Economics 01/02

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  • Edition: 30th
  • Format: Paperback
  • Copyright: 2000-11-01
  • Publisher: McGraw-Hill College

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This thirty-fourth of ANNUAL EDITIONS: ECONOMICS provides convenient, inexpensive access to current articles selected from the best of the public press. Organizational features include: an annotated listing of selected World Wide Web sites; an annotated table of contents; a topic guide; a general introduction; brief overviews for each section; a topical index; and an instructor' s resource guide with testing materials. USING ANNUAL EDITIONS IN THE CLASSROOM is offered as a practical guide for instructors. ANNUAL EDITIONS titles are supported by our student website, www.mhcls.com/online.

Table of Contents

To the Reader iv
Topic Guide 2(2)
Selected World Wide Web Sites 4(2)
UNIT 1 Introduction
Four articles discuss some of the basic theories that make up the foundations of the study of economics
Overview 6(22)
How Much for a Life? Try $3 Million to $5 Million
Peter Passell
Much economic reasoning is based on the opportunity cost principle, the idea that any decision involving scarce resources must involve costs in terms of forgone alternatives elsewhere
Peter Passell applies this principle to an age-old question: What is the value of a human life?
Building Wealth
Lester C. Thurow
Lester Thurow maintains that the world is currently in the throes of a third industrial revolution, in which knowledge---rather than natural resources --- is the key to success
The knowledge-based economy is asking new questions, giving new answers, and developing new rules for generating wealth
What in the World Happened to Economics?
Justin Fox
The field of economics has been the scene of some very public battles over the past half century
Recently, economists have attained a state of relative peace and consensus, but they have done so by diminishing their expectations
Justin Fox examines the current state of economic thought
The Internet Economy: The World's Next Growth Engine
Michael J. Mandel
The evolution of the Internet means that the traditional factors of production --- especially capital and skilled labor --- are no longer the major determinants of the power of the economy
Now, economic potential is increasingly linked to the ability to control and manipulate information
UNIT 2 Microeconomics
Nine articles examine various concepts of microeconomics such as laws of supply and demand, government regulation, oligopoly, competition, and delivery of services
Overview 28(28)
Smoke Signals
One of the more useful concepts in microeconomics is demand elasticity, which measures the responsiveness of consumer demand to changes in prices
Recently, the New Jersey legislature doubled the state cigarette tax in an effort to reduce smoking
This article examines the impact this has had on cigarette sales in both New Jersey and nearby states
The New Economy's `Network Society' Plays by Old-Economy Rules
Jeff Madrick
In the relentless search to find something unprecedented in the ``new economy,'' many business gurus are saying that the theoretical principles underlying the ``old economy'' don't apply
Jeff Madrick disagrees, and he demonstrates the usefulness of the time-honored principle of economies of scale
I Got It Cheaper Than You
Scott Woolley
What do American Airlines, Staples, Stanford University, AT&T, and Safeway Stores all have in common? They practice price discrimination by charging some customers more than other customers for the same thing
Scott Woolley says price discrimination seems destined to become more frequent and complex with the growth of electronic commerce
Is Big Bad?
J. Bradford De Long
The recent decision by a federal judge that the Microsoft Corporation is in violation of the 110-year-old Sherman Antitrust Act raises a very interesting question
J. Bradford De Long asks: How can we gain the benefits of efficient bigness and still keep the benefits of intense competition?
