Transcript American Nations - Arlington Public Schools

Sociology
The Scientific Study of Societies,
Social Groups and Social
interactions
Sociological Imagination

Teaching yourself to think about how societal
institutions and social interactions are shaped by
the social context.

For instance: Will you get married and why?
– Your image of love and marriage and the image of
most of the world are vastly different because of your
culture.
– Ideas about love and marriage are socially
constructed. If you had to marry, without every
meeting the person you were to marry, someone of
your parent’s choice, would it work?
Use your Sociological Imagination
Why the Olympics?
 Why do people love/hate Obama?
 Why did George Zimmerman shoot Trayvon Martin?
 Explain 911 attack from Al Qaeda’s perspective and/or
our response from our’s?
 Why do all cultures have religion?
 What’s happening in Syria and why? Which theory
explains it best?
 Why are you here, right now, in this room?
 Why did you choose that outfit?
 Should they shut Strasburg down?
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From a cultural perspective
Points of View:
not mutually exclusive,
different points of view
Functionalism: views social activity and
institutions as evolved to facilitates the smooth
operating of societies.
 Conflict Theory: views societal institutions as
conservative, in which power elites conflict
with oppressed groups to maintain power. Social
movement form to “fight the power.”(Think
American Revolution, Protestant reformation, Al
Qaeda, Civil Rights Movement.)

– Society is dynamic, constantly evolving.
Points of View
Feminist Theory: looks at the ways society
treats women.
 Symbolic Interactions: Looks at social
interactions at the micro level. Language and
symbols are interpreted to facilitate interactions.
(What do your clothes/language tell others
about you?)
 Rational Choice Theory: People always act in
their own self-interest and try to do what’s best
for them.
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Symbolic interaction
Change?
Ethnic stuff.

Ethnic group/ethnicity:
– shared cultural values and norms that
separate one group from another.
– Shared, distinct awareness of of common
cultural identity. Mormons?
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Ethnocentric: being centered around one’s
own ethnic group, not liking others.
Race in society

Race: socially constructed belief that biological difference in skin
color, hair and facial structure proved a difference in other more
complex polygenetic qualities.
– Doesn’t mean there aren’t differences, only that those differences are
caused socially, not biologically.
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Eugenics: the pseudoscience that supported above.
Self-fulfilling prophecy: when a belief creates the predicted
behaviors of a group. Labeling a group “angry” makes them angry.
Stereotype threat: when a group that has a belief held about
them then internalizes that belief themselves, then perform
differently on tests when made aware of their of status. VERY
significant results.
Just World Phenomenon: tendency to believe world is rational,
bad things happen to bad people, makes us feel safe.
How?
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Experiments:
– Cause and Effect:
– Butt patting
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Surveys:
– Correlations:
 poverty and low performance;
 Alabama and being Democrat;
 Woman and voting for Obama or being Pro Choice.
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Ethnographies: actually living among social
groups, recording complex social patterns.
– Not generalizable to others.
– Sewar Children.
What is Culture?

The Values, Norms and Artifacts of a society.
– Values: abstract beliefs of the importance of different
constructs: family, caring for others, the nation-state, religion,
yourself.
– Norms: are unwritten rules a society about behaviors in specific
social situations, reinforced overtly or subtly.
– Artifacts: material goods created by societies. Iphones,
chariots, sports stadia. What do they tell you about the society?
– Memes: Bits of culture that are passed on virally through
observation and imitation.
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“that’s a clown question, bro”
Knuckle bump
Hat on backward
Baggie jeans/skinny jeans/mom jeans
“da bomb”
How do you get your culture?
Through a process called Socialization.
 Socialization occurs through socialization agents:
family, friends, school, nation, religion, etc.
 Socialization occurs as agents reward or punish
you for “acting right.” May be overt or subtle.
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– “Look how nicely you share”
– “What were you thinking?”
– A sideway glance.
Social Capital: The social
knowledge and connections that
enable people to accomplish their
goals and extend their influence.
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This what you get from your family and community that
you use to succeed in your culture.
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Money
Education
Cultural values
Good looks
Ability to get on with people
Social norms that have been socialized.
Power
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Power is the ability to force others to do what you want.
Authority: the permission from society to exert power.
Traditional societies
– Loosely defined borders
– Multiple ethnicities: often semi-autonomous (tributes)
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Nation States
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Well-defined, defended borders
All nations today
More homogenous
Central government controls all of civil life.
Failed States
Often in regions that HAD traditional
states (Kingdoms, Empires) but are now
Nation-states.
 Often many ethnicities within Borders
drawn for them by exiting imperialists.
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Word Trend: Democracy
119 of 192 countries deemed
democracies.
 2.3 Billion still live in countries considered
“not free.”
 Most Western Nations are “liberal
democracies”:
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– Multiparty elections
– Free market, competitive capitalism
– If winners, then losers?
U.S. Government
The U.S. is a representative
democracy: elected officials represent
the general cultural values of the voters
who elect them.
 Voters with similar cultures tend to cluster
in the same areas, developing cultural
sub-nations.

