Transcript How Should the United States Government Carry Out Its Economic

How Should the United States
Government Carry Out Its
Economic Role?
Government intervention in the
economy…Keynesian Economics
Property Rights: Article I of US
Constitution
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Federal government’s powers under the
Constitution
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Delegated powers? Reserved powers?
Concurrent powers?
Regulation: establish laws and rules to
influence favorable economics
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US Patent and Trademark Office
Essential for Free Enterprise market system?
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John Maynard Keynes, “Keynesian Economics”
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Opposite of “Laissez-Faire”
Exception to Private Property!
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Eminent Domain
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Power of government to take individual
property for public use if the owner is “fairly”
compensated
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5th Amendment: “Nor shall private property be
taken for public use without just compensation”
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The “Takings Clause”: Kelo v. City of New London, 2005
Regulatory Roles of Government
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Acts to maintain competition when
markets don’t!
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Regulatory agencies: Justice Department,
Federal Trade Commission.
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In restraint of trade, mergers
Government Protection of
Consumers
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Food and Drug Administration
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Teddy Roosevelt
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The Jungle, Upton Sinclair
Department of Labor
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Franklin Delano Roosevelt
New Deal Legislation
 Francis Perkins
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Should Government Deregulate?
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Removal of government restrictions on
firms’ economic activity to increase
competition – more of a free enterprise
system
Government Involvement in
Externalities and Public Goods
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Positive versus Negative Externalities
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Public education versus health care
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Preservation of Common Resources
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Tolls, Quotas, Privatization
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Implementation of corrective taxes, cap and trade permits
(use of energy and pollution limits)
Overused or destroyed = “tragedy of the commons”
Government Failure?
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Causes inefficient allocation of resources
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Gray Davis and deregulation of energy, 1990s
Government Promotion of
Economic Well Being?
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Beginning with the Great Depression,
1929 – World War II
New Deal of FDR
 Cold War defense industries, 1945-1989
 Kennedy’s New Frontier, 1960-1963
 Johnson’s Great Society, 1964-1968
*Government welfare system has become
ingrained…American citizen:
“government must take care of us!”
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Government Regulation Vocabulary
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Regulation
Eminent Domain
Regulatory Agencies
Merger
Deregulation
Externalities and Public Goods
Common Resources
Tragedy of the Commons