Transcript US and Austrian Economies 2011

Introduction
to the US
Economy
1
Some of your impressions of the USA . . .
"There is no social safety net in the
United States."
"American hospitals /doctors refuse
treatment to patients without
health insurance."
"Most Americans own a gun."
"Most black people in the US are
poor."
2
Some of your impressions of the USA . . .
"There is no social safety net in the
United States."
62% agree
"American hospitals /doctors refuse
treatment to patients without
health insurance."
38% agree
"Most Americans own a gun."
45% agree
"Most black people in the US are
poor."
28% agree
3
Question #1
capitalism - C
lobby - B
Reaganomics - E
tariffs - K
private sector - A
business ethics - D
tycoon - J
anti-trust action - F
"a hand out" - I
market forces - G
public sector -
H
4
Question #2
Political Action Committee ( - lobby)
International Monetary Fund
Food and Drug Administration
International Business Machines
Internal Revenue Service ( - the “tax police”)
Securities Exchange Commission
General Motors
“Grand Old Party” ( - the Republican Party)
Non-governmental Organization
5
Question #2 (continued)
National Association for the Advancement of
Colored People
General Agreement on Tariffs and Trade
Federal Trade Commission
American Civil Liberties Union
North American Free Trade Agreement
American Telephone and Telegraph
Federal Reserve Board ( - national bank)
Environmental Protection Agency
World Trade Organization
6
Question #2 (b)
International: IMF, NGOs, GATT, NAFTA, WTO
(and the corporations)
Government Agencies: FDA, IRS, SEC, FTC, the
Fed, EPA
Corporations: IBM, GM, AT&T
7
Question #2 c
Identify salient aspects of the American and
Austrian economies with reference to:
•land (resources and energy)
•labor (high, medium, and low skilled)
("brain drain", education, immigration)
•capital (the current crisis, savings, indebtedness)
•management
•technology (know-how)
8
9
• Area: 54,000 sq miles
• Area: 32,000 sq miles
ca. 40% forest, 41% farmland
46% forest, 45% farmland
• Population: 5.6 million
• Population: 8.2 million
93% German speaking, 99% covered
by health insurance
93% English speaking, 91-95%
covered by health insurance
• Largest cities:
• Largest cities:
Vienna - 1.7 (2.3) million
Graz - 288,000
Linz – 188,000
Milwaukee – 600,000 /1.7 million
Madison - 223,000
Green Bay – 100,000
• Poverty Rate: 7-9%
• Unemployment Rate: 5.8 %
• Educational Attainment:
High school education: 85%
Bachelors Degree or higher: 22.4%
• Poverty Rate: 7%
•
Unemployment Rate: 6.2 %
• Educational Attainment:
more than "Lehre": 36.7%
college/university degree: 9.8%
10
Question #3 c
consumers:
buy products and invest
provide labor
business: employs people
manufactures and sells products
creates wealth and invests
government:
consumes / employs people
regulates business
protects consumers
redistributes wealth
11
12
How do
consumers influence producers?
• boycotts
• in what they buy
• consumer
protection groups
• NGO’s
• investing
•
•
•
•
•
strikes
trade unions
civil action suits
class action suits
the media
13
How do
consumers influence government?
• consumer
protection
organizations
• NGO’s
• voting
• the media
• lobbies and
PAC’s
• SIG’s (special
interest groups)
• demonstrations
• referendums
14
How do producers influence
consumers?
• corporate
philanthropy
• product offerings
• advertising
• employment
15
How do
producers influence government?
• lobbies
• foreign
investment
• legal action
(MAI)
• employment
•
•
•
•
the media
taxes
tax shelters
investment
16
How does
government influence consumers?
• services
• welfare
assistance
• interest rates (the
Fed)
• taxation
• monetary policy
(supply of money)
• fiscal policy (how the
government spends its money)
• information
• propaganda
17
How does
government influence producers?
• subsidies
• regulatory
agencies (FDA,
EPA, FTC, etc.)