As Mergers Get Bigger, So Does the Danger
Louis Uchitelle
Seldom since the late nineteenth century, when corporate trusts dominated oil, steel, copper, and railroads in the United States, has there been such a march toward concentration
Louis Uchitelle considers the ramifications of megamergers
Telecom Act Delivers a Scrambled Price Picture to Consumers
Timothy C. Barmann
The Telecommunications Act of 1996 provided for a 3-year phaseout of federal controls over television cable rates
But while the prospect of competition was supposed to drive prices down, Timothy C. Barmann reports that cable rates continue to rise, with many companies announcing increases for this year that are more than double the projected rate of inflation
Worker Capitalists? Giving Employees an Ownership Stake
Margaret M. Blair
Douglas L. Kruse
Today employees are emerging as a key shareholder group in American corporations
In survey after survey, members of the general public, working people in particular, say they believe that employees in substantially employee-owned firms work harder and better, and they are more likely than outside shareholders to vote their shares in the long-term interests of the company
Making Green Policies Pay Off: Responsible Climate-Change Package Can Benefit Environment, Workforce
James Barrett
J. Andrew Hoerner
Because the economy is largely dependent on the consumption of fossil fuels that result in carbon emission by-products, concerns exist about the economy's ability to reduce these emissions without sacrificing output and employment
The authors show how responsible policies might benefit both the environment and the economy
Congested Parks --- A Pricing Dilemma
Dan M. Bechter
Overcrowding at public parks creates a classic microeconomic dilemma: Outdoor recreationists face insufficient parking spaces, which must be allocated through adjusting park fees
Dan Bechter investigates possible solutions to the problem
UNIT 3 Income Distribution and Economic Justice
Ten articles discuss income distribution and economic growth by looking at income equality and welfare reform
Overview 56(38)
Growing American Inequality: Sources and Remedies
Gary Burtless
For the better part of two decades, the gap in earning between rich and poor Americans has increased steadily
The incomes of poor Americans shrank and those of the middle class stagnated while the incomes of the richest families continued to grow
Gary Burtless asks: Should we care? And, if we do care, what should be done about it?
The Victimless Income Gap?
Robert H. Frank
Some economists maintain that inequality doesn't really matter so long as no one ends up with less in absolute terms
Robert Frank disagrees
He argues that when the rich get richer, the rest do suffer
Working Full-Time Is No Longer Enough --- Despite Boom, Americans Are More Likely to Fall Below the Poverty Line
Jacob M. Schlesinger
Available evidence suggests that lower-skilled workers have profited much less than others from the current U.S. economic boom
While the boom ensures that they are able to find jobs, Jacob Schlesinger asserts that it is still much too hard for the poor who work full-time to rise above the poverty level
Without a Net: Whom the New Welfare Law Helps and Hurts
Christopher Jencks
Joseph Swingle
Christopher Jencks and Joseph Swingle demonstrate why the impact of welfare reform has been neither as grim as its critics feared nor as encouraging as its advocates promised
Corporate Welfare Remains Unchecked
Doug Bandow
``Welfare reform'' is a term generally applied to changing the system through which poor people receive government aid
While sharp cutbacks have been made in this form of federal assistance, another sort of subsidy (otherwise known as ``corporate welfare'') is expanding rapidly
Doug Bandow describes the many ways in which businesses benefit from government largesse at public expense
Should We Retire Social Security?
Henry J. Aaron
Robert D. Reischauer
Most Americans understand that Social Security faces a long-term imbalance between the cost of benefits promised under current law and the program's projected income
Today, policymakers and the public face a bewildering array of proposals to reform or replace the nation's public pension system
The authors evaluate major proposals currently under consideration
Search for the Cure
John C. Baldwin
C. Evereff Koop
The crisis in American health care is real and getting worse
A record 16 percent of Americans now have no health care --- a grave situation that, in the view of the authors, cannot be solved by conventional business methods
New Unions for a New Economy
Stephen A. Herzenberg
John A. Alic
Howard Wial
How will American trade unionism fare in the twenty-first century? In the so-called New Economy, very few new jobs are broken down in classic production-line fashion, and productivity improvements depend more than ever on the ability of employees to solve problems and to improvise
The authors recommend ways in which unions can meet these challenges
Equality in Hiring Remains the Key to Civil Rights Goals
Alan B. Krueger
Since 1965, when the Civil Rights Act went into effect, median earnings of black full-time workers have gained ground on the earnings of their white counterparts
Alan Krueger shows that discrimination still persists, taking on more subtle forms that are less amenable to correction by legislation
Immigrants Fill Critical Gap in Wide-Open Job Market
Dina Temple-Raston
With more than 9 million legal immigrants arriving on its shores in the past decade, the current immigration wave is the largest in U.S. history
Dina Temple-Raston traces the impact of this wave on U.S
job markets and wages
UNIT 4 Macroeconomics
Eleven articles examine various concepts of macroeconomics such as unemployment, deficits, fiscal policy, taxes, U.S. monetary policy, and globalization
Overview 94(42)
The Risk That Boom Will Turn to Bust
Michael J. Mandel
The editor of Business Week argues that a New Economy has been born, which is transforming America and much of the world at a pace that is scarcely imaginable
Unfortunately, too many have given in to the temptation to conclude that the New Economy also means the end of the business cycle
Just How Productive Are U.S. Workers?
