3.5. Adopt Rules to Limit Special Interests

1. Put your phone in your bag!

PUT YOUR
PHONE IN
YOUR BAG!
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

2. The $300 Million Law

THE $300 MILLION LAW
Congress gave $300M to a tiny sugar-farmer group.
Families paid small unnoticed costs (10$ each)
How could a small group beat millions of consumers?

3.

Week #1: Foundations: Incentives & Trade-offs
Week #2: Margins & Gains from Trade
Week #3: Exchange & Transaction Costs
Week #4: Firms, Profits & Income
Week #5:Value, Wealth & Sources of Progress
Week #6: Market Forces & Unintended Effects
TOPIC OF THE WEEK:
Week #7: Institutions that Support Progress
Week #8: Midterm Exam [20 Oct – 24 Oct]
Week #9: Macro Stability & Policy
Week #10: Trade & Part 3
Week #11: Government’s Basic Roles
Week #12: Political Economy & Rules
Week #13: Government Support Programs
Week #14: Planning & Competition
Week #15: Final Exam [15 Dec – 19 Dec]

4. Adopt Rules to Limit Special Interests

ADOPT RULES TO LIMIT
SPECIAL INTERESTS
ELEMENT 3.

5. Review

REVIEW
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

6. Markets vs Politics

MARKETS VS POLITICS
Markets: trades
only if all sides
benefit.
Politics: 51% can
impose costs on
100%.
Creates win–lose
outcomes.
Example: stadium
tax burden for all
taxpayers.

7. Rational Ignorance

RATIONAL IGNORANCE
One vote rarely changes outcome → low incentive to
research.
Voters rely on surface info
Research shows that majority of voters do not name the
candidates even!
Consumers research because choices directly affect them.

8. What then?

WHAT THEN?
Shift decisions to markets when possible, allowing
individual choice.
Decentralize decisions to local levels to match local
preferences.
Add variety within public systems (multiple options instead
of one rule).
Public vs private education
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

9. Adopt Rules to Limit Special Interests

ADOPT RULES TO LIMIT
SPECIAL INTERESTS
ELEMENT 3.

10. Learning Objectives

Understand the special-interest effect.
LEARNING
OBJECTIVES
See why politicians cater to small, organized
groups.
Learn logrolling and pork-barrel politics.
Recognize why rules are needed to protect broad
welfare.

11. Who Are Special Interests?

WHO ARE SPECIAL INTERESTS?
Small groups with large benefits at stake.
Example: UzAvto, UzAirways.
Public pays small, unnoticed costs.
Strong lobbying vs weak public opposition.

12. Why Politicians Listen

WHY POLITICIANS LISTEN
Special interests provide votes, money, mobilization.
Average voters barely notice technical policies.
Politicians gain by pleasing focused groups.
Special-interest effect favors narrow benefits.

13. Invisible Costs, Visible Benefits

INVISIBLE COSTS,VISIBLE BENEFITS
Costly policies persist
because losses are hidden.
Markets cannot force
payment; politics can.
Sugar example: few gain,
many lose, net loss remains.
Groups frame demands as
public interest.

14. The Special-Interest Cycle

THE SPECIAL-INTEREST CYCLE
Budgets fill with
narrow
programs.
Each group
wins; total
economy
suffers.
Everyone seeks
benefits at
others’
expense.
Examples:
subsidies, tariffs,
wasteful
projects.

15. Logrolling & Pork-Barrel

LOGROLLING & PORK-BARREL
Logrolling: vote trading.
Pork-barrel: bundling
projects to pass them.
Inefficient projects pass when
packaged.
District coalitions allow
wasteful bills to succeed.

16. Limiting Special Interests

DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

17. Limiting Special Interests

LIMITING SPECIAL INTERESTS
Need strict rules to change incentives.
Constitutional limits prevent narrow spending.
Transparency reduces voter ignorance.
Goal: align politics with broad welfare.

18. Examples of Rules

EXAMPLES OF RULES
Balanced budget requirements.
Line-item veto to cut waste.
One-issue-per-bill laws.
Aim: restrain targeted favors.

19. Summary

SUMMARY
Small groups win because benefits concentrate, costs
diffuse.
Politicians respond to organized, intense groups.
Logrolling and bundling pass inefficient laws.
Constitutional limits and transparency protect public
interest.
Vigilance is needed to curb special-interest power.

20. Any questions?

ANY QUESTIONS?
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS

21. Thanks

THANKS
DR. TURAKULOV VALIJON | INTRODUCTION TO ECONOMICS