Economic Institutions and Inequality Lecture 5 Outline Economic Institutions Economic Systems Capitalism Welfarism Socialism Globalization of Economy Socioeconomic Consequences of Capitalism Michigan Revenue Highest Paid CEOs Richest of the World What Are Economic Institutions Social organization of production distribution and consumption of goods and services in a society Production of goods Distribution Consumption Economic Systems of the World Capitalism Welfarism Socialism Means of production are owned by the state Production for use not profit No social stratification State is responsible for basic needs Globalization of Economy Globalization refers to economic and political interdependence of nations around the globe Globalization of production International Trade International Finance World Bank IMF World Trade Organization NAFTA Cooperation among industrial nations Third world debt Socioeconomic Consequences of Capitalism Environment degradation Economic insecurity Social inequality Ascribed Economic Inequality Inheritance of property Inheritance of occupations Politics of Inequality Education and Economic Inequality Legal systems and Economic Inequality Socioeconomic Consequences of Capitalism Continued Advertising and Consumerism Create perceived desire or needs for products that are not necessary Planned artificial obsolescence Influence on the contents of mass media Over emphasis on consumer goods and services leading to alienation Strengths of Capitalism Social Darwinism Competition leading to excellence Creativity Innovations and Inventions Motivation to succeed Trickle down effect Michigan Revenue 20062007 Federal Government Individual Income Business Tax General Sales Property Taxes Transport Tobacco Sales Tobacco Settlement 13 4 Billion 6 3 Billion 2 1 Billion 8 6 Billion 2 1 Billion 2 3 Billion 1 1 Billion 286 6 Million State of Michigan 2007 Highest Paid CEOs Richard Fairbank CAP 249 Million Terry Semel Yahoo 231 Million Henry Silverman Cen 140 Million Bruce Karatz KBH 136 Million Rick Fuld Leh 123 Million Ray Irani O Pat 81 Million Larry Ellison Oracle 75 Million John Thompson Sym 72 Million Edwin Crawford H 70 Million Angelo Mozilo FIN 69 Million Forbes 2006 Richest of the World Forbes 2008 Warren Buffett Carlos Slim Helu Bill Gates III Lakshmi Mittal Mukesh Abani Anil Ambani Ingar Kamprad KP Singh Oleg Deripaska Karl Albrecht United States Mexico United States India India India Sweden India Russia Germany 62 60 58 45 43 42 31 30 28 27 Billion Billion Billion Billion Billion Billion Billion Billion Billion Billion Richest of the World Forbes 2011 Carlos Slim Helu William Gates Warren Buffet Bernard Arnault Larry Ellison Lakshmi Mittal Amanico Ortega Eika Batista Mukesh Ambani Christy Walton Mexico United States United States Germany USA India Spain Brazil India USA 74 Billion 56 Billion 50 Billion 41 Billion 39 5 Billion 31 1 Billion 31 Billion 30 Billion 27 Billion 26 5 Billion