1. How Should the United States Government Carry Out Its Economic Role?
Government intervention in the economy…Keynesian Economics

2. Property Rights: Article I of US Constitution
Federal government’s powers under the Constitution
Delegated powers? Reserved powers? Concurrent powers?
Regulation: establish laws and rules to influence favorable economics
US Patent and Trademark Office
Essential for Free Enterprise market system?
John Maynard Keynes, “Keynesian Economics”
Opposite of “Laissez-Faire”

3. Exception to Private Property!
Eminent Domain
Power of government to take individual property for public use if the owner is “fairly” compensated
5th Amendment: “Nor shall private property be taken for public use without just compensation”
The “Takings Clause”: Kelo v. City of New London, 2005

4. Regulatory Roles of Government
Acts to maintain competition when markets don’t!
Regulatory agencies: Justice Department, Federal Trade Commission.
In restraint of trade, mergers

5. Government Protection of Consumers
Food and Drug Administration
Teddy Roosevelt
The Jungle, Upton Sinclair
Department of Labor
Franklin Delano Roosevelt
New Deal Legislation
Francis Perkins

6. Should Government Deregulate?
Removal of government restrictions on firms’ economic activity to increase competition – more of a free enterprise system

7. Government Involvement in Externalities and Public Goods
Positive versus Negative Externalities
Public education versus health care
Implementation of corrective taxes, cap and trade permits (use of energy and pollution limits)
Preservation of Common Resources
Tolls, Quotas, Privatization
Overused or destroyed = “tragedy of the commons”
Government Failure?
Causes inefficient allocation of resources
Gray Davis and deregulation of energy, 1990s

8. Government Promotion of Economic Well Being?
Beginning with the Great Depression, 1929 – World War II
New Deal of FDR
Cold War defense industries,
Kennedy’s New Frontier,
Johnson’s Great Society,
*Government welfare system has become ingrained…American citizen: “government must take care of us!”

9. Government Regulation Vocabulary
Eminent Domain
Regulatory Agencies
Merger
Deregulation
Externalities and Public Goods
Common Resources
Tragedy of the Commons