acceptable so long as they conform to my society’s approved practices. |
| Consequentialism | Acts are good if they have good consequences. AKA the morality of an action depends solely on the consequences it brings about; the right thing is do whatever will produce the best state of affairs, all things considered.” |
| Egoism | Acts are good if they benefit me |
| Utilitarianism | Acts are good if they can be expected to raise the sum of all human welfare |
| Golden Rule | Do unto others as you would have others do unto you. AKA Treat others the way you wish to be treated. |
| Kant's 1st Rule, the Categorical Imperative | Act according to principles that are universalizable |
| Kant's 2nd Rule, the Practical Imperative | Do not treat people purely as a means. |
| Conventionalism | It is right to do whatever the immediate social environment dictates. |
| Types of Egoism (Ethical Egoism) | Moral agents should do what is in their self-interest. Two arguments...SMITH (pursue self interest collectively better off), RAND (egoism recognizes the value of each individual life and how that person's sacrifices for the good of others.) |
| Types of Egoism (Psychological Egoism) | Self-interest is what motivates people in fact. |
| Jeremy Benthem (father of utilitarianism) | Create all the happiness you are able to create; remove all the misery you are able to remove......it is the greatest happiness of the greatest number that is the measure of right and wrong" |
| Hong Kong Hand Grenade | Dude threw himself over grenade to save the team so they could live. |
| Utilitarian Problems | Involuntary sacrifices, justified torture, equal treatment for innocent and guilty, breaking promises and lying for the greater good, and monetizing everything including life itself. |
| Universality | I want everyone to follow that rule. EX I want everyone to be honest. |
| Reversibility | The rule should apply to me. EX I should be honest. |
| Rights Based Moral Philosophy Approach | The duty to follow this moral rule establishes a right to expect honest dealings. |
| The social contract | Individuals consent, either explicitly or tacitly, to surrender some of their freedoms and submit to the authority of the state, in exchange for protection of their remaining rights. |
| Rousseau and Democracy | Rousseau argued that democracy (self-rule) was the best way of ensuring the general welfare while maintaining individual freedom under the rule of law |
| Kant: The categorical imperative | Act only according to that maxim whereby you can at the same time will that it should become a universal law without contradiction.” |
| Rule Utilitarianism | is a more practical approach: Obey moral rules, which if universally followed, would maximize social welfare. |
| Practical Imperative (reformulated) | Never treat other human beings in a way that violates their autonomy. |
| Reading: Disaster Relief Economics | Arguing that the government should set all the marginal costs equal to the marginal benefit of an additional dollar on spending. When disaster hits, marginal benefit per dollar on relief raises, balance budget in present terms, and reduce spending LT. |
| Reading: Should we tax people for being annoying? | The main message of the article is that economists support the idea of implementing Pigovian taxes, which are taxes imposed on activities that have negative externalities, such as congestion pricing, to address the costs imposed on society by these activi |
| Reading: The moral hazard of naloxone in the opioid crisis | The Peltzman Effect shows that car safety regulations and increased naloxone access for opioid overdoses can lead to unintended consequences and a need for balancing risk mitigation and ethical considerations. |
| Reading: The obvious answer to homelessness | This article is that the homelessness crisis in America is primarily a result of housing scarcity and inaffordable housing, rather than stuff like mental illness or drug addiction, and that policy failures have contributed to the current situation. |
| Reading: We like to think we'd never commit fraud | This article is about how most individuals are capable of committing fraud under certain scenarios, as they have the ability to rationalize their actions using various strategies, which has implications for detecting and preventing fraud in corporations. |
| Environmental Externalities Examples | Oil Sands Leaking chemicals, air pollution from cars, ozone depletion via cfcs, global warming from greenhouse gases. |
| Externality Equilibrium | Where MB = SMC which is just PMC + external costs. |
| Pollution Optimal Point | The optimal point of pollution is NOT zero, we should pollute until the increases of pollution increase exponentially, until that point its manageable to pollute. Apply marginalist principle. |
