POLS 112 Lecture: Allocating Values - Economic Prosperity and Social Welfare
POLS 112 Lecture: Allocating Values - Economic Prosperity and Social Welfare 8616
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This 5 page One Day of Notes was uploaded by Julia Gladding on Sunday January 25, 2015. The One Day of Notes belongs to 8616 at California State Polytechnic University taught by Michael Latner in Winter2015. Since its upload, it has received 119 views. For similar materials see POLS 112- American and California Government in Political Science at California State Polytechnic University.
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Date Created: 01/25/15
Tuesday January 20 2015 POLS 112 Lecture T 120 Allocating Values Economic Prosperity and Social Welfare The Provision of Goods Markets and Market Failures much of public policy is making up for where markets fail policy provision of goods excludable nonexcludeable rivalrous Private Goods Common Goods Tragedy of the Commons nonrivalrous Club or Toll Goods Public Goods social media parks safety markets do a good job at providing private goods because of the exclusive and rivalrous properties some think we should rely on markets to provide all of these goods often establish governmental groups to provide public goods Monetary Policy Rates amp Circulation the regulation or circulation of capitalmoney in the economy enacted and regulated through central independent banks US s central bank The Federal Reserve primarily through interest rates which change the amount of money circulating in the economy Libertarian Only when individuals are given full economic freedom will it be possible to secure political ad moral freedom Liberal When the rate of return on capital exceeds the rate of growth of output and income capitaism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based Tuesday January 20 2015 Picketty Capitalism unregulated leads to oligarchy Socialist In bourgeois society capital is independent and has individuality while the living person is dependent and has not individuality markets fundamentally don t work Medication for Depression every nation state has some sort of regulation Keynes is right Keynes v Hayek Hayek free market In the Classical World Hayek Free markets economies are always stable Tending toward full employment amp full production equilibrium Freely fluctuating prices in the three major macro markets ensure this goods money and labor markets instability is the market doing its job setting the clearing rate for products and goods there is no alternative critique of top down planning there is no way a bureau can take in all the information necessary to set prices prices are the result of millions and millions of individual decisions when a government artificially changes pricesdemand sending bad signals into the economy When people read these bad signals will create artificial value gt inflation bubble In the Keynesian World Free market economies are unstable Equilibrium yes but no reason for full employmentfull production Hayek s view unemployment is good for markets Demand becomes a much bigger driving force Tuesday January 20 2015 Supply will always adjust to Demand stimulate demand by injecting capital into the economy because markets don t selfcorrect In a way according to Keynes Demand creates its own Supply Market Failures TimeInconsistency people will get return now even if people could get a higher return in the future We tend to discount the future because the future is unstable Bad Signaling real estate Hidden Information investors engage in more risky behavior because they are acting with your money not theirs Economic Steering trying to keep the economy stable primary interest rate the rate of interest charged when banks borrow money from each other If the economy starts to slow down Federal Reserve should lower the prime interest rate making it easier to borrow stimulating economic growth encouraging investment Lower tax rates to put more money in people s pockets Downside Value of the capital becomes less inflation Keynesian answer if inflation starts to become a problem the Fed can take money out of the economy Raise the interest rates Keynesian argue we can smooth out the businessboomandbust cycle If growth slows too little capital circulation cut rates cut taxes and invest stimulate If growth is inflationary too much capital circulating raise rates increase taxes and cut programs Fiscal Policy Distribution amp Redistribution Taxation Income Sales Feeds Spending The Federal Budget Tuesday January 20 2015 Roosevelt s New Deal purpose to put money in people s pockets they will spend it Where does the money for government spending come from Mainly income tax Local state governments get revenue mainly from sales tax Most states property tax California does not take in a lot of property tax Prop 13 property tax cannot go above 1 Californians pay additional property fees just don t call it tax Marx v Keynes v Friedman v Picketty lEfDEBALBUDGET Deleqse andolnlemationall Social Security A Security Assrstance Bene ts lur federal Retirees and Veterans SareryNer 44m W EEmT M W Non323m Medicare Medicaid and CHIP Allow hlemabona l Picketty s point If the wealthy top 1 aren t taxed than they will control more of the wealth and that s normal The Great Gatsby Curve the connection between income inequality and social mobility US has the worse of both worlds ow social mobility and rapidly increasing inequality Tuesday January 20 2015 Equality v Liberty Social Welfare and Inequality fundamental tension between equality and liberty we value them both the more free we become the more unequal we become If we want to maximize liberty it comes at the cost of equality If we want to maximize equality it comes at the cost of equality
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