1. AMERICAN CIVILIZATION
THE AMERICAN ECONOMY

2. THE FOUNDATIONS 1776. The Wealth of Nations-Adam Smith
Liberal Economy-laissez faire
Alexander Hamilton
Economic plan: Bank of the United States,
Uniform national currency: dollar
Protective tariff
First Supreme Court decisions strengthening interstate commerce, power of the federal govt.

3. CONGRESS AND THE ECONOMY
Raising taxes
Coining money
Establishing postal service
Tax bills must originate from the House
Power of the purse: establishes how much money the federal government can spend
Budgetary committee controls the federal budget

4. BASIC LAWS OF THE ECONOMY
The invisible hand
Supply: the available goods and services
Demand: buying power
Business cycles: boom and bust periods
Boom: demand high, supply low
Bust: supply high, demand low

5. STIMULATING THE ECONOMY
Bust periods: 1819, 1857, 1873, to be followed by boom, but 1929: Depression
Causes of the Depression: speculating on the stock market, overproduction, underconsumption, unequal distribution of wealth
Depression: long term economic downturn

6. DEMAND SIDE ECONOMICS
Government stimulated demand by injecting money into the economy
John Maynard Keynes
Government creates jobs, example: FDR’s New Deal
Civilian Conservation Corps
Work Progress Administration

7. SUPPLY SIDE ECONOMICS Trickle down theory
Cutting taxes of the wealthy, of corporatons
Extra money will be invested in the economy
No extra taxes are needed, government does not interfere directly in the economy

8. MAJOR MILESTONES IN ECONOMIC HISTORY
Until Civil War: rural economy 20% live in city
American Industrial Revolution
Urbanization
1920’s: economic superpower
1932: end of laissez faire economy
1945: World War Two: Government mobilizes the economy.
1970’s: oil shortage, stagflation
1980: Reagan revolution, deregulation, supply side economics

9. TYPES OF BUSINESS ORGANIZATION
Corporation: legally a person, protection of investor assets, corporate veil, forerunner: joint stock company, piercing the corporate veil
Partnership: partners are responsible financially for business losses
Sole proprietor: individual owner

10. STRENGTHS OF THE ECONOMY
Natural resources
Highly trained labor force
Protestant work ethic
Business mindset „America’s business is business”
Spirit of the entrepreneur, Carnegie—Bill Gates
Flagship industries: information and communication technology, automobile industry, chemical industry-oligopolies

11. WEAKNESSES OF THE ECONOMY
Reliance on foreign energy sources
High budget deficit
Crisis of the farms
High indebtedness
Environmental perspective is not on the long run, but on the short run