Transcript Name of your country - Memorial University of Newfoundland

POSC 1000(056)
Introduction to Politics
Russell Alan Williams
Part One: Introduction
Politics and the Economy
Required Reading: Mintz, Chapter 3, pp. 52 74.
Unit Objectives:
To explore the relationship between politics & economics
To examine how economic systems impact politics
Outline:
1.
2.
3.
4.
5.
Introduction
Types of Economic Systems
Why do modern governments intervene in the
economy?
Economic sources of political conflict
For next time
1) Introduction:
i) Politics and economics?
Politics = struggle over public policies
Authoritative allocation of resources . . .
Similar definition to economics
Economics focuses on how markets work
Separation of economics from politics?
Ignores degree to which politics supersedes
markets???
Political impacts on economy:
Theoretical: Markets cannot exist without
political order
E.g. private property
Practical: Governments are major players in
the economy
• E.g. Taxes, spending and employment
ii) Economic systems generate “inequality”:
Countries with
highest inequality
Gini index
Poorest 20%
Wealthiest 20%
1.
Sierra Leone
62.9
1.1%
63.4%
2.
Central African Republic
61.3
2.0
65.0
3.
Swaziland
60.9
2.7
64.4
4.
Brazil
60.7
2.2
64.1
5.
Nicaragua
60.3
2.3
63.6
6.
South Africa
59.3
2.9
64.8
7.
Paraguay
57.7
1.9
60.7
8.
Colombia
57.1
3.0
60.9
9.
Chile
56.7
3.3
61.0
10.
Honduras
56.3
2.2
59.4
Countries with
lowest inequality
Gini
Index
Poorest 20%
Wealthiest 20%
1.
Slovakia
19.5
11.9%
31.4%
2.
Belarus
21.7
11.4
33.3
3.
Hungary
24.4
10.0
34.4
4.
Denmark
24.7
9.6
34.5
5.
Japan
24.9
10.6
35.7
6.
Sweden
25.0
9.6
34.5
7.
Czech Republic
25.4
10.3
35.9
8.
Finland
25.6
10.0
35.8
9.
Norway
25.8
9.7
35.8
22.
Pakistan
31.2
9.5
41.1
23.
Canada
31.5
7.5
39.3
Political struggles often about public policy
impacts on equality
Inequality rising . . . .
Question: Should governments redistribute
wealth?
E.g. Provide basic services regardless of ability to
pay?
2) Types of Economic Systems:
i)
Pre modern market economies:
Free exchange of goods
Most production for personal consumption
=Low inequality
=Inefficiency
ii)
“Mercantilist Policies”/Economics:
States organize economy to achieve “national
interests”
Development and industrialization
•
•
•
Protectionism
Monopolies
Exploitation of colonies
=increased scale of production
=increased power of dominant states
Problems?
-Inefficiency
-Little international trade
iii) “Free-Market Capitalist System”:
Based on:
•
•
•
Private ownership of production – decisions made to
profit investors, not national interest
Economic activity organized through voluntary markets
Little role for state in economy – politics is residual
Efficient!
• Links production to what consumers want
• Incentives for innovation – new technology
– E.g. Competition
Problems?
a) High Inequality: Political challenge?
b) Concentration:
Development of monopolies
E.g. Rogers - Suggests need for government
intervention/regulation
c) Concentration and politics: Produces an economic
elite who may be able to dominate politics – risky
•
Can abuse political system to undermine market
iv)
“Socialist Economic Systems”: Based on:

“Public” ownership of businesses and economy

State “central planning” of production replaces
markets
– E.g. State officials make decisions about
what should be produced

Examples?
=Lower levels of inequality
=Central planning can stimulate industrialization
Problems:
Inefficiency -poor goods; or not available
Corruption
v)
“Mixed Economy”: Mixture of socialism and free
market capitalism
Much production organized by private investors
Large state involvement (public ownership) in
some areas of economy
Examples?
Benefits?
Open to debate . . .
Controversy:
Large state involvement in economy corresponds to
higher equality
Lower state involvement corresponds to better
economic growth
E.g. globalisation – economies with low state
involvement “rewarded”
Important modern debate – what kind of mixed economy
do we want?
Very ideological . . .
3) Why do gov’s intervene in the economy?
Practical reasons:
i) Protect environment
Intervention = regulation of pollution
ii) Protect consumers
Markets do not always protect health and safety
of consumers
• Intervention = product safety standards
Markets too concentrated
• Intervention = Ownership restrictions or state
ownership
iii) Protecting citizens
E.g. High level of inequality
• Intervention = “Welfare state”: Policies to
ensure minimum standard of living
– EI and social assistance
– Health care, housing and education
• Right of citizens regardless of market
outcomes
Question: Status of the welfare state in Canada????
iv) Protect the economy
Capitalism = volatility in economy – “boom and
bust”
• Intervention = Government macroeconomic
policies
=“Keynesianism”: Gov’t increases spending or
cuts taxes to stimulate economy during
recession
=“Monetarism”: Gov’t intervenes in markets to
control supply of money – promote stability
– Keep inflation low
– Keep currency stable
Bottom Line:
Political interventions are common
Debates over whether interventions are in the
“common good” or not
Modern “neo-liberal” economists think most
interventions economically bad
Yet, intervention still common . . . .
4) Economic sources of political conflict:
All economies generate conflicting economic interests
Manifested in “political cleavages”
i) “Social Class”: Group of people who have similar
position (or interests) in economy
• E.g. “Merchant class”
Political importance depends on existence of
“class consciousness”
• Group has to see them selves as class with
shared interests
• Do classes exist in Canada . . . ?
ii) Geographic divisions
Economic development is uneven
• Urban centres “better off” than rural areas
• Manufacturing based economies better of than
natural resource based economies
Can cause geographic cleavages
• Rural residents demand special status
E.g. Increased electoral representation
• Irony: Rural residents tend to be less supportive
of state intervention in economy
iii) Gender and Race: Economic benefits uneven based on
social groups
E.g. Aboriginal Canadian Unemployment
• Leads to demands for “Affirmative Action”
E.g. Women's “income gap”
• Leads to demands for “Pay Equity”
Close link between these cleavages and new forms
of “identity politics”
Conclusions:
1) Politics often involves debates over how, or whether to
intervene in economy to redistribute resources
2) Economics and politics are interactive
Politics sets ground rules for economy
Economic system creates political cleavages
Political Science
Mixer
Friday, 18 September 2009
UC 2001 – Council Chambers
5pm – 8 pm
All political science faculty and
students are welcome to attend!
6) For next time:
Unit Three: Politics and Ideology
(September 23)
Required Reading:
Mintz, Chapters 4, 5 & 6, pp. 75 -148.