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Government protection of citizens' economic and social well-being through instruments of social insurance and transfers to the needy.
Historically, the American welfare state has not provided enough lifeboats to those who need medical care, child care, or income support.
A privilege defining what is assured and permitted that lies beyond the reach of ordinary legislation; such rights—whether about speech or assembly or belief and worship—cannot be taken away, but are fundamental attributes of citizenship.
- These rights developed
- over time, often as the result of conflict and struggle.
The fundamental principles, establishing rules and institutions, that shape how a country is governed and by whom, for what ends, and with which limitations. A constitution may be set down in a written document, as in the United States, or it can be unwritten, the result of long-accepted laws and the development of precedent, as in Great Britain.
The Constitution recognized slavery as legitimate within the country's constitutional democracy.
Bill of Rights
- The first ten amendments to the Constitution of the United
- States that guarantee Americans freedom of religion, the right to bear arms, habeas corpus, a speedy trial by a jury,
- and other aspects of due process of law, as well as protection from unreasonable search and seizure by public authorities.
- In 1791, four years after the Constitution was written, the
- ten amendments called the Bill of Rights
- were added.
Separation of Powers
- A term used to describe the national government in the
- United States in which the Constitution grants the presidency, Congress, and judiciary independent (separated) powers. This situation differs from the system of cabinet government, in which the powers of the cabinet and parliament are fused.
The national government is characterized by a separation of powers, and the capacity to govern is shared by the executive branch (led by the president), by the legislative branch (Congress), and by the judicial branch (the Supreme Court).
Checks and Balances
- In order to prevent undue concentrations of power, each
- branch of the federal government has independent standing. This institutional design enables the presidency, Congress, and the judiciary to check and balance possible abuses by the other two. A possible disadvantage of this situation is institutional gridlock or stalemate since any one branch can hinder action by the others.
These branches are in a relationship of checks and balances with each other. The president can veto congressional legislation; the Senate must approve key presidential appointments; the Supreme Court can review laws passed by Congress and signed by the president.
- A political system in which governing authority is shared
- between the national government and subordinate units (the fifty states in the United States).
The political system is characterized by federalism, a system that limits national power by reserving many powers and functions to the governments of the country’s fifty states.
A form of government in which sovereign authority ultimately rests with the people, who choose their leaders in competitive elections.
Democracy cannot be judged, however, only by these cherished rights and formal procedures.
- The idea that the ultimate and supreme source of political
- authority lies not with rulers but with the people, the citizens of the republic.
To what extent is popular sovereignty possible in a society characterized by large inequalities of resources?
- The institution of trade and exchange, where commercial
- transactions of buying and selling take place and where the chance to seek deals and make profits exists.
The country’s capitalist market economy—an economy that has produced great prosperity and economic development as well as significant inequality, insecurity, and cycles of boom and bust, some greater than others—is inherently not democratic.
The close relationship between corporations and the federal government. Together, they shape key features of public policy that organize and regulate how economic affairs are conducted.
When key sectors of the private economy fail spectacularly, as the automobile industry recently has, government has little choice but to step in to shepherd them back to self-sustaining health.
- An economic system based on the private ownership of
- property in which profit is pursued through the investment of capital and the employment of labor.
What, in short, Is the relationship of capitalism and democracy?
A country that combines a far greater degree of power and might than other nations, and thus develops a dominant position in world affairs.
- After the Cold War ended in 1989 and the Soviet Union
- collapsed in 1991, the United States was left as the only superpower in the world.
- Circumstances, in political life, where differences between
- views, preferences, and voting divide the population into sharply contrasting groups with little or no overlap.
How will global challenges and political polarization advance or impede a balancing role for government in managing risk and providing economic security?
What new patterns linking capitalism and democracy will emerge?
- A classical term in political thought, political economy
- refers to the institutions and arrangements that govern how goods are produced, distributed, and consumed within a country’s economy, and, more broadly, across the globe.
- Part I of The Politics of Power examines the political
- economy of the United States, that is, the interaction between the economy and government.
Costs involved in production that a firm can externalize, that is, avoid paying by transferring to government, consumers, and the wider society. Because such costs don’t affect the firm’s balance sheet, the firm has no incentive to find ways to minimize them even when they may be extremely costly for the society.
- Economists designate as externalities those costs that a
- firm can successfully avoid paying that do not affect its balance sheet.
