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Table of Contents

Introduction
Market Failure
Public Policy
Philosophy of State

Introduction

The efficiency of most public policies is determined by the ability of markets and governments to implement them. Failure to actualize these strategic plans can be defined from the perspective of an economist or a political scientist. The interplay between these perspectives is significant, because public policies affect the process of decision making in a country.

In this paper, the author will look at market failure, focusing on the definitions provided by economists and political scientists. The fit between these conceptualizations and the policy problem addressed by the author of this paper will be reviewed. The author will also analyze various elements associated with the philosophy of the state. To this end, the opinions of Thomas Hobbes and John Locke will be examined. A number of theories will be used to address the issues raised in this paper.

Market Failure

Market Failure from the Perspective of an Economist and Government Breakdown in the Opinion of a Political Scientist

Definitions

It is important to understand that the rationale behind the formulation of public policies can be failure on the part of either the government or the market. In economist’s opinion, market failure is defined in terms of demand and supply. It is a situation where the demand for goods and services does not correspond to the outputs of the suppliers.

It can also be defined as the failure by markets to yield efficient output of resources. The development impacts the society negatively. Market failure is often evident through its ‘non-rivalrous’ nature of consumption and non-excludable element of use. In a nutshell, the breakdown from the perspective of the economist implies the failure of a free market to distribute resources efficiently.

From the perspective of a political scientist, government failure is made evident when intervention from the authorities leads to inefficiencies in the distribution of resources and other goods. In such situations, it is noted that government interventions make matters worse.

Definition that Best Fits the Policy Problem of the Law I am Studying for my Final Paper

In my opinion, the concept of market failure best defines the Sarbanes-Oxley Act of 2002, which was formulated to address the issue of information asymmetry. I am currently studying this policy issue. As far as information asymmetry is concerned, market failure occurs when the outcomes of a given transaction favors the party with more information than the other stakeholders. The Enron scandal is a classic example of the market meltdown through skewed access to information.

Company executives took advantage of an existing loophole in the policy and used reports of false earnings to make their company more appealing to investors. As a result, hundreds of investors ended up making wrong decisions, leading to huge losses. The SOX could be the cure to potential market failures in the future.

Negative Externalities

Negative externality is a term used to define the benefits achieved by an individual or a company. The gains made by the individuals are more than those made by the society. Examples of externalities in consumption include situations where people who are not directly consuming a product incur costs. A case in point includes alcohol consumption, car accidents, and second hand smoke from cigarettes. The Enron scandal is an example of how negative externalities can lead to or aggravate market failure.

Using the Enron scandal as a reference, one can look closely at the details of market breakdowns. The scandal was as a result of uneven distribution of information pertaining to investment. Company executives failed to be honest with the members of the public and their stockbrokers regarding the financial standing of the company. The false reports led to the downfall of the organization.

The government took steps to ensure that this type of practice is eliminated in the future. Some of the measures put in place include the creation of the Sarbanes Oxley Act. The legal framework was meant to regulate accounting firms and to monitor their financial reports. The advantage of this form of regulation is that the possibilities of public companies providing misleading financial statements are reduced. However, the major weakness of this law involves the costs associated with the move.

It is noted that companies incur costs in form of fees as far as abiding by the regulations is concerned. The development affects the revenues of various organizations negatively.

Public Goods and how they are Framed within the Theory of Market Failure

In business, ‘public goods’ is a term used to refer to things that can be lawfully enjoyed or consumed by anyone in the society. Such items are classified into two major clusters. The two include non-excludable and non-rival products. Theories of market failure can be used to analyze these goods. For example, the theoretical framework explains a scenario where consumers increasingly take advantage of a public good while paying little attention to the efforts made to obtain it.

The situation is referred to as the free rider effect. For example, if a club offers free food during weekly meetings, both members and non-members will have an access to the meals. While the members pay for the food through membership fees, non-members get it for free. If everyone were to enjoy the free food without signing up to the club, then the establishment will experience a reduction in revenues. The situation may eventually lead to the withdrawal of the free food package. Such action may lead to market failure as a result of the reduced revenue, which causes a decline in food supply for the weekly meetings.

