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patterson9_sg_ch15 - Chapter Fifteen Economic and...

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Chapter Fifteen Economic and Environmental Policy: Contributing to Prosperity Chapter Outline I. The Public Policy Process A. Problem Recognition B. Policy Formation C. Policy Implementation II. Government as Regulator of the Economy A. Efficiency Through Government Intervention 1. Preventing Price Fixing 2. Making Business Pay for Indirect Costs 3. Deregulation B. Equity Through Government Intervention C. The Politics of Regulatory Policy III. Government as Protector of the Environment A. Conservation: The Older Wave B. Environmentalism: The Newer Wave 1. Environmental Protection 2. Energy Policy and Global Warming IV. Government as Promoter of Economic Interests A. Promoting Business B. Promoting Labor C. Promoting Agriculture V. Fiscal Policy: Government as Manager of the Economy, I A. Taxing and Spending Policy and Politics 1. Demand-Side Stimulation 2. Supply-Side Stimulation 3. Controlling Inflation 4. Partisan Differences B. The Budgetary Process VI. Monetary Policy: Government as Manager of the Economy, II A. The Fed B. The Politics of the Fed Chapter Summary Although private enterprise is the main force in the American economic system, the federal government plays a significant role through its policies to regulate, promote, and stimulate the economy. Regulatory policy is designed to achieve efficiency and equity, which require government to intervene, for example, to maintain competitive trade practices (an efficiency goal) and to protect vulnerable parties in economic transactions (an equity goal). Many of the regulatory decisions of the federal government, particularly those of older agencies (such as the Food and Drug Administration), are made largely in the context of group politics. Business lobbies have an especially strong influence on the regulatory policies that affect them. In general, newer regulatory agencies (such as the Environmental Protection Agency) have policy SG – 15 | 1
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responsibilities that are broader in scope and apply to a larger number of firms than those of the older agencies. As a result, the policy decisions of newer agencies are more often made in the context of party politics. Republican administrations are less vigorous in their regulation of business than are Democratic administrations. Business is the major beneficiary of the federal government’s efforts to promote economic interests. A large number of programs, including those that provide loans and research grants, are designed to assist businesses, which are also protected from failure through measures such as tariffs and favorable tax laws. Labor, for its part, obtains government assistance through laws concerning matters such as worker safety, the minimum wage, and collective bargaining. Yet America’s individualistic culture tends to put labor at a disadvantage, keeping it less powerful than business in its dealings with the government. Agriculture is another economic sector that depends substantially on government’s help, particularly in the form of income stabilization programs such as those that provide crop subsidies.
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