Preface

Introduction: Economics and Economists: The Basis for Controversy

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PART 1 MICROECONOMIC ISSUES

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Issue 1. Are Profits the Only Business of Business?

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YES: Milton Friedman, from "The Social Responsibility of Business Is to Increase Its Profits," The New York Times Magazine (September 13, 1970)

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NO: Robert Almeder, from "Morality in the Marketplace: Reflections on the Friedman Doctrine," in Milton Snoeyenbos, Robert Almeder, and James Humber, eds., Business Ethics, rev. ed. (Prometheus Press, 1998)

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Free-market economist Milton Friedman contends that the sole responsibility of business is to increase its profits. Philosopher Robert Almeder maintains that if capitalism is to survive, it must act ín socially responsible ways that go beyond profit making.

Issue 2. Should the Regulations Regarding Overtime Pay Be Changed?

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YES: Elaine Chao, from 'Bush Administration Proposal," Congressional Digest (March 2004)

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NO: Ross Eisenbrey, from "On the Department of Labor's Final Overtime Regulations," Testimony before the Senate Subcommittee on Labor, Health and Human Services, and Education (May 4, 2004)

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Secretary of Labor Elaine Chao believes that today's workers are "severely disadvantaged" by current regulations regarding overtime pay, and she believes it is time to institute new rules that would benefit more workers." Ross Eisenbrey, Economic Policy Institute vice president, believes that the Department of Labor's proposed changes will mean "longer hours and less pay for millions of workers—and more litigation for our entire economy."

Issue 3. Is There Discrimination in U.S. Labor Markets?

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YES: William A. Darity, Jr., and Patrick L. Mason, from "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives (Spring 1998)

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NO: James J. Heckman, from "Detecting Discrimination," Journal of Economic Perspectives (Spring 1998)

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Professor of economics William A. Darity, Jr., and associate professor of economics Patrick L. Mason assert that the lack of progress made since the mid-1970's toward establishing equality in wages between the races is evidence of persistent discrimination in U.S. labor markets. Professor of economics James J. Heckman argues that markets—driven by the profit motive of employers-will compete away any wage differentials that are not justified by differences in human capital.

Issue 4. Will the Medicare Modernization Act of 2003 and Its Drug Discount Cards Lower the Cost of Prescription Drugs for Seniors?

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YES: Mark Merritt, from Testimony before the Senate Committee on Finance (June 8, 2004)

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NO: Robert M. Hayes, from Testimony before the Senate Committee on Finance (June 8, 2004)

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Pharmaceutical Care Management Association President Mark Merritt believes that the introduction of drug discount cards has stimulated competition among drug card sponsors, retail pharmacies, and drug manufacturers, and this competition will generate drug discounts for the elderly of about 17 percent on brand name drugs and 35 percent on generic drugs. Medicare Rights Center President Robert M. Hayes asserts that drug discount cards "will do some people some important good, but the discount cards are leaving the overwhelming majority of people with Medicare without help and angry."

Issue 5. Should Markets Be Allowed to Solve the Shortage in Body Parts?

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YES: Charles T. Carlstrom and Christy D. Rollow, from "The Rationing of Transplantable Organs: A Troubled Lineup," The Cato Journal (Fall 1997)

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NO: Nancy Scheper-Hughes, from "The End of the Body: The Global Traffic in Organs for Transplant Surgery," Organs Watch, http://sunsite.berkeley.edu/biotech/organswatch/pages/cadraft.html (May 14, 1998)

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Free-market economists Charles T. Carlstrom and Christy D. Rollow argue that the simple use of market incentives can go a long way to solving the shortage of transplantable organs. They contend that although some people may have "qualms about the buying and selling of organs, the cost of our current approach is that shortages will remain endemic, and ultimately, more lives will be lost." Professor of anthropology Nancy Scheper-Hughes acknowledges that markets in and of themselves are not evil. But she asserts that "by their very nature markets are indiscriminate, promiscuous and inclined to reduce everything, including human beings, their labor and even their reproductive capacity to the status of commodities, to things that can be bought, sold, traded, and stolen."

Issue 6. Is It Time to Reform Medical Malpractice Litigation?

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YES: U.S. Department of Health and Human Services, from "Confronting the New Health Care Crisis: Improving Health Care Quality and Lowering Costs by Fixing Our Medical Liability System" (July 24, 2002)

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NO: Jackson Williams, from "Bush's Medical Malpractice Disinformation Campaign: A Rebuttal to the HHS Report on Medical Liability," A Report of Public Citizen's Congress Watch (January 2003)

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The U.S. Department of Health and Human Services (HHS) argues that although the United States has a health care system that "is the envy of the world," it is a system that is about to be brought to its knees by aggressive attorneys who force the medical community to practice costly "defensive medicine." Jackson Williams, legal counsel for the watchdog group Public Citizen, charges that the position taken by the HHS is factually "incorrect, incomplete, or misleading" and even contradicted by other governmental agencies.

PART 2 MACROECONOMIC ISSUES

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Issue 7. Is Wal-Mart Good for the Economy?

