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How Should the United States Government Carry Out Its Economic Role?

How Should the United States Government Carry Out Its Economic Role?. Government intervention in the economy…Keynesian Economics. Property Rights: Article I of US Constitution. Federal government’s powers under the Constitution Delegated powers? Reserved powers? Concurrent powers?

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How Should the United States Government Carry Out Its Economic Role?

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  1. How Should the United States Government Carry Out Its Economic Role? Government intervention in the economy…Keynesian Economics

  2. Property Rights: Article I of US Constitution • Federal government’s powers under the Constitution • Delegated powers? Reserved powers? Concurrent powers? • Regulation: establish laws and rules to influence favorable economics • US Patent and Trademark Office • Essential for Free Enterprise market system? • John Maynard Keynes, “Keynesian Economics” • Opposite of “Laissez-Faire”

  3. Exception to Private Property! • Eminent Domain • Power of government to take individual property for public use if the owner is “fairly” compensated • 5th Amendment: “Nor shall private property be taken for public use without just compensation” • The “Takings Clause”: Kelo v. City of New London, 2005

  4. Regulatory Roles of Government • Acts to maintain competition when markets don’t! • Regulatory agencies: Justice Department, Federal Trade Commission. • In restraint of trade, mergers

  5. Government Protection of Consumers • Food and Drug Administration • Teddy Roosevelt • The Jungle, Upton Sinclair • Department of Labor • Franklin Delano Roosevelt • New Deal Legislation • Francis Perkins

  6. Should Government Deregulate? • Removal of government restrictions on firms’ economic activity to increase competition – more of a free enterprise system

  7. Government Involvement in Externalities and Public Goods • Positive versus Negative Externalities • Public education versus health care • Implementation of corrective taxes, cap and trade permits (use of energy and pollution limits) • Preservation of Common Resources • Tolls, Quotas, Privatization • Overused or destroyed = “tragedy of the commons” • Government Failure? • Causes inefficient allocation of resources • Gray Davis and deregulation of energy, 1990s

  8. Government Promotion of Economic Well Being? • Beginning with the Great Depression, 1929 – World War II • New Deal of FDR • Cold War defense industries, 1945-1989 • Kennedy’s New Frontier, 1960-1963 • Johnson’s Great Society, 1964-1968 *Government welfare system has become ingrained…American citizen: “government must take care of us!”

  9. Government Regulation Vocabulary • Regulation • Eminent Domain • Regulatory Agencies • Merger • Deregulation • Externalities and Public Goods • Common Resources • Tragedy of the Commons

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