Public Policy

Types of Policies and Policy Foundations

Policy foundations are classified into two key broad categories. They include multifaceted and pervasive bases. Multifaceted policy foundations imply the presence of various elements that are not created in a vacuum or by single actors. Both parties support the process of policy formulation. Pervasive policy foundations, on the other hand, indicate the widespread nature of the phenomenon. Consequently, the policies affect executive orders, rules, and regulations. What it means is that these foundations are unlimited.

There are 8 types of public policies. They include distributive, substantive, and regulatory. Others are procedural, redistributive, and collective. Finally, there are private and liberal versus conservative policies.

Regulatory policies restrict or limit given behaviors. For example, they criminalize the production and distribution of items that contravene copyright laws. In addition, the policy expects parties to adhere to rules regulating access to copyright materials. The Digital Millennium Copyright Act (DMCA) stipulates the fines and penalties imposed on individuals proved guilty of infringing the internet copyrights. In addition, the law prohibits people copying original works of authorship. As such, it is correct to infer that DMCA is a regulation policy.

Distributive policies are those that govern the processes involved in availing goods and services to the people. They also determine the distribution of the cost of goods and services among members of a particular organization. Substantive policies are a compilation of what the government intends to do in regards to certain issues. Procedural policies, on their turn, stipulate the processes through which something is done. Finally, collective policy highlights the nature of the goods given to all. Private policy includes divisible goods and individual beneficiaries and/or payers.

It is my belief that the policy foundation applied in DMCA is multifaceted. The reason is that this act has a number of elements. It is also noted that this legislation is a regulative policy. To this end, it limits and restricts given activities in the society.

Policy Goals and Political Feasibility

Political hurdles encountered in passing DMCA bill into law

Owners of small businesses were the biggest losers as far as the implementation of DMCA is concerned. They lost a great deal since they ended up paying the music industry every time they purchased a blank CD-ROM to back up their data. Other parties that were negatively affected included those competing with large scale musicians. They had to pay their competitor for every CD of their music that they recorded. The excessive consecration on competitors and small businesses can be considered the greatest political hurdle in passing DMCA into law.

The benefits and costs associated with DMCA

The aforementioned law makes it illegal for people to circumvent technological measures regulating access to copyrighted work. The regulation protects internet service providers and web hosts from infringement claims if they implement the specified ‘takedown’ procedures and notices. The element is one of the major benefits of the law.

The US Copyright office works on the DMCA copyright trolls and takedown notices. As a result, it is difficult to establish the actual costs incurred as far as the work of the officers is concerned. However, the benefits should outweigh the costs to enhance the applicability of this law. The OMB 2004 report captures this scenario vividly. According to the report, federal regulations provide benefits of between 135 and 218 billion dollars annually. On the other hand, the taxpayers incur costs ranging from 38 to 44 billion dollars per annum. The development illustrates the major costs of this law.

Financial feasibility of DMCA

In my opinion, DMCA is financially feasible. I will use a hypothetical case involving Bill and John to drive this point home. If Bill was to copy a piece of work by John, his (John’s) lawyers had the right to make him (Bill) pay for it. In this case, Bill will have violated the provisions of DMCA law.

Liberal and Conservative Politics in Relation to DMCA in America

Conservatives have a unique set of beliefs. For example, they subscribe to the idea of a government that has limitations. They also believe in individual responsibility. In addition, they promote traditional values and cultures. They believe that empowering the individual to solve problems is the best way for a country to move forward. They are also interested in market regulation. On the other hand, liberals base their political concepts on the actions taken by the government to enhance equality. They capitalize on the government’s ability to solve problems. They emphasize more on state regulation.

In light of the explanation given above, one can infer that DMCA is a conservative policy. The reason is that although the government is taking steps to solve the copyright infringement issue, the law empowers individuals to implement measures to safeguard their interests. Consequently, DMCA possesses key traits associated with conservatives.

Philosophy of State

Social Contract According to Thomas Hobbes and John Locke

Hobbes and Locke in social contract

In American history, social contract is used to define the relationship between the state and the individual. The government is viewed as a contract between the citizens and governing body. Thomas Hobbes and John Locke define the term differently. For example, the former regards social contract as the mutual transference of rights.

