What to do with unemployment?
1) Centre-left John M. Keynes, when there is unemployment there is not enough
consumer demand. So how do you solve it? By increasing demand!
RESPONSE: add money! GOVERNMENT SPENDING (things such a
Who Can Provide Welfare?
Anglo-Saxon Countries: UK, US, CAN, AUS
Nordic/Scandinavian: Sweden, Norway, Denmark, and Finland
Continental Europe: Germany, France, Japan
US is the least generous of
The Role of Politics in the Economy
Early interpretation of the role of politics:
Early pre-war period: LIBERALISM (Frederick Hayek, Milton Friedman, James
All three were economists
From the various generations
RESPONSE TO POVERTY AND INEQUALITY
Average Gini Index by Region
Gini: Index used for inequality (0%-1%) where 0 is where everyone is equal and 1 is
where one person owns all Latin America: highest inequality
Europe and Asia: m
COMPARING WELFARE STATES
Three types of welfare state regimes
1) Social Democratic Welfare State
2) Liberal Welfare State
3) Conservative Welfare State
1) SOCIAL DEMOCRATIC WELFARE STATE -SCANDANVIAN COUNTRIES
Comparing Welfare States: Continuation
Scandinavian: small land holding. RED-GREEN alliance
Continental: large land-holding. NO ALLIANCE
Anglo-Saxon: mixed holding patterns, but SOCIAL DEMOCRATS TOO WEAK!
Public v. Private Service Delivery
What is the motivation for altruism?
1) Pure: sympathy for others
2) Impure: self image
People get a warm glow from making a sacrifice.
The monetary incentives crowd out the warm glow of sacr
What is a welfare state?
1) PURPOSE: reducing inequality and poverty.
TRANSFER: the cash payments you receive from the government: pensions,
unemployment, baby bonus, etc.
SIZE of TRANSFER: this determines how generous the welf
Three Regimes of Wage Bargaining
The Anglo-Saxon model narrowly organized (company based unions). Enterprise
How does bargaining regime affect unemployment?
Golden age almost full employment after WWII there was a
Diverse Reactions to Poverty
First Estate: CLERGY (priests, etc)
Second Estate: NOBILITY (knights, guards, etc)
Third Estate: COMMONERS (small land owners)
Conservative: born from French Revolution (against radical change)