– Arlington ALWAYS votes Democratic.
Competing Interests

U.S. system is one of competing interests:
– Businesses, Unions, Single issue groups:
Abortion, Women’s rights, farm workers, NRA
– Left out: those without money.

Internet is widening the Net and reducing
the power of money
Today’s Democracies either have a
Multiparty of Two-Party system
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Parliamentary Systems.
– Members of Parliament elect the Prime
Minister.
– Have many political parties that form
coalitions to select the Prime Minister
– Multiparty systems creates a wide variety of
political thought within legislature,
compromised required.
Compare the Two based on
Influence from Interest Groups
A Billion Spent of Presidential PACs
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Our’s
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Britain’s
United States: Two party system
More likely to develop wide schisms between
political parties.
 Compromise required for actions. The Wider the
schism, the less likelihood for action.

– House of Reps (435): a simple majority of 218
required to pass anything
– In Senate (100): a Super Majority of 60 Required
these days. (filibuster)
– To override Presidential veto:2/3 of each. Party of the
President MATTERS.
So, Is the U.S. less democratic than
Parliamentary systems?
Probably not, its system is just different.
There are many competing interests.
Unions, Interest Groups like Unions and the
NRA, Lobbyists, and PACs all vie with CASH and
influence to influence the elections and
electorate in local, state and federal offices.
 Those without money and who don’t vote are
left out: poor, homeless, young etc.
 The United States has tens of thousands of
elected offices and the combination
provides lots of representations.
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U.S. Democracy: Voting Patterns
Increasing distrust of government and whether
or not your vote matters, reducing vote.
 U.S. has an awful turnout: 38th in world
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U.S.
Europe
Asia
S. America
Mexico
Africa
48%
74
70
62
60
55
In 2008
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Women Obama 54% McCain 46
Men
Obama 43
McCain 57
18-49
Obama 2 to 1
Women vote in larger numbers 55% to 45%
This year Republicans having been working hard
to limit voting of constituencies that traditionaly
vote Democratic. (Immigrants, poor Blacks)
Republicans have been more successful at
electing local politicians and judges.
Women in the Power Elite?

