1

Introduction

to the US

Economy

2

Some of your impressions of the USA . . .

"There is no social safety net in the United States."

"American hospitals /doctors refuse treatment to patients without health insurance."

"Most Americans own a gun."

"Most black people in the US are poor."

3

Some of your impressions of the USA . . .

"There is no social safety net in the United States."

"American hospitals /doctors refuse treatment to patients without health insurance."

"Most Americans own a gun."

"Most black people in the US are poor."

62% agree

38% agree

45% agree

28% agree

4

Question #1

capitalism - CReaganomics - Eprivate sector - Atycoon - J "a hand out" - Ipublic sector - H

lobby - Btariffs - Kbusiness ethics - Danti-trust action - Fmarket forces - G

5

Question #2

Political Action Committee ( - lobby)

International Monetary Fund

Food and Drug Administration

International Business Machines

Internal Revenue Service ( - the “tax police”)

Securities Exchange Commission

General Motors

“Grand Old Party” ( - the Republican Party)

Non-governmental Organization

6

Question #2 (continued)

National Association for the Advancement of

Colored People

General Agreement on Tariffs and Trade

Federal Trade Commission

American Civil Liberties Union

North American Free Trade Agreement

American Telephone and Telegraph

Federal Reserve Board ( - national bank)

Environmental Protection Agency

World Trade Organization

7

Question #2 (b)

International: IMF, NGOs, GATT, NAFTA, WTO

(and the corporations)

Government Agencies: FDA, IRS, SEC, FTC, the

Fed, EPA

Corporations: IBM, GM, AT&T

8

Question #2 cIdentify salient aspects of the American and Austrian economies with reference to:

•land (resources and energy)

•labor (high, medium, and low skilled)

("brain drain", education, immigration)

•capital (the current crisis, savings, indebtedness)

•management

•technology (know-how)

9

10

• Area: 54,000 sq miles

46% forest, 45% farmland

• Population: 5.6 million

93% English speaking, 91-95% covered by health insurance

• Largest cities: Milwaukee – 600,000 /1.7 million Madison - 223,000 Green Bay – 100,000

• Poverty Rate: 7-9%

• Unemployment Rate: 5.8 %

• Educational Attainment:High school education: 85%

Bachelors Degree or higher: 22.4%

• Area: 32,000 sq miles

ca. 40% forest, 41% farmland

• Population: 8.2 million

93% German speaking, 99% covered by health insurance

• Largest cities: Vienna - 1.7 (2.3) million Graz - 288,000 Linz – 188,000

• Poverty Rate: 7%

• Unemployment Rate: 6.2 %

• Educational Attainment:

more than "Lehre": 36.7%

college/university degree: 9.8%

11

Question #3 c

consumers: buy products and invest

provide labor

business: employs people

manufactures and sells products

creates wealth and invests

government: consumes / employs people

regulates business

protects consumers

redistributes wealth

12

13

How do consumers influence producers?

• boycotts

• in what they buy

• consumer protection groups

• NGO’s

• investing

• strikes

• trade unions

• civil action suits

• class action suits

• the media

14

How do consumers influence government?

• consumer protection organizations

• NGO’s

• voting

• the media

• lobbies and PAC’s

• SIG’s (special interest groups)

• demonstrations

• referendums

15

How do producers influence consumers?

• corporate philanthropy

• product offerings

• advertising

• employment

16

How do producers influence government?

• lobbies

• foreign investment

• legal action (MAI)

• employment

• the media

• taxes

• tax shelters

• investment

17

How does government influence consumers?

• services

• welfare assistance

• interest rates (the Fed)

• taxation

• monetary policy (supply of money)

• fiscal policy (how the government spends its money)

• information

• propaganda

18

How does government influence producers?

• subsidies

• regulatory agencies (FDA, EPA, FTC, etc.)

• anti-trust actions

• legal and civil suits

• tariffs (on imports)

• taxes• incentives (tax

breaks)• labor and

bankruptcy laws• minimum wage

19

Question #4 a

centralplanning socialism regulation

nationalization intervention laissez faire

Austria USA

20

Question #4 b

1930s – The Depression – The US Government under Roosevelt created many social programs and the social security system to combat poverty and unemployment

1980s - Reaganomics - A return to more capitalistic economics – reduction of welfare programs, increased liberalization and deregulation

2008 – Mortgage/Housing crisis, Credit Crunch,

Stock Market crash, Government Bailout . . .

21

Question #4 dgas, oil, and electricity

heavy industry (e.g. steel), miningrailroads, airports, airlines

tobaccopublic transport

postal and telephone servicelottery, gambling

health system, hospitalshealth insurance

pension systembanking

schools, education system

The Austrian Public Sector: http://www.statistik.at/web_de/statistiken/oeffentliche_finanzen_und_steuern/

oeffentliche_finanzen/oeffentlicher_sektor/index.html

22

Question #4 dgas, oil, and electricity

heavy industry (e.g. steel)railroads, airports, airlines

tobaccopublic transport

postal and telephone servicelottery, gambling

health system, hospitalshealth insurance

pension systembanking

schools, education system

The American Public Sector: http://en.wikipedia.org/wiki/State-owned_enterprise#United_States

23

However . . .

in 2008 . . .