| Pollution | A by-product of activates that create desired goods. |
| Abatement | This is an investment in technology that cleans pollution, almost always underprovided. EX: Waste treatment, scrubbers, and carbon captures and storage. |
| Policy Response: Abatement | Since this is almost always underprovided, the governmetn should SUBSIDIZE the production and utilization of abatement technology. |
| Solutions to Environmental Externalities | 1. Internalize the externality, 2. Remedy legally with quantity controls or standards. 3. Tax pollution activities. 4. Subsidize abatement, 5. Allocate pollution rights via tradable permits. 6. Social responsibility (we hold them accountable). |
| Cap and Trade | Gov can reduce DWL with pollution by setting a max amount of allowable pollution, they can be traded. Incentivizes pollution reduction as firms that can easily reduce their emissions can do so and SELL their permits. Can also auction or grandfather. |
| Pigovian Taxes | By taxing pub goods, govt gets rev but more DWL, by taxing pub bads, govt gets rev AND less DWL. Carbon taxes have been working well here! |
| Setting Tax Appropriately | Externalities arise when SMC > PMC, such that SMC = PMC + x (external costs), if tax = t, the new effective PMC becomes: PMC + t = PMC + x = SMC, however x is hard to measure. Taxes dont work when demand is inelastic and/or dealing with income disparity. |
| Acid Rain | needed a bilateral agreement to solve a problem. |
| Bilateral Agreement | International agreement, needed in order to respond to global externalities. |
| Easter Island Significance | Moai ppl on the island, built weird shit, carving stops in 1500 AD, they overused their wood resource and diminished it entirely, leading to canibbalization as they used wood for building, housing, canoes, tools, fishing, and firewood. |
| Why Easter Island CONT | It had a relatively cool climate, with less rainfall, had the jubea chilensis which reached fruit growing stage every 40-60 years not quick enough to sustain them. |
| The population model of renewable resources. | 1. Entity reproduces w/o comp. 2. More entity, more reproduction. 3. Crowding effect: newborns compete with large stock for survival (grow at dec rate). 4. Entity stock climbs till growth of 0, reaches its carrying capacity. |
| Growth Graph | Graphs stock against growth (births-deaths). Upside down parabola, M=where growth rate is 0 (g=0), H=harvest amount. K= max # of stock that can live (carrying cap) |
| Growth Rate Harvest Breakdown | When the amount harvest is on the right side of M (downward part of curve), considered STABLE bc g>H and thus will restore. Left side of M is UNSTABLE, if stock reduces, g<H, thus driven to extinction. At M is SEMI-STABLE H>g, next period will fall more! |
| Intrinsic Growth Rate | How fast they can replenish without competition. High for fish, medium for trees, and extremely low for oil. |
| Harvest choice selection factor (shock size) | How big/common are the shocks and how good/costly is the monitoring of populations. |
| Harvest choice selection factor (economical?) | Does it make sense to cut back harvests? Are the costs of harvesting low? Is the value of the harvest good? Whats the growth rate? These will determine if we should deplete or not. |
| Cyclical Management | Process of over-harvesting some years and under-harvesting in others. |
| Grand Banks Example and Significance | Shallow fishing place, stocks were ok bc harvests were low, until SONAR developed, made it easy to get fish, and thus overfished and depleted the population of cod there. |
| Tragedy of the Commons Grazing Lands EX and Significance | In og days, bitches had no land, so aristocrats allocated a plot of grass to the people so they could take their livestock there to graze to make them fatter for a better price. Everyone overused and the land became unusable. |
| Tragedy of the COmmons | lack of property rights leads to a depletion and overuse of public resources. |
| Open Access Problem | Resources that are common goods (rival and non-excludable) suffer from over-harvesting. Control over harvests are hard to control if preventing access and policing is difficult or impossible. |
| Non-renewable resources | Materials that do not renew themselves in human time frames. EX fossil fuels and minerals. |
| Hartwick's Rule | Goal: keep the citizens from falling into poverty when natural resources are exhausted. invest surplus profits from resource extraction into various forms of proactive capital. |
| Thomas Malthus once said... | "We will suppose the means of substinence, in any country equal to the easy support of its inhabitants. effort towards population increases the number of people before the means of substinence increase. |
