AHTG Final Exam

Yeah

How does Pherson make distinctions between liberty?

He divides it into Negative and positive liberty. Negative liberty is defined as freedom from the government. A good example of people wanting negative liberty is the idea of the revolution, people wanted to be free from the government. Positive Liberty is freedom that is enabled by the government, such as public school that enables people to receive education. In short, the government needs to get involved to expand what people can do.

What is the triumph of free labor?

Free markets can give propel a self interest that results in virtue. Government attempts to set prices or control products often reduces the welfare of society. This idea of free labor and a free market brings the idea that customers have self sovereignty over the things they trade is a brand new idea. Free labor cannot stand on its own though, it needs an additional institution that can limit things like fraud, defines property rights and can enforce contracts. It also needs an institution that makes money and makes public goods such as highways or airports

Why do markets have more innovations?

The example of the automatic machine for knitting and queen Elizabeth 1, when they showed her the machine, she denied it and banned it from being produced, she initially sighted that she feared it would make people lose their jobs. In reality, it was an extractive institution where she made all of the decisions based on if it gave her more power. Here, creative destruction was denied and society was made worse off because of it.

What is creative destruction?

The creation of new products may destroy old products or methods because the new product is simply better at achieving the goals of the old methods. In our modern applications, this could mean replacing certain jobs people have. Computers are a big example of this a lot of jobs were made obsolete since computers could store a lot of data much more efficiently and accesibly than humans could.

What are some other benefits of the Free Markets?

In general, it benefits the population, makes humans in general less poor and results in longer life spans

What were some negatives of the initial free market in the US?

Economic inequality is crazy bad (market weakness), This is where Jacob Reece and other muckrakers try to expose this inequality by taking pictures of "How the Other Half Lives"

What is the progressive movement?

It is a reformation movement centered on solving social and economic problems to seek a good society. Their main methods are through scientific discovery and innovation as well as some religious principles. Progressivists believed that humans are blank slates and are only corrupted by bad institutions. They believe that if they create the correct society, the nature of people will be correct. They view the lack of progress because of bad institutions. Institutions need technical expertise to improve, this is highly reflected in how government becomes more so shaped at this time

What were somethings Adam Smith did not account for when writing about free markets?

He did not account for Market failures and weaknesses. A market failure is when a market fails to do what it promises, when it doesn't promote welfare or allow competition.

What are some market failures?

EMPI (RE)

Externalities:

Can be positive or negative. Basically when an exchange happens and a third party uninvolved in that exchange is affect. Examples of negative: Pollution, consumer buys a car, manufacturer produces that car, but to produce it, pollution is made which negatively affects the health of the people surrounding the factory. These are solved by taxes, or government regulation to decentivize these things. Positive: when a third party benefits from an exchange happening that they were not involved in. An example is a flu shot. Positive externality causing goods rarely happen, as it is rarely in the best self interest of anybody to not try to profit off of the third parties benefit

Market Power:

When a single manufacturer has a lot of market share of a product and can therefore control the price due to a captive consumer. Price is controlled and so is quality. Market power is hard to reduce, most of the time, competitors would enter into the market if they saw the potential for profits, firms with large market power have the ability to buy them out and eliminate competition. This hurts the consumer and hurts the people working for the monopoly as well.

Public Good:

Public goods deal with the free rider problem where making a product serves no self benefit but benefits everyone around them. The are also non excludable and non rival. Meaning that it is almost impossible to prevent anyone from using the product and non rival meaning that multiple people can use the product at the same time without diminishing it for the other person. Because these products are so non competitive and cannot be profited off of, government must step in to make these products.

Imperfect Information:

When the consumer cannot make an educated decision in the products they're buying. The FDA made it so that everything sold has to have labels on it so the consumer knows what they are buying. Without it, producers are not held accountable. Shown in muckrakers like Upton Sinclair who exposed the meat industry

What did the government do in relation to Monopolies?

They passed multiple laws such as the Sherman act that outlawed monopolization. Clayton Act which disallows companies to collude with each other. The FTC is formed which polices trusts. Some problems with these institutions thought is that often they rely on the companies they are policing to provide the data on which they make decisions on.

What are some problems with looking at market power?

