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UNC-Chapel Hill ENST 201 - Market Fundamentalists

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I. Market Fundamentalists: tax cuts aimed at the wealthy, which will trickle downa. These people will use money to create jobsb. CEO’s however tend to not focus on shareholder needs, the shareholder and CEO views do not alignII. The Role of Corporationsa. Bonus culture: CEO can become major shareholder, they get rewarded on short term stock increasesi. This creates a more short term view for CEO, they no longer look at the long-term goalsii. This also undervalues the skills of workers and the CEO’s ability to retain workersiii. 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 backb. The relationship between management and labor is always perceived as an adversarial relationship, but that is not always the casei. 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)i. Corporations can now use their funds to support political parties1. Major shift from when this was not allowedb. MF believes environmental protection can only come at the expense of Jobsi. Removing environmental protection is key for economic growthii. People can vote with their dollars if they want a clean environmentc. MF have very optimistic views of human rationalityi. Human beings are independent and not interdependent1. This goes against human developmental psychology2. Free market insures us of justice3. Reduced all problems to private issuesII. Keynesian Economicsa. Keynes believes economics is a very subjective sciencei. First to identify that there are failures to the market and that it is the role of the government to protect citizens from these failures1. Failure of market to deal with segregation in Jim Crow South2. Rise in antibiotic resistance3. Negative externalitiesii. Was a moralistiii. Believes the crisis represents a moral failure: that of a system built on money valuesiv. Also believes the needs of society are better served by the creation of economic security and the maintenance of a large middle class1. Boom and bust of markets are really damaging to the middle classv. Green Keynesianism: ex. South Korea spent everything on greening their economy1. They wanted a more efficient society2. SMART citiesb. Role of Governmenti. Should play a vital role in protecting society against market failuresii. Risk v. Uncertainty: uncertainty to bring down regulationiii. Positive externalities: investment that benefits everybody1. Ex. Polio vaccinesiv. Should use money on infrastructure to create jobs in order to get more money to the people1. However during these times, government goes into a lot of debtIII. Cons of Keynesian Economicsa. Only works with mature society that is willing to increase taxes when it is necessaryEnst 201 1st Edition Lecture 34Outline of Last Lecture I. EconomicsOutline of Current Lecture II. Market FundamentalistsIII. Role of CorporationsIV. KeynesianismV. Cons on Keynesian economicsCurrent LectureI. Market Fundamentalists: tax cuts aimed at the wealthy, which will trickle downa. These people will use money to create jobsb. CEO’s however tend to not focus on shareholder needs, the shareholder and CEOviews do not alignII. The Role of Corporationsa. Bonus culture: CEO can become major shareholder, they get rewarded on short term stock increasesi. This creates a more short term view for CEO, they no longer look at the long-term goalsii. This also undervalues the skills of workers and the CEO’s ability to retain workersiii. 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 backb. The relationship between management and labor is always perceived as an adversarial relationship, but that is not always the casei. 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.i. Corporations can now use their funds to support political parties1. Major shift from when this was not allowedb. MF believes environmental protection can only come at the expense of Jobsi. Removing environmental protection is key for economic growthii. People can vote with their dollars if they want a clean environmentc. MF have very optimistic views of human rationalityi. Human beings are independent and not interdependent1. This goes against human developmental psychology2. Free market insures us of justice3. Reduced all problems to private issuesII. Keynesian Economicsa. Keynes believes economics is a very subjective sciencei. First to identify that there are failures to the market and that it is the role of the government to protect citizens from these failures1. Failure of market to deal with segregation in Jim Crow South2. Rise in antibiotic resistance3. Negative externalitiesii. Was a moralistiii. Believes the crisis represents a moral failure: that of a system built on money valuesiv. Also believes the needs of society are better served by the creation of economic security and the maintenance of a large middle class1. Boom and bust of markets are really damaging to the middle classv. Green Keynesianism: ex. South Korea spent everything on greening their economy1. They wanted a more efficient society2. SMART citiesb. Role of Governmenti. Should play a vital role in protecting society against market failuresii. Risk v. Uncertainty: uncertainty to bring down regulationiii. Positive externalities: investment that benefits everybody1. Ex. Polio vaccinesiv. Should use money on infrastructure to create jobs in order to get more money to


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