| Malthus' key point | Population grows geometrically wheras food production increases arithmetically... so population grows until it can't feed itself. War pestilence and famine are restraining mechanisms. |
| Escaping the Malthusian Trap | Birth-rates lower due to improved healthcare, nutrition, educated parents. Technology improvements to food production. Better war protection. Medical improvements reducing diseases. |
| Earth's Carrying Capacity | Estimates vary extremely from lows of 4 billion to max of 16 billion, the median being 10 billion, however some resources will be consumed to zero, we are already exceeding carrying capacity. |
| Solutions to over-capacity: PROPHETS APPROACH | Established by William Vogt, suggests that the only way to save ourselves is to REDUCE consumption and LIMIT population. 'CUT BACK, CUT BACK!" |
| Solutions to over-capacity: WIZARDS APPROACH | Introduced by Norman Borlaug, proposes the idea of a Green Revolution. He says that SCIENCE and TECHNOLOGY, properly applied, will save us. Getting richer and more knowledgeable will resolve our environmental crises. "INNOVATE, INNOVATE!" |
| The NIMBY (not in my backyard) Problem | Deals with the location of public bads. Waste plants, hazardous materials, and other undesirable materials need places to go. They result in a boosted social benefit for everyone, but the people next to them suffer. Should be compensated for bearing this. |
| Norway's Government Pension Fund | Norway stored its revenue from oil export into a country-wide pension to be distributed, such a great way to redistribute wealth. |
| Alberta's Tar Sands | Oil from our tar sands is funneled into the US as they are only buyer, creating a monopsony, or trading at a steep discount, leading to lost revenue of over 40 billion. |
| Preventative Factors in Climate Action | 1. Comps see as no more than expense. 2. media misinfo +confirm bias. 3. elders dont care bc they wont be here. 4. What can one person do? |
| Confirmation Bias | Fit all the new info you see to fit that initial belief. |
| Global Warming Mechanism | Sun gives off UV rays, 1/2 absorbed by Earth, rebounds into space. Problem is since more of our ice caps, (UV reflectors) are melting, more dark ocean exposed, thus more UV absorbed. |
| Greenhouse Gases | 1. Carbon Dioxide (CO2)-fossil fuel use (57%), land use deforest biomass decay (20%), 2. Methane (Ch4): agricultural activities, waste (14%). 3. Nitrous oxide (N20): fertilizer (7%) |
| Climate Change Evidence | 1. Earths avg surface temp rising by 1.0 celsius a year. 2. Most warming within past 35 years. 3. Canada warming at twice the average. |
| Climate Change Evidence (Warming Oceans) | Shallow parts of the oceans and others have absorbed a big portion of the increased heat rays, top 700 meters warming of more thna 0.2 degress celsius since 1969 |
| Climate Change Evidence (Global Average Temperature) | Rising significantly especially from 1960 to present. |
| Climate Change Evidence (Shrinking Ice Sheets, Declining Arctic Sea Ice) | Greenland and Antarctic ice sheets have decreased SIGNIFICANTLY. 281 billion tons of ice per year between 1993 and 2016, while antarctica lost about 119 billion. Antarctica land mass loss has tripled in the last decade. |
| Climate Change Evidence (Glacial Retreat & Less Snow Cover) | Glaciers are retreating almost everywhere globally including the Alps, Himalayas, Andes, Rockies, Alaska, and Africa. |
| Climate Change Evidence (Sea Level Rise) | A global sea level rise of about 20cm in the last century, dnagerous for tides and hurricanes prompting flooding. Result of so much ice melting. |
| Climate Change Evidence (Ocean Acidification) | An increase in the CO2 is leading to more acid, coral bleaching, since the industrial revolution acidity of surface ocean waters has increased by 30%. This destroys coral reefs and other underwater ecosystems. |
| Climate Change Evidence (Extreme Events) | The number of record extreme temperature highs has been increasing exponentially and low temp events falling, leading to increasing events of intense rainfall, drought, flood, hurricanes, |
| Climate Change and Coffee | Coffee needs specific conditions to grow, with these new events taking over and the planet heating up, 65% of the plots for coffee will become unsuitable by 2080. |
| What do we blame in terms of global warming? | The problem is that it is not attributed to one source global warming is comprised of so many factors, industrial processes, power use, waste, land use, buildings, fossil fuels, agriculture, transport etc. |
| Tipping Points (Melting Ice Bodies) | Albedo effect (water is darker than ice) and thus absorbs more of the UV rays. The more ice that melts the more oceanic surface area available. |