U. S. ranks 71st in World in women in power
positions.
– Tied with Turkmenistan and Rwanda
Not offered by two parties as candidates.
 Traditional power elites have been White,
Protestant, Wealthy, Males.
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– Felt a responsibility of that status.
– Very unrepresentative of population.
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Today: as independents have increased, more
economic diversity in candidates.
Does Money Buy Elections?
Citizens United vs. Federal Election
Board
In a Supreme Court decision it was ruled
that corporations have the same right of
free speech as individuals.
 Money=Speech. Therefore, corporations
can give as much money as they want to
PACs, that fund many election campaigns.
 Obama/Alito
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The Big Sort
In the U.S., people tend to move into
regions and neighborhoods with similar
thinking people:
 For instance, “the People’s Republic of
Arlington barely even nominates
Republicans for office.
 Gerrymandering even makes the ‘regional
cultures” more pronounced.
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The Supreme Court
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One of the biggest results of this years
election is the possible replacement of 3
judges on the Court having significant
influence on law for the next 20-30 years.
Could be significant in Roe v. Wade.
– Scalia: very conservative: 76
– Ginsberg: very liberal; 79
– Kennedy: moderately conservative, swing vote
in recent years. 76
Psychological concepts to Note
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Group Polarization: Psychological concept that the more you
are with groups of people with a specific value, the more like the group you
will become.
– Immigrants to a community will become more like the culture than they
were before.
– The culture changes the people more than the people change the
culture.
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In Group Out Group Bias:
Once established as an out
group, in groups form negative stereotypes about the outgroup, confirming
biases and scapegoating
Belief Bias: twist logic to make ideas fit you existing
belief.
Confirmation Bias: seek information that confirms,
ignore contrary.
Electoral College
The President is elected by the electoral college, which is filled by
electors that come from all the states.
 Each state gets its number of electors based on its representatives
(population) and Senators (2 each regardless of population)
 This system gives states with small population more weight than
they deserve (based on pop.) because each state gets credit for
their two senators.
Wyoming 3 Electors for 568,000 people;
Kansas get 6 for a population of 3 million
6 x more people, 2x the electors.
So Sometimes(3), Presidents are elected with a minority of votes:
George W. Bush, for instance.
Gore: 48.33%
Bush 47.8%
Nader 2.75%
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Real Debate
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Republicans: Private
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Free Market/Limited government:
let markets determine rights and privileges.
Minimal Regulation on Business activities.
Small Taxes, Small Benefits, small government
Limited protections for poor, unemployed.
Social conservative: no Gay marriage, no abortion (rape/incest).
Limited control of business uses of the environment.
Strong military
Democrats: Public
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Welfare/Socialist State
Not communist: Social protections.
Government actively involved in helping communities/people: Public/Private Partnerships.
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Regulate business to stop abuses.
Higher taxes for Bigger benefits, more protection for poor, elderly, unemployed.
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“We built it”
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Retirement
Health care
Unemployment
Help the poor
Socially Progressive: Pro Gay marriage; Pro Choice;
Environmental protections
Electoral College
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It requires 270 Electoral votes to be elected President.
Real Clear Politics (mid August): About 237 votes will
probably go to Obama (California and New York always
vote Democratic.)
About 191 will go to the Romney: (Since the 60s,
Republicans usually get the solid South.)
There are about 110 swing state votes left.
Romney needs to sweep most to win. (79 out of 100)
Obama can win with Florida only. Or several
combinations of smaller states.
These Swing States Will determine
the 2012 President
Electoral Votes in Swing Will
determine Presidency
Obama needs 23 to Win, Romney 79
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Fla 29
Ohio 18
North Car 15
Virginia 13
Colorado 9
Wisconsin 10 (Ryan)
Iowa 6
 NH 4
 Nevada 6
 Total 110
 Obama Needs 33
 Romney needs 79
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America’s Cultural Nations: Colin Woodward suggests
America is made up of 11 cultural nations with widely
different cultural beliefs established by their histories.
These cultural differences explain why we are so divided
politically. (and always have been)
American Nations: Colin Woodward
Remember
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These are Broad cultural trends. They say
NOTHING about and individual. Woodward
attempts to explain regional values and
voting patterns based on the cultures of
these regions.
Yankeedom: New England, Upper
Midwest: Mich, N Ohio, Wisc.
N.Ind
Utopian: City on
the Hill.
– Collectivists:
 planned community
– Egalitarian: no elites
– Predestined
– Education Imp.,
literacy for Bible
reading, business;
Ivy league schools
– Progressive use of
government to help
community
Yankeedom: New England
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Belief in Science, evolution and
global warming
Public Protestants Hoped God
would favor community;
Chosen People: needs to be
reflected by policies.
Allegorical biblical
interpretation
Became more religiously
tolerant over time (UU)
Women’s vote, Abolitionists,
Gay Marriage movement all
started here.
New England: Progressive
American Revolution Began here
 Abolition began here.
 American higher education began here
 Transcendentalists movement began here.
 Utopian Movements began here.
 Women’s Suffrage movement began here
 Universal health care began here
 Gay Marriage first legalized here.
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Midlanders: Pa, Del, Md,
