Governmemt's Economic Functions

6) Government's Economic Functions

A. Provide Proper Legal Atmosphere

B. Insure Competition\

C. Provide for an equitable distribution of income

D. Adjust for Market Failures 1 video

E. Affecting Total; Economic Activity

F. Success of US Macro Economic Activity

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Lecture Notes

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      A. Provide a proper legal atmosphere (rules) for capitalism
      B. II. Insure competition
          1. Antitrust laws protect against abuse of monopoly power.
          2. Natural (justifiable) monopolies such as AT&T were allowed because
              duplicating high-cost fixed investments is illogical.
          3. The emphasis on free markets discussed in chapter 3 has resulted in some natural
              monopolies being broken into smaller companies which had to compete against
              new companies touting new technologies.
      C. Provide for an equitable distribution of income
           1. Transfer payments where a government moves general revenue to a
               specific group, i.e., Aid to Families with Dependent Children, students...
           2. Market Intervention (affecting supply and demand)
              a. Minimum wage decreases supply raising price and lowering quantity.
              b. Excise taxes on alcohol, cigarettes, jewelry, etc., deceases supply.
              c. Farm price supports, aid to small business and education increases supply.
     D. Adjust for market failures
           1. Adjust for spillovers (externalities)
               a. Effects of a market system often spillover onto non-participants who are
                   external to the market transaction.
               b. Both costs and benefits result.

2. Covid-19 Unemployment Caught Between Two Systems
a. Federalism and Capitalism Want Local Control

b. Socialism Wants Federal Bailout!

Government too big? 1:13 video

Supplemental
Political Economy Stuff
Conservatism vs. Progressivism

Provide a proper legal atmosphere
A. Freedom of Religion Began in 1636
B. 1619 Began Representative Democracy and Slavery
C. 1735 Zenger Trial brought freedom of the press.
D. Managing a democratic, federal, capitalist republic has been a process
E. Process rules by Democracy 2024 Election Information

Insure competition

Justice Marshals Took Charge in 1803

Teddy Roosevelt continued the battle against monopoly power of trusts

Provide equitable income distribution
A. 1930's_Government_Safety_Net_Deficits began the process
D. Does the Economics of the Trans-Pacific Partnership create conflict
between functions 3 and 4?

What You Should Know About Government
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    E. Affecting total economic activity
     1. This includes a multitude of diverse topics.
               a. Trying to limit the effects of business cycles by lowering unemployment and inflation
               b. Assisting companies trying to compete in the new global economy. Example: Decades of government
                   sponsored research creating franking which could result in U.S. energy independence.
             c. Using foreign aid to make sure we have stable oil prices
                   1. Israel-United States military relations
                   2. US and Foreign Aid Assistance from GlobalIssues.org
               d. The Bailouts of 2007 results are in.

          2. Opinions differ substantially as to the responsibilities or lack of
               responsibilities government has in these areas.

          3. Modern Money & Public Purpose 1 hour plus
             a. The Historical Evolution of Money and Debt
             b . Governments Are Not Households
            c . The Eurozone
          d . Real vs. Nominal Economy

F. Success of US Macro Economic Activity

. Macroeconomic goals of government 7.20 video

Fiscal Foundations, History of Successful for US pp181-224

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