• anti-trust actions
• legal and civil
suits
• tariffs (on imports)
• taxes
• incentives (tax
breaks)
• labor and
bankruptcy laws
• minimum wage
18
Question #4 a
central
planning
socialism
nationalization
regulation
intervention
Austria
laissez faire
USA
19
Question #4 b
1930s – The Depression – The US
Government under Roosevelt created many social
programs and the social security system to combat
poverty and unemployment
1980s - Reaganomics -
A return to more
capitalistic economics – reduction of welfare
programs, increased liberalization and deregulation
2008 – Mortgage/Housing crisis, Credit Crunch,
Stock Market crash, Government Bailout . . .
20
Question #4 d
gas, oil, and electricity
heavy industry (e.g. steel), mining
railroads, airports, airlines
tobacco
public transport
postal and telephone service
lottery, gambling
health system, hospitals
health insurance
pension system
banking
schools, education system
The Austrian Public Sector:
http://www.statistik.at/web_de/statistiken/oeffentliche_finanzen_und_steuern/oeffentliche_finanzen/oeffentlicher_sektor/index.html
21
Question #4 d
gas, oil, and electricity
heavy industry (e.g. steel)
railroads, airports, airlines
tobacco
public transport
postal and telephone service
lottery, gambling
health system, hospitals
health insurance
pension system
banking
schools, education system
The American Public Sector: http://en.wikipedia.org/wiki/State-owned_enterprise#United_States
22
However . . .
in 2008 . . .
23
24
25
26
More public sector . . .
(police and fire departments)*
(the justice system)
(the education system)
the road system
social statistical reporting
(national defense)
(space exploration)
(postal system)
printing money
(social security)
•brackets mean that these areas are run by both the public and private sectors, but government
maintains the primary responsibility
27
Question #4 h
Democrats
Republicans
28
Question #4 e
Democrats
Republicans
left
right
liberal
conservative / (neo-liberal)
John Keynes
Adam Smith
more government
less government
social welfare
self-reliance
intervention
liberalization
national health care
personal responsibility
government spending
fiscal conservative
public sector
private control
29
30
-isms
(Media Matters)
http://www.youtube.com/watch?v=qKCEBOSWVMU
31
Question #5 a
USA
Austria
Federal
State
Corporate Tax rate
15-39%
0-12%
Individual Tax rate
0-35%
0-10%
Payroll tax or
15.3% (capped)
"FICA" (= social
(average = 6%)
contributions)
Sales Tax (=VAT)
Property tax (local)
0-10%
ca. 2.5%
32
Question #5 a
USA
Austria
Federal
State
Corporate Tax rate
15-39%
0-12%
25%
Individual Tax rate
0-35%
0-10%
21-50%
Payroll tax or
"FICA" (= social
contributions)
Sales Tax (=VAT)
Property tax (local)
ca. 17 %
15.3% (capped)
(average = 6%)
0-10%
ca. 2.5%
(yearly)
10-20%
One time payment
on acquiring 33
property
Question #5 b
USA (Federal /
State)
GDP (per capita)
Austria
$46,653
Public expenditure on health (% of GDP)
6.9%
Public expenditure on education (% of
GDP)
5.9%
Mean years of schooling
12.4
34
Question #5 c
35
Social benefits and assistance in the US
• Federal:
• State: (using Wisconsin as an example)
http://www.govbenefits.gov/govbenefit
s_en.portal
http://www.wisconsin.gov/state/core/p
ublic_services.html
36
Question #5 f
More specifically, the role of the government
in the economy includes:
• direct services (post, fire, schools, police, highways,
•
•
•
statistical information (census))
direct assistance (tarriffs, subsidies, welfare, social
security, medicaid, medicare)
regulation and control (federal agencies, patents and
copyrights, bankruptcy laws, minimum wage and
labor laws, corporate charters)
stabilization and growth (regulating foreign trade,
monetary and fiscal policies)
37
The Declaration of Independence
"We hold these truths to be
self-evident, that all men
are created equal, that they
are endowed by their
Creator with certain
unalienable Rights, that
among these are Life,
Liberty and the pursuit of
Happiness."
