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FSU ECO 4132 - STUDY GUIDE

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STUDY GUIDE Domestic Issues of Compassion• Home for redeeming love (1910) founded and run by women of the Methodist church.o Funded by church donationso Women from the church staffed ito Became a well-known hospital by 1950• This is an example of Americans using associations• Alexis De Toqueville 1835/1840 wrote about associations• Richard Cornwelle in 1965 wrote about the “Independent Sector”• Fraternal organizations were mainly responsible for charitable activity.o Ex: free masons, shriners• Omaha, Nebraska is an agglomeration for the insurance industryo Ex: “Woodmen of the world” is a fraternal society that operates a privately held insurance company exclusively for its members in Omaha.• Price Fishback and Shawn Kantor had a role in fraternal organizations providing workers insurance prior to the advent of government sponsored workman’s compensation.Emergence of Workman’s Compensation• Fraternal organizations were the beginning of workman’s compo Workman’s compensation came important because people injured at work would sue the company.o But also happened because of dissatisfaction on the part of the companies to sue workers.o 82% collected on an insurance claim by private or fraternal organization.o NOT necessarily true that workers were unprotectedo Received best response in fraternal organization• 3 things that cause for profit insurance company to avoid workman’s compensation market:o Risk spread- paying out too many claimso Adverse selection (the tendency of those who engage in high-risk behavior to get insurance)o Moral hazard (engaging in high-risk behavior because someone has insurance)• Marvin Olasky- religious-associated anti- poverty programs of the 19th century.o Not an economisto Came up with 7 principles of what makes associations successful:o Affiliation- successful independent integrated recipients into new proxy or old version of social structureo Bondingo Categorization- one size doesn’t fit all. A successful organization realizes this.o Discernment- to be able to realize when they’re being scammedo Outside employment as ulmiate goalo Avoid engagements with parallel government programso Stayed true to their core principles (catholic, protestant, Jewish are the 3 best examples) most representation in religious organizations Dr.Isaac considers these people “revisionists”• Ideas involve a lot of what is learned in high school: dog eat dog, free for all, competition.• Associational Presence of Charities o Questions to keep in mind: 3 models:• Traditional model (Dickensenian):social Darwinism, people left on their own• Revisionist model-robust presence of associational programs• Modified Dickensenian (based on Charles Dickens) model: were the associational programs simply overwhelmed? Yes programs were in place but they couldn’t handle everything What happened to the associational programs?• Protestant traditiono Traditionalisto Social gospel movement. Outgrowth of string of theological discourse in Germany in late 19th century. New translation of New Testament of the Bible. Woodrow Wilson turned Princeton into German/American research union for this purpose. Merged with T. Roosevelt’s US movement of progressivism, which came from discontent with social economy, such as rural populism (associated with MM Jennings Bryant) and radicalism (associated with EV Debs and the socialist movement).• Heirs of Protestant denominations theology of social• Government should be primary giver of domestic help.• Women play a really important role of aid in the Methodist church.• Temperance- the idea that people act on self control for consumption.• Prohibition- legal control of consumption.• Methodists put a building on Capitol Hill so they could keep an eye on prohibition.• 4 progressive amendments to the Constitution: prohibition, legalization of income tax, adoption of women’s suffrage, senators• Minimum wage began with social gospel and progressive movements. Can the government and independent provision of charitable goods coexist? Are they complimentary or are they substitutes?• Crowding outo Began with MM Jennings theorem- deciding what the debt to equality ratio really waso Proved that charitable organizations are crowded out.o It appears that in areas in which government assistance is high, charitable organizations are crowded out. However, the effect may be happening vice versa• Poverty o Bases for measuring poverty: Income- $made per year Wealth- asset providing potential stream of income and utility or financial wealthy (ex: bond) Consumption Socialo Example of wealth: a house, a durable good, human capital.o You can be poor in any of the above ways without being poor in other ways.o Poverty can be social, not necessarily income.• Blackboard articles discussed in class:o US census website Income-based measurements used (money income) Non-cash benefits not included: food stamps, subsidies, housing assistance Definition came from efforts 40/50 years ago to develop basket of food stuffs.o Understanding America’s Poor What do their lives look like? What kind of amenities are in poor households? There is disconnect between the amenities poor people tend to have and their income. (i.e. they have luxury goods when they can’t afford to put food on the table)• Measure of inequality is usually income.• Income has been growing to a position of greater inequality since 1970.• In reference to the model used to display poverty (the Gini coefficient) a change in inequality may not be accompanied by a change in the wealth coefficient.• Heritage foundation identifies the 70 federal assistance programs.• Shanks and Dazinger have determined the ten most important.• Federal government is a major player in poverty programs• Regulatory minimum wage, who does it really help?• Criterion for success of a program:o Static- it is inefficient because of fraud, rent seeking, and administrative costs. Rent seeking- people spending more money in order to qualify for program.o Dynamic- people need to be on the assistance program with the intent to get off.o Moral hazard needs to be eliminated• The effects of price floors and ceilings are often debated by economists:o How big are job losses from these?o Who are the people getting the increased wage from it? (studied by Dave MacPherson)o People who experienced unemployment may be full time


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