Chapter 5 class questions

Question 1

what does it mean to socialize a cost?

Answer 1

to spread individual cost to society

Question 2

according to socialists, which economic goal should individuals have?

Answer 2

promote good of society

Question 3

what did Karl Marx say about production?

Answer 3

according to his ability and to each according to his need

Question 4

according to socialism, something keeps individuals from auctioning off their labor to the highest bidding firm. what is that something?

Answer 4

firms are not in competition. they are all on the same team

Question 5

what did Marx predict about unemployment rates? what did he give for his prediction?

Answer 5

technology advances would replace labor with capital, causing a growing army of the unemployed

Question 6

why were socialists searching for new ways of selling socialism by the 1950’s?

Answer 6

Marx predictions of worsening conditions of workers and worsening unemployment did not come to pass

Question 7

t/f only government socializes cost and benefits by tax

Answer 7

false, some benefits and costs are not socialized by government, such as the benefit from national defense and cost of pollution
naturally spread to society

Question 8

cost of natural spill over

Answer 8

externality

Question 9

second hand smoke is what that the consumer produces. each pack of sigs lowers medicare cost by .41

Answer 9

external costs

Question 10

what reason do capitalists philosophers give for not expanding the state to solve the problems of externalities

Answer 10

the public choice school points out that government officials are self interested and have limited knowledge. they may not be interested in solving problems but in getting money and reelection and their limited knowledge may try to solve problems

Question 11

how can the state maintain socialist order if individuals disagree about their abilities, needs, or what is good for society

Answer 11

by force

Question 12

t/f explain, socialism can only exist with unelected dictators

Answer 12

false, if cost and benefits are socialized by legal systems

Question 13

an economic system under which the state has the title to all property

Answer 13

communism

Question 14

an economic system under which the state leaves property in private hands but extensively regulates

Answer 14

fascism

Question 15

what is eminent domain?

Answer 15

state taking private property but compensating the owner

Question 16

what is civil forfeiture?

Answer 16

state taking private property from those it suspects of criminal behavior

Question 17

who typically receives proceeds from civil forfeiture?

Answer 17

law enforcement body that seized the property

Question 18

what is the latest rational for socialism in the US?

Answer 18

if the state produces any good with spillover benefits, the state is justified in dictating the use of individuals property

Question 19

why is the percent of total spending down by the state a measure of the degree of socialism?

Answer 19

because the state spends more, it makes more of the economic decisions, that is, the individual, more and more serves that states conception of the good of society

Question 20

what do many capitalist philosophers consider the legit functions of the state?

Answer 20

protection of property and persons

Question 21

what does the pursuit of happiness mean?

Answer 21

right to use property freely, choose profession, make contacts, and travel

Question 22

if property is protected, how can individual in capitalist society advance materially?

Answer 22

by creating value through production and or trade

Question 23

how do markets encourage conservation of resources that become scarce?

Answer 23

by increasing the price

we find things to replace these scarce resources

Question 24

what do capitalist philosophers say about how markets solve fairness problems?

Answer 24

may or may not be solved. given limit of state, might not do any better and may make things worse

• • calculation problem and self interest
• • would have to have continuous equalization

Question 25

what did Piety and Saez’s research show?

Answer 25

tax research, average tax payer’s income in US has been stagnant since the 1980’s while top incomes have grown

Question 26

what is Berc, L, and simon

Answer 26

we see 37% growth in incomes when household data, account for taxes, transfer, and fringe benefits and adjust for household size

Question 27

what 2 observations did thomas swell make about inequality?

Answer 27

people age, gaining experience and education, grow richer. people who are poor increase incomes and wealthy sometimes lose incomes moving to different categories of earned income

Question 28

what did milton Friedman point out about different economic systems in his interview with talk show host?

Answer 28

leaders are greedy but capitalist harness greed to improve general welfare, whereas socialism does not. benefits themselves

Question 29

poverty rate in the US is approximately

Answer 29

16%

Question 30

how much per person US spend on anti poverty programs?

Answer 30

$20000

Question 31

how is poverty related to anti government spending? how is poverty related to economic growth?

Answer 31

poverty does not seem to respond to anti poverty spending, economic growth does reduce poverty with lag