GEB 4455 EXAM 2 Spring 2020 PDF

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GEB 4455—Exam 2—Spring 2020 DIRECTIONS -DO NOT COMMUNICATE WITH ANYONE ELSE ABOUT THE EXAM (except Dr. Christiansen or Kelsey). -USE YOUR OWN WORDS. -USE CITATIONS IF YOU QUOTE OR HEAVILY DEPEND ON REFERENCES (I DO NOT CARE ABOUT STYLE). -YOU SHOULD SUBMIT AN ELECTRONIC COPY ON CANVAS NO LATER THAN APRIL 13 TH BY MIDNIGHT. -THE MAXIMUM NUMBER OF PAGES FOR EACH QUESTION—3 PAGES. -THE QUESTIONS ARE EQUALLY WEIGHTED. -STATE AT THE END OF YOUR EXAM THAT YOU HAVE NOT RECEIVED ASSISTANCE FROM ANY PERSON. -GRADING WILL BE BASED ON CONTENT AND PROFESSIONALISM.

1. For our policymakers (Fed, Congress, President), which school/philosophy (Marx, Rand, Friedman, or Keynes) is best to use in addressing external shocks (like the coronavirus or the financial crisis) in our country? “Best” means to maximize social well-being (economy, health, happiness). This question is (in part) asking what the role of government (state and national) should be (and what it shouldn’t be) in addressing serious shocks to our economy. Be as specific as you can.

Each school of thought would have a different method of attacking an economical crisis. Marx would believe in government taking control of the situation from the start with stimulus packages, bail outs, and general guidance during those times. Rand’s school of thought would only want government help if the need is dire and would believe that if everyone looked out for themselves than the economy would be fine and bounce back. Freedman would believe in the free market over intervention, and that the market would eventually correct itself. Even though these two schools of thoughts could work In certain situations I believe the best method for addressing a serious shock to our economy would be more of the Keynesian philosophy which, is that there should government help in times of need through government intervention in the form of public policies such as: bail outs, stipends, tax relief, and stimulus packages to name a few. In Keynesian’s theory there would be a belief that the economy would need intervention and would not just balance out automatically. His theory was created during a time that a lot of people are familiar with, that’s called the Great Depression. Before his theory classical theorist believed that the economy would balance out and find its equilibrium. According to Jim Chappelow from Investopedia, “ In response to this, Keynes advocated a countercyclical fiscal policy in which, during periods of economic woe, the government should undertake deficit spending to make up for the decline in investment and boost consumer spending in order to stabilize aggregate demand.” To combat the high employment spike which we are currently seeing now during this coronavirus crisis Keynesian became a

pioneer of the idea that the only way to fix this was to have government stimulate the economy to fix the aggregate demand. With the government pumping more money into the economy it would increase consumer spending which in turn have the economy performing much higher than it is, which will create more jobs during these unstable times. There are many examples of Keynesian’s theory being used today and many times throughout history. More recently the 2trillion dollar stimulus package would be something that Keynesian would agree with because it would lead to more business activity and spending, boosting the aggregate demand. This would result in the economy eventually stabilizing itself once people can get back to work, with jobs being created due to the influx of cash government put into the economy. Most people in this situation that saving would be the smartest thing to do but using the Keynesian theory would want people to spend their extra income to help increase the GDP, on top of the stimulus from the government. Examples of times where Keynesian’s theory has been implemented is The Great Depression which caused President Roosevelt to pass laws such as: the federal minimum wage, social security, and child labor laws to name a few. President Reagan increased the spending budget, and more than doubled our deficit, which in turn help end the recession of 1981. More recently President Obama helped in the Great Recession with the Economic Stimulus Act, spending more than 200 billion on unemployment benefits, healthcare and education. Also, creating jobs using federal contracts, and loans. These are just a couple of ways that Keynesians theory has helped are country get out of troubled times using government intervention.

I believe that the best way for our economy to bounce back from this coronavirus that has shocked our economy is to no sit around and wait but for the government to intervein and stimulate the economy like they have done already. Citation Chappelow, Jim. “Keynesian Economics Definition.” Investopedia, Investopedia, 29 Jan. 2020, www.investopedia.com/terms/k/keynesianeconomics.asp.

2. A significant portion of this class (looking at the perspectives of Rand, Friedman, Keynes, and Marx) has focused on the role of government (spending, taxes, regulations, etc.). Look at our proposed federal government spending and tax burden for 2020 in this link. Regarding spending and tax burden, what would you change (areas to spend more or areas to spend less, changes in tax burden for individuals, corporations, etc.)? https://www.thebalance.com/fy-2020-federalbudget-summary-of-revenue-and-spending-4797868

Every year our deficit grows as a county, this means that we are spending more than we are earning. According to Kimberly Amadeo of the balance” The Office of Management and Budget estimated that revenue will be $3.706 trillion. That's less than the planned spending of $4.79 trillion and will create a $1.083 trillion budget deficit.” If we are going to spend more than we earn anyways, we should make sure we are allocating that spending to the right places and departments. President Trump has also recently passed Tax cuts and job act that cut the top individual tax rate from 39.6% to 37%, and cut corporation tax from 35% to 21%, which is the largest tax change in the past three decades. Starting with our spending I believe there are better ways we can spend our money, by decreasing spending in certain areas and increasing it in others. First, I believe we should drastically cut our spending on the defense department, according to the article by the balance almost half of our spending budget is used on the defense, which doesn’t include the emergency budget and the contingency budget. I am a firm believer of keeping our country safe, but there has never been an attack on U.S soil and for the most part we are at times of peace. Cutting back a little of that spending from the defense department could go to departments such as education. The education department in the United States could use a lot of upgrades which increase spending could do. More spending in that department can provide better training for teachers, upgraded books for students in Title 1 schools, allow schools to hold more students which in turn would shift zoning to allow for lower income students to get into the better prepared public

