Interest Groups

Questions:

In the Free Market it is impossible to know the needs and wants of each individual.

What piece of information allows the free market to function? In other words what piece of information allows suppliers to know what to produce and how much?

Price

In our political system what pieces of information tell the politicians what we want?

Voting – informs politicians of position

Campaign Donations and Donations for Special Interest Groups- Informs politicians of intensity.

Political Parties Interest Groups

Nominate

Larger Scope and more issues

Obtain votes

Supports one candidate

Supports candidates

Raise $

Solve issues

Members share views

Influence

Compete, inform, activate

Single issues

Multiple candidates

Influence but don’t nominate

Political Action Committees

Political Action Committees (PACs): an organization that pools contributions from group members and donates those funds to candidates for office

They win more often than not.

PACs are often created by big business, unions, and corporations

The are also PACs called leadership PACs that are created by other politicians, these politicians raise money for other candidates in the hopes that if the candidate wins the election that they will be rewarded by being promoted to leadership positions.

Remember + 90% of all elections are won by the candidate who spends the most money.

Key: Correlation does not mean causation

Primary goal of contributions is generally to gain access to incumbents.

Why do you think PACS donate more to incumbents (current office holders)

Campaign Finance ReformPrior to 2002

Hard money- money directly donated to candidates was limited

Individual- $1000 per electionPAC- - $5000 per election

Soft money- money indirectly donated to candidates (through the party) was unlimited

Bipartisan Campaign Reform Act 2002 aka McCain-Feingold Act

Hard Money

Individual PACS$2,500 per election $5000 per election$30,800 per year to party, $15,000 per party$10,000 per year to state/local2 year cycle- $46,200 to candidates, $70,800 to parties

Soft Money that is given to political parties for the sole purpose of elections is illegal

Soft money used for voter mobilization and “issue” ads but not directly endorsing or criticizing as specific candidate are legal. This is called a 527

Summary- limits hard money, eliminates soft money

10 10 10 10 10 10 10 10 10

People will stay on the beach and in between jettys and eat hotdogsAll vendors are the same, people will eat at the closet hotdog vendors

Where do you place your hotdog cart if you are by yourself? Why?

Where do you place your hotdog cart if you have competition? Why?

What does a third hotdog vendor do to the situation?

Median Voter Theorem-Nash Equilibrium

The median voter theory, also known as the median voter theorem or Black's theorem, is a famous voting theorem. It posits that in a majority election , if voter policy preferences can be represented as a point along a single dimension, if all voters vote deterministically for the politician who commits to a policy position closest to their own preference, and if there are only two politicians, then a politician maximizes their number of votes by committing to the policy position preferred by the median voter.

http://www.nytimes.com/2010/02/07/business/economy/07view.html