Northern Va; some midwest,
Iowa, Missouri
Established by German
Protestant refugees: Pacifists.
– Quakers
– Amish
– Mennonites
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Very tolerant of others.
Strong community values.
Valued education
– Ben Franklin
– First Library
– Many newspapers
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Public Protestants
Progressive, Unions.
New Netherlands: New York city
and environs
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The business district, whatever is
good for business.
Welcomed all; think New York City
Always been multiethnic (first to
welcome Jewish people)
Supports established Federal
power: likes stability and control.
Good for business.
Financed and built most of early
nations infrastructure: Vanderbilt,
Rockefeller, J.P. Morgan.
Home of the Industrial revolution
(at least the financing)
Progressive Movement Started
here and Yankeedom as a
response to Industrial abuse.
The Left Coast: coastal area of
California, Oregon and Washington
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Very similar to Yankeedom,
settled by New Englanders
(Progressive) and
Borderlanders (fierce
independents)
Proud trendsetters
Progressive in Politics
Think: U. Berkley, Portland,
Seattle.
Education very important
Environmentalist, Hollywood
limousine liberals
Tidewater: Coastal Va. No. Carolina
Old Virginny
 Hierarchal status: like English
nobility.
 Hierarchy:
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– White tobacco farmers.
– freed indentured, poor whites;
– African-Americans.
Education for Aristocrats only
(UVA, Private colleges): not much
spending on public education.
 No federal involvement: Thomas
Jefferson/antifederalists.
 Little spending on infrastructure
well into the 1960s
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Borderlanders: Greater Appalachia:
W.Va, West Va. W. Carolina, W. Ga,
Ozarks, Kentucky, So Ohio, S.
Indiana, Tenn
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Scots Irish: escaping English
abuse.
Highly Clannish
Belief Local Control by
elders.
Warrior Class, VERY
INDEPENDENT
Education less imp. Know
your letters.
Frontiersman: cities not
planned, random, no schools
Think: Guns, God and
Nascar
Borderlanders: Appalachia, W. Ga.
Kentucky, Tennesee, Arkansas, S.
Missouri.
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Fought as much against Tidewater elite in
Revolution as British.
Used Whiskey as currency: Whisky Rebellion,
Bootleggers.
NOT slave owners, generally. Fought equally
North and South in CW.
Area ecology raped by New York Industrialists
need for timber, then coal, fueled anti Yankee
sentiments. (and Civil War, reconstruction)
Been impoverished since the beginning.
Borderlanders: Greater Appalachia
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Private Protestant,
– Personal redemption;
– Emotional,
– Literal interpretation of Bible
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Belief in rapture, return to
Jerusalem for 2nd coming.
Question scientific theories like
evolution and global warming
Social conservatives: Guns,
Gods and NASCAR, anti Gay
Marriage, Pro Life;
State’s Rights. Resent
interference from
“carbetbaggers”
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Creation Museum
Petersburg, Ky.
Deep South: Ga. S. Carolina, Ala.,
Mississippi, Louisiana, Texas
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Plantation Cotton chattel slavery: from
sugar islands and Ga.
Deeply hierarchal social order:
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Aristocratic whites,
poor whites,
blacks.
More radical than Tidewater
South shall rise again! Civil War: war
of Yankee aggression.
State’s Rights.
Feds are carpetbaggers;
Blacks and poor whites in direct
economic competition: sharecroppers
No education for blacks and poor
whites. No need. No Money for schools
Under economic stress since Civil War.
Deep South
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Emotional, private
Protestants. Personal
redemption.
Literal interpretation of
Bible
Belief in Rapture: return
to Jerusalem for 2nd
coming.
Question scientific
theories: Evolution, global
warming. Pro Gun, Pro
Life (one abortion clinic surviving in
Mississippi, home of Roe.V Wade.
Texas v. NY)
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Gone With the Wind
Not that long ago
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Far West: Nevada, Wyoming,
Idaho, Dakotas, Montana, Utah,
Colorado
Sparsely populated.
Not overly religious compared with
Dixie (except Utah)
 Controlled politically Mining,
corporate interests and mega
ranchers
 Much land owned by Feds,
resented.
 Formed out of Railroad tracts sold
to farmers from East.
 Can go either direction: some
battlegrounds states, differ with
Dixie and Borderlanders on some
issues.
 EPA is a pain vs.
Environmentalists.
 Belief in individualism. Pro Gun.
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El Norte: Parts of Texas, Nevada,
Ariz. New Mexico, Colorado, Calif.
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Here before English, left
over from Spanish
Conquest.
Closer culturally to
Northern Mexicans than
whites or So. Mexicans.
Never had much political
power: that’s changing.
Areas they live, controlled
by whites.
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Caesar Chaves: United
Farm Workers.
The Republican Coalition:
historically conservative
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Tidewater: hierarchal
Greater Appalachia/Borderlanders: fiercly independent, clannish.
Deep South: VERY anti Yankee, hierarchal.
(Mostly) Far West: independent. Guns. Federal Lands.
Consistently votes anti-federal, State’s and local rights.
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Small Government
Against Obamacare
Suspicious of welfare
Less regulation of industry (right to work states)
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anti-Gay marriage,
pro Life,
Anti-immigrant.
Question Science: evolution, global warming.
Strong supporters of Israeli control of Jerusalem, Holy Land.
Socially conservative:
The Democratic Coalition:
consistently Progressive
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Yankeedom: most progressive, communal.
New Netherlands: business and finance.
Midlanders: toleration, communal.
Left Coast: progressive, new ideas.
Have voted progressive, regardless of Political Party of
time. (yesterday’s Republicans, today’s Democrats)
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Pro Gay Marriage;
Pro Choice
