Introduction to political thinking

4 Major Political Ideologies

• Four Major Political Ideologies

• Classical Liberalism

• Libertarianism

• Conservatism

• Populists

Classical Liberalism Government should stay out of the peoples’ business because

government is almost always oppressive (Jefferson) Industrial Revolution changes this meaning because it restricts individual

autonomy-wage labor did not allow for achievement of the liberal idea of an autonomous individual

Government was seen as a way of promoting individual development through wage and work regulations; government should liberate people from poverty, oppression, and economic exploitation

Outside of economic realm, government should leave the people alone or promote individual liberties

Liberals believe in solving problems collectively through government, provide for economic well-being of the nation, tolerance of various lifestyles, non-interventionist foreign policy, strong but economical defense

Libertarianism They embrace most aspects of classical liberalism, but emphasize

the autonomy of the individual and the minimal role of the government in all spheres of life

Usually reject any regulation of private matters such as religion, morality or conscience

Libertarian views have tended to be ignored until recently Due to increase in the general level of education, mass media, affluence Increased polarization of Democrats and Republicans

Libertarians tend to believe in: protection of property and the freedom of the individual, no government intervention in the economy, non-intervention in foreign affairs

Conservatism After the industrial age, conservatives called for the government to stay

out of economic affairs and allow businesses to follow their actions Humans do not have the capacity to plan for the economic future Economic inequality is a natural outcome of inequality of human ability-

taking wealth from those who have it undermines initiative Focus on what is good for the economy as a whole, not the individual

Conservatives emphasize order-no problem restricting individual liberties in favor of common sense or morality

Conservatives believe in: reducing spending on social programs, reduction of taxes to encourage economic growth, strong military defense, little action to redress gender and racial discrimination, assertive foreign policy, acceptance of moderate welfare state

Populism An outgrowth of industrialism, tend to embrace many

liberal ideals of private property and individualism and the economy has not provided those to enough people They favor economic intervention on behalf of the common

man Tend to reject the changes in social values and mores that

came with industrialization-want to preserve more traditional social values, and are willing to use the government to achieve that purpose

Populists believe in: programs to provide for the economic well-being of small business and the common man, reducing spending on social programs, reduction of taxes to encourage economic growth, noninterventionist foreign policy, return to the values of the past, mistrust of foreign competition

American ideologyLiberals Conservatives

Military spending Spend less Spend more

Use of force Less willing to commit More likely to support

Abortion Support for freedom of choice

Right to life

Affirmative action Favor Oppose

Scope of government Government is a regulator in the public interest

Favor free-market solution

Taxes Tax the rich more Keep taxes low

Spending Spend more Spend lower

Cutting crime Solve the problems that cause crimes

Stop coddling criminals

Cumulative Responses to 10 Opinion Questions in 2008(from Erikson and Tedin, p. 79)

What Is Really Happening?• An intensely polarized elite—political activists generally, pundits,

convention delegates, office-holders• The media playing up differences—conflict is dramatic, eye-

catching; agreement is not• The media are poor and generally ineffective at analysis and rely

heavily upon selective examples to dramatize differences• Confusion of positions and choices, especially when observing

voters

Who is a Republican or Democrat?• Most Democrats are labor union

members, minorities (especially Hispanic and African-American), 18-29 year olds, blue-collar workers, unions, and unemployed, widowed, Liberals, non-religious, and people that live in urban areas.

• Most Republicans are men, professionals, executives, Protestants, married couples, conservatives, have European ancestry and live in rural areas, conservative, military vets, wealthy, self-employed or businessmen, Cubans, the West (more rural).

Where are the Republicans and Democrats—2014?

(in one class period)(borrowed from Ulrich Kleinschmidt)

Two Hundred Years of Economic Thought

Classical Economics 1776-1930s, 1980s to present• Also known as: new classical, supply-side, trickle down

economics, monetary• Key people: Adam Smith, J.B. Say, David Ricardo (comparative

advantage), A. Marshall (graphs), Hayek, and Milton Friedman

• Competition causes businesses to always improve product to win the market• Competition causes businesses to

lower their prices• This effect is called the Invisible

Hand• In the end, consumers get

products that are better and cheaper• Inefficient companies leave or

disappear from the market• New companies will have to be

more efficient in order to compete

• Say’s Law• Say built on Smith’s theory• If suppliers overproduce, they

correct the surplus by cutting production and lowering prices

• The economy then rebalances because wages are lower, but so are prices

• If suppliers under produce, they correct for the shortage by increasing production and raising prices

• The economy will rebalance because wages are higher, but so are prices

• Thus, “Supply creates its won Demand” Say’s Law

Fundamentals of Classicalism

Role of Government in the Classical World• Government ensures that competition occurs

• Government must stop monopolies or unions because they prevent competition

• Classical economists want to lower taxes to reduce government interference; real income reduces the role of government

• In the long run, the economy will balance near Full Production (in other words, stay out of way and keep markets level)

Keynesian Economics: 1930s to present

• Key people: J.M. Keynes, Krugman

• Fundamental idea is that competition is GOOD, but flawed

• In the Short Run, Smith’s Invisible Hand will always have companies that are inefficient• Say’s Law is a myth because

businesses can’t really lower prices at will because production costs are fixed (known as sticky prices)• Consumers will also be paid by

businesses, but will save some of the income, thus undercutting production• This will cause a constant leakage

or loss of income

• Prices can also increase easily, but not decrease. This is known as the Ratchett Effect• Markets can reach

efficiency and full employment, but Keynesians assume that they will soon become inefficient or recessionary• Recession, in Keynes world,

will probably become the economic norm• Government must now

step in and correct Aggregate Demand

Keynesianism

• Congress will represent the interests of the people by using taxes and spending to prevent recessions• Congress can’t wait of

the potential Long Run because workers need help• “In the Long Run we are

all dead”

• During recessions• Congress should cut taxes, and

raise government spending (deficits occur)

• During inflation• Congress should raise taxes and

cut government spending (creating a surplus)

• Congress also has automatic stabilizers to keep economy from crashing too much• Unemployment insurance• Social Security• Progressive taxes

Role of Government in Keynes world

Monetary School Economics: (1913), 1970 to the Present• Also known as: Federal Reserve Policy, Central Bank Policy

• Current US Chairman of the system: Volcker, Greenspan, Bernanke

Monetary School• Competition is Good, but needs fine tuning.

• The average recession lasts about 14 months in the US

• We only know a recession has started after at least 6 or more months have passed

• Even if Congress agrees on a policy, it can take many more months to enact

• By the time the policy comes into force, the recession may have already ended naturally

• Congress may be able to cut taxes during recessions, but they will never have the will to raise taxes to fight inflation

Monetary School continued• Therefore, the best way to correct economic flaws is to have the Federal Reserve

act quickly• Plus, the Federal Reserve can focus on stable prices that helps control demand

pull inflation• They can also focus on long run growth with realistic growth around 2-3%

• This means that the government, through this nonpolitical and independent agency can control national growth by manipulating interest rates and the money supply (which is also why Ron Paul doesn’t like the FED)

• This will keep inflation under control and healthy for businesses and other borrowers

• When recessions threaten, lower interest rates on borrowing.• When inflation threatens, the FED will raise interest rates on borrowing• The FED is typically better at controlling inflation than preventing recessions

So, who will win?

• 270 to win