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Chapter 10 Economy and Politics

Tracking the Trends: Economy and Politics

In 2013, just 19% of people said they trust the U.S. government to do what is right most of the time.

Q. How do you feel about the federal government’s performance? What are some of the consequences of low public confidence in government?

Survey Question: “How much do you trust the government in Washington?”

Column1 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0.7300000000000002 0.65000000000000024 0.53 0.3600000000000001 0.28000000000000008 0.25 0.47000000000000008 0.44000000000000006 0.25 0.47000000000000008 0.23 0.17 0.39000000000000012 0.24000000000000005 0.4200000000000001 0.6000000000000002 0.3600000000000001 0.31000000000000011 0.17 0.22000000000000003 0.19000000000000003

Percentage Responding

“Just about always” or “Most of the time”

Economy and Politics

Politics: The social institution that guides a society’s decision making about how to live

Economy: The social institution that organizes the production, distribution, and consumption of goods and services

The Capitalist Model

Capitalism: Economic system in which natural resources and the means of producing goods and services are privately owned

Pursuit of self-interest

Market competition; supply and demand

Private property

The Capitalist Model

Little interference from government, a formal organization that directs the political life of a society

But…

What is economically efficient for producers is not always good for workers or community members

High level of economic inequality

The Socialist Model

Socialism: Economic system in which natural resources and the means of producing goods and services are collectively owned

Limits to the right to private property

Interest of the people over the individual

Government guides operation of the economy

Relatively low standard of living

Government can limit personal freedom

Mixed Systems

All countries have elements of both systems.

Majority of countries are mostly capitalist

About 20 countries are mostly socialist

Types of Mixed Systems:

State capitalism: Government works closely with large, privately owned companies

Welfare capitalism: Government provides extensive welfare programs, funded by high taxes.

Mixed Systems

The U.S. is among the most capitalist countries, with 82% of production in the private sector.

In difficult economic times, government steps in with loans.

Figure 10-1 Percentage of Gross Domestic Product (GDP) in the Private Sector and the Public Sector

Bipin (B) - COMP: Please replace image with final art.

Global Map 10-1 Economic Freedom in Global Perspective

Figure 10-2 Who Should Control Production, the Market or the Government?

The Economy and Politics

Political economy: The closely linked economic and political life of a nation or world region.

Types of political systems:

Democracy - political system in which power is exercised by people as a whole

Authoritarianism - political system that denies popular participation in government

Monarchy - political system in which a single family rules from one generation to the next

Problems of the U.S. Political Economy: Power of Corporations

Corporations: Businesses with a legal existence, including rights and liabilities, separate from that of their members

The largest 100 corporations control most U.S. production

Share has been increasing

Often receive taxpayer money, in the form of government handouts and subsidies

Monopoly and Oligopoly

Monopoly: the domination of an entire market by a single producer

Emerged at the end of the nineteenth century

Sherman Anti-Trust Act (1890)

Oligopoly: the domination of a market by a few companies

Conglomerates and Other Linkages

Conglomerate: Giant corporation composed of many smaller corporations

PepsiCo Taco Bell, KFC, Frito-Lay, Pizza Hut, Quaker Oats

Interlocking directorates: Social networks made up of people who serve as directors of several corporations at the same time

The Power of Money

Corporate wealth influences political process

Special-interest groups: political alliances of people interested in some economic or social issue

NRA (National Rifle Association )

AARP (American Association of Retired Persons)

ACLU (American Civil Liberties Union )

Money buys political power though lobbying, the efforts of special-interest groups to influence government officials

Campaign Financing

Total campaign spending for 2012 elections: $7 billion+

Sources:

Corporations (largest source)

Political Parties

PACs (Political Action Committees)

Unions

Individuals

The social problem: Government for Sale?

Campaign contributions are made in expectation that specific political objectives will be advanced.

Political decisions are made with fundraising implications in mind.

Campaign Financing: PACs

Political Action Committees: Organizations formed by special-interest groups to raise and spend money in support of political goals

5,700 PACs in the U.S.