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YES: Los Angeles County Economic Development Corporation, from "Wal-Mart Supercenters: What's in Store for Southern California?" http://www.laedc.info/data/documents.asp (January 2004)

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NO: Democratic Staff of the House Committee on Education and the Workforce, from "Everyday Low Wages: The Hidden Price We All Pay for Wal-Mart," http://www.mindfully.erg/Industry/2004/wal-mart-labor-record16feb04.htm (February 16, 2004)

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The Los Angeles County Economic Development Corporation believes that the introduction of Wal-Mart supercenter stores into the Southern California market will generate significant savings for consumers on their grocery, apparel, and general merchandise spending, and the redirected spending from the savings will create over 35,000 new jobs. The Democratic Staff of the House Committee on Education and the Workforce believes that Wal-Mart, in its efforts to achieve and maintain low prices, has "come to represent the lowest common denominator in the treatment of working people."

Issue 8. Should Social Security Be Changed to Include Personal Retirement Accounts?

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YES: The White House, from "Strengthening Social Security for the 21st Century, "http://www.whitehouse.gov/infocus/socialsecurity/200501/strengtheningsocialsecurity.html (February 2005)

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NO: Dean Baker, from "Bush's Numbers Racket: Why Social Security Privatization Is a Phony Solution to a Phony Problem," The American Prospect Online Edition (January 14, 2005)

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The White House identifies a number of problems with the present structure of the Social Security system and proposes personal retirement accounts as a way of resolving these problems, and dramatically reduce the costs of permanently fixing the system." Dean Baker, co-director of the Center for Economic and Policy Research, argues that President Bush's plan for personal retirement accounts would not fix Social Security; instead, it would "undermine a system that has provided security for ten of millions of workers, and their families, for seven decades, and which can continue to do so long into the future if it is just left alone."

Issue 9. Should the Double Taxation of Corporate Dividends Be Eliminated?

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YES: Norbert J. Michel, Alfredo Goyburu, and Ralph A. Rector, from "The Economic and Fiscal Effects of Ending the Federal Double Taxation of Dividends," A Working Paper of the Heritage Center for Data Analysis (January 27, 2003)

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NO: Joel Friedman and Robert Greenstein, from "Exempting Corporate Dividends From Individual Income Taxes," A Report of the Center on Budget and Policy Priorities (January 11, 2003)

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Free-market economists Norbert J. Michel, Alfredo Goyburu, and Ralph A. Rector applaud the George W. Bush administration's initiative to eliminate the double taxation of corporate dividends. They assert that this action will improve economic efficiency and that, in the long run, this tax cut will pay for itself because it will stimulate economic growth. Economic policy analysts Joel Friedman and Robert Greenstein argue that there are no valid economic justifications to propose the elimination of the tax on dividends. All that cutting dividend taxes will really do, they say, is reduce the tax burden of high-income individuals.

Issue 10. Are Credit Card Companies Exploiting American Consumers?

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YES: Robert D. Manning, from "Perpetual Debt, Predatory Plastic," Southern Exposure (Summer 2003)

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NO: Michael F. McEneney, from "Written Statement of Michael F. McEneney on Behalf of the Consumer Bankers Association," Testimony before the House Subcommittee on Financial Institutions and Consumer Credit (September 15, 2004)

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Professor Robert D. Manning lists a number of problems with credit cards, including high interest rates, misrepresentation of the cost of debt consolidation loans, use of double billing cycles, use of "bait and switch" techniques, improper use of personal consumer credit information, and the proliferation of number of practices that are of little or no benefit to consumers. Lawyer Michael F. McEneney stresses the benefits that consumers experience because of the "ever-expanding choices available to consumers," and he supports his claims by reporting that a Federal Reserve study found that "91% of credit card holders are satisfied with their credit card issuers."

Issue 11. Is It Time to Abolish the Minimum Wage?

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YES: Thomas Rustici, from "A Public Choice View of the Minimum Wage," The Cato journal (Spring/Summer 1985)

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NO: Charles Craypo, from "In Defense of Minimum Wages," An Original Essay Written for This Volume (2002)

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Orthodox neoclassical economist Thomas Rustici asserts that the effects of the minimum wage are clear: It creates unemployment among the least-skilled workers. Labor economist Charles Craypo argues that a high minimum wage is good for workers, employers, and consumers alike and that it is therefore good for the economy as a whole.

Issue 12. Are Declining Caseloads a Sign of Successful Welfare Reform?

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YES: Michael J. New, from "Welfare Reform That Works: Explaining the Welfare Caseload Decline, 1996-2000," Policy Analysis No. 435 (May 7, 2002)

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NO: Evelyn Z. Brodkin, from "Requiem for Welfare," Dissent (Winter 2003)

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Cato Institute researcher Michael J. New presents statistical evidence that welfare reform, and not a growing economy, is the primary cause of the recent decline in welfare caseloads. This means that welfare reform has been a success. Evelyn Z. Brodkin, an associate professor in the School of Social Service Administration and lecturer at the University of Chicago Law School, contends that in assessing welfare reform, one must look beyond the decline in welfare caseloads and ask, What has happened to those who no longer receive welfare? Her answer to this question evokes in Brodkin nostalgia for the "bad old days" of unreformed welfare.

