Slide 1OutlineWhat Are Economic Institutions?Economic Systems of the WorldGlobalization of EconomySocioeconomic Consequences of CapitalismSocioeconomic Consequences of Capitalism Continued…Strengths of CapitalismMichigan Revenue (2006-2007)Highest Paid CEOsRichest of the WorldRichest of the WorldEconomic Institutions and Inequality Economic Institutions and Inequality Lecture 5Lecture 5OutlineOutlineEconomic Institutions?Economic SystemsCapitalismWelfarismSocialismGlobalization of EconomySocioeconomic Consequences of Capitalism Michigan RevenueHighest Paid CEOsRichest of the WorldEconomic Institutions?Economic SystemsCapitalismWelfarismSocialismGlobalization of EconomySocioeconomic Consequences of Capitalism Michigan RevenueHighest Paid CEOsRichest of the WorldWhat Are Economic Institutions?What Are Economic Institutions?Social organization of production, distribution, and consumption of goods and services in a society. Production of goodsDistribution ConsumptionSocial organization of production, distribution, and consumption of goods and services in a society. Production of goodsDistribution ConsumptionEconomic Systems of the WorldEconomic 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CapitalismWelfarismSocialismMeans of production are owned by the stateProduction for use, not profitNo social stratificationState is responsible for basic needsGlobalization of EconomyGlobalization 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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 debtSocioeconomic Consequences of CapitalismSocioeconomic 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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 InequalitySocioeconomic Consequences of Capitalism Continued…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?)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 CapitalismStrengths of CapitalismSocial DarwinismCompetition leading to excellenceCreativity, Innovations, and InventionsMotivation to succeedTrickle down effectSocial DarwinismCompetition leading to excellenceCreativity, Innovations, and InventionsMotivation to succeedTrickle down effectMichigan Revenue (2006-2007)Michigan Revenue (2006-2007)Federal Government $13.4 BillionIndividual Income $6.3 BillionBusiness Tax $2.1 BillionGeneral Sales $8.6 BillionProperty Taxes $2.1 BillionTransport $2.3 BillionTobacco Sales $1.1 BillionTobacco Settlement $286.6 MillionState of Michigan, 2007Highest Paid CEOsHighest 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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 MillionForbes, 2006Richest of the WorldRichest of the WorldWarren Buffett United States $62 BillionCarlos Slim Helu Mexico $60 BillionBill Gates III United States $58 BillionLakshmi Mittal India $45 BillionMukesh Abani India $43 BillionAnil Ambani India $42 BillionIngar Kamprad Sweden $31 BillionKP Singh India $30 BillionOleg Deripaska Russia $28 BillionKarl Albrecht Germany $27 Billion(Forbes 2008)Richest of the WorldRichest of the WorldCarlos Slim Helu Mexico $74 BillionWilliam Gates United States $56 BillionWarren Buffet United States $50 BillionBernard Arnault Germany $41 BillionLarry Ellison USA $39.5 BillionLakshmi Mittal India $31.1 BillionAmanico Ortega Spain $31 BillionEika Batista Brazil $30 BillionMukesh Ambani India $27 BillionChristy Walton USA $26.5 Billion(Forbes