schools, or just better prepared Title 1 schools. Health services is also another department that could use a major bump in their funding. The circumstances we are in right now as a country have proven how unprepared we are for a health crisis not having enough testing for one, extra funding would help us be better prepared for the unknown so that when and if this happens again we can be ready to deal with it the right way. Universal Healthcare is something else that could also be affordable with an increase bump in the funding, too many times there are people that must choose between paying an unaffordable hospital bill or the well being of a loved one. That should not be an issue in a 1st world country and more funding should be appropriated towards that. There are somethings that are beneficial to the people on president Trump’s ne tax plan, but I believe that a couple changes to it can make a lasting difference. One of the changes I would make is to decrease corporate taxes, corporate tax only contributes about 7% to the revenue. Even though corporate tax is such a small part of the revenue lowering it would benefit the economy. Decreasing the corporate tax rate just by 2% would increase the creation of jobs, wages, and would also increase the incentives for US companies to become more invested. According to an article by Erica York” Economic evidence suggests that corporate income taxes are the most harmful type of tax and that workers bear a portion of the burden. Reducing the corporate income tax will benefit workers as new investments boost productivity and lead to wage growth.” Even though the tax rate has already been reduced significantly, decreasing it slightly more can produce many benefits and lift the burden off workers. This would be the only change to tax burdens as I agree with most of the new policy president Trump has put in place.

Citations York, Erica. “The Benefits of Cutting the Corporate Income Tax Rate.” Tax Foundation, 21 Jan. 2020, taxfoundation.org/benefits-of-a-corporate-tax-cut/.

Amadeo, Kimberly. “Compare Congress Enacted FY 2020 Budget to Trumps Request.” The Balance, The Balance, 28 Feb. 2020, www.thebalance.com/fy-2020-federal-budget-summary-ofrevenue-and-spending-4797868.

3. Is America the greatest country in the world? (this is the first episode of the popular HBO series, Newsroom. In this video, we see a moderator (professor), a conservative, a liberal, and Jeff Daniels (local news anchor). Please critique this video and explain why you agree or disagree with what Jeff Daniels is saying. https://www.youtube.com/watch?v=M9ar5f87DFU

“Is America the greatest country in the world?” Is a very subjective questions and there are facts to support both sides of this argument. Jeff Daniels brought up some factual information, that included percentages and numbers, to prove his point that America isn’t the greatest country in the world, but as said before that is subjective, and his points could also be used to prove that it is the greatest country in the world. Many people would agree with the first speakers’ statement that it’s the greatest country because of its diversity and inclusion, but that is hard to measure. I would say that we have the greatest religious diversity, but there are many studies that don’t even have us in the top 10 of diversity. The Fearon list is one of those measurements of diversity by language and as is not in the top 10 of diversity, another list would be Alesina list that is based on multiple factors such as religion and ethnicity does not have us in the top 20. Jeff Daniel goes on a rant while staying composed somewhat in the information he is delivering. I agree with one of his opening statements and that is too many Americans are narrowminded when it comes to other countries and believe that we’re the only country with the freedom and liberties that we have. He brings up a great point when talking about thee United State’s education ranking, for a country that considers itself to be the greatest ever we should be at least top ten in every educational category. One of the reasons are education system is lacking compared to other countries is that because we simply do not put enough money into funding it. We do not pay our teachers what they should be paid, there are a lot of schools in America that our understaffed and undersupplied. A great example of this is what is going on right now, schools are requiring distant learning and to do that students must have

access to laptops. There are many instances where we have athletes, celebrities, etc. donating laptops to schools that should be provided by the government. Being rated 49th in life expectancy, and 178th in child mortality has a lot to do with our health care system. Not having universal healthcare system, allows for lower income families to not be able to take care of their young and themselves which contributes to those rates. According to the world atlas America ranks 12th in obesity among all countries, this also is a major factor into why we have such a low life expectancy because obesity cause many other health issues and leads to an early death. He rushes the part about him saying that the U.S is 3rd in medium household income and makes it seem insignificant but that is a huge plus for the US and a reason why this country is so great. Being a major export brings in much needed revenue to the country and widens are reach globally, being able to have U.S influence all over the world is another reason why this country is a great one. Next he brings up very valid points about the categories we are leading in. We lead in the number of imprisoned citizens per capita, the next closest is China with over a million fewer people incarcerated. This is a very negative look for a country that is supposed to be the land of the free to lead in having the most people imprisoned. Our defense spending is another big negative for the United States spending almost half the budget at 633 billon. Our allies make up twenty five out of twenty-six top spenders ion defense which hammers home the point that we need to cut back defense spending and focus on our health care and education spending. Which would in turn improve our education rank, infant mortality rank, and our life expectancy rank. This was a phenomenal part of the show to critique and he finishes up with talking about how great we use to be. In my opinion that is subjective to the older citizens, younger people

believe America is becoming more about caring about each other and the environment. With all the facts that he stated I believe America is not a perfect country, no country is, but the good in this country far outweighs the bad. Citation Dillinger, Jessica. “The Most Obese Countries In The World.” WorldAtlas, WorldAtlas, 2 Nov. 2015, www.worldatlas.com/articles/29-most-obese-countries-in-the-world.html.

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