2002: Bipartisan Campaign Reform Act

No more than $5,000 to a single candidate

No more than $15,000 to a single party

PACs started encouraging individuals to give

Campaign Financing: Super PACs

2010: Citizen’s United vs. Federal Election Commission

No limits to the role that money can play in today’s elections

Super PACs

Raise money on behalf of candidates

Cannot work directly with candidates

Voter Apathy

In the last five presidential elections, between 52% and 63% of eligible voters voted.

Conservative view: Sign of indifference; people are satisfied with the way things are

Liberal and Radical view: Sign of widespread alienation from politics

Other countries have higher participation:

more political choices; laws that require voting

Why so much apathy?

National Map 10-1 Voter Turnout across the United States

Figure 10-3 Public Confidence in Selected

Institutions, 2013

Corporate fraud, negative campaign advertising, and ongoing political gridlock have caused a decline in public confidence.

Confidence in Congress has dropped to 10%.

Who Votes? Class, Race, Ethnicity, and Gender

Income:

Most people with high incomes vote

Most people with low incomes do not vote

Why? Affluent people:

More schooling

Older

More at stake

Figure 10-4 Voting by Income Level, 2012

Who Votes? Class, Race, Ethnicity, and Gender in 2012

Race and Ethnicity

66% of African Americans voted; 64% of whites

48% of Hispanics voted

Sense of cultural marginality

Lack of fluency in English

Gender

64% of women; 60% of men

Age

72% of those age 65+

41% of college-age

The Gender Gap

The tendency for women and men to hold different opinions about certain issues and to support different candidates

More women vote and they tend to support Democratic candidates

Women favored Obama over Romney, 55% to 44%

Women tend to support issues that protect children, older people, those with disabilities

Men more likely to support strong military, gun rights, and the death penalty

Voting Laws for Persons Convicted of Serious Crimes

6 million people in the U.S. do not have the right to vote:

48 states: no vote for people in prison (exc. VT and ME)

35 states: no vote for those on probation after being convicted of a felony

11 states: no vote for those who have completed their sentences

Controversial: Politically motivated?

Social Movements: How Much Change?

Political activism and social change

Civil Rights movement

Women’s movement

Gay Rights movement

Social movements have played important role in shaping the political landscape but have had little impact on economic inequality.

Occupy Wall Street

Structural-Functional Analysis: Rule by the Many

The economic system as complex system to produce and distribute goods and services

The political system as operating to distribute power and maintain order

Robert Dahl: The Pluralist Model

power widely distributed, with “veto groups”

Criticism: Does not reflect political reality; what about Wall St., wealthy individuals, Super PACS?

Social-Conflict Analysis: Rule by a Few

Economic and political systems operate under control of an elite to benefit the elite

President Dwight Eisenhower warned of the growing military-industrial complex.

C. Wright Mills: The Power-Elite Model

Power concentrated among a small elite: top military officials, heads of major corporations, top political officials

Children of the power elite marry one another, passing along privileges to another generation

Social-Conflict Analysis: Rule by a Few

Karl Marx: Capitalist Political Economy

Sees the concentration of wealth and power in a society as the result of capitalism

Criticism: Ignores U.S. progress in extending economic and political opportunity (Presidents Clinton and Obama were not born into political elite class); socialism may concentrate power even more than capitalism.

Conservatives: The System is Working

Free competition in the marketplace

Competition among political candidates

People are free to participate in political economy as much or as little as they wish

U.S. Constitution is the foundation of these freedoms

Major problem: increase in the size of government

Liberals: The Need for Reform

Favor a free market but support more government regulation of the economy

Laissez-faire economy concentrates wealth and power in the hands of a few

Support a welfare state to reduce inequality, transferring wealth from rich to poor and providing benefits to the needy

Progressive taxation

The Radical Left: A Call for Basic Change

Oppose a market system and support government control of the economy

Capitalism is the source of the problem

Small changes make no difference; only solution is placing entire economy under government control