Transcript Review Course Learning Outcomes Appropriate Roles for Economic

MBA 540: Societal Economic Analysis
Lesson #2 Agenda
 Course Research Paper------Questions?
 Review Course Learning Outcomes
 Appropriate Roles for Economic Actors? Desired Outcomes?
Private Sector: Consumers? Producers / Firms?
Public Sector: Government? Local? State? Federal? International?
Service Sector: Non-Profit Organizations
Societal: Citizens and Civil Society Organizations
 Key Economic Policy Issues to consider today-----roles, desired outcomes, impacts?
 Unemployment Benefits
 Federal Spending, Deficits, and Surpluses
 Public Education
 Health Care
Rick Coplen; Cell: 703-786-7181; [email protected]
1
Course Learning Outcomes
• Develop an economic view of the state of the world through the
application of rigorous analysis that connects real-world issues with
core economic theories.
• Assess and interpret the challenges of the global economic
environment by exploring and evaluating a wide-range of issues that
encompass the private-sector, government and societal environments.
• Appraise the economic impact of issues and synthesize a course of
action by analyzing arguments by thinking economically, while
recognizing and avoiding logical traps.
• Envision what possible changes are likely to occur in the global
economic environment over the next decade and apply economic
concepts to develop rational market actions.
• Synthesize an understanding of the interplay between economics and the
process of creating public policy.
• Apply economic methods; build practical approaches that promote
both the short and long-term economic well-being of the organization
and society.
Market Demand and Supply Curves / Shifters
and Equilibrium Price
Demand Curve Shifters
Consumer Tastes
Price
Consumer Income
Supply Curve
Demand Curve
Number of Consumers
Level of other prices
- Substitutes
- Complements
Equilibrium
Price
Supply Curve Shifters
Technology
Input Prices
Changes in “Demand” vs
Changes in “Quantity Demanded”
Equilibrium
Quantity
Quantity
3
Intended Spending
Determination of GDP = C + I + G + (X-M)
Co + I + G + (X-M)
(zero tax rate)
C1 + I + G + (X-M)
(15% tax rate)
45°
GDP1
GDP0
Gross Domestic Product
If …
Then …
Taxes
GDP __
Taxes
GDP __
I
GDP __
I
GDP __
G
GDP __
G
GDP __
What are the “appropriate” roles for all these actors?
What McGraw-Hill/Irwin
are the desired outcomes
forCompanies,
all these
actors?
©2012 The McGraw-Hill
All Rights
Reserved
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Model for Sustainable Economy presented in the
Guiding Principles
Causes of weak economic development and instability in
the context of capacity building systems ...
Control Illicit Economy &
Economic-Based
Threats to Peace
Economic
Macroeconomic
Stabilization
Money,
Banking, Finance
Governance
• Fiscal Policy
• Tax Collection
• Budgeting
• Monetary Policy
• Trade Policy
• Regulatory
(Human Capacity)
Policy
• Illiteracy / Uneducated
• Unskilled workers
Rule of
Infrastructure / • Health/Welfare issues
Law
Public Services • Insurgents undermine
• Land Tenure and
• Sewage
capacity building
Property Rights
• Water
• Illicit Economies
• Energy
• Corruption
• Transportation Market Economy
• Telecom
• Unemployment
•
•
Info Creation •
•
&
Hidden banking actions
Dependent on aid / DFI
Inflation/Deflation
Lack of access
People
Sharing System to credit
Employment
Generation
•
•
•
•
Agriculture weak
Inflation / Deflation
Imports > Exports
Supply Chains
Market Economy
Sustainability
Civil Society
People
(Human Capacity)
Business
•
•
•
•
...................
Illiteracy
/ Uneducated
Unskilled workers
Health/Welfare issues
Insurgents undermine
capacity building
Education & Training
Government
Asset-Based Community Development
TEDxHouston 2011
Angela
Blanchard
http://www.youtube.com/watch?v=TaX5DUGC1CU
Key Takeaways??
“You can’t build on broken.”
Supporting economic development is ...
... all about building local capacity, not projects or handouts.
GAIN
Framework for Analysis
• Goals
• Actors
• Interests
• Negotiation (Position, Leverage, Tactics)
Extend Unemployment Benefits?
There are 10,000 Virginians who have been struggling to find work for too long – and
because of Congressional inaction, they are beginning 2014 without any
emergency unemployment assistance.
For many, this makes a tragic situation potentially debilitating. These benefits help
folks keep the heat on and put a little bit of food on the table.
Earlier this week, the Senate passed the first hurdle in the fight to extend this critical
lifeline for those striving to find work. But there is a lot more work to be done to
ensure Congress passes this legislation – and I’m asking for your help.
Will you join my colleagues and me and demand that Congress extend emergency
unemployment benefits?