Pro Obamacare or Single Payer.
Pro Science.
Dream Act
For Government regulation of industry.
Federal government seen as ally
Swing States are often split
culturally
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Virginia:
– Northern Virginia is more midlander culturally.
Arlington/Alexandria should be in New
England. Fairfax Moderate/conservative.
– Everything South is more Tidewater.
– West is Borderlander.
Red and Blue 2012:
Obama needs 23-50
Romney needs 79
Predict based on Cultural Natures
Obama needs 23, Romney 79
RCP With Polls
Real Clear Politics Map
 http://www.realclearpolitics.com/epolls/20
12/president/2012_elections_electoral_coll
ege_map.html
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LA Times
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LA Times Electoral Map
Today’s Economic/Government
Theory
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Market Oriented States:
– Free markets work, Government stay out: Tea Party
Republicans.
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Welfare States/Socialism:
– People’s needs are a social right:
– Unemployment insurance, health care and retirement
guaranteed. Democrats
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State Centered:
– The government should control, help and guide
economy: China.
– Usually Single Party.
Economic Systems
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Free Market Capitalism:
– unregulated, investment and return system.
– Winners get rich, losers try again.
– Creative Destruction, some get wiped out to
make way for innovation
– Adam Smith: Wealth of Nation (1776),
suggested this is the best system.
– Forced on South American countries in 1980s
and was very effective.
Economic System
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Socialism:
– System of market capitalism, where the
government makes sure the losers have
economic protections through unemployment
insurance, health care, guaranteed
retirement, etc.
– Embraced by all the industrialized
European countries
– Supported by high tax rates.
 Question of sustainablility.
Economic Theories in the Election
and beyond
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John Maynard Keynes: Keynesian economics. Economist
from Depression.
– Democratic vision
– Stimulus and Tarp were good ideas.
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Friederich Hayek/Chicago school/Austrian school.
– Tea Party Republicans.
– Stimulus Bad: tax cuts Good
– Lowering the budget deficits and National debt most important.
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Trickle-down: Reagan era,(Laffer curve).
– Current Republican vision.
– Reduced taxes on wealth and money will “trickle down” through the
economy.
– Economy will grow so big that tax revenues will incresase.
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http://www.youtube.com/watch?v=d0nERTFo-Sk
If tax rates go up, you eventually
get less tax revenue, as economy
shrinks.
Gross Domestic Product
All the money (value) generated by our
whole economy in a year.
 U.S. :Approximately 15 Trillion, largest in
world, by far.
 About the same as whole European Union.
 China about 7 Trillion
 Per Capita (ppp) 45,000 U.S. (China 8400)
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GDP Comparison: industrialized
world
Just to give you an idea: U.S. about
45K
2008 Crash/Recession/Depression
Monetary vs. Fiscal
Fiscal Policy: Spending is what the
government spends its money on: defense
and domestic.
 Right now:
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– Approximately 15 Trillion in debt.
– Running trillion dollar yearly deficits.
Debt: how do we stand? By 2030,
200% of GDP
Monetary Policy
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Is how much money flows into the economy and
how fast it flows.
Quantitative Easing: paying bills with printed
money
Controlled by the Federal Reserve, an
independent board.
Sets interest rates (prime)
Prints money
About 40% of the money we borrow we borrow
from the Fed, they print it.
– Watch for inflation, very low now.
Keynesian
The Economy can be controlled
manipulating fiscal and monetary policy.
 A recession is when the GDP shrinks.
 Fixes:
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– Fiscal policy: spend more money (Obama)
– Monetary policy: lower interest rates and print
money.
– If prices go up (inflation), raise interest rates.
Keynesian Critics (Tea Party
Republicans)
Say that Keynesian practices distort the
free markets, creating booms and busts,
picking winners and losers.
 Left to itself, the Free Markets will create
the best, most efficient economy.
 There will be business cycles, but they will
be moderate.
 Worked in South America.
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Hayek (Tea Party)
The government should stay out of the
economics business, sound policies aren’t sexy
but they work.
 Keep government debt low, money will build up
in banks, lowering interest rates naturally.
 If inflation starts, interest rates naturally will go
up, through market forces.
 Regulations also distort market, let the market
control what businesses do. If they mess up,
people won’t by their products, and they’ll go
bankrupt. That fear will keep them in line.
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Hayek Critics (Democrats)
We tried this unregulated economy and
got the Great Depression.
 Do you want to wait until we have a mass
die off from tainted food before the
business that produced it goes out of
business?
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Trickle Down (Republicans)
Reagan Era scheme. (George H.W. Bush called
“voodoo economics”).
 Reduce taxes on rich. The will then invest
money and hire people and increase the size of
the GDP until the economy grows so much, the
government will acutally bring in more money in
taxes.
 Sort of a Keynesian plan, where government
uses fiscal and monetary policy to control the
economy.
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Trickle down Critics (including
David Stockman, Reagan’s budget
chief)
It has never worked.
 It increases debt, without increasing GDP
 Only benefits the rich.
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Ryan Budget
Large cuts in domestic spending to reduce
debt and “bend the curve.”
 Large Tax cuts for rich and middle class.
 Change Medicare and Social Security to a
more private, market-based plan.
 Give seniors vouchers so that they can
buy their health insurance on private
market.
 Reduce regulations on businesses.

