Sackrey Ch. 5 Other Class Analyses
·
Max Weber’s Class Stratification
o
Economic class objectively determined.
o
Social class subjectively determined.
·
Cultural Capital
o
Greater ability to “navigate the class system.”
o
Does not mean one can’t rise above birth class.
o
Government acts to favor privileged classes.
·
Consequences of Social Class Position
o
Working class subject to greater disease/mortality rates. (blood
pressure, heart disease etc)
o
Working class inherently has less control over pace and nature of work.
o
Working class has less safe neighborhoods.
o
Lower half of socioeconomic structure suffers 80% of severe distress.
“…best way to avoid mental illness is to be born into the upper
classes.”
·
Frederick J. Taylor (“time and motion studies)
o
Separated mental from physical labor.
o
Increased supervisory control in the workplace.
o
Reduced skill level of production jobs.
·
Does Social Mobility Make a Difference?
o
Only “10% of working population” experiences upward mobility.
o
Those who do typically cross only one social class boundary.
“Real structural barriers to upward mobility exist
…[best approach is]…being born to parents with socioeconomic privilege.”
o
Even those who “make it” suffer “status dissonance.”
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Kuttner ~ Ch. 1 The Resurgent Market
Question: Is the Supermarket a good example of
allocative efficiency along the lines of Adam Smith?
Supermarkets operate on thin profit margins, many price fluctuations, lots of
bargain-hunting among relatively informed shoppers. It gets tons of products to
relatively satisfied consumers everyday.
But
it is heavily regulated (USDA inspectors), unionized workforce, excessive number
of brands and initial producers enjoy large farm subsidies.
Question:
If free markets don’t equilibrate well and don’t have the characteristics of
the restrictive assumptions of Smith’s model, then it is said we must resort
to “Second-Best Markets.” What are those?
Examples:
Markets with regulation, professional standards, supervision, subsidies etc.
Banking, farming, health care etc.
Question:
Banking is an example of an industry where regulation is necessary. Why? What
experience occurred in the 1970-1980s that confirmed this?
Question:
The
S&L crisis was an experiment in free-market banking that failed. Why?
Ignoring the Great Depression and special "fiduciary role" of banks, Congress deregulated S&Ls, freeing them from interest rate constraints and investment rules while maintaining the government provided deposit insurance --> Result: wild speculation in risky loans.
Ignored Theory of the Second Best, banks eventually held third world debt = twice bank capital. Banking, like health care is a second best realm, i.e., doesn't work in free market.
The Three Efficiencies
Smithian (A. Smith), Schumpeterian (J. Schumpeter), and Keynesian (J.M. Keynes)
Smithian Efficiency: The market-clearing, goal-maximizing dependence on the price mechanism to allocate resources in an efficient manner.
Schumpeterian Efficiency: Innovation in oligopolistic markets is more robust than in ruinous price competitive markets. In other words, "markets tend to under-invest in innovation" because firms fear competitors will gain from their advances in technology.
German Cartels, Japanese Keiretsu, Korean Choebols
Keynesian Efficiency: Loss of efficiency in society can occur as a result of market forces creating avoidable unemployment and idle capital during economic downturns. Government-induced demand for output can correct.
"It Takes a lot of Harberger Triangles to fill up an Okun Gap." (25)
How Smithian Economics Triumphed over S & K Efficiencies
Post-World War II Rise of Neo-Classical Synthesis: Roosevelt's social policies, Bretton Woods Agreement, Nation-State Economic Management Regime, Capital-Labor Accord. Keynesian economics seemed proved by WW II dramatic economic growth spurt (50% in four years).
Collapse of Synthesis beginning in 1970s: Bretton Woods abandoned, stagflation and loss of nation-state ability to control economy, labor movement loses power, Smithian views of free-market merits revived in Chicago School of economics. Even liberals (Okun, George Schultze) begin to revere the market and argue for after-market methods to help "society's losers."
"...government failure is ubiquitous." (36)