David Friedman
Why did U.S
productivity, the nation's economic output per labor hour, suddenly accelerate in 1995 after decades of stagnation? David Friedman suggests that the answer will determine whether America is truly leading the world into a new, prosperous era, or whether its good times reflect unique circumstances that can, and likely will, change for the worse
The New Economy: A Millennial Myth
Dean Baker
Dean Baker questions the view that the New Economy is rapidly propelling the nation and the world into a new, possibly endless, era of prosperity
From his perspective, what we see in the New Economy is nothing more than an old-fashioned bubble
Notes From Underground: Money That People Earn and Spend Outside the Realm of Official Economic Calculations Is Nonetheless Real
Elia Kacapyr
A large share of economic activity occurs in the underground economy, where goods and services --- some legal, some not --- are produced but not reported
Elia Kacapyr considers possible implications of proposals for regulating such activity
Why Are Taxes So Complicated, and What Can We Do About It?
William Gale
Since virtually everyone agrees that taxes should be easy to understand, administer, and enforce, why are taxes so complicated? William Gale suggests that the answer is that people also agree that taxes should be fair, should be conducive to economic prosperity, should raise sufficient revenue to finance government spending, and should respect the privacy of individuals
The Case Against Tax Cuts
Alan J. Auerbach
William G. Gale
Emerging federal budget surpluses have sparked calls for large-scale tax cuts
Even if surpluses do materialize, they will exist only because government accounting obscures the fact that the United States faces a large, long-term deficit
Alan Auerbach and William Gale suggest that saving the surplus by paying down public debt would help the economy much more than would tax cuts
U.S. Monetary Policy: An Introduction
This essay provides insights into the major dimensions of U.S. monetary policy
What are the ultimate goals of the Federal Reserve? What happens when these goals conflict? How does the Fed formulate its strategies, and what effect do its policies have on the economy?
What Greenspan Doesn't Know
Robert J. Samuelson
Robert Samuelson says that the ``dirty secret of today's economy'' is that no one --- including Fed chairman Alan Greenspan---truly understands it
One reason is that the standard model of how the economy operates (upon which experts generally base their conclusions) has gradually broken down, and there is thus far nothing to replace it
Central Banking in a Democracy
Alan S. Blinder
Alan Blinder, former vice chairman of the Federal Reserve Bank's Board of Governors, asks, Who does the Federal Reserve serve? Blinder argues that it is not the U.S. president, or the Congress, or the banks, or the financial system
The Fed's true constituency is the entire nation
The New World of Banking
Jim Campen
The Gramm-Leach-Bliley Financial Service Modernization Act of 1999 makes possible a new kind of corporation---called a financial holding company---that allows any number of banks, insurance companies, and securities firms to be brought together under the same corporate umbrella
Jim Campen suggests that the result is likely to be another wave of financial megamergers
Who Needs Money?
