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[Meridian]_Overview_of_the_US_Economy - Overview of the US...

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Overview of the US Economy Introductory Page I. Philosophical Basis of US Economy II. Government’s Role III. Financial System IV. Revenue Collection V. Business Organization VI. Labor (see labor review notes) VII. Panics-Recessions-Depression VIII. Econ 101-“Classical”(supply side) v. Keynesian I. PHILOSOPHICAL BASIS Adam Smith’s the Wealth of Nations-1776 If individuals are left alone to pursue their self interest, their behavior would as if guided by an invisible hand, lead to maximum benefits for society Laissez-faire is essential to a society’s economic efficiency o Foundation for Capitalism The Declaration of Independence-1776 o -all men are created equal o -All men are endowed with certain unalienable rights…life, liberty, and the pursuit of happiness (property) o -The purpose of government is to protect these rights (right to becoming rich) The constitution of the United States-1787 o -Philosophically and foundationally supports the premise of the Declaration of Independence o -The purpose of government is to protect the rights of the governed-espeically private property rights II. GOVERNMENT ROLE Foundational and Primary Economic Role: o -To protect property rights f individuals and businesses o -To protect the right of all to pursue happiness o -To promote the common welfare o (Court constantly has to balance abridgment of rights) Confederate Government-177701788 o -Power to regulate national economy went to the states (mainly thru default0national govt. had LITTLE POWER to do anything) (didn’t work, mob-o-cracy, right of majority dominating right of minority) Federal Government-1788 to current: o -Power to regulate
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o Interstate commerce o International trade o Taxes State Governments-1788 to current: o -Power to regulate: All affairs of the state as long as they do NOT conflict with the National Government’s powers (10 th Amendment) The Courts: The following court cases help establish the foundational basis of the US economy The John Marshall Court-A Nationalistic Court: Time and again, his court will rule in favor of Nation over state o -1819 McCulloch v Maryland: Declares the BUS is constitutional Denies states the right to destroy (tax) a national entity The decision invokes the doctrine of implied powers in determining the BUS as constitutional o 1824 Gibbons v Ogden (dueling steamboats) Established that ONLY the National Government had the power to regulate interstate commerce-not the states also o 1810 Fletcher v Peck and 1819 Dartmouth v Woodward: State laws cannot impair business contracts Protects business enterprises from donation by state government But this set a precedent that helped chartered corporations later on to escape public control (Later helped the businesses escape control) The Roger B Taney Court (Southern Dem) o 1837 Charles River Bridge decision: Decision tweaks the Marshall Court’s precedent regarding the “sanctity of contract” Whenever there may be a question as to the precise privileges of the contract, the benefit must be awarded the state
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[Meridian]_Overview_of_the_US_Economy - Overview of the US...

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