Differences in Economic Plans.

Obama
– Cut taxes on Middle Class
to stimulate growth.
 Economic growth will
increase revenue enough
to slow debt
– Cut some spending but
leave entitlements largely
uncut
– Cut defense
– AFA (Obamacare) bend
curve of Heath Care costs.

Romney
– Cut Taxes on Wealthy and
Middle Class
– Leave Defense
– Get rid of AFA (Obamacare)
– Dramatically cut spending
on Entitlements:





Social Security
Medicaid
Medicare (Ryan)
Unemployment
Welfare.
PreObamacare Health Care
Seniors: covered by Medicare (government
insurance.)
 Well-employed: covered in combination with
employers.

– Typically 2/3 employer; 1/3 Employee
– If you lose your job, you lose insurance.
Working poor: uninsured, use emergency room.
 Poor: covered by Medicaid (government
insurance)

What to Do?

Attempts to take the
50 million
uninsured and put them in a subsidized
private market for health insurance, so they
don’t have to use the emergency room as their
primary health provider.
 About 70% of bankruptcy are caused by health
related problems. Average bill for hospital care
over $20,000. (includes those who don’t have
insurance and those who do, but can’t afford
out of pocket costs.
Currently
Medicare (65 +)
 Insured through employer
 Uninsured
 Medicaid (poor)

50 million
150 Million
50 million
60 Million
Under Affordable Care Act
Obamacare
Medicare: 50 Million
 Insured:
200 Million
 Uninsured: small number paying
taxes/penalty.
 Medicaid: expanded to 80 million or so.

(Many Red states saying they will not accept the Federal money
designed to help.)
Eligibility by State: notice cultural
trend?
Is Race an Issue?
Obamacare
Seniors: Medicare: No Change.
 Well-employed No Change, except

– Can take insurance with you
– Can’t be denied: prexisting conditions.
– Kids can stay until 27
– No lifetime cap
– Free well care, women’s care
– No discrimination for sex
Obamacare:
The Mandate

Working poor/not insured (young and
fearless):
– Must buy health insurance from “exchanges”.
– If can’t afford, government pays/helps.
– If can afford, you have to buy or pay a “tax”
(Mandate)
– No more emergency room “tax” on the rest of us.
 Currently, unpaid “bills” are passed on to government or rest
of us in higher prices: $60 aspirins, etc.
Obamacare

Poor: covered by Medicaid.
– Increase in number by about 20 million
expected.
Ryan Plan: designed to bend the
curve in 10 years.

Seniors: given vouchers to pay for health
insurance.
– If not enough, burden shifts to them.
– Vouchers indexed to inflation: currently health
insurance goes up twice that rate.
 Ryan assumes increases will decreast because of
competition.


Well-employed: no change
Working Poor:
– back to emergency room, cost passed on.
– charity

Poor: Medicaid reduced numbers qualify.
Single Payer (Liberal position)
Health Care is right, not a commodity.
 Everyone gets Medicare coverage.
 Done everywhere but here.
 Very expensive, but government control
means government control of prices

– See Japan, Britain, France.

