Government Regulation: Crash Course Government and Politics #47
Summary
TLDRIn this Crash Course Government and Politics episode, Craig discusses the broad goals of economic policy, including promoting stable markets, economic prosperity, business development, and protecting consumers and employees. He explores government actions like national regulations, financial market oversight, and subsidies, as well as the historical evolution of government's economic role from minimal intervention to an active regulatory state. The episode highlights the complexity and interrelation of these goals in shaping the U.S. economy.
Takeaways
- đ Economic policy aims to achieve broad goals through various government actions, though not all goals are consistently met.
- đ The government promotes stable markets by structuring market systems, maintaining law and order, and regulating industries like automobile fuel efficiency.
- đŠ Economic prosperity is supported by the government through positive investment climates, financial market regulations, and public investments in infrastructure and research.
- đ° The Federal Reserve is the primary tool used by the government to control inflation, though it is a complex institution.
- đ Business development is fostered by the government through tariffs, subsidies, and policies that encourage competition and growth.
- đŸ Subsidies can be controversial, with indirect subsidies like infrastructure investments generally accepted, while direct subsidies to businesses can be seen as unfair advantages.
- đĄ The government's role in protecting consumers and employees has evolved, with past actions including making unionization easier and setting labor standards.
- đ·ââïž The federal minimum wage and regulations by the Occupational Safety and Health Administration (OSHA) are examples of current government efforts to protect workers.
- đĄïž Consumer protection is ensured by numerous regulations, including those by the FDA, USDA, and the Consumer Product Safety Commission, aimed at preventing harm from products and ensuring safety.
- đ The government's role in the economy has expanded over time, with significant regulatory changes occurring during the Gilded Age, the New Deal, and the 1970s.
- đ Despite periods of deregulation, the administrative regulatory state persists, reflecting the complexity of modern economic concerns and the belief in government's role in addressing them.
Q & A
What is the primary focus of the video script?
-The primary focus of the video script is to discuss the broad goals of economic policy and the various actions the government takes to achieve those goals.
What are the four main goals of economic policy mentioned in the script?
-The four main goals of economic policy mentioned are promoting stable markets, promoting economic prosperity, promoting business development, and protecting consumers and employees.
How does the government attempt to maintain a stable market system?
-The government attempts to maintain a stable market system by maintaining law and order, minimizing monopolies, and implementing national regulations such as automobile fuel efficiency standards.
What is the role of the Securities and Exchange Commission in promoting economic prosperity?
-The Securities and Exchange Commission plays a role in promoting economic prosperity by regulating financial markets to build confidence and ensure a positive investment climate.
How does the government contribute to national prosperity through public investment?
-The government contributes to national prosperity through public investment by funding projects like highways and the internet, which were initiated through government programs.
What is the main tool the government uses to control inflation as mentioned in the script?
-The main tool the government uses to control inflation is the Federal Reserve.
How does the government promote business development?
-The government promotes business development through tariffs and subsidies, which can provide indirect or direct assistance to businesses.
What is the purpose of subsidies according to the script?
-Subsidies serve to provide financial support to businesses, either indirectly through grants for infrastructure like highways or directly through assistance programs, to help them grow and compete.
How does the government protect consumers and employees?
-The government protects consumers and employees through various regulatory bodies and laws such as the National Labor Relations Act, Fair Labor Standards Act, Occupational Safety and Health Administration, and the Consumer Products Safety Commission.
What historical event marked the beginning of the federal government's active role in regulating the economy?
-The New Deal under President Franklin Roosevelt marked the beginning of the federal government's active role in regulating the economy.
How has the role of the federal government in the economy evolved over time?
-The role of the federal government in the economy has evolved from a more laissez-faire approach in the early 20th century to an active regulatory role, especially with the advent of the New Deal and the creation of various regulatory bodies.
Outlines
đ Economic Policy Goals and Government Actions
This paragraph introduces the topic of economic policy, highlighting the broad goals that governments aim to achieve. Craig, the host, humorously sets the stage by comparing his personal goal to the government's more significant objectives. The main goals discussed include promoting stable markets, which involves maintaining law and order and minimizing monopolies, as well as national regulations like automobile fuel efficiency standards. The paragraph emphasizes the importance of these goals and the government's role in shaping the market system to ensure stability and predictability.
