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ECONOMICS 3. 2/9/2012. Learning Objectives. Critically analyze social problems by identifying value perspectives and applying concepts of sociology, political science, and economics;
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ECONOMICS 3 2/9/2012
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 10-2
Readings • Required • Tax Policy (Chapter 8) Dye • Health and Welfare (Chapter 5, pp 88-96) • International Trade and Immigration (Chapter 9, pp 198-199) • American Dilemmas Handbook, pp9-15, 89-100
Goals of a Sound Economic Policy • GDP Growth • Low Unemployment • Low Inflation • Positive balance of Trade • Sound Tax Policy
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
The National Debt • What is it? • Why do we have it?
The Debt • Disadvantages • Advantages
What to about it • Raise Taxes • Cut Spending • Some Combination of both
Changing the Tax System • Tax Cuts • Tax Reforms
Raising Taxes • A Political Albatross • We like Tax Cuts instead • We Like sin taxes- but we are running out of these
Raising Taxes on the Wealthy • The lowest 50% of Americans pay 3% of all federal income tax • The Wealthiest 1% pay 39% of all income Taxes
Raising Taxes on Who? • 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
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 15% of the Population • Low Wage Jobs or do not Work full time
The Political Impact Social Class
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 Democrats Do better with poor and working class Do better with the very wealthiest Do better with Union Members • Do better with poor whites in the South • Do better with Upper Middle Class voters • Historically have done better with Middle Class voters
Social Class and Voting • Wealthy people vote at higher Rates • Related to education • Lower Information Costs
The Poor • Historically Between 12-13% of the Population • Recession has caused this to increase (15%) • Low Wage Jobs or do not Work full time
Who are the Poor • Employment • Family Composition • Region
Consequences of Poverty • Lower Quality of Life • Less access to health care • Higher Crime Rates
Why are the Poor, poor? • There are Multiple Causes, which makes Policy difficult- which one do you address? • Low Social Mobility • Educational inequalities • The Transformation of the Economy • Family Structure
Solutions to Poverty • The national government provides two types of benefits • Means-tested benefits:conditional benefits provided by a government to individuals whose income falls below a designated threshold • Non-means-testedbenefits: benefits provided by government to all citizens, regardless of income; Medicare and social security are examples
Social Insurance Programs • Usually Non-Means Tested • Prevent People from Falling into poverty
Public Assistance • Usually Means Tested • Commonly referred to as welfare • Many Receive it
Cash Assistance • Monetary Transfers • Temporary Assistance for Needy Families Act:
Non-Cash/ In-Kind Assistance • The Transfer of a tangible benefit • Food Stamps • Subsidized Housing • Medicaid
The Problem of Poverty • Too Many root causes • Solving the Problem would require broad social reform • Those harmed by the problem do not have a voice • States do not want to become Welfare Magnets • Federal and State Governments have no money