| Tipping Points (Changing Ocean Circulation): | Shutdown of Atlantic Thermohaline current: North seawater cools, sinks, flows south, warms, rises, flows north. Now with warmer temperatures, the north water not cooling like before, the current is stopping. |
| Tipping Points (Changing air circulation): | Jet streams weakening leading to persistent weather systems, and more extreme weather as there is no wind pushing these systems through. high pressures = More intense droughts, and more prolonged low pressures = flooding, |
| Tipping Points (threatened large-scale ecosystems): | Boreal forests (excellent carbon sinks) and scrub the earth of CO2, at some point they won't regrow, once you pass the tipping point its game over. |
| IPCC Projections (intergovernmental panel on climate change) | 1. More droughts and heat waves = more fires, 2. Hurricanes are stronger, 3. sea level rise 30cm-120cm by 2100. 4.Arctic = ice free, 5. Equator and see level cities are fucked, 6. Food shortages + mass displacement. |
| Kyoto Protocol | 1. Signed nations agreed to reduce GHG emissions to 5.2%, 2. US didnt, 3. Developing countries excluded. 4. No penalties for non-compliance Canada flopped eventually leaving kyoto in 2011 |
| Kyoto Protocol Results | Some countries reduced their emissions others soared above. |
| Paris Agreement | 2015 UN climate conference, limit warming to less than 2 deg C, bound 55 countries together rep 55% of emissions, can withdraw w/o penalties for non-compliance. US rejoined, argued to vague. |
| Policy Responses to global warming (Michael Mann 'The New Climate War') | 1. Widespread carbon pricing, 2. Allowing renewable energy to compete fairly with fossil fuels (remove subsidies for oil and gas). 3. Debunking false arguments (up to indiv not firm or gov), 4. Combat climate "doomism" --> narrative has changed majorly |
| Policy Responses to global warming (Michael Mann 'The New Climate War') | 5. Relying on tech is too risky. 6. GHG reductions are advisable, 7. gonna reach a tipping point where non recoverable. 8. Commitment to goals like Paris and Kyoto. 9. Inequality inc w/ clim change. 10. change poss but need firm and gov to get to work. |
| Market Capitalism | Private Ownership and Decentralized/Competition Supply and Demand Decisions |
| Market Socialism | Public Ownership and Decentralized/Competition Supply and Demand Decisions --> CHINA |
| Monopoly Capitalism | Public Ownership and Centralized/Planning Supply and Demand Decisions |
| State-Directed Socialism | Public Ownership and Centralized/Planning Supply and Demand Decisions |
| Democracy | Citizen participation in the political system. Leaders are elected by the citizens. |
| Republic | Government is subject to the people and can be recalled. Often democratic but can also be with monarchy (crowned republic), one party can be too. |
| Monarchy | Monarch is head of state. Can be a constitutional monarchy (Canada & has a parliament) or absolute (king/queen/emperor Decide) |
| Communism | System based on ideology of communism. Combined with centrally planned economic systems --> USSR 1950s |
| Despotism | Rule by an individual (autocracy or dictatorship) or by a group of individuals (oligarchy) |
| If liberal economists were kings what would happen? | 1. Minimal DWL, no market failures, interventions (taxes, subsidies, floors or ceilings), where there is a failure, corrective policy applied (tax on bads, subs for abatement). DWL ONLY FROM taxes, disincentives tied to safety net (unemp, insur, dis rel) |
| Government Failure | Occurs when a government acts in a way contrary to what normative analysis prescribes. |
| Winston Churchill Democracy Critique quote summary | Democracy is NOT perfect, compared to alternatives, its not the worst. To reap the benefits of political order need to give up certain freedoms. |
| Terry Pratchett quote summary | Have a sweet loving person act in the best interest of the country on their lonesome, but so dumb because power changes people, once they get that power will do anything to hold onto it over everything else. #SelenaGomezForPrez |
| Winston Churchill Challenges of Democracy quote | "the best argument against democracy is a five minute conversation with the average voter" MEANING democracy only works well if ppl know about gov, environment, social issues, and panel policies of representatives. No clue if a policy is good or bad |
| Requirements for a healthy democracy | 1. An educated electorate: understands politics, econ, and social issues, 2. Free press: independent |
| Liberal Democracy Rights (Property) | Right to protect owners and investors from expropriation, ensures nobody is stolen from. |
| Liberal Democracy Rights (Political) | Right to ensure that groups that win electoral contests can assume power and choose policies. |
| Liberal Democracy Rights (Civil) | Right to guarantee equal treatment before the law and equal access to public services such as education. |
