Essay: Why is it that some laws and policies that almost all economists think are misguided (eg protectionism, fossil fuel subsidies, rent control, the Jones Act) attract popular support and are very hard to reverse?

Requirements: 

What we score:

79%

Our Writer’s Comment 

This assignment is designed to assess students’ understanding of business practices.

To secure an A+ grade, adhere to these guidelines and make sure your work aligns with the grading criteria:

Step 1: Understand the Question

The question is asking why certain laws and policies that most economists see as misguided—like protectionism, fossil fuel subsidies, and rent control—manage to gain popular support and are difficult to reverse. These are policies that may be economically inefficient but remain politically popular.

Your job is to explain why this happens and how it relates to the UK. So, you’ll need to look at the tension between economic theory and public opinion, as well as the role of politics and interest groups.

Step 2: Structure Your Essay

Here’s a clear structure to follow:

1. Introduction (Around 150-200 Words):

• Start by summarizing the question. Explain briefly what these policies are and why economists generally think they’re misguided.
• For instance, economists criticize protectionism because it leads to inefficiencies in trade, rent control for distorting housing markets, and fossil fuel subsidies for promoting environmentally harmful activities.
• In the UK context, you could mention examples like the UK’s housing crisis, debates over Brexit (protectionism), or energy subsidies.
• End the introduction with a thesis statement that outlines your main argument. For example, you might say something like, “These policies attract popular support due to political incentives, short-term benefits, and misinformation, making them difficult to reverse even when economically inefficient.”

2. Body Paragraphs (Around 900 Words Total):

Break this section into 3-4 paragraphs, each focusing on a different reason why these policies persist. Here’s how you could structure it:

A. Short-Term Benefits vs. Long-Term Costs (Around 250-300 Words)

• Many of these policies offer short-term benefits that are immediately felt by voters. For example, rent control keeps rents lower in the short term, and subsidies lower the cost of fuel. However, the long-term costs—like reduced housing supply or environmental damage—are harder to see.
• Explain that voters tend to prioritize short-term gains because they’re more tangible. This is known as myopia in economics.
• You could include a diagram here, such as a supply and demand graph to show how rent control creates a housing shortage by capping rent prices below the equilibrium point.

B. Interest Groups and Lobbying (Around 250-300 Words)

• Certain groups benefit disproportionately from these policies, such as landlords in rent-controlled areas, or industries that rely on fossil fuel subsidies. These groups have a strong incentive to lobby politicians to keep these policies in place.
• You could discuss how these interest groups are often well-organized and politically influential, while those who suffer from the policies (like renters or consumers paying higher prices) are less organized.
• Use a UK example here—like how energy companies have influenced fossil fuel subsidy policies or how farmers might support agricultural protectionism.

C. Lack of Public Understanding or Misinformation (Around 250-300 Words)

• Many of these policies are counterintuitive. For example, the idea that rent control could actually make housing more expensive in the long run is not obvious to most people. Similarly, protectionist policies may seem like they’re protecting jobs, but they can lead to inefficiencies.
• Discuss how misinformation or lack of understanding of economic principles makes it easy for politicians to promote these policies as beneficial.
• You could tie this into the UK context by discussing how public support for Brexit was driven, in part, by a misunderstanding of the economic benefits of free trade versus protectionism.

D. Political Incentives (Around 250-300 Words)

• Politicians often have short-term election cycles and need to cater to voters, even if the policies they support aren’t economically efficient. They may promote policies that appeal to voters’ immediate concerns (like keeping energy prices low or protecting jobs) even if they know the policies are flawed in the long term.
• Explain how populism and political incentives can sometimes outweigh sound economic reasoning.
• Include a UK example, such as rent control policies being popular in London due to high housing costs, despite economists arguing that they reduce housing supply.

3. Conclusion (Around 100-150 Words):

• Summarize the key reasons why these policies persist, despite being economically inefficient.
• End with a broader reflection on the role of education and economic literacy. You could suggest that improving public understanding of these policies might help align public opinion with what economists know to be true.

Step 3: Use Diagrams and Graphs

Since the question allows for diagrams and graphs, make sure to use them effectively. For example:

• A supply and demand diagram can help illustrate the impact of rent control on the housing market (lower prices, but less supply).
• You could also include a graph showing the deadweight loss from protectionism (tariffs or quotas creating inefficiencies in the market).

Make sure the diagrams are well-labeled and directly relevant to the argument you’re making. Don’t include them just for the sake of it—they should add clarity to your points.

Step 4: Use Real-World Examples

To score well, you need to ground your essay in real-world examples. Since the context is the UK, focus on examples from there. For instance:

• Protectionism and Brexit: Many people supported Brexit in the hope of protecting UK industries, even though most economists argued that it would create trade inefficiencies.
• Rent Control in London: Rent control has been suggested as a solution to the housing crisis, despite concerns from economists about long-term supply problems.
• Fossil Fuel Subsidies: Energy subsidies have been criticized for delaying the shift toward renewable energy, but they remain popular because they keep energy costs down for consumers.

Step 5: Cite Economists and Studies

Make sure to reference relevant economic theories and studies to back up your points. You might cite:

• Adam Smith’s theory on free trade and the inefficiencies of protectionism.
• Studies that show the negative long-term impacts of rent control or fossil fuel subsidies.
• Economist critiques of policies like the Jones Act (a US policy, but you could mention similar UK trade restrictions).

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