Transcript American Dilemmas - St. Edward's University

American Dilemmas
Models and Economic
Approaches
1/24/2012
Learning Objectives
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Critically analyze social problems by
identifying value perspectives and applying
concepts of sociology, political science, and
economics;
Use knowledge and analyses of social
problems to evaluate public policy, and to
suggest policy alternatives, with special
reference to questions of social justice, the
common good, and public and individual
responsibility.
Opportunities to discuss course
content
• Today- 11:45-2:00
• Wednesday- 10-2:00
Paper Proposal
• Due in class on 2/7
• 5% of your final Grade
• Involves submitting 2 Parts
– Worksheet
– 2 page paper
ECONOMIC MODELS
What are Perspectives/Models
• Methods that each discipline uses to
understand social problems
• Simplified representations of some aspect of
the real world
– Simplify and clarify difficult problems
– Help understand what is important and
unimportant
ECONOMIC MODELS
Rationalism
• Cost- benefit
• Cost Effectiveness
• Risk assessment
Cost Benefit Analysis
• What is it?
• How Do you Conduct it?
• How do you put a value
on Human life?
Cost-Benefit II
• Advantages
• Criticisms of C-B
Cost Effectiveness
• How it Works
• Fixed-Budget Analysis
• Slot Machine strategy
Cost Effectiveness II
• Fixed- Effectiveness
• Criticisms
Risk Assessment
• What is it?
• How does it Work?
• What are its' criticisms?
– Overestimating error
– Lowering Risk is
Expensive
A Cross-over Model
Rational/Public Choice
Rational/Public Choice
• The application of
economic analyses to
public policymaking
• In economics, people
pursue their selfinterests in the market.
• In policy you try to
maximize your personal
benefits
Public Choice Actors
• Can be applied to any unit of analysis (state,
person, interest group, etc)
• People will join collective organizations when
it benefits them.
POLITICAL MODELS
Incrementalism
• Select policies based on the existing order.
• Policy is a continuation of past government
activities with only incremental modifications
• A policy conservative and expedient way of
making change.
• Downsides?
Political Feasibility
• What is it
• How Does it work
Economics
The Dismal Science
Economics
• Fiscal Policy
• Monetary Policy
The Economy as a series of sectors
The Modern U.S. Economy
• A Shift Away from the
First Two Sectors
• A Service Based
Economy
– Affluent service jobs
– Welfare service
– Service Jobs
The Economy as a series of “Collar” Jobs
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White Collar
Blue Collar
Pink Collar
Green Collar
Collar does not always
equate with income
Who Does it
ECONOMIC POLICY MAKERS
Key actors in Economic Policy
• We do not have a single
economic policy
• The federal government
is the key player here,
why?
– The Power to Tax
– Regulate foreign trade
– Coin Money and set its
value
States and municipalities are also Big
Players
• They can also tax
• They can provide
incentives for economic
growth
• Provide services for its
residents
Economic Growth: Goal #1
• An Increase in the GDP each year
• More Money means more tax revenue
• uncontrolled growth, however, is not a good
thing
Historical GDP Change
Low Unemployment: Goal 2
• What is Unemployment
• Who does this Exclude?
• What it doesn’t measure?
The Positive aspects of Low
Unemployment
• More Tax Revenue
• Fewer people receiving
benefits
• Lower Crime
Unemployment in U.S.
Our Unemployment compared to other
Nations
• Historically, it has been much lower
• Even in our poor economy, it is lower than the
EU region
The Decline of Labor Unions
The Economic and Political Effect of Unions
• Union Workers earn
10% to 15% than nonunion workers in similar
occupations
• A large player in
“special interest”
politics
Why the decline in Organized
Labor
• The Growth in “RTW” States
• The decline in manufacturing jobs and large
factories
• Globalization of the economy
• Government has assumed many of labor’s
roles
Economic Goal 3: Low Inflation
• What causes inflation?
• The Government wants
low levels of inflation,
why?
The Consumer Price Index
• What it includes
• What it excludes
• How it has changed
over time
Goal 4: A positive Balance of Trade
• A Nation Wants to Export more than it
Imports
• The United States is the reverse
The Big Mac Index
• A way of measuring the
strength of the dollar
• Big Mac’s involve a fixed
product
• What it involves
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http://www.youtube.com/watch?v=sz656YOEixI
Big Mac
Index
Our Trade Deficit
Why We have a Trade deficit
• Where it comes from
• What are the reasons
The Advantages and Disadvantages of a
Trade Deficit
• Disadvantages
• Advantages