Shou-Dom.Policy

Chapter 16: Domestic Policy

Concept of Public Policy

  • Definition: Public policy refers to the broad strategy that the government employs to address societal concerns.

  • Characteristics:

    • A relatively stable set of governmental behaviors.

    • Focuses on issues affecting large segments of society rather than individuals.

    • Encompasses both actions of government and outcomes that arise from these actions.

  • Purpose:

    • To guide long-term legislative actions.

Historical Context

  • Great Depression Example: In 1937, families in Calipatria, California, waited for government relief checks, highlighting the establishment of a social safety net.

Types of Goods in Society

Economic Definitions

  • Goods: Commodities, services, and systems fulfilling societal needs or wants.

  • Rivalrous vs. Excludable:

    • Rivalrous goods: Used by one person at a time (e.g., a phone).

    • Excludable goods: Property rights can be assigned (e.g., a car).

Categories of Goods

  • Private Goods:

    • Owned and controlled by individuals or groups, exclusive access via pricing (e.g., homes).

  • Common Pool Goods:

    • Rivalrous but non-excludable, leading to potential overconsumption (e.g., fish stocks).

  • Public Goods:

    • Non-rivalrous and non-excludable, available to all (e.g., clean air, national defense).

  • Toll Goods:

    • Available to all but require payment for usage (e.g., cable TV).

Transfer of Goods

  • Policy Types:

    • Distributive Policy: Society provides private goods to individuals for social benefits.

    • Regulatory Policy: Controls or protects public/common resources.

    • Redistributive Policy: Aims to transfer income and wealth to ensure a minimum living standard for all.

Domestic Arenas of Public Policy

  • Key Areas:

    • Social Welfare

    • Science, Technology, and Education

    • Business Stimulus and Regulation

  • Major Social Safety Net Programs:

    • Social Security: Supports those without income from employment.

    • Medicaid: Health insurance for low-income citizens.

    • Medicare: Health insurance for retirees and older citizens.

Promotion and Regulation Agencies

  • Promotional Agencies:

    • National Science Foundation

    • National Institutes of Health (NIH)

    • NASA

    • NOAA

  • Regulatory Agencies:

    • Occupational Safety and Health Administration (OSHA)

    • Food and Drug Administration (FDA)

    • Bureau of Consumer Protection

    • Environmental Protection Agency (EPA)

Types of Policymakers

  • Policy Advocates:

    • Actively seek change in public policy, driven by strong beliefs.

  • Policy Analysts:

    • Assess and predict outcomes of policies with impartiality.

Public Policy Process

  • Stages:

    1. Agenda Setting

    2. Policy Enactment

    3. Policy Implementation

    4. Evaluation

Economic Theories

  • Pre-1930s Approach: Hands-off economic policy with belief in natural economic cycles.

  • Keynesian Policies: Emphasizes government spending to boost consumption, especially during times of economic distress (e.g., Great Depression).

  • Supply-Side Economics: Focuses on productive capacity, guiding policies but risks creating consistent deficit spending.

Federal Budget Overview

Spending Categories

  • Mandatory Spending:

    • Funding for entitlement programs (e.g., Medicare, Medicaid, Social Security).

  • Discretionary Spending:

    • Requires annual legislative approval, includes areas such as education and transportation.

Tax Policy

  • Revenue Generation:

    • Progressive Tax System: Higher effective tax rates at increased income levels.

    • Regressive Tax System: Tax rates decrease as income rises, affecting overall income percentages.

Role of the Federal Reserve Board

  • Primary Functions: Influence monetary policy, supervise banks, provide financial services.

  • Monetary Policies: Affect the economy via interest rates determined by the Federal Reserve, impacting inflation and economic growth.