Ain’t gonna happen, too many interest
groups aligned against it.
– Obama didn’t even try, angered liberal base.
Former Vs. Obamacare (ACA, 2014)
 Formerly:



Seniors: Medicare (50m)
Well-employed: employer
based(120m)
Uninsured: (50m)
– go to emergency room,
– pay out of pocket,
– deficits passed along

Poor: Medicaid (50m)
– VARIES BY STATE
 Obamacare:




Seniors: Medicare
Well-employed: employer
based.
*Protecton laws.
Uninsured: Must buy,
government help working
poor.
Poor: Medicaid.
– Expanded
– Paid by fed.
Major Complaints
Government forcing people to buy a
product. Health Care NOT a right!
 Government will be able regulate industry,
distorting economics, inefficient.

– Death Panels!

Profit based health care:
– More effective
– cheaper
Major supports
Health care currently doesn’t cover everyone, it’s
a right in an industrialized economy.
 Health Insurance companies

– work to maximize profits,
 kick off sick, exclude those who are potentially more
expensive,
 charge whatever the market will bear.
If government controls prices, it can reduce
costs for nation.
 If people want more, they can still buy it.

Here’s the Problem and Ryan’s
Point

Medicare WILL bankrupt the country,
probably by 2030.
– He’s right, but what to do?
We spend 16-18% of GDP on Health Care.
Next closest about 12% and they cover
everyone.
 Opponents to nationalized believe our’s is
better, not supported by statistics.

Ryan’s Medicare





Indexed to Inflation
Offers option to stay on
current Medicare or Buy
Privately
Assumes cost decline
because of competition.
Higher cost for those who
can afford, lower for
those who can’t.
Doesn’t start for 10
years.
As percent of GDP
What’s Happening?
http://theincidentaleconomist.com/
wordpress/health-outcomes-reportcards-by-country/
The U.S. Econonmy
How To Buy a House

Normally, when you buy a house you must
-bring some of your own money (5%)
-borrow money from the bank the
repayment of which is called a
mortgage.
Your money
Mortgage Loan from
PLUS
+
You buy
House
Regular mortgage

You, then, repay the bank every month for
your mortgage.
You make monthly
Payments to bank.
If you don’t pay the bank, the bank forecloses on
you and takes your house and sells it to someone
else to get their Mortgage money back.

And you lose the money you put in:
Mortgage Back Securities

If enough people buy houses, the Banks would
run out of money to lend as mortgages, so there
needs to be a way for banks to get more money,
so they can make more loans.
– So, the bank sells all their mortgages in big bundles
of mortgages called Mortgage Backed Securities:
– They take fees for their effort, those are their profits.
– More mortgages, more fees, more profits.
Fannie and Freddie

Fannie and Freddie are called Secondary
lenders.
– They buy the Mortgaged Back Securities from the
banks.
Mortgage Back Securities
>>
^
^
^
----
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
Banks get their money back, to make new mortgages.
:
:
:
:
So

The more mortgages a bank places the
more money in FEES they made:
And So Does Freddie and Fannie
because they sell their Mortgage
Back Securities
Fannie and Freddie Sold the Mortgage
Back Securities they bought from Banks to
INSTITUTIONAL INVESTORS: like big
Insurance Companies, Pension
Funds, Oil Rich Nations, OTHER
nations, and Billionaires and
 Fannie and Freddie Make Fees and they
get richer and richer.

Ultimately
The money for House Mortgages comes
from these Institutional Investors who
need long term return on their money:
 Institutional investors>>>>>Fannie and
Freddie>>>To Mortgage Banker>>>>to
house buyer>>>>>House Seller

All in all, pretty safe system. Most
people repay because regulations
required:
*Buyers required to use some of their own money. No moral
Hazard.
*The Bank Checked the borrower’s credit history.
*The Bank Made sure the borrower had a job that pays enough
to make the mortgage payment.
In the late 1990s

Bill Clinton signed bill getting rid of Glass
Steagall
The Depression

Because of the Great Depression the GlassSteagall Act was passed, to prevent commercial
banks from making risky investments.
– Commercial Banks: take money from depositors and
lend it to homeowners and consumers at interest.
 Deposits are insured by government.
– Wall Street Banks: take money from big money
investors and invest it into business at high risk/high
reward.
 If you lose: tough
In 2000