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25

26

27

More public sector . . .(police and fire departments)*

(the justice system)(the education system)

the road systemsocial statistical reporting

(national defense)(space exploration)

(postal system)printing money

(social security)

•brackets mean that these areas are run by both the public and private sectors, but government

maintains the primary responsibility

28

Question #4 hDemocrats Republicans

29

Question #4 eDemocrats Republicans

left right

liberal conservative / (neo-liberal)

John Keynes Adam Smith

more government less government

social welfare self-reliance

intervention liberalization

national health care personal responsibility

government spending fiscal conservative

public sector private control

30

-isms

(Media Matters)http://www.youtube.com/watch?v=qKCEBOSWVMU

31

32

Question #5 aUSA Austria

Federal State

Corporate Tax rate 15-39% 0-12%

Individual Tax rate 0-35% 0-10%

Payroll tax or "FICA" (= social contributions)

15.3% (capped)

(average = 6%)

Sales Tax (=VAT) 0-10%

Property tax (local) ca. 2.5%

33

Question #5 aUSA Austria

Federal State

Corporate Tax rate 15-39% 0-12% 25%

Individual Tax rate 0-35% 0-10% 21-50%

Payroll tax or "FICA" (= social contributions)

15.3% (capped)

(average = 6%)

ca. 17 %

Sales Tax (=VAT) 0-10% 10-20%

Property tax (local) ca. 2.5% (yearly)

One time payment on

acquiring property

34

Question #5 bUSA (Federal /

State)Austria

GDP (per capita) $46,653

Public expenditure on health (% of GDP) 6.9%

Public expenditure on education (% of GDP)

5.9%

Mean years of schooling 12.4

35

Question #5 c

36

Social benefits and assistance in the US

• Federal:

http://www.govbenefits.gov/govbenefits_en.portal

• State: (using Wisconsin as an example)

http://www.wisconsin.gov/state/core/public_services.html

37

Question #5 f

More specifically, the role of the government in the economy includes:

• direct services (post, fire, schools, police, highways, statistical information (census))

• direct assistance (tarriffs, subsidies, welfare, social security, medicaid, medicare)

• regulation and control (federal agencies, patents and copyrights, bankruptcy laws, minimum wage

and labor laws, corporate charters)• stabilization and growth (regulating foreign trade,

monetary and fiscal policies)

38

The Declaration of Independence

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

Schoolhouse Rock link: http://www.youtube.com/watch?v=CvH7ySQi37E

39

The Constitution and the Bill of Rights

Schoolhouse Rock link: http://www.youtube.com/watch?v=Q_TXJRZ4CFc

40

Question #6 a

"life, liberty and the pursuit of happiness"

= property

Question 6 g

• Treaty of Lisbon http://europa.eu/lisbon_treaty/glance/rights_values/index_en.htm

• Charter of Fundamental Rights http://eur-lex.europa.eu/LexUriServ/site/en/oj/2007/c_303/c_30320071214en00010016.pdf

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42

Question #6 h

43

Your answers to "What is the purpose of government?"

to provide a good and healthy environmentto support the citizens and improve the countryto represent the opinions, desires and requirements of the populationto define rights, create a social safety net, build infrastructure, maintain relations with

other countriesto create welfare, regulate the market and make lawsto provide a peaceful life and consider the people's wants and needsto provide a fair and social system everyone can "live" into proved a framework for economic and social behavior (security, laws, supporting

the "have-nots")fraternité, egalité, libertéto provide for stability and general social levelsto protect the countryto say what is going onto manage and organize everythingto lead the country in the right direction and listen to the voices of the peopleto control (watch over) the people and their needsto regulate and mediate a communityto keep the country on the "right" path in a social, economic and technical wayto control and direct the stateto make rules so people can have a good lifeto regulate parts of the economy and deal with social fairnessto mediate between people's egotistic and social naturesto help and protect the people and economy and to support their developmentto support and stabilize the people / countryto be a kind of safety net, to support the population and regulate difficulties

Outside the box:to keep citizens sane

to provide resources to business

44

Your answers to "What is the purpose of government?"

to provide a good and healthy environmentto support the citizens and improve the countryto represent the opinions, desires and requirements of the populationto define rights, create a social safety net, build infrastructure, maintain relations with

other countriesto create welfare, regulate the market and make lawsto provide a peaceful life and consider the people's wants and needsto provide a fair and social system everyone can "live" into proved a framework for economic and social behavior (security, laws, supporting

the "have-nots")fraternité, egalité, libertéto provide for stability and general social levels

to protect the countryto say what is going on

to manage and organize everythingto lead the country in the right direction and listen to the voices of the people

to control (watch over) the people and their needsto regulate and mediate a community

to keep the country on the "right" path in a social, economic and technical wayto control and direct the state

to make rules so people can have a good lifeto regulate parts of the economy and deal with social fairness

to mediate between people's egotistic and social naturesto help and protect the people and economy and to support their development

to support and stabilize the people / countryto be a kind of safety net, to support the population and regulate difficulties

Outside the box:to keep citizens sane

to provide resources to business

45

Question #6 i1 You can freely choose which religion you will follow.

8 You may not be tortured

4 The state cannot take your private property away from you.

3 The government cannot place soldiers in your home.

2 You have the right to own and carry a gun.

6, 7 You have the right to a trial by jury.

5, 7 You may not be tried twice for the same crime.

1 The state cannot censor anything you say or publish.

1 You can take part in demonstrations – even anti-government ones.

4 The police cannot arrest or search you without a warrant.

6 You have a right to have a lawyer if you are accused of a crime.

1 You do not have to pay church taxes and churches do not have to pay taxes.

46

Question #6 j

People started paying taxes on their income. 1913 (#16)

Drinking alcohol became illegal. 1919 (#18)

Alcohol was legal once again. 1933 (#21)

Slavery ended. 1863 (#13)

The government could not discriminate against people of color.

1870 (#15)

Women could vote. 1920 (#19)

47

A second Bill of Rights?

http://www.youtube.com/watch?v=3EZ5bx9AyI4