ECONOMICS II

2/2/2012

Learning Objectives

• 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- 11:00-2:00

• Monday 10-1

Readings

• Required – Economic Policy (Chapter 7) Dye – American Dilemmas Handbook, pp 73-88

• Optional – Wealth and Poverty: U.S. and Global Economic

Inequalities (Chapter 2) Kendall

Paper Proposal

• Due in class on 2/7

• 5% of your final Grade

• Involves submitting 2 Parts– Worksheet– 2 page paper

Goals of a Sound Economic Policy

• GDP Growth

• Low Unemployment

• Low Inflation

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• 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

Goal 5: Sound Tax Policy

• A sound tax policy should collect as much at it spends

• A sound policy does not disrupt the functioning of the economy

Where to set the Tax Rate• http://www.youtube.com/watch?v=dxPVyieptwA

Types of Taxes

• Regressive

• Progressive

• Sin Taxes

Our Tax Burden Is Lower than Most Nations

Who Pays Income Tax?

The National Debt: The problem of our Tax Policy

• We accumulate annual budget Deficits

• We have to Pay interest on this

• We owe roughly 14 Trillion Dollars

Everyone has a hand in it

Comparative Debt

The Debt

• Disadvantages

• Advantages

What to about it

• Raise Taxes

• Cut Spending

• Some Combination of both

Raising Taxes

• A Political Albatross

• We like Tax Cuts instead

• We Like sin taxes- but we are running out of these

Raising Taxes on Who?

• Soak The Rich

• Make the Poor Chip in

• Close Loopholes

Change How We Tax

• Add a consumption or VAT Tax

• Add a Flat Tax

• Try A “Fair Tax”

Cut Spending

• There is No Political Gain to do so

• Cut Back on Entitlements

• Reduce Discretionary Spending

We Love to Spend

Pay the Light Bill

Economic Inequality

AKA Poverty

What is Poverty

• Absolute Deprivation

• Relative Deprivation

The Role of Social Class

• What is Social Class

• How the United States compares to other nations

• Why social class is not as important in the United States

The Components of Social Class

• Wealth

• Status

• Political Power

The Wealthy

• About 3% of the Population

• Old vs. New Money

• An Endogamous culture

The Middle Class

• Most of us claim to be in here

• Upper-Middle

• Lower Middle

Working Class• About 30% of the Population

• Not as identifiable in the United States as other Nations

• Tend to be Hourly rather than salaried

The Poor

• Between 12-13% of the Population

• Low Wage Jobs or do not Work full time

SOCIAL CLASSThe Political Impact

Why not social class

• The Parties do not try to exploit social class

• We have never had an appreciable socialist movement

• People identify with other groups before class

Measuring Social Class

• We ask people which class they belong to– We are very likely to say middle class

• Within Social classes there are great variations in income

• Our partisanship doesn’t change with rising or lowering class.

Social Class and Partisanship

Republicans• Do better with poor whites

in the South

• Do better with Upper Middle Class voters

• Historically have done better with Middle Class voters

Democrats• Do better with poor and

working class

• Do better with the very wealthiest

• Do better with Union Members

Social Class and Voting

• Wealthy people vote at higher Rates

• Related to education

• Lower Information Costs

The Wealthy are More Likely to join Interest Groups