Identify Political Factors That Influence And Determine Fina

Identify political factors that influence and determine financial management practice in the public arena

Describe at least three public goods provided by public institutions and how these public goods impact society domestically and/or internationally. Discuss how demand and supply of public goods is influenced by external, environmental, economic, and political factors. Discuss Arrow’s impossibility theorem, and give an example of how it can affect the political process, other than the example discussed in the unit lesson and the textbook. You must use at least one scholarly source in addition to your textbook to complete this assignment. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. All references and citations used must be in APA style.

Paper For Above instruction

The intersection of politics and financial management within the public arena is a complex field influenced by various political factors that determine how resources are allocated, prioritized, and governed. One of the fundamental elements that shape public financial practices is the provision of public goods by government institutions. Public goods are characterized by their non-excludability and non-rivalrous consumption, meaning no individual can be effectively excluded from their use, and one person’s use does not diminish the availability to others. They play a pivotal role in societal development, economic efficiency, and international relations, as they often require significant public investment and policy support.

Among the critical public goods provided by public institutions are national defense, public health infrastructure, and clean air and water. National defense is a quintessential public good that ensures sovereignty and security, impacting societal stability domestically and safeguarding national interests internationally. For example, military force deters external aggression and maintains peace, which is essential for economic stability and socioeconomic development. Public health infrastructure, including vaccination programs and sanitation facilities, improves societal well-being and reduces healthcare costs, fostering economic productivity and social cohesion. Clean air and water are vital for environmental sustainability and public health, which have direct consequences on a nation's productivity levels and international environmental commitments.

The demand and supply of public goods are significantly influenced by various external factors. Environmental factors such as pollution levels or climate change influence the need for public health and environmental protection services. Economic variables, including income levels and fiscal capacity, determine the scope and quality of public goods delivered. Political considerations heavily influence the prioritization of public goods; political ideologies may favor spending on defense versus social welfare, thus affecting their availability. External pressures such as international agreements or global economic trends also shape how governments allocate resources to these goods.

Arrow’s impossibility theorem is a fundamental concept in social choice theory, illustrating the challenges in aggregating individual preferences into a collective decision that satisfies fairness criteria. The theorem states that no voting system can convert individual preferences into a collective decision that simultaneously fulfills the criteria of unrestricted domain, non-dictatorship, Pareto efficiency, and independence of irrelevant alternatives. An example outside the textbook occurs in environmental policymaking, where conflicting interests between economic development and conservation efforts make aggregating preferences difficult. For instance, a democratic government may face difficulty in formulating policies that balance industrial expansion with environmental preservation, as individual preferences often conflict. This decision-making challenge can result in stalemates or suboptimal policy outcomes, illustrating Arrow's theorem's practical implications.

In conclusion, political factors such as ideological priorities, international obligations, and societal demands critically influence financial management practices within the public sector. The provision of public goods and their demand is shaped by external environmental, economic, and political factors, which require careful consideration by policymakers. Arrow’s impossibility theorem underscores the inherent difficulties in collective decision-making processes, influencing how political entities negotiate and implement policies affecting public goods and broader societal outcomes. Understanding these dynamics is vital for designing effective and equitable public financial management strategies.

References

• Hyman, D. N. (2014). Public finance: A contemporary application of theory to policy (11th ed.). Cengage Learning.
• Sen, A. (1995). Development as freedom. Oxford University Press.
• Arrow, K. J. (1951). Social choice and individual values. Yale University Press.
• Samuelson, P. A. (1954). The pure theory of public expenditure. The Review of Economics and Statistics, 36(4), 387-389.
• Musgrave, R. A., & Musgrave, P. B. (1989). Public Finance in Theory and Practice. McGraw-Hill.
• Buchanan, J. M. (1965). An economic theory of clubs. Economica, 32(125), 1-14.
• Stiglitz, J. E. (1989). The economic role of the state. In L. Alan Winters & G. S. Gopinath (Eds.), Trade and development (pp. 31-42). Oxford University Press.
• Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3, 1-44.
• Ostrom, E. (1990). Governing the commons: The evolution of institutions for collective action. Cambridge University Press.
• Besley, T., & Coate, S. (1997). An economic model of representative democracy. The Quarterly Journal of Economics, 112(1), 85-114.