Economic Dimensions

Background info not in here, but important to know: 1) The economic cycle- Inflation, recession, Deficits, credit, etc. 2) The Great Depression, history, influence, cause and effect.

free-market economics

free-market economics

an economic system based on supply and demand with little or no govt control.

• spontaneous and decentralized order of arrangements thru which individuals make economic decisions

mixed economy

an economic system combining private and public enterprises.

command economics

an economy in which production, investment, prices, and incomes are dictated by central govt- public enterprise

public enterprise

a business organization wholly/partly owned by the state and controlled through public authority

Private enterprise

Business or industry managed by independent companies or individuals rather than the state.

Privatization

transfer public ownership (state) over to private ownership (individual) of a business, service, or industry.

Socialism

government has a significant role in controlling vital industries and agencies, peaceful and orderly. Use the democratic power of the govt to achieve egalitarian objectives.

John Maynard Keynes

When the stock market crashed in 1929, Govt’s moved toward welfare states and interventionist policies advocated by this economist.

The founding father of Macroeconomics, had full support for full employment and govt. intervention

created the ____ian theory summary--

• Boom (Tax rates and interest rates increase, social spending decrease)

• Bust (tax rates and interest rates decrease, social spending increase)

also known as the model of boom and bust, or inflation and recession

Roosevelt’s New Deal

an set of economic policies put in place by US President Franklin Roosevelt in 1933 that gave the govt. a more significant role in the regulation of the economy to provide social “safety net” programs

Demand side economics

focuses on govt works projects and other govt initiatives that create jobs. By increasing job opportunities thru govt projects, more consumers may feel safer to spend more- increasing economic growth and softening the recession.

Keynes suggested to lessen a recession. govt’s should…

• spend more money (social programs, projects)

• Reduce taxes to reduce the recession

to lessen an inflation…

• spend less money (social programs, projects)

• Increase taxes to soften the boom

Supply side economics

govt economic policies that include reduced income business taxes, regulation, and increased govt spending on the military

this is also called “Trickle down economics” or “Reaganomics”

• Lower taxes and fewer regulations for businesses will increase profits, and provide greater incentive for increased investments.  This will provide the economic stimulus (profits) for business to create jobs.

• Lower taxes will result in reduced revenues for governments, which in turn equates to less government spending (no deficits, reduced debt).

• Social services must be reduced (this will provide greater incentive to people to be self-reliant).

• Governments should "privatize" publically owned and operated services (e.g. health care) to promote competition and increase levels of private investment.

Ronald Reagan

the economic policies of the Ronald Reagan presidency in the US, which advocated less government intervention in the economy and pro-industry, anti-labour, anti regulation, anti-environmental regulation policies. “Reaganomics”

Margaret Thatcher

tried to reduce govt involvement in the UK economy, and increase economic freedom under entrepreneurship (Privatization of the British Telecom) “Thatcherism”

She was extremely violent toward unions and social issues.

Laissez-faire Capitalism

Theodore Roosevelt (1901-1909) was a reformer who showed his desire to curb the excess of laissez-faire capitalism early in his presidency.  He called out the owners refusing miners demands for better pay and work hours. He coined the term square deal at this time to signify that both labor and capital must be treated fairly. Progressivism posed challenge to laissez-faire as it advocates for change and involvement in the wellbeing of economic affairs.

The late 20th century embrace of (this economic system) was initially considered neo-liberalism (a revival of classical liberalism) but was eventually re-branded neo-conservatism. Neo-conservatives emphasize fiscal restraint and believe the government should privatize economic interests, restrict social spending and deregulate the economy.

Their support for business promotes “supply-side” policies that promote business profitability. Neocons are dogmatic in their beliefs and are prepared to use extreme measures to achieve their goals of free markets and democracy.

Maximum Economic Freedom

Anarchism/Libertarianism. No state involvemement whatsoever in any economic enterprise.

Maximum Economic Control

Communism/Socialism. Extreme state control over economic enterprise.

Competition

an activity involving two or more industries, in which each one tries to get people to buy its own goods over the other

Self-Reliance

the social and economic ability of an individual/community to meet essential needs in a sustainable manner

Collusion

a situation in which a group of companies cooperate to set prices higher than a competitive benchmark- close enough to resemble a monopoly

Right wing economic Ideologies

free market, laissez faire, classical liberalism.

advocates for…

• less govt. intervention

• pro-industry

• anti-labour intervention

• anti regulation

• anti-environmental regulation policies

Left wing economic ideologies

social programs, welfare state,

advocates for…

• government intervention

• higher taxes

• public property

• etc

Capitalist economy

Characteristics:

• capital assets (mines, railroads, factories) can be privately owned

• labour is purchased for money wages

• capital gains accrue to private owners

• supply & demand

socialist economy

Characteristics

• social over private ownership of the means of production

• organizes economic activity thru planning instead of market forces

• gears production toward satisfaction over profit accumulation

Govt involvement in the economy

• The govt provides the legal and social framework

• maintains competition (oligopoly intervention

• provide public goods and services

• redistribute income

• stabilize the economy

Government Subsides

a benefit given to an individual, business, or institution from the government. Can be things such as cash payment, or tax breaks.

Individualism

the principal of being independent and self-reliant

• Rule of law

• Individual rights and freedoms

• private property

• economic freedom

• self-interest

• competition

Collectivism

the principle of giving a group priority over each individual in it.

Market Economy

an economic system where all economic activities are performed by private companies and people. Govt does NOT interfere in economic activity

Free Enterprise

an economic system in which private business operates in competition and largely free of state control

Income Disparity

the difference in earnings between the rich and the poor (uneven wealth distribution throughout the population)

Neo-Conservatism

emphasize fiscal restraint (taxing and spending functions of govt) and believe the govt should privatize economic interests, restrict social spending and deregulate the economy. Support “supply-side” economics

this ideology is a revival of classical liberalism to an extreme extent

Social Welfare Programs

Includes…

• Family benefits

• Employment Insurance

• Pensions

• Maternity/Paternity leave

• Income support

• Public Healthcare

• Student aid

• Disability accomodations

• housing benefits

The Third Way

a more moderate platform that adopted some Thatcherite and free market policies, while maintaining some social programs.

A new form of mixed economy, a compromise between Keynesian economics and more recent Monetarism

Monetarism

A theory that says to hold control of a country’s money supply is the best means to encourage economic growth.

Stagflation

when a recession and high inflation occur at the same time

Monetary policy

a set of actions to control a nations overall money supply and achieve economic growth (opposite of fiscal restraint)

fiscal restraint

to use financial control to employ a monetary limit, to reduce costs, to exercise economic restrictions (refrain from taxation- opposite of monetary policy)

beauraecracy

a system of govt. in which most of the important decisions are made by state officials rather by elected representatives.

Proponent

a person who advocates for a theory, proposal, or project