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econ 5

Terms in this set (36)

What does it mean to "socialize" a cost?-
To spread an individual cost to society
According to socialists, which economic goal should individuals strive to meet?
- To promote the good of society.
What did Marx say about production and distribution of goods and services?-
"...from each, according to his ability, to each, according to his need..."
According to socialists, something keeps individuals from auctioning off their labor to the highest bidding firm. What?
- Firms are not in competition--they are all on the same side.
What did Marx predict about unemployment rates? What reason did he give for his prediction?-
Technological advances would replace labor with capital, causing a growing army of the unemployed.
Why were socialists searching for new ways of selling socialism by the 1950s?-
Because Marx's predictions of worsening conditions of workers and worsening unemployment did not come to pass.
True, false, explain: Only government socializes costs and benefits by taxation and subsidy. There are no costs and benefits that are socialized unless the government does it.-
False. Some benefits and costs are not socialized by government, such as the benefit from national defense and the cost of pollution.
Costs that naturally spill over to others are called____-
external cost
What reason do capitalist philosophers give for not expanding the state to solve the problems of externalities?-
The public choice school points out that government officials are self-interested and have limited knowledge. This means that (1) they may not be interested in solving problems, but in getting money and reelection and (2) their limited knowledge may cause them to make things worse as they try to solve problems.
How can the state maintain a socialist order if individuals disagree about their abilities, needs, or what is good for society?-
By force
True, false, explain: Socialism can only exist with unelected dictators in power.-
False. If costs and/or benefits are socialized by the legal system, socialism exists, whether or not the state is headed by a dictator.
An economic system under which the state has title to all property is called___
-Communism
An economic system under which the state leaves property in private hands, but extensively regulates the use of property is called____
-Fascism
What is imminent domain?-
The state taking private property, but compensating the owner
What is civil forfeiture?-
The state taking private property from those it suspects of criminal behavior
Who typically receives the proceeds of a civil forfeiture?-
The law enforcement body that seized the property
What is the latest rationale for socialism in the U. S.?-
If the state produces any good with spillover benefits, the state is justified in dictating the use of individuals' property
Why is the percentage of total spending done by the state a measure of the degree of socialism?-
Because as the state spends more, it makes more of the economic decisions--that is, the individual, more and more, serves the state's conception of "the good of society."
What do many capitalist philosophers consider the legitimate functions of the state?-
Protection of property and persons
What does "the pursuit of happiness" mean?-
The right to use property freely, to choose one's profession, to make contracts, and to travel
If property rights are protected, how can an individual in a capitalist society advance materially?-
By creating value through production and/or trade
How do markets encourage conservation of a resource that becomes scarcer?-
By increasing its price
What do capitalist philosophers say about how markets solve fairness problems?-
Markets may or may not solve fairness problems, but, given the limitations of the state, it might not do any better, and may make things worse
What did Piketty and Saez's research show?-
Based on tax records, the average taxpayer's income in the U. S. has been stagnant since the 1980s, while top incomes have grown.
What did Burkhauser, Larrimore, and Simon show?-
We see a 37% growth in incomes when we use household data, account for taxes, transfers, and fringe benefits, and adjust for household size
What two observations did Thomas Sowell make about inequality?-
As people age, gaining experience and education, they grow richer. Also, people who are poor can increase their incomes and the wealthy sometimes lose income, moving them to different categories of earned income.
What did Milton Friedman point out about different economic systems in his interview with a talk show host?-
The leaders of all states are greedy. But capitalism harnesses greed to improve the general welfare, whereas socialsm does not.
The poverty rate in the United States is approximately?-
16%
How much per person does the U. S. spend on anti-poverty programs?-
About $20,000
How is poverty related to anti-poverty spending? How is poverty related to economic growth?-
Poverty does not seem to respond to anti-poverty spending, but economic growth does reduce poverty, with a lag.
What is one area where government spending on fairness replaced private spending?-
Unemployment insurance and education.
What does Bastiat say about countries with machines vs. those with less mechanization?-
He said that more mechanization allows people to have more satisfaction for less work, so mechanized societies are well off.
Bastiat says that to curse machines is to curse_______
.-The human mind, since machines, since only advanced thought can invent advanced machines.
When James Goodfellow replaces a worker with a machine, what could possibly employ the worker?-
The money saved on the worker will be spent by J. G., creating a job with an equivalent paycheck.
When James Goodfellow replaces a worker with a machine, does the total amount of production in the economy change? Why or why not?-
Total production rises, since there is a free worker and JG also has income freed up to purchase the worker's output.
Who profits from James Goodfellow's inventiveness?-
In the short run, JG. In the long run, others imitate JG and prices are bid down for all consumers.
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