exploring economic equality (done) Flashcards
Modern concepts of economic equality came about as a result of….
THE GREAT DEPRESSION
John Maynard Keynes’ economic theories inspired governments to create…
most of the social programs that we associate with the modern social safety net.
How did The Great Depression challenge Adam Smith’s theory if laissez-faire capitalism?
because his theory was that the economy would always bounce back after a bust due to the invisible hand.
Why didn’t the economy rebound from the “bust” of the depression like it was supposed to?
The bust was too low, the banks ran out of money and the people did too so the economy stood still in a hole.
What did John Maynard Keynes believe governments should do during an economic recession or depression?
he believed that governments should prioritize spending over saving in order to redistribute wealth in society
What is the meaning of fiscal policy? what should they do during a boom according to Keynes?
during a recession governments can spend more money to reduce taxes, thereby leaving more money in people’s pockets. During inflation (a boom), governments can spend less money and increase taxes, leaving less money in people’s pockets
What is the meaning of monetary policy? what should they do during a boom according to Keynes?
To encourage consumer spending in a slow economy, the government can also lower interest rates (or raise interest rates to discourage spending during boom times).
How were FDR and the New Deal an example of Keynesian economics in action?
he invested a lot more money on “the forgotten” focusing on the most vulnerable groups. prioritizing spending in times of need in an effort to move the economy.
What was the main reason for the Great Recession?
The housing market crash. Banks loaned too much money to individuals with bad credit, that ended up being unable to pay their mortgages.
name an ideology that is individualist and one that is collectivist
Individualist: classical liberalism
Collectivist: communism
Egalitarianism?
(collectivist view)
Egalitarianism is a collectivist ideology because it focuses on equality for all people rather than individual success.
Equality of opportunity? (collectivist view)
While this concept is sometimes linked to individualism (because people still compete), a collectivist view of equality of opportunity focuses on government action and social programs to level the playing field.
Equitable distribution of income? (collectivist view)
Equitable distribution of income means that wealth should be shared more fairly among all members of society not necessarily equal, but fair based on people’s needs and circumstances.
Egalitarianism?
(individualist view)
Typically associated with collectivist value because it promotes equality. However, it still exists in values like:
equal rights and freedoms
Equal opportunity to succeed.
No one gets special treatment.
Equality of opportunity?
(individualist view)
Everyone has the same legal and political rights, and from there, success is up to the individual.
It emphasizes freedom, personal effort, and minimal government interference.
Equitable distribution of income? (individualist view)
Often rejected or redefined. Individualists believe that: “People should earn what they work for—not have wealth redistributed just to make things fair.”
Individualists focus on fair processes, like:
Equal opportunity
Freedom to choose careers
Rewards based on merit and effort
What is often referred to as the “welfare state”?
The period of time after the Great Depression, governments in Canada and the United States took an unprecedented role in helping to run the economy.
What was the reason for the Great Recession in 2008?
The housing market crash. Banks loaned too much money to individuals with bad credit, that ended up being unable to pay their mortgages.
What are three things that happened in the Great Recession of 2008 that are similar to what was happening during the Great Depression?
- Increase in government intervention.
- Sharp drop in consumer spending/investment.
- Collapse of financial institutions
In terms of the economy, which side of the spectrum leans towards collectivism and which leans toward individualism?
Parties that lean to the left tend to be more collectivist and favor government intervention to reduce economic inequality, whereas parties that lean right on the spectrum favor more individualism and a smaller role for government in the economy.
Give two reasons why left-leaning political parties in liberal democracies usually try to eliminate or reduce economic inequality in society.
- fairness and social justice
- social stability and unity
Give two reasons why right-leaning political parties generally prefer a small role for government when it comes to economic equality.
- belief in individual responsibility and freedom
- faith in free market (capitalism)
Command economy: how do they answer the main questions of scarcity? (What to produce?
How to produce it?
For whom to produce?)
The government decides what to produce, how to produce it, and for whom, aiming to use limited resources efficiently and meet everyone’s basic needs.
Command economy: advantages
Can reduce inequality, ensure basic needs are met, and allow for quick decision-making in national planning or emergencies.
Command economy: disadvantages
Can lead to inefficiency, lack of innovation, shortages or surpluses, and limited personal freedom due to government control over production and choices.
Command economy: Examples (past and present)
past: Soviet Union
present: Cuba
Mixed economy: how do they answer the main questions of scarcity? (What to produce?
How to produce it?
For whom to produce?)
Both the government and the free market help decide what to produce, how to produce it, and for whom—balancing efficiency with fairness to manage scarce resources.
Mixed economy: advantages
Combines the efficiency of markets with government support to reduce inequality, protect consumers, and provide public services like healthcare and education.
Mixed economy: disadvantages
- Income inequality
- Market failures
- Exploitation of workers and environment
- Short-term focus
Mixed economy: Examples (past and present)
Past: US under FDR’s new deal
Present: Canada
Free market economy: how do they answer the main questions of scarcity? (What to produce?
How to produce it?
For whom to produce?)
Individuals and businesses decide what to produce, how to produce it, and for whom—based on supply, demand, and prices, which help allocate scarce resources efficiently.
Free market economy: advantages
Encourages innovation, competition, and efficiency, giving consumers more choices and rewarding businesses that meet demand effectively.
Free market economy: disadvantages
- Income inequality
- Market failures
- Exploitation of workers and environment
- Short-term focus
Free market economy: Examples (past and present)
Past: enlightenment era
Present: USA
What does the phrase “cradle to the grave” or “womb to the tomb” refer to?
Economic systems where citizens are taken care of from birth to death like Sweden.
Define Progressive Taxation
The more you make the more taxes you have to pay
Define Supply and demand
If there is more supply than demand prices go down, if there is more demand than supply prices go up
Define Bourgeoisie
Refers to the social class that owns the means of production
Who was Robert Owen?
Social reformer and industrialist known for his efforts to improve the conditions of workers during the Industrial Revolution.
What were the Roaring Twenties?
The famous economic boost in the 1920’s characterized by economic prosperity, technological innovation, and the flourishing of jazz music, fashion, and modern consumer culture.
