Ohio Wesleyan University Goran Skosples 5. United States

Background US Constitution principle of classical liberalism rejection of a strong state low gov’t intervention that would reduce the liberties of private individuals in their economic activities laissez faire

Economic History Gilded Age (1865-1900) Progressive Era (1900-1920) Roaring Twenties (1920-1929) Great Depression (1929-1933) Postwar prosperity (1945-1973) Reaganomics (1976-1992) Globalization (1990s-late 2000s) The Great Recession (2007- ) Gilded Age (1865-1900) rapid growth and industrialization low federal gov’t intervention tariff protection, land grants to the railroads low role of the unions increasing income inequality Progressive Era (1900-1920) Roosevelt (trustbuster) and Wilson revolt against entrenched wealth regulation, national park system established Roaring Twenties move back toward laissez faire mass production Great Depression (1929-1933) GDP decline about 30%, unemployment 25% New Deal Keynesian principles increase in the role of the government Social Security system, FDIC, SEC, various public works projects post-WWII expanded role of the government under JFK Great Society (Lyndon Johnson) War on Poverty, Medicare program, civil rights legislation, expansion of social welfare programs Reaganomics supply-side policies deregulation Milton Friedman Globalization (1990s-late 2000s) Stock markets rise – flow of capital Dot-com boom (IPOs) Housing boom Corporate scandals The Great Recession (2007- ) Housing market collapse Financial crisis CDO, MBS, CDS Massive gov’t spending + debt Quantitative Easing

Government Share of GDP

The US Corporation Corporate governance capital markets shareholders: maximizing shareholder value neglects stakeholders  information distortions  required for efficient operation of __________ markets corporate incentives stock options _________ parachute capital markets separation of ________ and ___________ provides ________, but allows for ___________

Labor Market flexible labor market low union membership competitive wages act as _________ low union membership @ 12% (peaked in mid-1950s at 35%) currently high rate of unemployment – 8.3% Jan 12 government involvement less than elsewhere regulation, licensing, setting wages ...

A Service Economy Percentage distribution of employment Year Agriculture Industry Service 1870 47 27 26 1900 35 34 31 1920 24 41 1940 19 46 1960 8 51 1980 4 32 64 1990 3 70 1995 20 77 2005 17 80

Poverty and Inequality higher levels of income inequality and poverty efficiency favored over ___________ principle of self-reliance economic mobility Inequality explained growing gap between the incomes of skilled and unskilled workers declining union membership growth in the number of single-income families increase in the proportion of part-time jobs GINI graph

Child Poverty Rates

Inequality