Essay Questions
1) Transaction costs are ones which refer to the consumption of effort, time as well as other resources that are necessary for reaching all sorts of collective decisions. Whereas, conformity costs refer to the extent by which all collective decision persuade people to perform or participate in activities and talks which the people want to avoid. The government overcomes this problem of unnecessary costs, collective decision making and coordination by creating institutional designs which involve trade-offs between conformity costs as well as transaction costs. This, in turn, allows the government to decide as well as act accordingly and rather quickly.
This is obvious to the eye as the government often tries eradicating all forms of unnecessary decision making by joining entire departments into a single panel instead of numerous panels. This can be seen as the government of the United States of America has very limited panels for dozens of departments and regulatory bodies that work within the country with a separate role and duty in different states of the country. However, if each department was given a panel, it would have to use its own transaction costs in making a decision and then referring it to other departments who would also be using these methods in their own departments. So this will observe each department sharing a conformity and transaction cost within the department before relaying that decision to the government. The solution to this crisis and wastage of time was for the government to create large panels where representatives from each department would discuss and come across an agreement together. This reduces conformity costs and transaction costs to a minimum and overcomes the problem of collective action and coordination to a greater extent.
2) The free rider problem explains a situation in which individuals of a population consume way more than their share of common resources which are deemed fair or pay way less than the fair cost of such common resources. The articles of the confederation made it difficult to amend them and therefore, solutions to resolving the crisis of free rider problems came to an abrupt halt. However, the constitution resolved this by issuing the concept of taxes within the nation where everyone was asked to give a percentage of their earnings every month in order to pay for the facilities they were being provided by the government.
This becomes obvious to witness as through taxations, the entire populace of America generally distributes their equal share of cost to the country’s common resources, which in this case are represented by the facilities, infrastructure and other services that are provided by the government. Moreover, everyone has to pay an equal amount of general sales tax on any product they buy which means that the resources, which a person within the United States buys, are paid for an in equal manner throughout the country, making it impossible for free riding to occur within the nation without detection. Furthermore, the constitution abruptly stated that anyone who doesn’t pay taxes will be punished accordingly. In other words, this means that anyone who commits free riding in the new country will be punishable by law.
3) The federalists wanted to create the Union upon the signing of the constitution and determined that each state who signed the constitution would become part of America while states who didn’t sign the constitution would become an entirely different country and would need its own legislation. In short, the federalists wanted complete federal and national control over all 50 states, deeming that transaction and conformity costs would become as minimal as possible over such a vast country. The Anti-federalists included some of the most popular revolutionary war figures in the newly born America. They believed that all states should be within America. However, they argued that national or federal rule within the country should not be an option and, instead, each state should have autonomous powers and independent governments while operating in the same country. They also argues that the constitution would setup a new form of government that was untested in all circumstances. The Virginia Plan dictated the motives of federalists and were deemed unacceptable by other smaller states who feared their loss of power in the new country. As a result, the New Jersey plan was proposed that equalled the power of small states in the region with bigger sates so as to have an equal say in the country. AS there was no agreement, the great compromise, also known as the Connecticut compromise, was proposed so as to create senates that would have equal say within the constitution. This was first dismissed but later agreed upon by both the federalists and the anti-federalists at it gave much more power to smaller states that originally planned and allowed them to seek more dominant motives in the end within the constitution. On the other hand, the bill of rights was favoured by the anti-federalists while it was opposed by the federalists who were against its uncertain outcomes. However, the bill was eventually passed as another mutual agreement found way between the federalists and the anti-federalists, just like in the Connecticut compromise.
4) The anti-federalists supported the inclusion of a bill of rights into the constitution and they believed it was extremely important because they thought it was the only chance for the anti-federalists to involve some of their own rights into the constitution. Therefore, the anti-federalists urged the federalists to include the bill of rights into the constitution as they also feared that a lack of bill of rights would give the federalists national control over all states and would make the president look as a perceivable king on the throne of an entire nation. The leaders argued but most importantly, it was Jefferson who conveyed to Madison that if they cannot have all their rights, they deserve some of their rights and this, in the end, is what led to the amendment in the constitution towards a bill of rights. The Anti-federalists also believed the constitution to be withholding itself from mentioning the rights of the general public that lived within the nation. Therefore, they also thought that a bill of rights would constitute and hard line the several rights that people deserve within the country and, therefore, be subject to the will of the people rather than the will of the national government only. This approach was seriously repulsed by the federalists but still, after much negotiations, agreed to the new bill of rights to the constitution. However, the bill of rights was not presented as an amendment to the constitution of the United States of America but as a supplemental addition to the constitution.