đ Government's Role in Economic Prosperity and Business Development
The second paragraph delves into the government's efforts to promote economic prosperity, including maintaining a positive investment climate and building confidence in the economy. It mentions the role of the Securities and Exchange Commission in regulating financial markets and the government's investment in public infrastructure, research, and workforce development. Additionally, the paragraph discusses the government's role in promoting business development through tariffs and subsidies, with a historical perspective on how these policies have evolved since the Great Depression. The mention of controversial subsidies, such as those for corporations and farms, underscores the complexity and debate surrounding these economic measures.
đĄ Protecting Consumers, Employees, and the Evolution of Economic Regulation
This paragraph focuses on the government's responsibility to protect consumers and employees, detailing various regulatory bodies and acts that have been established to ensure safety and fair labor practices. It covers the establishment of the National Labor Relations Act and the Fair Labor Standards Act, as well as the setting of federal minimum wage and the role of the Occupational Safety and Health Administration. The paragraph also highlights consumer protection agencies like the Food and Drug Administration and the Consumer Product Safety Commission. Furthermore, it provides a historical overview of the government's evolving role in economic regulation, from the laissez-faire approach of the early 20th century to the regulatory state that emerged with the New Deal and continued through the 1970s, emphasizing the enduring nature of the administrative regulatory state despite calls for deregulation.
Mindmap
Keywords
đĄEconomic Policy
đĄStable Markets
đĄEconomic Prosperity
đĄInflation
đĄBusiness Development
đĄTariffs
đĄSubsidies
đĄConsumer Protection
đĄRegulatory State
đĄDeregulation
đĄAdministrative State
Highlights
Economic policy has broad goals and the government uses various means to achieve them, sometimes successfully.
The government's economic goals are larger and more important than personal goals, such as the humorous example of punching an eagle.
The first goal of economic policy is promoting stable markets, which includes maintaining law and order and minimizing monopolies.
National regulations, such as automobile fuel efficiency standards, help keep markets predictable.
The second goal is promoting economic prosperity, which can involve government intervention contrary to the belief of some individuals.
Regulating financial markets through the Securities and Exchange Commission is a way to build confidence in the economy.
Public investment, such as in highways and the internet, is another method the government uses to promote prosperity.
Research funding and education policy contribute to the workforce and national prosperity.
The Federal Reserve is the main tool the government uses to control inflation.
Promoting business development is a third goal, with policies such as tariffs and subsidies.
Tariffs have historically allowed American businesses to develop without foreign competition.
Subsidies can be indirect, like those for transportation infrastructure, or direct, such as assistance to specific businesses.
Farm subsidies, initially meant to help during the Great Depression, are controversial due to their current recipients.
The fourth goal is protecting consumers and employees, with the government setting labor standards and regulating workplace safety.
The federal minimum wage is a debated method of protecting workers.
Agencies like the FDA and USDA protect consumers by ensuring the safety of products and food.
The government's role in the economy has evolved significantly from the 19th century to the present day.
The advent of the administrative and regulatory state began with the New Deal and has continued despite deregulation efforts.
The federal government's belief in its role to achieve economic goals has persisted despite the complexity of modern economic issues.
Transcripts
Hello, Iâm Craig and this is Crash Course Government and Politics and today Iâm going
to talk a bit more about economic policy. Ran into the table there a little bit. Whoo!
Economic policy can be dangerous.
Specifically, weâre going to look at some of the broad goals of economic policy and
some of the things that the government does to try to accomplish those goals.
And we may even provide some examples of times when the government DID accomplish them, so
take that, skeptics. But, I have to admit, a lot of the time the goals are just goals.
[Theme Music]
So all people have goals and aspirations (except me) and the government, since itâs made
up of people is no different. Well I do have one goal: to punch the eagle again. And I did it. Accomplished.
Well, actually the government's different because itâs economic goals are much bigger
and more important than, say my goal of punching the eagle again. Although I would argue my
goal is pretty important. So what are these, goals of economic policy?
The first goal is promoting stable markets. We talked about how the government structures
the market system in the last episode, so I probably donât need to repeat it.
At least I hope I donât. You shouldâve been paying attention.
But since nobody wants a malfunctioning market, most of the things the government does to
create a market system also work to make the system stable and predictable.
Maintaining law and order and minimizing monopolies are examples of government actions that make
the market system stable. I didnât know the government maintained Law and Order â oh not the tv show, OK.
One of the more interesting ways â ok interesting to me â that the government keeps markets
predictable is through national regulations of things like automobile fuel efficiency standards.
