9 - Spending Other Peoples Money: What are the Rules? F.P....

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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 1 Spending Other People’s Money: What are the Rules?
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 2 Economics •W h a t ? •H o w ? • For Who?
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 3 Accommodates different individual taste with at least some choice Applies discipline regarding quality and cost through destructive competition Accommodates investment, technology, and change over time Capitalism allows complex system of production and consumption
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 4 • Selfish behavior • Rule of law, reliable enforcement • Distribution of wealth and income acceptable • Reasonable full employment Capitalism assumes:
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 5 What does market NOT deal with? • Public goods (difficult to exclude free riders) • External costs and benefits • Equity • Structural unemployment
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 6 Role of Government • Tax and spend • Regulate • Redistribute wealth and income • Provide universal opportunity
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 7 Institutional Structure • National (federal) • Regional (state) • Local (city, town, county)
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F.P. Salvucci/M. Murga 1.252J/11.540J Fall 2006 November 3, 2006 8 Annual Appropriation • Administration and finance; OMB / Ways and Means • Same as last year plus inflation
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F.P. Salvucci/M. Murga
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9 - Spending Other Peoples Money: What are the Rules? F.P....

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