ECON 104 1st Edition Lecture 2Outline of Last Lecture I. Syllabus Lecture – no course material covered yetOutline of Current Lecture I. Economic StatisticsII. Basic Economic DefinitionsIII. Different Economic IdeologiesCurrent LectureI. 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 thesocial 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 96These 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. 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?”II. 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 bya 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.- 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. III. 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 EnterpriseInstitute 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 taxationand spending, regulation, production of goods and services, and overall responsibility for a stable system e.g. John Kenneth Galbraith, Paul Krugman, Presidents Clinton andObama, 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 rootcauses- 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