Political and economic institution

Details about Political Institutions and Economic Institutions

1. POLITICAL AND ECONOMIC INSTITUTION BY MUSSAWER KHAN

2. POLITICAL INSTITUTION:- Political institutions are the organizations in a government that create, enforce, and apply laws. They often mediate conflict, make (governmental) policy on the economy and social systems, and otherwise provide representation for the population. As a rule, popularity based political systems are partitioned into two sorts: official (headed by a president) and parliamentary (headed by a parliament). Lawmaking bodies worked to help the systems are unicameral (just one house) or bicameral (two houses—for instance, a senate and a place of delegates or a place of lodge and a place of masters). Gathering frameworks can be two-party or multiparty and the gatherings can be solid or frail relying upon their degree of inward attachment. The political organizations are those bodies—gatherings, councils, and heads of express—that make up the entire component of current governments.

3. Types of Political Systems:- The political framework comprises of both legislative issues and government and includes the law, economy, culture, and other social ideas. The most well known political frameworks that we are aware of around the world can be decreased to a couple of basic center ideas. Numerous extra sorts of political frameworks are comparative in thought or root, however generally will in general encompass ideas of:

4. Democracy : A system of government by the whole population or all the eligible members of a state, typically through elected representatives.

5. Republic:-  A state in which supreme power is held by the people and their elected representatives and that has an elected or nominated president rather than a monarch .

6. Monarchy :- A form of government in which one person reigns, typically a king or a queen. The authority, also known as a crown, is typically inherited.

7. Communism : - Communism:  A system of government in which the state plans and controls the economy. Often, an authoritarian party holds power and state controls are imposed.

8. Dictatorship :- Dictatorship : A form of government where one person makes the main rules and decisions with absolute power, disregarding input from others .

9. The Function of a Political System:- In 1960, Gabriel Abraham Almond and James Smoot Coleman gathered three core functions of a political system, which include:  To maintain the integration of society by determining norms. To adapt and change elements of social, economic, and religious systems necessary for achieving collective (political) goals. To protect the integrity of the political system from outside threats. In modern-day society in the United States, for example, the main function of the two core political parties is seen as a way to represent interest groups and constituents and to create policies while minimizing choices. Overall, the idea is to make legislative processes easier for people to understand and engage with.

10. Political Stability and Veto Players:- government seeks stability, and without institutions, a democratic politic Everyal system simply cannot work. Systems need rules to be able to select political actors in the nomination process. The leaders must have fundamental skills about how the political institutions work and there must be rules about how authoritative decisions are to be made. The institutions constrain political actors by punishing deviations from institutionally-prescribed behaviors and rewarding appropriate behavior. Institutions can resolve collection action dilemmas—for example, all governments have a collective interest in reducing carbon emissions, but for individual actors, making a choice for the greater good makes no good sense from an economic standpoint. So, it must be up to the federal government to establish enforceable sanctions.

11. But the main purpose of a political institution is to create and maintain stability. That purpose is made viable by what American political scientist George Tsebelis calls " v who eto players." Tsebelis argues that the number of veto players—people must agree on a change before it can go forward—makes a significant difference in how easily changes are made. 1  Significant departures from the status quo are impossible when there are too many veto players, with specific ideological distances among them. Agenda setters are those veto players who can say "take it or leave it," but they must make proposals to the other veto players that will be acceptable to them.

12. ECONOMIC INSTITUTION The term “Economic Institutions” refers to two things: 1. Specific agencies or foundations, both government and private, devoted to collecting or studying economic data, or commissioned with the job of supplying a good or service that is important to the economy of a country.  The Internal Revenue Service (the IRS—the government tax-collection agency), the U.S. Federal Reserve (the government producer of money), the National Bureau of Economic Research (a private research agency) are all examples of economic institutions . 2. Well-established arrangements and structures that are part of the culture or society, e.g.,  competitive markets, the banking system, kids’ allowances, customary tipping, and a system of property rights are examples of economic institutions .

13. Economists are interested not only in understanding specific existing institutional agencies, but also in the more exciting question of why some institutions evolve and others don’t. Why do institutions differ in one country to the next? Why do some institutions take centuries to get started while other spring up in a few years? Why do some institutions evolve spontaneously in general society? When does government get involved in supervising societal institutions? Does the wording of a Constitution or the structure of a country’s legal or religious background influence the economic institutions that arise in a country?

14. A property right is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals. Society approves the uses selected by the holder of the property right with governmental administered force and with social ostracism. Property Rights :-

15. Political Behavior :- The fact of  scarcity , which exists everywhere, guarantees that people will compete for resources.  Markets  are one way to organize and channel this competition.  Politics  is another. People use both markets and politics to get resources allocated to the ends they favor. Political activity, however, is startlingly different from voluntary exchange in markets. In a democracy groups can accomplish many things in politics that they could not in the private sector. Some of these are vital to the broader community’s welfare, such as control of health-threatening air pollution from myriad sources affecting millions of individuals, or the provision of national defense. Other public-sector actions provide narrow benefits that fall far short of their costs….

16. Law and Economics :- A legal rule has two consequences. The most immediate is to determine who pays what penalty to whom if the rule is broken. Thus, one might describe a law against speeding as a rule providing that anyone caught driving more than fifty-five miles an hour on the Dan Ryan Expressway must pay fifty dollars to the city of Chicago. Viewed this way, a speeding law is simply a way of  raising revenue  and a speeding ticket a rather peculiar sort of tax bill…. Economics has made a substantial contribution to our understanding of the law, but the law has also contributed to our understanding of economics.

17. Courts routinely deal with the reality of such economic abstractions as  property and contract . The study of law thus gives economists an opportunity to improve their understanding of some of the concepts underlying economic theory. The most notable example is the work of University of Chicago economist Ronald Coase . Coase received the 1991 Nobel Prize in economics, in part for using ideas based on his study of the law of nuisance to revolutionize the corresponding area of economics—the theory of externalities.

18. The market, then, is not simply an array, but a highly complex, interacting latticework of exchanges. In primitive societies, exchanges are all barter or direct exchange. Two people trade two directly useful goods, such as horses for cows or Mickey Mantles for Babe Ruths . But as a society develops, a step-by-step process of mutual benefit creates a situation in which one or two broadly useful and valuable commodities are chosen on the market as a medium of indirect exchange. This money-commodity, generally but not always gold or silver, is then demanded not only for its own sake, but even more to facilitate a reexchange for another desired commodity. It is much easier to pay steelworkers not in steel bars, but in money, with which the workers can then buy whatever they desire. They are willing to accept money because they know from experience and insight that everyone else in the society will also accept that money in payment…. Free Market :-

19. Federal Reserve System :- The Federal Reserve System (the Fed) has been the central bank of the United States since it was created in 1913. The main purpose of a central bank is to regulate the supply of money and credit to the economy. The board of governors, the Fed’s principal policy-making organization, plays a key role in this process….