United States Economy Social 30

The Least You Need to Know… Difference between theory and practice Difference between theory and practice Keynesian economics/demand-side econ. Keynesian economics/demand-side econ. The importance of change The importance of change Reaganomics/Supply-side economics Reaganomics/Supply-side economics

History of United States Economy Limited Intervention (to 1929) –Government intervened very little in the economy. –All the government did was maintain public order, develop laws, provide roads and education, etc. –Government did not spend a lot of money and taxes were kept relatively low.

Great Depression ( ) Tuesday October 29, 1929—Stock Market Crash Tuesday October 29, 1929—Stock Market Crash –Stocks were bought on borrowed money –People tried to get their money back by selling stocks quickly –People went bankrupt –Individual consumption of goods decreased. In 1932, Franklin D. Roosevelt, Democratic presidential candidate campaigned on “Relief, Recovery, Reform.” Roosevelt was elected. In 1932, Franklin D. Roosevelt, Democratic presidential candidate campaigned on “Relief, Recovery, Reform.” Roosevelt was elected. New Deal ( ) New Deal ( ) “Hundred Days” “Hundred Days” Congress enacted legislation to help alleviate the economic crisis. Congress enacted legislation to help alleviate the economic crisis.

ABBA – Money, Money, Money

Mixed Economy in America ( ) The entry of the United States into WW II marked the beginning of unprecedented government intervention in the economy. The entry of the United States into WW II marked the beginning of unprecedented government intervention in the economy. After the war was over, the government continued many of the New Deal ideas such as road building, damn building, regulating banking, etc. After the war was over, the government continued many of the New Deal ideas such as road building, damn building, regulating banking, etc. During this time, Cambridge University professor, John Maynard Keynes, influenced American Economic philosophy. During this time, Cambridge University professor, John Maynard Keynes, influenced American Economic philosophy.

After 1945, the American government adopted many of Keynes’s fiscal policy instruments, seeking to provide stability to the economy and even out fluctuations in production and employment caused by the business cycle. It was hoped that government spending on goods and services, as well as its transfers of income to the poor, would stabilize the economy. After 1945, the American government adopted many of Keynes’s fiscal policy instruments, seeking to provide stability to the economy and even out fluctuations in production and employment caused by the business cycle. It was hoped that government spending on goods and services, as well as its transfers of income to the poor, would stabilize the economy. In bad economic times, government would increase spending and reduce taxes. Governments may have to run deficits to achieve these goals. In bad economic times, government would increase spending and reduce taxes. Governments may have to run deficits to achieve these goals.

Neo-conservatism variant of the political ideology of conservatism that combines features of traditional conservatism with political individualism and a qualified endorsement of free markets. variant of the political ideology of conservatism that combines features of traditional conservatism with political individualism and a qualified endorsement of free markets. –Neoconservatism arose in the United States in the 1970s among intellectuals who shared a dislike of communism and a disdain for the counterculture of the 1960s, especially its political radicalism and its animus against authority, custom, and tradition.

Retreat of Government from the Economy ( ) Early 1970s expenditures of the Vietnam War were mounting. Also, the world economy was not thriving. Early 1970s expenditures of the Vietnam War were mounting. Also, the world economy was not thriving. In 1981, newly elected President Ronald Reagan announced an economic policy that would return the country to prosperity. In 1981, newly elected President Ronald Reagan announced an economic policy that would return the country to prosperity.

Reagan’s policies later became know as supply-side economics or Reaganomics. These policies called for lower government spending on social welfare programs, lower personal and corporate income taxes, less regulation of business activities, and lower increases in the growth of money supply. Reagan’s policies later became know as supply-side economics or Reaganomics. These policies called for lower government spending on social welfare programs, lower personal and corporate income taxes, less regulation of business activities, and lower increases in the growth of money supply.

Reagan lowered income tax, reduced limitations on business. Reagan lowered income tax, reduced limitations on business. Increased military spending. Increased military spending. Bush Sr. kept the same direction. Bush Sr. kept the same direction. Clinton  1993—had to balance the budget. Clinton  1993—had to balance the budget.

Post 911 America ???????  Bush Jr. has reduced taxes, but increased spending, especially military spending (I think there is a war on) ???????  Bush Jr. has reduced taxes, but increased spending, especially military spending (I think there is a war on) The USA has been spending their future Social Security (like the CPP in Canada) in order to finance the spending. The USA has been spending their future Social Security (like the CPP in Canada) in order to finance the spending. At least until At least until SS minutes SS minutes

How to Slay “The Great Recession” –> Stimulus vs. Regulation THE U.S. SOLUTION - STIMULUS: For the Americans, the priority is to get credit flowing again. Their Job One is to free up the movement of money - preferably through co- ordinated stimulus efforts that can kick-start a recovery. More regulation for the financial system can come later. Treasury Secretary Tim Geithner has urged other countries to join the U.S. in making bold moves to pump more money into their economies. THE U.S. SOLUTION - STIMULUS: For the Americans, the priority is to get credit flowing again. Their Job One is to free up the movement of money - preferably through co- ordinated stimulus efforts that can kick-start a recovery. More regulation for the financial system can come later. Treasury Secretary Tim Geithner has urged other countries to join the U.S. in making bold moves to pump more money into their economies.

WHAT DO YOU THINK? THE EUROPEAN SOLUTION - REGULATION: Better regulation is the key, counter the Europeans. Their hope is to create an international body with cross-border power. They also want action to cut down on tax havens and make private equity more transparent. European politicians, such as German Finance Minister Peer Steinbrueck, have resisted U.S. calls to ramp up their stimulus packages, saying they are doing enough. THE EUROPEAN SOLUTION - REGULATION: Better regulation is the key, counter the Europeans. Their hope is to create an international body with cross-border power. They also want action to cut down on tax havens and make private equity more transparent. European politicians, such as German Finance Minister Peer Steinbrueck, have resisted U.S. calls to ramp up their stimulus packages, saying they are doing enough.

“Rockin in the Free World” Q: What criticisms exist of the American, market economy? Q: What criticisms exist of the American, market economy?

Canadian GDP in the 2000s

Evaluation Q: Based on what you have seen in the news; is it possible for the government to stop the recession through intervention? Q: Based on what you have seen in the news; is it possible for the government to stop the recession through intervention? Q: Should we, in Canada, be laissez-faire or socialist in our government intervention? Q: Should we, in Canada, be laissez-faire or socialist in our government intervention?

Work Booklet Please do the assigned booklets Please do the assigned booklets Dragons Den SS 45-3 Dragons Den SS 45-3 The Cost of Cool SS 13-8/9 The Cost of Cool SS 13-8/9 The Age of Walmart SS 38-4 The Age of Walmart SS 38-4