If there were no national regulations, and states were allowed to set the rules, then
it might be possible for car makers in Detroit to build cars that live up to the mileage
standards in Michigan, but not in California, and that would be anarchy.
Well, maybe not anarchy exactly, but it wouldnât be good, and itâd make it much more difficult
for manufacturers to know what kind of cars to make. Also, do you really want California,
the state with the biggest population, making rules for the rest of us? Of course you donât.
The second major goal of economic policy is promoting economic prosperity. Hereâs another
example of a situation where many people will tell you that the best way for the government to promote
prosperity is to get out of the way, and they may have a point, but the government doesnât stop trying.
So what does the government do to promote prosperity? For one thing, it tries to keep
a positive investment climate and build confidence in the economy.
One way the federal government can accomplish this is through regulating financial markets
through the Securities and Exchange Commission since people wonât want to invest in the
securities markets if they think the game's fixed.
Another thing the government can do, if itâs feeling particularly Keynesian, is to spend
money on public investment in things like highways and the internet. While not actually
built by Al Gore, it did begin with a government program out of the Defense Department.
The government also pays for research through the National Institutes of Health and the
National Science Foundation, and enhances the workforce through education policy and
immigration policy, all of which contribute to national prosperity.
Another, and by no means the last, way that the government can try to make the country
more prosperous is by keeping inflation low. You can find out more about inflation from
Crash Course: Economics, but the main tool the government uses to control inflation is
the Federal Reserve, which is so complicated that it gets itâs own episode.
A third goal of government economic policy, one closely related to the first two, is promoting business development.
Many people would probably argue that promoting business development and promoting prosperity
are the same thing but policies aimed at helping businesses are slightly different and more
focused than those targeting the broader goal of promoting prosperity.
The main ways that the federal government promotes business development are through
tariffs and subsidies. Since the Great Depression, the U.S. has pretty much pursued a policy
of free trade, which means lowering tariffs on most things, which by forcing them to compete
can hurt businesses, at least in the short run.
In the past, however, high tariffs allowed American businesses to develop free from foreign
competition and this helped to make the U.S. the most powerful industrial nation in the world!
Can we use that Libertage from US History? I think Yes!
[Libertage]
Subsidies are very controversial and they come in two forms. Grants in aid for things
like transportation â building those superhighways again â provide an indirect subsidy to businesses
who donât have to pay for the roads they use to ship the goods they make.
Most people donât complain about this type of subsidy, because they can also be looked at as a public good.
Direct subsidies are another issue. These include direct assistance to businesses through
the Small Business Administration and government investment in firms like Sematech and, more
recently and more controversially, Solyndra.
Many people donât think that the government should be in the business of investing in
business and that these subsidies provide the businesses that receive them with an unfair advantage.
Farm subsidies are probably just as controversial. They were put in place to help farmers during
The Great Depression, but these days, critics worry that most of the subsidies go to corporate farms.
The fourth goal of government economic policy is to protect consumers and employees. A lot
of people will tell you that the federal government doesnât do much to protect employees these
days, and those people are probably right, but in the past it certainly did.
The government made unionization easier with the National Labor Relations Act and setting
labor standards, especially overtime rules with the Fair Labor Standards Act.
Both of these were passed in the 1930s, by the way.
Probably the most notable thing that the government does to protect workers these days is set
the federal minimum wage, but since that topic is being hotly debated as this episode is
being produced in 2015, I canât really comment on how itâs going to turn out.
On the other hand the Occupational Safety and Health Administration does set up regulations
to prevent workers from breathing in hazardous fumes and protect them from other potentially
life threatening workplace conditions, and thatâs a good thing.
As far as consumers are concerned, there are thousands of regulations that protect us to
make sure that the things we buy donât kill or maim us. The Food and Drug Administration
makes sure that our medicines arenât poison, and the Department of Agriculture inspects
meat, which I think is really good a idea, actually.
The National Traffic and Motor Vehicle Safety Act of 1966 made cars safer, and the Consumer
Products Safety Commission helps keep lead paint out of our toys and saves us from exploding
toasters. I like explosions as much as the next guy, but not with breakfast.
All of these goals of economic policy, promoting stable markets, promoting economic prosperity, fostering
business development and protecting employees and consumers are interrelated and important.
Iâll leave it up to you to decide if one is more important than the other three, because
that makes for excellent dinner conversation. If your dinner parties are mostly about the
role the government plays in our economy. Please invite me to those dinner parties.