PART 3 THE WORLD AROUND US

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Issue 13. Are Protectionist Policies Bad for America?

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YES: Murray N. Rothbard, from "Protectionism and the Destruction of Prosperity," Ludwig von Mises Institute, http://mises.org/fullarticle.asp?title=Protectionism&month=l (July 13, 1998)

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NO: Patrick J. Buchanan, from "Free Trade Is Not Free," Address to the Chicago Council on Foreign Relations (November 18, 1998)

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Free-trade economist Murray N. Rothbard objects to the prospect of protectionism, which he sees as an attempt by the few who make up special interest groups "to repress and loot the rest of us" who make up the many. Social critic and three-time presidential hopeful Patrick J. Buchanan argues that America's "new corporate elite" is willing to sacrifice the country's best interests on "the altar of that golden calf, the global economy."

Issue 14. Should We Sweat About Sweatshops?

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YES: Richard Appelbaum and Peter Dreier, from "The Campus Anti-Sweatshop Movement," The American Prospect (September-October 1999)

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NO: Nicholas D. Kristof and Sheryl WuDunn, from "Two Cheers for Sweatshops," The New York Times Magazine (September 24, 2000)

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Sociologist Richard Appelbaum and political scientist Peter Dreier chronicle the rise of student activism on American campuses over the issue of sweatshops abroad. Students demand that firms be held responsible for "sweatshop conditions" and warn that if conditions do not improve, American consumers will not "leave their consciences at home when they shop for clothes." News correspondents Nicholas D. Kristof and Sheryl WuDunn agree that the working conditions in many offshore plant sites "seem brutal from the vantage point of an American sitting in his living room." But they argue that these work opportunities are far superior to the alternatives that are currently available in many parts of the world and that what is needed are more sweatshops, not fewer sweatshops.

Issue 15. Are the Costs of Global Warming Too High to Ignore?

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YES: Lester R. Brown, from Eco-Economy: Building an Economy for the Earth (W.W. Norton, 2001)

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NO: Lenny Bernstein, from "Climate Change and Ecosystems," A Report of the George C. Marshall Institute (August 2002)

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Lester R. Brown, founder and president of the Earth Policy Institute, describes his vision of an environmentally sustainable economy, which includes food supplies, population growth issues, water availability, climatic changes, and renewable energy. Lenny Bernstein, head of L.S. Bernstein & Associates, which advises companies and trade associations on political and scientific developments on global environmental issues, acknowledges that ecosystems are sensitive to climate change, but he argues that the change that we have seen repeated again and again over the course of history can lead to benefits for our children and our children's children.

Issue 16. Do Living Wage Laws Improve Economic Conditions in Cities?

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YES: Chris Tilly, from "Next Steps for the Living-Wage Movement," Dollars & Sense (September-October 2001)

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NO: Steven Malanga, from "How the 'Living-Wage' Sneaks Socialism into Cities," City Journal (Winter 2003)

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Professor Chris Tilly supports the living wage for two basic reasons: (1) It is only fair to increase the incomes of those who earn the lowest wages, and (2) the living wage laws that have been passed "have not escalated costs, nor repelled businesses." Author Steven Malanga believes that the actions to pass living wage laws represent a "savvy left-wing political movement," and that living wage laws threaten the economic health of cities by increasing wage costs and "send businesses fleeing to other locales.'

Issue 17. Has the North American Free Trade Agreement Hurt the American Economy?

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YES: Robert E. Scott, from "NAFTA's Hidden Costs: Trade Agreement Results in Job Losses, Growing Inequality, and Wage Suppression for the United States," EPI Briefing Paper (April 2001)

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NO: Daniel T. Griswold, from "NAFTA at 10: An Economic and Foreign Policy Success," Free Trade Bulletin (December 2002)

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Economic Policy Institute director Robert E. Scott argues that besides the loss of a significant number of jobs, the North American Free Trade Agreement (NAFTA) has generated a number of less visible harmful effects on the American economy. These include increased income inequality and reduced fringe benefits. Daniel T. Griswold, associate director of the Cato Institute's Center for Trade Policy Studies, contends that NAFTA has helped the American economy by producing better-paying jobs and contributing to increased manufacturing output in the United States between 1993 and 2001.

Issue 18. Is the No Child Left Behind Act Working?

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YES: House Education and the Workforce Committee, from "Fact Sheet: No Child Left Behind Is Working," http://edwork-force.house.gov/issues/lOBth/recess/nclbworks.htm (October 7, 2004)

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NO: Gerald W. Bracey, from "The Perfect Law: No Child Left Behind and the Assault on Public Schools," Dissent (Fall 2004)

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The House Education and the Workforce Committee lists a number of positive results for the No Child Left Behind Act, including higher reading and math test scores in several states as well as improved data and information for teachers and parents. Professor Gerald W. Bracey believes that the No Child Left Behind Act is, from the perspective of the Republican party, a perfect law because it will ultimately transfer billions from the public sector to the private sector, because it will reduce the size of government, and because it will "wound or kill" a large Democratic party power base.

Contributors

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Index

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