``E-money'' (or electronic money) is money that moves along multiple channels largely outside the established network of banks, checks, and paper currency that are overseen by the Federal Reserve
The Economist discusses what e-money might mean for the future of banking and the monetary system
Unit 5 The Changing Global Economy
Twelve articles examine the impact that current events have on the overall stability and alignment of the world economy
Overview 136(64)
The ``Globalization'' Challenge: The U.S. Role in Shaping World Trade and Investment
Robert E. Litan
Economic engagement with the rest of the world has played a key part in the current U.S. economic boom
However, as Robert Litan warns, American economic policy must steer a middle course between the extremes of either unilateralism or one-worldism
Why Trade Is Good for You
If countries specialize according to their comparative advantage, they can prosper through trade regardless of how inefficient, in absolute terms, they may be in their chosen speciality
This article demonstrates how this principle can be used to support the case for free trade
The Trade Deficit May Seem Harmless, but It Could Be What Trips Up Growth
Jeff Madrick
Many economists say that, since we've dealt with high trade deficits for 20 years and the U.S. economy is remarkably strong, there is little, perhaps nothing, to worry about
However, as Jeff Madrick shows, America's relentless borrowing from abroad may ultimately be what trips up its growth
The Insider: What I Learned at the World Economic Crisis
Joseph Stiglitz
Joseph Stiglitz, one-time chief economist and vice president of the World Bank, provides an insider's view of the International Monetary Fund
He maintains that while, in theory, the fund supports democratic institutions in the nations it assists, in practice it undermines the democratic process by imposing policies
Eliminating Child Labor
Miriam Wasserman
Much of the developing world continues to rely on child labor
Miriam Wasserman asks, Can we learn from the U.S. experience about what is required for its elimination?
NAFTA After 5 Years: `Free' Trade Is Often Costly
Kathy McCabe
The formation of the North American Free Trade Agreement (NAFTA) was marked both by extravagant promises about its benefits and by blood-curdling warnings about its costs
Now that 5 years have passed, Kathy McCabe asks: ``How is NAFTA doing?''
Europe Can't Handle the Euro
Martin Feldstein
When leaders of the 11 nations that comprise the European Monetary Union agreed to combine their currencies in January 1999, they predicted great things
Instead, as Martin Feldstein notes, the euro plummeted, Europe's economy remains weak, and unemployment is more than twice the U.S. level
After Communism, Russia Has Gone From Menace to Mess
Lester C. Thurow
After the breakup of the USSR, many believed that Russia's well-educated citizenry, its demonstrated mastery of technology, and abundant natural resources would result in its quickly joining the ranks of the developed world
Lester Thurow explains why, more than a decade later, the Russian economy is in trouble
Re-Emerging Economies: Uncertain Prospects
Emerging economies appear to have finally clawed their way back from the brink of financial collapse, following years of serious crisis
But they are still a long way from economic health
Trade and the Developing World: A New Agenda
Joseph F. Stiglitz
The gap between the developed and the less developed countries is widening, a gap which, in Joseph Stiglitz's view, the international community is doing too little to narrow
As developing countries take steps to open their economies and expand their exports, they find themselves confronting significant trade barriers---leaving them, in effect, with neither aid nor trade
Trade: A Third Way
Robert B. Reich
Global trade agreements often have one thing in common: there's almost no agreement on what labor and environmental standards actually mean
Robert Reich proposes an interesting solution to this problem
Changing Today's Consumption Patterns --- for Tomorrow's Human Development
World consumption has expanded at an unprecedented pace over the twentieth century
As this United Nations report shows, competitive spending and conspicuous consumption have turned the affluence of some into the social exclusion of many
The following is a list of documents that appear in this edition of Annual Editions: Economics
Total Output, Income, and Spending
Disposition of Personal Income
Sources of Personal Income
Corporate Profits
Consumer Prices
Real Personal Consumption Expenditures
Consumer Credit
Share of Aggregate Income and Mean Income in 1967 to 1999
Employment, Unemployment, and Wages
Average Weekly Hours, Hourly Earnings, and Weekly Earnings
Employment Cost Index---Private Industry
Federal Receipts, Outlays, and Debt
U.S. International Transactions
* The Economic Indicators are prepared and published monthly for the Joint Economic Committee by the Council of Economic Advisers. They can be contacted by phone at (202) 512-1530, FAX at (202) 512-1262, or through the World Wide Web at http://ww1.access.gpo.gov/GPOAccess/sitesearch/congress/eibrowse/brocind.html
Glossary 200(9)
Index 209(3)
Test Your Knowledge Form 212(1)
Article Rating Form 213

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