George W. Bush is elected,
– He’s a free market capitalist and hates
regulations,
– So doesn’t strickly enforce regulations against
Wall Street Bankers.
Wall Street Banker
Some Terms
GDP: all the goods and services a country
produces: its WEALTH.
 Fiscal Policy: How much money the
government taxes and spends.
 Monetary Policy: set by the Federal
Reserve Bank:

– How much money is in the Economy.
– How high or low interest rates will be.
After 911 Fear of Recession
(shrinking of GDP)

So, Bush wants to STIMULATE the
economy by increasing Real Estate
purchasing. (Irony alert: Keynesian)

The FED lowers interest rates, making a
new home owners payment to bank less:
– Monthly payment = Amount of mortgage and
interest.
Wall Street Gets in the Game
Wall Street wanted to get into the
lucrative housing Mortgage game.
 Created something called a SUB Prime
Mortgage.
 No pesky regulations of banking

How Subprime Mortgages Differed
from Conventional Ones
No Down Payment Required. (Moral
Hazard)
 Bad Credit History OK! More risk, more
gain!
 Unverified Income: Liar Loans.

ARMS: Adjustable Rate, Sub Prime
Mortgages
In the first few years, these mortgages
had VERY low payments. (Anyone could
afford)
 After the first few years, the Payments
went WAY up. (Almost no one could
afford).
 The Gimmick: After the first few years,
you could borrow another mortgage with a
low payment and pay off the first one.

Sub Prime Mortgages
Original Mortgage: $500,000-payment low
for two years, then goes way up.
 Go to bank create another mortgage for
$500,000 with a low payment first few
years: use money to pay off Original one.
 People often borrowed $550,000, paid off
original one, and kept the leftover $50,000
to buy things with.

Win Win Win

Everybody Wins:
– Sellers have more buyers to buy their house
(demand skyrockets)
– Buyers with no way to pay back loan, gets the
American Dream.
– Mortgage Bankers make fees everytime a loan
is made or refinanced.
– The High, newly created demand, makes
home prices for everyone go way up.
But who would buy Mortgage Back
Securities based on these shady
loans?
Wall Street, that’s who.
 They funneled Trillions into the Amerian
housing market.
 The only way they could lose is if housing
prices quit going up, or horrors, went
down.


Wall Street Would sell these
“subprime” mortgage backed
securities.
To “Insitutional investors”
– Insurance Companies (AIG)
– Pension funds (Va Teachers retirement plan)
– Nation States: (Iceland, etc)
– Mutual Funds (IRAs)
Rating Agencies

Rated this Junk: AAA
In 2008
Prices for houses rose so high that even
with Sub Prime Mortgages, demand went
down. (Predictable).
 When Demand dropped, Prices dropped.
 Dropped Fast.

Owners with Sub primes
Walked away, leaving a glut of houses on
the Market. (moral hazard)
 Prices dropped further: 9 Trillion dollars
evaporated from economy.
 Anyone who made money from housing,
was laid off. Unemployment rates
skyrocketed.
 Obama elected Preident.

TARP
Banks lost So much money that we were
endanger of the entire banking system
collapsing, wore that the Great
Depression.
 U.S. Government (and European govts)
bail out the banks to save the economy.

Recession Reocurs because of out
of work workers.

What to do?
– Stimulate: spend money to keep the economy
moving and raise taxes on wealthy. or
– Cut spending: making everything Worse.
Liquidity Trap
Businesses had money, but no one to buy
their goods. Money stopped flowing
through economy.
 People with Money were scared to spend
so paid of debt and saved. Lowered
demand further.
 So, the spender of last resort is the
government.

Most Economist wanted to take a
Keynesian Stimulus Course

Congress okayed about 800 Billion, about
½ what economist believed would be
necessary.
The national debt Ballooned
because of:
Bush Tax cuts to EVERYONE, including
wealthy.
 Bush Drugs for seniors.
 Two Wars: Afghanistan and Iraq.
 The lose of Tax Revenue because of
Recession.
 The Stimulus package and Tarp (the least
expensive) to save the economy.

This doesn’t include Medicaid Plan
B, which was a trillion of it.
Should we freak out?
Should we raise taxes?
The Debate

Do you keep spending and cut taxes on the
middle class spenders to get out of the
Recession?
– Increases debt in the short term
– Increases size of economy increasing tax revenues
and shrinking “relative size” of debt.

Do you cut the budget and slow spending from
the government and CUT taxes further?
– If we get debt down and Lower taxes on Wealthy
“investors” they will hirer workers to stimulate the
economy.