1. Introduction to political thinking

2. 4 Major Political Ideologies
Four Major Political Ideologies
Classical Liberalism
Libertarianism
Conservatism
Populists

3. Classical Liberalism
Government should stay out of the peoples’ business because government is almost always oppressive (Jefferson)
Industrial Revolution changes this meaning because it restricts individual autonomy-wage labor did not allow for achievement of the liberal idea of an autonomous individual
Government was seen as a way of promoting individual development through wage and work regulations; government should liberate people from poverty, oppression, and economic exploitation
Outside of economic realm, government should leave the people alone or promote individual liberties
Liberals believe in solving problems collectively through government, provide for economic well-being of the nation, tolerance of various lifestyles, non-interventionist foreign policy, strong but economical defense

4. Libertarianism
They embrace most aspects of classical liberalism, but emphasize the autonomy of the individual and the minimal role of the government in all spheres of life
Usually reject any regulation of private matters such as religion, morality or conscience
Libertarian views have tended to be ignored until recently
Due to increase in the general level of education, mass media, affluence
Increased polarization of Democrats and Republicans
Libertarians tend to believe in: protection of property and the freedom of the individual, no government intervention in the economy, non-intervention in foreign affairs

5. Conservatism
After the industrial age, conservatives called for the government to stay out of economic affairs and allow businesses to follow their actions
Humans do not have the capacity to plan for the economic future
Economic inequality is a natural outcome of inequality of human ability-taking wealth from those who have it undermines initiative
Focus on what is good for the economy as a whole, not the individual
Conservatives emphasize order-no problem restricting individual liberties in favor of common sense or morality
Conservatives believe in: reducing spending on social programs, reduction of taxes to encourage economic growth, strong military defense, little action to redress gender and racial discrimination, assertive foreign policy, acceptance of moderate welfare state

6. Populism
An outgrowth of industrialism, tend to embrace many liberal ideals of private property and individualism and the economy has not provided those to enough people
They favor economic intervention on behalf of the common man
Tend to reject the changes in social values and mores that came with industrialization-want to preserve more traditional social values, and are willing to use the government to achieve that purpose
Populists believe in: programs to provide for the economic well-being of small business and the common man, reducing spending on social programs, reduction of taxes to encourage economic growth, noninterventionist foreign policy, return to the values of the past, mistrust of foreign competition

7. American ideology Liberals Conservatives Military spending Spend less
Spend more
Use of force
Less willing to commit
More likely to support
Abortion
Support for freedom of choice
Right to life
Affirmative action
Favor
Oppose
Scope of government
Government is a regulator in the public interest
Favor free-market solution
Taxes
Tax the rich more
Keep taxes low
Spending
Spend lower
Cutting crime
Solve the problems that cause crimes
Stop coddling criminals

9. Cumulative Responses to 10 Opinion Questions in 2008 (from Erikson and Tedin, p. 79)

10. What Is Really Happening?
An intensely polarized elite—political activists generally, pundits, convention delegates, office-holders
The media playing up differences—conflict is dramatic, eye-catching; agreement is not
The media are poor and generally ineffective at analysis and rely heavily upon selective examples to dramatize differences
Confusion of positions and choices, especially when observing voters

11. Who is a Republican or Democrat?
Most Democrats are labor union members, minorities (especially Hispanic and African-American), year olds, blue-collar workers, unions, and unemployed, widowed, Liberals, non-religious, and people that live in urban areas.
Most Republicans are men, professionals, executives, Protestants, married couples, conservatives, have European ancestry and live in rural areas, conservative, military vets, wealthy, self-employed or businessmen, Cubans, the West (more rural).

12. Where are the Republicans and Democrats—2014?

14. Two Hundred Years of Economic Thought
(in one class period)
(borrowed from Ulrich Kleinschmidt)

15. Classical Economics 1776-1930s, 1980s to present
Also known as: new classical, supply-side, trickle down economics, monetary
Key people: Adam Smith, J.B. Say, David Ricardo (comparative advantage), A. Marshall (graphs), Hayek, and Milton Friedman

16. Fundamentals of Classicalism
Say’s Law
Say built on Smith’s theory
If suppliers overproduce, they correct the surplus by cutting production and lowering prices
The economy then rebalances because wages are lower, but so are prices
If suppliers under produce, they correct for the shortage by increasing production and raising prices
The economy will rebalance because wages are higher, but so are prices
Thus, “Supply creates its won Demand” Say’s Law
Competition causes businesses to always improve product to win the market
Competition causes businesses to lower their prices
This effect is called the Invisible Hand
In the end, consumers get products that are better and cheaper
Inefficient companies leave or disappear from the market
New companies will have to be more efficient in order to compete

17. Role of Government in the Classical World
Government ensures that competition occurs
Government must stop monopolies or unions because they prevent competition
Classical economists want to lower taxes to reduce government interference; real income reduces the role of government
In the long run, the economy will balance near Full Production (in other words, stay out of way and keep markets level)

18. Keynesian Economics: 1930s to present
Key people: J.M. Keynes, Krugman
Fundamental idea is that competition is GOOD, but flawed

19. Keynesianism
Prices can also increase easily, but not decrease. This is known as the Ratchett Effect
Markets can reach efficiency and full employment, but Keynesians assume that they will soon become inefficient or recessionary
Recession, in Keynes world, will probably become the economic norm
Government must now step in and correct Aggregate Demand
In the Short Run, Smith’s Invisible Hand will always have companies that are inefficient
Say’s Law is a myth because businesses can’t really lower prices at will because production costs are fixed (known as sticky prices)
Consumers will also be paid by businesses, but will save some of the income, thus undercutting production
This will cause a constant leakage or loss of income

20. Role of Government in Keynes world
During recessions
Congress should cut taxes, and raise government spending (deficits occur)
During inflation
Congress should raise taxes and cut government spending (creating a surplus)
Congress also has automatic stabilizers to keep economy from crashing too much
Unemployment insurance
Social Security
Progressive taxes
Congress will represent the interests of the people by using taxes and spending to prevent recessions
Congress can’t wait of the potential Long Run because workers need help
“In the Long Run we are all dead”

21. Monetary School Economics: (1913), 1970 to the Present
Also known as: Federal Reserve Policy, Central Bank Policy
Current US Chairman of the system: Volcker, Greenspan, Bernanke

22. Monetary School Competition is Good, but needs fine tuning.
The average recession lasts about 14 months in the US
We only know a recession has started after at least 6 or more months have passed
Even if Congress agrees on a policy, it can take many more months to enact
By the time the policy comes into force, the recession may have already ended naturally
Congress may be able to cut taxes during recessions, but they will never have the will to raise taxes to fight inflation

23. Monetary School continued
Therefore, the best way to correct economic flaws is to have the Federal Reserve act quickly
Plus, the Federal Reserve can focus on stable prices that helps control demand pull inflation
They can also focus on long run growth with realistic growth around 2-3%
This means that the government, through this nonpolitical and independent agency can control national growth by manipulating interest rates and the money supply (which is also why Ron Paul doesn’t like the FED)
This will keep inflation under control and healthy for businesses and other borrowers
When recessions threaten, lower interest rates on borrowing.
When inflation threatens, the FED will raise interest rates on borrowing
The FED is typically better at controlling inflation than preventing recessions

24. So, who will win?
270 to win