The basic ingredients of the US economy Before working with this presentation you might like to look at ‘The short economic history of post war world - its elsewhere on bized.’

The basic ingredients - 1 Natural resources including the climate Labour - productive - look at presentation on immigration Economic swings have been met with ability to accept lower wages Protestant work ethic high value on education and an ability to cope with change Human capital is a key factor to success nimble minds and adaptable skills

Basic ingredients - 2 Organisation very important market signals lead policy division of labour/scientific management now being flattened Funds accumulation very successful stocks and bonds popular investments for all Federal and state rules govern financial behaviour and information disclosure

Basic ingredients - 3 The role of the market in a mixed economy private ownership two-thirds of output goes to personal consumption it is a consumer economy Personal freedom central supply and demand decide what is produced and at what price Some goods/services are best provided by State

Basic ingredients - 4 Public goods include most education, justice, roads, social statistics and the reporting of these, defence Government regulates monopolies Government provided medicare for the elderly and the poor, regulates environmental issues,provides loans for those in natural disasters and drives the space programme

Basic ingredients - 5 Consumers send signals through purchases and are now stating what they will accept in health, safety and ethical issues Labour force has changed from farm based to city based, then onto service based. Trend away from self- employment to working for others Next: The role of government in the economy

Government’s role in the economy Stability and growth maintaining macro stability this began as a fight against recession and has moved onto controlling inflationary pressures In 1960’s more emphasis on fiscal policy, now monetary policy is main tool All monetary policy directed by Federal Reserve Board

Role of Government - 2 Regulation and Control two main types - controlling prices and anti-trust laws, which control competitive behaviour social goals also set These include: public health, safety and the environment De-regulation arose during 1970’s Stop support for inefficient industries promote change in technology based industries

Role of Government - 3 Direct services national defence research and development local and regional re- generation Direct Assistance low-cost loans Technical assistance to small firms promote exports seek to stop others putting up tariffs Medicare and Medicaid Food Stamps success is not God’s favour

Poverty and Inequality Poverty persists in the richest nation on earth Government decides what equals ‘poverty’ In 1998 a family of four was in poverty below $16,530 13% of population classified as this Masks reality of ethnic poverty 26.1% African- Americans Single parent families, 1 in 5 children live in poverty 36.7% of African- American children live in poverty

Poverty and Inequality % Hispanic children live in poverty In 1997 the wealthiest 20% of population accounted for 47.2% of nation’s income, poorest 20% accounted for 4.2% The poorest 40% accounted for 14% of nation’s income Increased global competition making more workers vulnerable tax system now less favourable for the poorest

Poverty and Inequality - 3 What has happened to the spirit of New Deal? Increased dislike of big government, high spending, large tax bills resulted in cuts in social welfare spending Privitisation introduced Familiar battle of opinions - efficient v must make a profit, so what is cut? Election of Bush suggests that de- regulation, lower Federal spending and welfare reform have won