It is so dynamic and really hard to gauge. Microsoft for example was in dispute because it was a monopoly, they made the argument that they shouldn't be sued for what they were doing because their competition was still being invented. Now, Microsoft owns a much smaller part of the market because of companies like apple.

What is one of the best ways of fix negative externalities?

Create a market system out of the thing you want less of. You create and distribute licenses to produce more CO2 depending on how many licenses you have. You can sell these licenses if it's easy for you to reduce your CO2 production or buy them if its hard for you to.

What was the social gospel?

It is a middle class protestant movement that said that religion is relevant to social problems. They want to get rid of child labor.

Who was Jane Addams?

She was an important progressive that uproots her life to live among poor people and immigrants. She believes in democracy and wants to extend equality. She is an idealist that believes that when basic needs are met the youth would want to change the world in a positive way. She also believes in the renaissance of Christianity, that we need religion is integrated into the way life is lived always

What is prohibition and why did it start?

Alchohol is seen as an extreme negative externality, starts with temperance and self control but soon becomes out right banning. This had terrible consequences as crime was raised in relation as it was not regulated any more

How was democracy expanded under Woodrow Wilson?

Recalls referendums and initiatives were introduced. recalls allowed the people to vote on recalling public representatives early for unwanted behavior. Initiatives could be started by the citizens to vote on and introduce a law. referendums are laws proposed by representatives that the people vote on. the 17th amendment happened as well where there is direct election of senators. There is a secret ballot so intimidation is very hard to do

what is a recession?

When an economy isn't producing all of the stuff it is able to produce. During good times weakness forms, employers fire less people, and people invest poorly. Recessions can be caused because people are expecting them and therefore save money, causing less money to circulate in the economy

What does FDR do that changes the way people interacts with government?

He adopts the idea that government needs to be actively involved in peoples lives. Many people needed confidence. He established institutions such as the FDIC and the SEC to watch aspects if the economy. He adapts Keynesianism which means that during good times, government should work to repay debts while during bad times they should spend a lot of money in order to raise the people up. This is Fiscal Policy where the government spends money to get people more money in bad times. Second bill of Rights: Freedom from want, freedom from fear, freedom of worship, freedom of speech

Why did the civil rights movement not happen earlier?

Black people were being more integrated in things like the military, TV and media were becoming more accessible and popular and there is a lot more change in ideology and gaining of political entrepreneurs

What was brown v board?

it was a Supreme Court case that set the precedent that schools could not be segregated by race and the plessy case does not apply to education. This case, and the eventual Little Rock stuff showed that institutional decisions could not stand on their own

What is MLKs ideas and methodology?

He wants immediate action after negotiations, be non violent and self purification (you will break laws, although they are unjust, you must accept their consequences). A good term for this is "civil disobedience". It is only justified to break laws to MLK when you are supporting a higher law, when the laws are un just, are out of harmony with the rule of law, degrades human personality, and when it only affects a minority group

What could be the two definitions of equality?

Equality of Outcome and Equality of Opportunity. Outcome means that fairness is decided in the outcome of doing something rather than the preparation for something. Equality of opportunity is that everyone has the same opportunity (like education) but not the same outcome. This is similar to equality of proportionality as people contribute more to society they should be rewarded proportionally to their effort

What are John Rawls' ideas?

He thinks that for a good society, we need a veil of ignorance and constantly build a society for the least advantaged in that society you will have a good society. Following Rawls ideas, it would be best to be apart of the 80 society

What is the city on a hill idea?

That the US should e an example of a good society for the rest of the world to model after. We shouldn't have many foreign political ideas and should do alliances. This is political neutrality and moreso falls into the internal ideal section of the graph.

What are Wilsons ideas about foreign relations?

Hes an idealist progressive, institutions are meant to restrain bad actions, he wants a league of nation to enforce leaders. This is more of a external ideal idea

What were progressives ideas of foreign relations?

Colonialism, one where we showed others by force how to live, while also being an example? weird, but falls into external in-between ideal and material

What is radical liberty?

It is when a group does not answer to anyone, you have no obligations to the community. The problem with this is that you're really just denying responsibility.

What is the problem of political identity?

We unite in our groups and end up hating our groups and have cloudy judgement

What is the principal-agent problem

The more people there are it is harder to monitor them