| Illiberalism | Often called a partial democ, low intense democ, empty democ, or hybrid regime, is a governing system in which although elections take place, voters are cut off from knowledge about activities of those exerting power bc low civil liberties. |
| Demarchy | variant of democracy, government in which the state is governed by randomly selected decision makers who have been picked by LOTTERY from a list of eligible citizens, then make decisions about pub policies just like a jury. |
| Demarchy Pros | 1. Overcome fucntional problems of conventional rep democs, avoids being subject to manipulation by special interests and a division between professional policymakers vs. a largely passive, uninvolved and uniformed electorate. .New thoughts too! |
| Democratic Decision Making (PURE) | Involves direct voting by individual citizens on alternatives and policies. |
| Democratic Decision Making (Representative) | Involves the election of delegates who are vested with the power to vote on alternatives who represent the interest of individuals they represent (MP in parliament, MLA in legislative assembly) |
| First Past The Post | Divide the provinces into ridings, everyone in riding votes for ho they want to rep for them in the parliament. NOTE the more seats held by party in parliament is the winner, can be a majority or minority government as well. |
| CONS to direct democracy | 1. Expensive: everyone incurs costs to voting on every issue. 2. Expertise/Specialization: Voters may lack expertise to judge issues, costly to be informed. 3. Aggregate preference problems: Voting does imperfect job of revealing aggregate preferences. |
| Ice Cream Truck Example: Median Voter Theory | road with two poles, communism and fascism, and the trucks can go anywhere to persuade voters. By parking to the left, the other party can leap over to the other side to catch more voters, eventually leaving mid as eqm. Both parties market in the middle! |
| Electoral Systems (Majoritarian) | Winning candidate must have an absolute majority of votes (>50%) |
| Electoral Systems (Plurality) | An electoral system that requires that the winning candidate receive more votes than any other candidate. |
| Electoral Systems (Proportional) | An electoral system that ensures a fairly close relationship between the popular vote a party receives and the number of candidates it elected. |
| Gerrymandering | Party influence by manipulating the boundaries of an electoral constituency so as to favour one party. |
| Voter Suppression | Party influence by discouraging or preventing specific groups of people from voting (EX using new laws to restric voting access, typically justified by alleging voter fraud) EX make sundays voting days, relig people cant vote. |
| Vote Manipulation | Party influence by installing partisan officials who can manipulate vote counting. |
| Pros to Plurality System | 1. Encourages fewer larger and more inclusive parties, 2. Tends to produce majority governments. 3. Maintains a direct link btwn local rep and riding-can go to for concerns, 4.simple. 5.less fair for smaller parties. |
| 3 main consequences of rent-seeking | 1. Transfer of wealth to the rent seeker. 2. resources consumed in rent-seeking are wasted. 3. policy induced rent seeking usually has a pure waste associated with it (efficicency is compromised.) |
| Special Interest Groups (EIG) | Represents Unions, industries, professions, and regions |
| Social Interest Groups (EX MADD) mom against drunk drive | Promote particular values or moral views |
| Lobbying | Occurs when an individual is paid to communicate with a public-officer holder in an attempt to influence government policy. LEGAL BUT RULES... see lobbying act |
| Principles of the lobbying act | 1. free and open access to gov. 2. lobbying public office holders is a legit activity. 3. It is desirable that public office holder and the public be able to know who is influencing the gov. 4. regi system of paid lobbyists should not stop free gov access |
| Milton Friedman Quote | "there is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game" |
| Profit Maximization Argument | 1. Manager's duty as an employee overrides her alleged social responsibilities. 2. Pursuing social responses other than maxxing profit is a form of taxation without representation. 3. Pursuing profit leads to Pareto efficiency (invisible hand) |
| According to Friedman...Corporate activity that aims to help the community but reduces profits is... | 1. Undemocratic bc should be decided via politics. 2. Unwise bc businesspeople have no expertise to solve social probs. 3. Ineffective bc manager that acts contrary to profit max might be fired |
