We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.

The Constitution of The United States of America

UniteJusticeOrderProtectProvideSecure Liberty

JusticeOrderUniteProvideProtect

vs

Securing Liberty

Authority

Freedom

JusticeOrderUnite

ProvideProtect v

s

Securing Liberty

Authority

Freedom

There can be social justice, economic justice, military justice, ect. Conservatives generally believe that the government needs less power because natural laws will create balance and man will make good and fair choices- libertarismLiberals generally believe that government needs more power to help and in some cases insure that people will make good and fair choices.- paternalism

Economic Purposes of Government

(according to some)

Maintaining Legal and Social Framework

Examples:

Create laws and provide courts

provide information and services to help economy function better

establish a monetary system

define and enforce property rights.

Maintaining Competition

Examples:

Protect Competition not Competitors.

Create and enforce antitrust laws

regulate natural monopolies.

Providing Public Goods and Services

Examples:

Provide goods and services that markets are unable or unwilling to provide, such as national defense

Redistributing Income

Examples:

Higher income tax rates for rich than for poor

provide social security

aid to dependent children

Medicare

Medicaid.

Correcting for Externalities

Example:

Taxes to reduce negative externalities, such as environmental pollution

subsidies to encourage positive externalities, such as education.

Externalities exist when some of the costs or benefits associated with the production or consumption of a product "spill over" to third parties other than the direct producer or consumer of the product.

Correcting for Externalities

Lets return to the Stag hunt game

Hunter 2

Stag Hare

Stag 2, 2 0, 1

Hunter 1

Hare 1, 0 1, 1

Measuring Externality- gap between the private cost and the social cost. Individuals doing things to make themselves better at the expense of other.

What is the external cost of hunter 1’s decision to hunt the hare? Assuming that hunter 2 is hunting the stag regardless?

Brainstorm a list of ideas that the village could come up with to offset hunter 2’s external cost.

LawsFines and PunishmentSubsidies to Stag huntersSubsidies to Rabbit hunters- not to hunt rabbitRe-distribution of wealth TaxRegulate and quotasLicenses and certifactions

Stabilizing the Economy

Examples:

Use government budgets and/or the money supply to promote economic growth

control inflation

and reduce unemployment.

For each political cartoon

1. Answer the questions

2. Place yourself on the spectrum between 0 and 10 to determine how much you agree with the cartoon’s message. Explain your position.

Percent that you agree with the cartoon

0 1005025 75

Economic Purposes of Government