ECONOMICS II 2/2/2012

Learning Objectives Critically analyze social problems by identifying value perspectives and applying concepts of sociology, political science, and economics; Use knowledge and analyses of social problems to evaluate public policy, and to suggest policy alternatives, with special reference to questions of social justice, the common good, and public and individual responsibility.

Opportunities to discuss course content Today- 11:00-2:00 Monday 10-1

Readings Required – Economic Policy (Chapter 7) Dye – American Dilemmas Handbook, pp Optional – Wealth and Poverty: U.S. and Global Economic Inequalities (Chapter 2) Kendall

Paper Proposal Due in class on 2/7 5% of your final Grade Involves submitting 2 Parts – Worksheet – 2 page paper

Goals of a Sound Economic Policy GDP Growth Low Unemployment Low Inflation

Goal 4: A positive Balance of Trade A Nation Wants to Export more than it Imports The United States is the reverse

The Big Mac Index A way of measuring the strength of the dollar Big Mac’s involve a fixed product What it involves

Big Mac Index

Our Trade Deficit

Why We have a Trade deficit Where it comes fromfrom What are the reasons

The Advantages and Disadvantages of a Trade Deficit Disadvantages Advantages

Goal 5: Sound Tax Policy A sound tax policy should collect as much at it spends A sound policy does not disrupt the functioning of the economy

Where to set the Tax Rate

Types of Taxes Regressive Progressive Sin Taxes

Our Tax Burden Is Lower than Most Nations

Who Pays Income Tax?

The National Debt: The problem of our Tax Policy We accumulate annual budget Deficits We have to Pay interest on this We owe roughly 14 Trillion Dollars

Everyone has a hand in it

Comparative Debt

The Debt Disadvantages Advantages

What to about it Raise Taxes Cut Spending Some Combination of both

Raising Taxes A Political Albatross We like Tax Cuts instead We Like sin taxes- but we are running out of these

Raising Taxes on Who? Soak The Rich Make the Poor Chip in Close Loopholes

Change How We Tax Add a consumption or VAT Tax Add a Flat Tax Try A “Fair Tax”

Cut Spending There is No Political Gain to do so Cut Back on Entitlements Reduce Discretionary Spending

We Love to Spend

Pay the Light Bill

Economic Inequality AKA Poverty

What is Poverty Absolute Deprivation Relative Deprivation

The Role of Social Class What is Social Class How the United States compares to other nations Why social class is not as important in the United States

The Components of Social Class Wealth Status Political Power

The Wealthy About 3% of the Population Old vs. New Money An Endogamous culture

The Middle Class Most of us claim to be in here Upper-Middle Lower Middle

Working Class About 30% of the Population Not as identifiable in the United States as other Nations Tend to be Hourly rather than salaried

The Poor Between 12-13% of the Population Low Wage Jobs or do not Work full time

SOCIAL CLASS The Political Impact

Why not social class The Parties do not try to exploit social class We have never had an appreciable socialist movement People identify with other groups before class

Measuring Social Class We ask people which class they belong to – We are very likely to say middle class Within Social classes there are great variations in income Our partisanship doesn’t change with rising or lowering class.

Social Class and Partisanship Republicans Do better with poor whites in the South Do better with Upper Middle Class voters Historically have done better with Middle Class voters Democrats Do better with poor and working class Do better with the very wealthiest Do better with Union Members

Social Class and Voting Wealthy people vote at higher Rates Related to education Lower Information Costs

The Wealthy are More Likely to join Interest Groups