Chapter Nineteen Social Welfare

Connection-Social Regulation Gov’t correction to wide variety of effects brought about by economic regulation. Includes equal rights in employment, education and housing –EPA –Consumer Product and Safety Commission (CPSC) –Occupational Safety and Health Administration (OSHA)-watches out for safety and health of 60,000,000 workers in the US Copyright © Houghton Mifflin Company. All rights reserved.19 | 2

Types of regulatory agencies Executive Branch- –FDA –National Highway Traffic Safety Administration Independent Regulatory Agencies-separate from Executive Branch and Congress- members appointed by president and confirmed by Senate –Federal Reserve Board Copyright © Houghton Mifflin Company. All rights reserved.19 | 3

Regulation Debate Over when/how to regulate Cost-to-society-side effects of industry with non- economic aspects (pollution, civil rights) Prices rise with regulation Antitrust regulation-destroys monopolies to create competition in the market Monopoly-situation where one company dominates one industry Oligopoly-situation where a few companies dominate an industry Conglomerate-a firm that runs businesses in many unrelated industries Copyright © Houghton Mifflin Company. All rights reserved.19 | 4

Sherman Anti-trust Act (1890) “to protect trade and commerce against unlawful restraints and monopolies” Copyright © Houghton Mifflin Company. All rights reserved.19 | 5

Clayton Act (1914) Outlawed: charging different prices to buyers to destroy competition –Rebates –Buying up supplies to stifle competition –Bribing competitor’s employees –Interlocking directorates-where an officer or director in one corp. serves on the board of a competitor –acquiring stock and assets in competing concerns Copyright © Houghton Mifflin Company. All rights reserved.19 | 6

Labor Three important federal regulations to protect labor: 1.Walsh-Healy Act (1936) minimum wage, max work hrs. a week 2.Fair Labor Standards Act (1938)-prohibits child labor, max work week of 40 hours 3.Occupational Safety and Health Act (1970): 1 st federal industrial safety program Copyright © Houghton Mifflin Company. All rights reserved.19 | 7

Unions Yellowdog contracts prevent new workers from unionizing However, by 1930s unions start gaining power 1.Norries-LaGuardia Act (1932): outlawed yellowdog contracts and gave unions the right to organize (again) 2.National Labor Relations Act (1935): Fully legalized unions, gave them fedearl backing. Additionally outlawed 5 types of employer actions: 1.Interfering with workers in attempts to unionize 2.Supporting company unions 3.Discrimination against union members Created National Labor Regulations Board 3.Taft-Hartley Act (1947)- Laws for unions and employers 1.Outlaws closed shop 2.Outlaws jurisdictional strikes, secondary boycott, excessive unions dues and federal employee strikes 3.Makes unions refusing to negotiate with employers unfair practice 4.Permits employers and unions to sue each other in federal court for contract violation 5.Limited use of labor injunction 6.Permits states to outlaw union shops Federal Action for Major Labor Strikes: President->fact committee->attorney general->80 day court injunction- >NCRB->secret vote->no settlement=Congress Copyright © Houghton Mifflin Company. All rights reserved.19 | 8

Copyright © Houghton Mifflin Company. All rights reserved.19 | 9

Environment: National Environmental Policy Act (1969) –Must issue environmental impact statements Air Quality Act (1967) –Establish national air standards for states –Loosely enforced Clean Air Act (1990) –Regulates 196 toxins –Phasing out of CFCs Acid rain –Regulate this but how? Copyright © Houghton Mifflin Company. All rights reserved.19 | 10

Deregulation 1.Airlines in 1978-fares are lower 2.Trucking and Railroads -1980: Staggers Rail Act and Motor Carrier Act -Teamsters and trucking companies angry, business happy 3.Banking and Saving and Loans Institutions 1930: Great Depression brings about FDIC (Federal Deposit Insurance Corp.)-successful 4.Telecommunications 1996: Telecommunications Act signed to deregulate Copyright © Houghton Mifflin Company. All rights reserved.19 | 11

Regulation Inefficiency Reduction in competition = less small business Lack of innovation Costs $ Do regulatory agencies do their jobs? Copyright © Houghton Mifflin Company. All rights reserved.19 | 12

Deregulation Lax industry policing Increased confusion in the marketplace Increases in regulation by the states instead of Feds Copyright © Houghton Mifflin Company. All rights reserved.19 | 13

Copyright © Houghton Mifflin Company. All rights reserved.19 | 14 Types of Programs Benefit most citizens, no means test (e.g., Social Security and Medicare) Benefit a few citizens, means tested (e.g. Medicaid and Food Stamps)

Copyright © Houghton Mifflin Company. All rights reserved.19 | 15 Social Welfare in the United States America has been slower than other nations to embrace the welfare state State and private enterprise play a large role in administering welfare programs Non-governmental organizations play a large role

Copyright © Houghton Mifflin Company. All rights reserved.19 | 16 Who Benefits? The public insists that it be only those who cannot help themselves There is a slow, steady change in popular views, distinguishing between the deserving and the undeserving The American public prefers to give services, not money, to help the “deserving poor”

Copyright © Houghton Mifflin Company. All rights reserved.19 | 17 Social Security Act of 1935 Insurance for the unemployed and elderly—workers contribute and benefit Everybody is eligible for insurance programs Assistance for dependent children, the blind, and the elderly Assistance programs are means tested

Copyright © Houghton Mifflin Company. All rights reserved.19 | 18 Medicare Act of 1965 Medical benefits were omitted in 1935 in order to ensure passage of the Social Security Act Covers medical care for the poor and pays doctors’ bills for the elderly

Copyright © Houghton Mifflin Company. All rights reserved.19 | 19 Reforming Welfare Programs Problem: there will soon be insufficient people paying Social Security taxes to provide benefits for every retired person Most solutions are opposed by the public Health care issues will remain on the political agenda

Copyright © Houghton Mifflin Company. All rights reserved.19 | 20 Table 19.2: Health Care Spending in the United States and Abroad, 2001

Copyright © Houghton Mifflin Company. All rights reserved.19 | 21 Possible Solutions for Social Security Raising the retirement age to 70, freezing retirement benefits, and raising Social Security taxes Privatizing Social Security Combine the first two reforms, and allow citizens to invest a portion of their Social Security taxes into mutual funds

Copyright © Houghton Mifflin Company. All rights reserved.19 | 22 Table 19.1: Public Views on Reforming Social Security

Copyright © Houghton Mifflin Company. All rights reserved.19 | 23 Temporary Assistance for Needy Families (TANF) Block grant program Had strict federal requirements about work, limited how long families can receive federally funded benefits By 2003, welfare caseloads had declined nationally by 60%

Copyright © Houghton Mifflin Company. All rights reserved.19 | 24 Figure 19.1: SSI, TANF, and Food Stamp Recipients, U.S. Census Bureau, Statistical Abstract of the United States, 2003, 371, 374.