Iâm hungry, for roast beef and political debate.
So, to shift gears a little, letâs talk history, and how the governmentâs role in
regulating the economy has changed in the last 240 years or so.
So you probably remember from back when we talked about the transition from congressional
to presidential government that began with Teddy Roosevelt and really came into its own
with Franklin Roosevelt, that before the 20th century the federal government didnât really do that much.
A lot of that has to do with fiscal policy and taxation, which weâre going to discuss
in another episode, and maybe that dinner youâre going to invite me to, but some of
it was certainly because of the way that the Supreme Court had interpreted the Commerce Clause
to mean that government regulation was suspect, and by suspect, I mean generally not allowed.
But by the end of the 19th century the Federal governmentâs regulatory power had begun
to change, and a lot of that has to do with one of my favorite subjects - no not Star Wars.
And no not the protection of endangered species. (punches eagle)
Iâm talking about railroads (Yeah!). Letâs go to the Thought Bubble.
So, with the completion of the transcontinental railroad in 1869, travel and communication across
the U.S. became much easier and it was possible for the first time to have a national market for goods.
If you raised cattle in Kansas, you could now easily ship beef to New York or San Francisco.
Railroads were, almost by definition, interstate entities, so it was pretty clear that Congress
could regulate them. And they needed regulation because railroads had a nasty habit of discriminatory
pricing, charging much, much more for some shippers than for others. Something had to
be done and Congress stepped in with the Interstate Commerce Act in 1887, which created the
Interstate Commerce Commission to regulate railroads.
The period of time around the turn of the 20th century in the U.S. is known as the Gilded
Age and is associated with runaway capitalism and the creation of modern corporate structures
and industrial capitalists like Andrew Carnegie â or Carnegie, if you will â and John
D. Rockefeller who are heroes to some and villains to others. In response to some of
the abuses of the Gilded Age, Congress passed its first wave of regulatory legislation.
In addition to the ICC, Congress created the Federal Trade Commission to regulate trade
and the Sherman and Clayton Acts to try to counter the problem of monopolies. These anti-trust
laws are the basis of modern anti-trust regulation and have been used against Standard Oil and Microsoft.
This first wave of economic regulation didnât have huge effects on the economy, certainly
not greater than the effects of, say World War I. In the 1920s the federal government
returned to a more traditional laissez faire approach, which lasted until the Great Depression
swept Herbert Hoover and the Republicans out of office and Franklin Roosevelt into it.
And with Franklin Roosevelt came the New Deal and the advent of what law schools sometimes
like to call the administrative and regulatory state.
Thanks Thought Bubble. Weâre not going to get into details about the various laws and
regulations of the New Deal here, but luckily I think John talked about them in Crash Course: U.S. History.
John, he talks about stuff.
But in general, those regulations meant that the federal government would take an active
role in regulating certain sectors of the economy, like agriculture and transportation.
Sometimes technology played a part. There really wasnât a need for a Federal Aviation
Administration until there were airplanes.
The next big wave of government regulation happened in the early 1970s under, of all people, president Nixon.
These new regulatory laws were different from their New Deal predecessors in that they focused
on the economy as a whole. For example the Occupational Safety and Health Administration
dealt with ALL occupations, or at least most of them, and the EPA was created to protect
the whole countryâs environment.
Beginning in the 1980s with Ronald Reagan, or actually before him under Carter, the federal
government has undertaken various initiatives to de-regulate the economy, but we already
talked about deregulation in our episode on taming the bureaucracy so we donât need to re-hash that here.
The point to remember is that, despite attempts at deregulation, the administrative regulatory
state appears to be here to stay.
So why do we have an administrative regulatory state now, even though so many people complain
about it? Part of the reason has to do with the remarkable staying power of bureaucracies,
which are harder to kill than Wolverine.
Nowadays the federal government not only has economic goals, goals like increasing prosperity
that most of us agree upon, it also has a sense, maybe even a belief that it should
try to achieve those goals.
This is a long way from the view of the federal government that persisted through the 19th
century, one which many people say was handed down by the framers. But times change, and
the world and the U.S. has gotten much more complex.
Economic concerns take up an increasingly large part of our lives and many of them,
especially big macroeconomic policies require big solutions. And for many Americans, but
certainly not all of them, the best solution we have is government.
Thanks for watching. See you next time.
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