Schoolhouse Rock link:
http://www.youtube.com/watch?v=CvH7ySQi37E
38
The Constitution and the Bill of Rights
Schoolhouse Rock link:
http://www.youtube.com/watch?v=Q_TXJRZ4CFc
39
Question #6 a
"life, liberty and the pursuit of happiness"
= property
40
Question 6 g
• Treaty of Lisbon
http://europa.eu/lisbon_treaty/glance/rights_values/index_en.htm
• Charter of Fundamental Rights
http://eurlex.europa.eu/LexUriServ/site/en/oj/2007/c_303/c_30320071214en00010
016.pdf
41
Question #6 h
42
Your answers to "What is the purpose of government?"
to provide a good and healthy environment
to support the citizens and improve the country
to represent the opinions, desires and requirements of the population
to define rights, create a social safety net, build infrastructure, maintain relations with
other countries
to create welfare, regulate the market and make laws
to provide a peaceful life and consider the people's wants and needs
to provide a fair and social system everyone can "live" in
to proved a framework for economic and social behavior (security, laws, supporting
the "have-nots")
fraternité, egalité, liberté
to provide for stability and general social levels
to protect the country
to say what is going on
to manage and organize everything
to lead the country in the right direction and listen to the voices of the people
to control (watch over) the people and their needs
to regulate and mediate a community
to keep the country on the "right" path in a social, economic and technical way
to control and direct the state
to make rules so people can have a good life
to regulate parts of the economy and deal with social fairness
to mediate between people's egotistic and social natures
to help and protect the people and economy and to support their development
to support and stabilize the people / country
to be a kind of safety net, to support the population and regulate difficulties
Outside the box:
to keep citizens sane
to provide resources to
business
43
Your answers to "What is the purpose of government?"
to provide a good and healthy environment
to support the citizens and improve the country
to represent the opinions, desires and requirements of the population
to define rights, create a social safety net, build infrastructure, maintain relations with
other countries
to create welfare, regulate the market and make laws
to provide a peaceful life and consider the people's wants and needs
to provide a fair and social system everyone can "live" in
to proved a framework for economic and social behavior (security, laws, supporting
the "have-nots")
fraternité, egalité, liberté
to provide for stability and general social levels
to protect the country
to say what is going on
to manage and organize everything
to lead the country in the right direction and listen to the voices of the people
to control (watch over) the people and their needs
to regulate and mediate a community
to keep the country on the "right" path in a social, economic and technical way
to control and direct the state
to make rules so people can have a good life
to regulate parts of the economy and deal with social fairness
to mediate between people's egotistic and social natures
to help and protect the people and economy and to support their development
to support and stabilize the people / country
to be a kind of safety net, to support the population and regulate difficulties
Outside the box:
to keep citizens sane
to provide resources to
business
44
Question #6 i
1
You can freely choose which religion you will follow.
8
You may not be tortured
4
The state cannot take your private property away from you.
3
The government cannot place soldiers in your home.
2
You have the right to own and carry a gun.
6, 7
You have the right to a trial by jury.
5, 7
You may not be tried twice for the same crime.
1
The state cannot censor anything you say or publish.
1
You can take part in demonstrations – even anti-government ones.
4
The police cannot arrest or search you without a warrant.
6
You have a right to have a lawyer if you are accused of a crime.
1
You do not have to pay church taxes and churches do not have to
pay taxes.
45
Question #6 j
People started paying taxes on their income.
Drinking alcohol became illegal.
Alcohol was legal once again.
Slavery ended.
The government could not discriminate against people
of color.
Women could vote.
1913
(#16)
1919
(#18)
1933
(#21)
1863
(#13)
1870
(#15)
1920
(#19)
46
A second Bill of Rights?
http://www.youtube.com/watch?v=3EZ5bx9AyI4
47