Enst 201 1st Edition Lecture 34 Outline of Last Lecture I Economics Outline of Current Lecture II Market Fundamentalists III Role of Corporations IV Keynesianism V Cons on Keynesian economics Current Lecture I II Market Fundamentalists tax cuts aimed at the wealthy which will trickle down a These people will use money to create jobs b CEO s however tend to not focus on shareholder needs the shareholder and CEO views do not align The Role of Corporations a Bonus culture CEO can become major shareholder they get rewarded on short term stock increases i This creates a more short term view for CEO they no longer look at the long term goals ii This also undervalues the skills of workers and the CEO s ability to retain workers iii Stakeholder model in Germany company s don t fire their workers easily during recessions they try really hard to retain their workers they may cut the workers hours but government pays part of unemployment for workers and also helps pay for the training of new workers this way after recession they are ready to go 100 1 After recessions Germans always come out on top due to their ability to bounce back b The relationship between management and labor is always perceived as an adversarial relationship but that is not always the case i Ex In Germany there is a push toward retaining jobs than raising paychecks They try their best to avoid out souring Corporations as persons Citizens United v Federal Election Commision 2010 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 III i Corporations can now use their funds to support political parties 1 Major shift from when this was not allowed b MF believes environmental protection can only come at the expense of Jobs i Removing environmental protection is key for economic growth ii People can vote with their dollars if they want a clean environment c MF have very optimistic views of human rationality i Human beings are independent and not interdependent 1 This goes against human developmental psychology 2 Free market insures us of justice 3 Reduced all problems to private issues Keynesian Economics a Keynes believes economics is a very subjective science i First to identify that there are failures to the market and that it is the role of the government to protect citizens from these failures 1 Failure of market to deal with segregation in Jim Crow South 2 Rise in antibiotic resistance 3 Negative externalities ii Was a moralist iii Believes the crisis represents a moral failure that of a system built on money values iv Also believes the needs of society are better served by the creation of economic security and the maintenance of a large middle class 1 Boom and bust of markets are really damaging to the middle class v Green Keynesianism ex South Korea spent everything on greening their economy 1 They wanted a more efficient society 2 SMART cities b Role of Government i Should play a vital role in protecting society against market failures ii Risk v Uncertainty uncertainty to bring down regulation iii Positive externalities investment that benefits everybody 1 Ex Polio vaccines iv Should use money on infrastructure to create jobs in order to get more money to the people 1 However during these times government goes into a lot of debt Cons of Keynesian Economics a Only works with mature society that is willing to increase taxes when it is necessary