He argues that in the state of nature, each person has a right to everything. In addition, the right of natural liberty is not limited. As such, Hobbes supports the idea that people transfer their rights to the government mutually. He also argues that since all people are born in a state, then the social contract is out of the control of the individual. The state already has existing expectations and laws. Hobbes looks at the state as at an artificial man. He considers it as an individual human body.

John Locke, on the other hand, looks at social contract as a state of nature. What it means is that the contract implies a state of complete and perfect liberty for a person to exist freely without interference from others. However, this is not an excuse for people to do anything they like. Social contract, according to Locke, means that people are free to do what they want provided that it is within the moral boundaries.

DMCA and evidence of Leviathan reaching into the American public policy domain

The term ‘Leviathan’ is used to indicate a situation where a policy is concerned with the majority of the people in a particular society or state. In my opinion, DMCA has Leviathan elements. The law is concerned with all industries, organizations, and individuals.

Characteristics of the American Social Contract

The Federalist Papers and their impacts on the ratification of the constitution

The authors of the Federalist were interested in ‘influencing the vote’ favoring future ratification and interpretation of the constitution. The long-term goal was to create a united nation with independent states and a federal government that possessed central power.

The meaning of the phrase “if angels were to govern men…”

The phrase is commonly used to define leadership in the society. It implies that if human beings were angels, then there would be no need for a government. The reason for this is that there would be no corruption or other forms of crime. The government would be made obsolete since people would know and respect their roles. People would also be able to discern what to do and what not to do.

How the US government balances power

Balancing of power by the US government is done in accordance with the constitution. The constitution explains how the state is run and ensures that no part of the government wields excessive powers. In the US, there are three branches of government specified in the constitution. Each branch is independent of the other and has its own responsibilities.

The legislature is made up of the Senate and House of Representatives. The two houses form the Congress. The arm is tasked with making new laws and amending existing ones where necessary. The executive body consists of the president, vice president, the cabinet, as well as the executive office of the president. The cabinet is the advisory body of the government. It is made up of 15 departments. The major responsibility of the judiciary is the administration of justice. It comprises the Supreme Court, special courts, lower courts, and court supply organizations.

The three branches of the government have equal powers. The legislature checks the operations of the executive. For example, it may overrule vetoes by the president with the two thirds majority vote. In addition, it regulates the funds made available to the executive. The senate approves treaties and presidential commitments.

The legislature also regulates the judiciary. For instance, it creates lower courts and may impeach non-performing judges. The senate approves the appointment of judges. The executive also monitors the activities of the legislature. To this end, the president wields the veto powers. In addition, the president has the powers to call for special sessions of Congress. Furthermore, the executive can recommend legislations and appeal to people to support or reject them.

How a bill becomes law

The bill must first go through Congress by a majority vote. It is then sent to the president for approval. The executive signs the bill and makes it a law. However, the bill may be returned to Congress in a process known as veto. When this happens, the Congress takes a second vote. It becomes law if it garners a two-thirds majority.

The process is known as ‘overriding-a-veto’. It is noted that a bill can become law without the president’s signature or approval. The scenario takes place if the executive fails to act on it for more than ten days. Sundays are not included in the specified 10 days. When it happens, the bill automatically becomes law.

Implementation of the law

An agency of the executive has to put a law into force for it to be implemented. The president has the authority to establish a body responsible for the implementation of a given legislation. The agency establishes how the law is to be put into power and what people need to do to comply with it. In consultation with the judiciary, the body may also come up with penalties that should be meted out on anyone found guilty of breaching the law.

Affirmation of the constitutionality of a law

The Supreme Court is the institution charged with the responsibility of affirming the constitutionality of a given law. It is the duty of the court to ensure that the American people enjoy ‘equal’ justice under the law. As such, the institution is considered as the guardian and interpreter of the constitution. The Supreme Court should ensure that a given piece of legislation does not act against other laws in the constitution. It is also the responsibility of this judicial establishment to make sure that the law under consideration is unbiased and that it works for the benefit of the entire society.

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