| Counters to the Friedman argument...Corporate activity that aims to help the community but reduces profits is... | 1. Not undemocratic bc they are well informed and vote in favour which is the literal definition. 2. Unwise... no bc often firms know more about thier product and process than any gov. 3. ineffective/job loss? not if shareholders endorse. |
| Friedman's Argument fails to account for... | 1. Negative externalities: Arrow focuses on the pollution caused by the firm, where itself is the best to regulate, gov may mismanage. 2. Asymmetric (imperfect) info: the firm knows more than customer about quality, and safety more than employees. |
| Potential Solutions to Market Failure OVERALL | 1. Regulation: prod stands, max emission quotas, safety inspec, competition policies. 2, Taxes and subsidies: tax pollution, sub abatement. 3. Legal response: laws for labour and consumer protection. 4. Gov: produces pub goods or externalities (health). |
| Potential Solutions to Market Failure OVERALL CONT | 5. Industry led solutions: guarantees, warrantees, volutary labelling. 6. Social responsibility: moral obligations to obey ethical codes. |
| Corporate social responsibility | Concept that captures the responsibility of business to the environement, stakeholders, and society. |
| To what extent should firms have this responsibility (CSR) considering the typical tradeoffs that there are | They should minimize detrimental impacts first and foremost, if they are still profitable post adjustments, it may be worthwhile to invest further in CSR initiatives. Some firms will do it on their own and use it as a point of differentiation in marketing |
| Should firms focus on CSR which is closely related to their operations, or should they do CSR intiatives which are potentially very different to their businesses? | It depends on company culture, expectations differ greatly. Some might expect a firm to give back more, others expect them to make as much as possible (invis hand). Some firms need subsidies to reduce impacts as well. |
| Shared Value | Where firms have benefit to thier (financial) bottom line from CSR initiatives. Other brands like consumer brands find it easier to create shared value over others. |
| ESG Investing | Where investors invest invest in equities of firms that score highly on an ESG index. It is an important means of incentivizing firms to engage in CSR. |
| Greenwashing | When firms appear socially responsible but without having much impact. They actually have a small or minimal impact on CSR, ESG, and pos externalities on society. |
| Triple Bottom Line | When firms expand their objectives beyond just making money to include having a positive impact on the environment and community. (PEOPLE, PLANET, PROFIT) |
| Shared Value Example: Unilever in India | Unilever employes 72000 indian women to sell their products, giving them training etc, while also integrating into india with minimal widespread initiatives. Contributed to boosted CSR and made life liveable for so many families. |
| Shared Value Example: Arc'teryx | Small team saw leftovers of scrap jackets, stitched them into ponchos, gave them to the VPD to distribute to homeless. NOTE CSR motions dont need to be huge small missions are amazing too. |
| Michael Porter's Approaches to CSR (Moral obligation) | Companies have a moral duty to do the right thing |
| Michael Porter's Approaches to CSR (Sustainability) | Companies should operate in ways to secure long-term economic performance by avoiding detrimental short-term behaviour. Aligns with triple bottom line, and if everyone focused short-term, the economy would collapse. |
| Michael Porter's Approaches to CSR (Freedom to operate) | Pragmatic approach where companies look to satisfy stakeholders. Common in mining, chemicals etc. |
| Michael Porter's Approaches to CSR (Reputation) | When companies do CSR to improve image, strengthen brands and enliven morale. |
| Challenge: Michael Porter's Approach to CSR (Moral obligation) | Difficulty balancing competing values, interests, and costs. |
| Challenge: Michael Porter's Approach to CSR (Sustainability) | Hard to balance short-term costs with long-term benefits. Uncertainty over long-term benefits and the advantages of vague notions (EX transparency) use an inside out approach |
| Challenge: Michael Porter's Approach to CSR (freedom to operate) | Agenda is ceded to outside groups. Stakeholder groups often don't understand the firm, its tradeoffs, and the importance of different issues. |
| Challenge: Michael Porter's Approach to CSR (reputation) | Social impact can be hard to determine |
| Solution: Michael Porter's Approach to CSR | Strategically integrate CSR initiatives that effect society with the impact that society has on the firm. |
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babybee27
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