This shouldn’t be a partisan issue. With the help of both Republicans and Democrats,
Congress has always extended these emergency assistance programs when long
term unemployment has remained as high as it is today.
This isn’t just the right thing to do. It’s also good economics. Funds spent on this
program are reinvested in the economy quickly – spurring job creation and
economic growth.
Please help apply the necessary public pressure to get this done.
Add your name and demand Congress pass emergency unemployment benefits.
Thanks for your help,
Mark Warner
See Selected slides from…
Chapters 3,4,5,6,11,12,14
Chapter
34
Education
©2012 The McGraw-Hill Companies, All Rights Reserved
Why “Free” Public School
Makes Economic Sense
• The external benefits (the benefits to the rest
of society that result from a child being educated)
are such that the efficient price is zero.
• External benefits include
• the social stability that is enhanced by providing
opportunity for all to succeed.
• the more intelligent voting population.
• the greater tax base associated with higher incomes.
• Lower crime rates
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-16
34-16
Should We Spend More?
• What we get for our $650 billion in
tax money
• More real spending per student
• Lower student-teacher ratios
• Flat to declining SAT Verbal (recently
rising SAT Math)
• Increasing high school graduation
rates
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-17
34-17
Cautions Against Quick
Conclusions
• Much of the increased spending has gone for
• Noninstructional spending (e.g. Janitors,
secretaries, administration)
• Special education spending (more than 10% of
students now qualify for special services)
• Some of the decline in SATs comes from
more (and less academically prepared)
students taking the exams.
• Some of the increase is graduation rates
comes from GEDs, and social promotion.
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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34-18
The Economic Literature on
Education Spending
• Economists have studied the relationship
between student success and spending.
The majority show little relationship.
• Measures of success
• Graduation rates, standardized test scores
• Inputs
• Student-teacher ratios
• Teacher degree attainment
• Teacher salaries
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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34-19
The Education Production Function
Test Scores
Education Production Function
The flat of the curve.
The argument is that in
this range more spending
does not increase scores.
Teacher Quality/Quantity
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
1-20
34-20
School Reform Issues
• The public school as a monopoly
• Lack of competition makes all monopolies less cost- and
quality-conscious.
• The existence of tenure (the job protection for
teachers with experience) and the lack of merit pay
• Tenured teachers are difficult to fire for poor teaching and
good teachers are rarely paid more than poor ones.
• Evidence indicates quality teaching matters, but without
merit pay, you can not use money to attract it.
• Private vs. Public Education and Vouchers
• Creating competition would stimulate cost and quality
consciousness. Evidence is mixed.
• Collective Bargaining
• In most states teachers can bargain collectively and
typically have relatively good (expensive) pensions.
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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34-21
Chapter 23
Health
Care
©2012 The McGraw-Hill Companies, All Rights Reserved
Chapter Outline
• Where The Money Goes And
Where It Comes From
• Insurance in the United States
• Economic Models Of Health Care
• Comparing The U.S. With The Rest
Of The World
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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23-23
Advantages and Disadvantages
of Insurance Types
Insurance
Type
Advantage
Disadvantage
Fee-forService
1)
2)
Highest premiums, deductibles, and
co-payment rates because of little
control over expensive and
unnecessary procedures
HMO
Maximum control over expensive
and unnecessary procedures so
premiums, deductibles and copayment rates are low.
PPO
1)
2)
3)
4)
Maximum physician choice
Little insurance company
meddling in doctors’
decisions
1)
2)
Minimal physician choice
Significant meddling in
physician decisions, especially
when differing procedures have
significant cost differences
Some physician choice
moderate premiums, deductibles and co-payment rates
some control over expensive procedures
minor meddling in physician decisions
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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23-24
Why Medicaid Raises
All Health Care Prices
P
P
S
S
P*
P*
Dpoor+nonpoor
Dpoor
Qpoor
Dnonpoor
Qnonpoor
Without Medicaid
McGraw-Hill/Irwin
Dpoor+nonpoor
Q/t
Dpoor
Qnonpoor
Dnonpoor
Qpoor
Q/t
With Medicaid
©2012 The McGraw-Hill Companies, All Rights Reserved
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23-25
Why Health Care is not
“Just Another Good”
• Rapid increases in quality (which get
confused as price increases)
• Treatments developed in the 1990s for
AIDS are expensive but this is a quality
increase, not a price increase
• Consumers have less knowledge about
what they are buying than they
typically do when buying goods.
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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23-26
Advantages and Disadvantages
of Single-Payer Systems
• Advantages
• Universal coverage
• Low-to-no cost coverage to patients
• Disadvantages
• Long waiting lines for heart bypass and
other surgeries
• Lower Survival Rates on many ailments
• High taxes
McGraw-Hill/Irwin
©2012 The McGraw-Hill Companies, All Rights Reserved
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The Affordable Healthcare Act
(aka “Obamacare”)
https://www.healthcare.gov/