Business and Government Week 2: History, Theory, Role of Government, and Modern Banking
Business and Government Week 2: History, Theory, Role of Government, and Modern Banking POLS 2340
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This 3 page Class Notes was uploaded by Aubrey Kenderdine on Monday September 19, 2016. The Class Notes belongs to POLS 2340 at Northeastern University taught by William D. Kay in Fall 2016. Since its upload, it has received 19 views. For similar materials see Business and Government in Political Science at Northeastern University.
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Date Created: 09/19/16
Business and Government Week 2 September 16 Lecture Notes 20012014 America at War and the Great Recession Troubled Asset Relief Program (TARP) Buy up companies that are about to go bankrupt Bush Administration American Recovery and Reinvestment Act Economic stimulus attempt Obama administration Consumer Financial Protection Bureau (Elizabeth Warren) Affordable Care Act (it’s unique for America to tie healthcare to employment) U.S. credit rating reduced, fiscal cliff U.S. debt ceiling keeps rising (maximum that the debt is allowed to be) Last thing to improve in a recovery is usually employment Public vs. Private and Government vs. Market approaches oversimplify the provision of goods and services; it’s more of a spectrum Direct government production (producing military weapons by the federal government) Intergovernmental agreement (federal government leasing local governments) Contracting (private prisons, local government contracting private towers) Franchising (county cable) Vouchers (food vouchers) Subsidies (government agencies giving grants to private companies Market (all private entities) Cooperative (companies teaming together) Self (homeschooling) Roles for government Producer, provider, operator Arranger Regulator umpire (environmental regulation), traffic cop (divided radio into frequencies) Consumer (buying rockets) Renaissance inventions and institutions First modern banking Medici Bank (13971494) financed the arts of the Renaissance The corporation Modern banking system Reserve requirement legal minimum and usually also a discretionary minimum Fractional reserve banking first used by Medici Lower reserve rate (10%) = more money out there Introduced money multiplier FDIC watches banks carefully, will reimburse account holders if bank fails Corporations British East India Company The first corporation in 1599 Founded by the wealthy, known for the start of imperialism and colonization 1601 Dutch East India Company was also a notable one of the first corporations Sole proprietor not a distinction between personal and business (risky and limited) Corporate entity distinction between personal and business (safe, secure, flexible) Critiques of government economic intervention Promotes rentseeking Income derived from markets for patents or other exclusivity rights Patent trolls, taxicab medallions, Icelandic fishing boat captain permits Government supports a certain type of technology that may not be the best Government monopoly leads to overproduction (inefficient, no incentive to innovate) Economic freedom = political freedom Regulatory takings Some laws infringe people of property right (5 Amendment) Seizing property where endangered animals live Increased costs Policy tools Regulation, legal sanctions Fiscal policy (taxing and spending), influenced by John Maynard Keynes Monetary policy Taxes criteria Productivity Neutrality (Reagan turned down movie that’d place him in the next tax bracket) Implementation costs Equity (progressive and regressive taxes)