ECON 104 1st Edition Lecture 2 Outline of Last Lecture I Syllabus Lecture no course material covered yet Outline of Current Lecture I Economic Statistics II Basic Economic Definitions III Different Economic Ideologies Current Lecture I Economic Statistics Major Economic Goals Unemployment 6 7 as of December 2013 Inflation 3 annualized December 2013 GDP Growth 4 1 third quarter 2013 Unemployment Number of People Unemployed 10 4 million Labor Force Participation Rate 62 8 lowest rate since 1978 Alternative Labor Market Utilization Rate 13 1 This includes voluntary part time workers discouraged workers and other marginally attached The Totals GDP and Role of the U S Government Size of the GDP 16 9 trillion Total Growth of Real GDP in Past 5 Years 4 GDP per Capita 49 965 Size of Trade Deficit 2 of GDP 34 3 billion Size of the U S Debt 17 trillion Over 2 7 trillion is owed back to the U S government e g for the social security trust fund Size of U S Deficit Fiscal Year 2014 744 billion U S Government Deficit as a of the GDP 4 4 What These Statistics Don t Tell Us but other numbers do People in U S Living in Poverty 46 million Percentage of People Living in Poverty 15 Number of Homes Receiving a Foreclosure Notice in 2013 1 in 96 These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute II As high as 1 in 33 in Florida Number of Banks that Failed in 2012 51 Number of Banks that Failed in 2013 24 26 total from 2000 2008 2 have failed so far in 2014 Thinking Critically About These Statistics It is a start to know what the statistics are how they are determined and what they mean However Macroeconomics is about the choices we make about the economy in general When do we act collectively via some government to achieve different better outcomes than those of the market When the market talks how much do we talk back Basic Definitions Economics as a Social Science Economics production distribution and consumption of goods and services As a social science we look at history and current activities we focus on the material or the stuff Economic Theory the method of economics the science aspect Assumptions if statements economics loves assumptions Relevance of Economics Controversy difference How Economics is Divided Up Macroeconomics operation and health of an entire economy the branch of economics concerned with large economic aggregates groups such as GDP total employment overall price level and how the aggregates are determined Important in economic history since WWII Microeconomics concerned with the activities of small economic units households firms and especially markets International Economics deals with international relationships on a global scale Different Economic Paradigms structures of thought about different aspects of nature life and society Change overtime as a dominant paradigm is replaced by a new one Can explain the same events and facts in different ways Economics explain what can be measured empirical or reasoned develop theories about purely economic relationships objective Political Economy concerned with the relationships of the economic system and institutions of the rest of society sensitive to politics social institutions morality and ideology III Orthodox Neoclassical Economics accepts the economic system capitalism as it is and explains it Marxian Economics Political Economy is critical of the economic system capitalism and wants to change it Institutional Economics bridges Orthodox and Marxian economics looking at institutions and power in the economy Different Economic Ideologies Conservative Ideology Capitalism is best if you let it be Free Markets are always the way to go they are efficient fair and equitable Private ownership and self interest assures political and economic freedom Individuals should make their own decisions Firms wanting profits as only goals is good for everyone and the economy There should be markets for mostly everything Government is bad for the economy and for the people e g Milton Friedman George W Bush Congressman Paul Ryan The Wall Street Journal The Hoover Institute American Enterprise Institute Liberal Ideology Basic structure of capitalism is good The efficiency and freedom of the markets is good Markets fail and produce problems unequal distribution of income pollution and other by products fails to produce goods we need and are unstable The government has a responsibility to solve problems through taxation and spending regulation production of goods and services and overall responsibility for a stable system e g John Kenneth Galbraith Paul Krugman Presidents Clinton and Obama Massachusetts senators Warren and Markey Business Week Brookings Institute Center for American Progress Radical Ideology Critical of structures institutions operation and results of capitalism Increased production has come at cost of different classes of people those who own have choices and those who don t own have little choices Conflict in system between individuals and groups producing inequality exploitation and alienation Unstable system and efforts to fix are Band Aids that s don t address root causes Some radicals want reform in ownership and economic policy some want social control of all production getting rid of capitalism e g Sam Bowels Rep Barry Saunders Dollars and Sense The Nation Economic Policy Institute United for a Fair Economy