Logical Reasoning

PT156 · S2 · Q20 Economist: When national governments dispense funds

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Economist: When national governments dispense funds to local governments to spend on local projects, any local government can receive a greater proportion of government funds by creating more local projects than other local governments create on average.

Evaluate

What was the moral to this story? They're asking for what proposition was illustrated by the statements, so they want us to extract some general idea.

There was a pot of government money, and the more projects you created the bigger a share of that pot you could receive. Because of that incentive, there's more spending and taxation by the government than there would be if the national government didn't offer the pot of money to local governments in the first place.

Illustrated Proposition

In a sense, this is a Plan backfiring. The national government was trying to help local governments with local projects, but this ended up being a more expensive way of doing things. All things considered, people would rather government accomplish a given goal with the least amount of taxation required.

Having local governments fund local projects was better than having the national government fund local projects, because the latter created some incentive that led to more bloat / more spending.

Goal

Let's look for an answer where a Plan backfires and we end up worse than we would have been if we hadn't tried that plan?

It might involve details like incentives leading to more bloat, but maybe it won't match that specifically.

20.

Which one of the following most closely conforms to the proposition illustrated by the economist's statements?

  1. A large company invests in

    Bad Conclusion Match

    We never hear about anything bad happening. We just hear about smaller players teaming up so that they can keep pace with a larger player. There wasn't any such teaming-up of David's to keep pace with a Goliath in the stimulus, and this doesn't have any vibes of a plan making us worse off than when we started.

    5% picked this

  2. A national government finances an

    Bad Conclusion Match

    There is a plan and it doesn't result in some negative outcomes (hurting farmers elsewhere). But it also results in some positive outcomes, and we don't get any sense that we end up worse than we would have if we hadn't done the plan at all.

    8% picked this

  3. Correct

    A sales manager offers prizes

    Why this is right

    This involves a Plan backfiring and leaving us worse than when we started: as a result, profits are lower than they would otherwise be. It also had some other lovable similarities - some powerful entity is offering "a prize" - this creates weird incentives that lead to counterproductive behavior

    Skill tested: Principle-Conform · how this choice captures the argument's function is the move to repeat next time.

    68% picked this

  4. People pool their money to

    Bad Conclusion Match

    This does involve a plan that somewhat backfires, in the sense that they don't achieve their goal of reducing their bills. However they don't end up worse than before, as in the stimulus. They end up the same as before. There are new incentives created by the Plan (hey, I've got all this food, I guess I could eat more of it), but there isn't some third party that created the Plan in the first place. So on a couple levels, it's inferior to the correct answer as a match.

    17% picked this

  5. Several communities band together to

    Bad Conclusion Match

    This sounds like a Plan that almost fails to achieve its goal, but we're not sure whether the conference center actually gets built: the project nearly collapses. There's no sense that we ended up worse than when we started. And there isn't an overarching third party who created the plan and put others into competition with each other. The plan was created by people teaming up.

    2% picked this

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