Well, assuming the size of the budget is the defining issue of the campaign,
all the Conservative candidate needs to do to win is to take a position
somewhere between the median voter and the Labor Party candidates position,
such as B sub C. At B sub C,
the Conservative candidate would attract
those 50% of the voters to the left of the median voter,
plus the voters represented by
B sub C minus B sub M. And if the Conservative were to take such a position,
the Liberal would lose the election in a landslide.
Of course, the Labor Party candidates pollsters may be smart enough to
figure out that their candidate has been outflanked during the campaign,
and thereby advise their candidate to leapfrog the Conservative position
by moving to B prime sub L. Now, you can see,
of course, that the Conservative might then move to B prime sub C,
and so it will go until both candidates effectively hug the median voter position.
And from this example,
it should be obvious how a primarily two major party system,
such as the ones in Great Britain and in the United States,
moved political outcomes to the political center.
More broadly, it is for this reason we often
observe political candidates taking very similar positions.
Essentially, becoming what one political wag in America once called
enormous Alice in Wonderland, Tweedledum and Tweedledee.
Of course, there are
a number of other interesting voter behavior models in public choice that you may
encounter if you take additional courses in either economics or political science.
For example, public choice theory explains the process of logrolling in politics.
This involves the well-known practice of reciprocal vote trading
among politicians for each other's proposed legislation.
For example, a dovish American congressman might vote for an increase in
the defense budget in exchange for a promise from a hawkish American congressman,
to approve a new public works project in the dov's home district.
The broader point of delving into this public choice here is to
reinforce one of the broad themes of this course here.
As I have said before,
and it is well worth repeating,
when you are in business, the laws,
regulations, rules and taxes of government
can often do more harm to your business than any 10 competitors.
And that's why it is particularly important to understand
government policy from an Economics and Public choice point of view.
For example, your company may face a regulation or
a tax and micro-economic analysis
may reveal to be totally inefficient and counterproductive.
Armed with that analysis,
it will be much easier for your firm and lobbying team to
argue against the proposed regulation of tax on public interest grounds,
rather than just opposing
the policy change because it might hurt your company's bottom line.
Of course, in other cases,
the proposed new policy may be totally justified on economic grounds.
For example, a tax hike may be necessary to pay for new roads,
so your business can transport its products faster.
In such a case,
your firm may find it more beneficial to work with
the government to implement the tax in the fairest possible way.
Dr. Peter NavarroProfessor