In economics, this refers to an economic downturn. The semiofficial definition of a recession is when the economy’s total production contracts for two consecutive quarters. Sometimes, other indicators are also used to assess whether a recession occurs such as rising unemployment.
When a downturn is fairly mild, involving negative economic growth for at least two quarters, it is designated as a recession. (Some accounts broaden the definition to include a decline in other indicators, such as employment and investment.)
A prolonged period of economic stagnation, in which there are high levels of unemployment, declining living standards, and social dislocation.
A prolonged period of sustained economic stagnation, such as occurred in the United States in the 1930s, is designated as a depression. A depression involves severe unemployment, idle productive equipment, declining living standards, and extensive social dislocation.
A system where a private organization, such as a business, firm, exercises power over its members and others, similar to the power exercised by public government.
Our economic system—that is, capitalism—can be considered a form a private government, a system that resembles public government in that its policies have a fundamental impact on people’s lives and their communities.
- The set of institutions that exercises binding legitimate
- authority within a territory.
Our economic system—that is, capitalism—can be considered a form of private government, a system that resembles public government in that its policies have a fundamental impact on people’s lives and their communities.
An economy dominated by large firms that produce for national and international markets and are able to dictate prices to suppliers and retailers as well as wages to their workers.
A convenient shorthand label for the system in which a small group controls the U.S. economy and, consequently, possesses immense political power, is corporate capitalism.
- What consequences flow from the fact that capitalists own
- and control capital?
- The situation in which there are extensive flows of
- commodities, capital, culture, and people across national boundaries.
Since the 1960s, firms began leaving the South to invest in less developed countries like Bangladesh, China, Mexico, and the Dominican Republic that offer still lower wages, higher subsidies, and a more anti-union climate. The shift of capital beyond U.S. borders, that is, offshoring, outsourcing, and foreign direct investment, are important elements of globalization.
Mobilization of bias
A situation in which some participants have a built-in or structural advantage over others. In a capitalist economy, the mobilization of bias favors business firms because the entire society is dependent on business.
The distinctive political advantage that business enjoys by virtue of its economic power has been described as the mobilization of bias, a term coined by political scientist E. E. Schattschneider.
The group that owns and controls business firms.
Social clubs promote capitalist class cohesion by creating information and friendship networks among the elite. The exclusive social club is the culmination of a process of elite socialization that begins in prep school, is reinforced at prestigious private colleges, is strengthened at selective law and business schools, and is polished at corporate headquarters.
Extreme market capitalism
A form of capitalism, such as that prevailing in the Unites States, in which there is relatively little state provision of social benefits and business regulation.
Capitalism comes in may flavors; the American variant, which we refer to as extreme market capitalism, is one of them.
Mortgages that are granted to homebuyers whose poor financial situation means there is a significant risk they will be unable to afford monthly mortgage payments.
- The first was subprime mortgages, that is, high-risk,
- adjustable rate mortgages sold to people whose income, according to prudent rules of risk management, was inadequate.
The practice by which a financial firm can invest substantially more than its own funds by using borrowed funds. Leveraging funds encourages a firm to take significantly greater risks.
Because of the second innovation in housing, the practice of leverage; that is, borrowing funds at low interest rates and using the loan to purchase securities that appreciated rapidly in value.
The practice of combining assets, such as mortgages, into a security that is marketed and sold to investors. A principal cause of the 2008 recession was that poor quality mortgages (known as subprimes) were securitized. Since the mortgages underlying these securities were of questionable quality, the security itself lost considerable value when mortgage holders defaulted.
The danger posed by leveraging was compounded by the third innovation: securitization—the practice of slicing and dicing mortgages, bundling the slices into the mortgage-backed securities just described, and selling these questionable assets to other financial institutions.
- A plan by which a con artist hoodwinks victims into
- investing with the promise of obtaining high returns.
One way to appreciate the logic underpinning what seems so irrational is by describing a gigantic Ponzi scheme that made headlines in 2009. In a Ponzi scheme, a con artist hoodwinks victims into investing with the promise of obtaining high returns.
A series of policies associated with President Roosevelt’s response to the Depression. Such policies included social security, unemployment insurance minimum-wage laws, and public works programs for the unemployed, and laws protecting workers’ right to organize unions.
The initial enthusiasm and justification for this expansion of government occurred in response to the Great Depression of the 1930s. President Franklin Delano Roosevelt’s New Deal created the outlines of the modern welfare state to cope with the distress.
A rise over time in the price of goods and services. Inflation is often accompanied by a decline in the value of the currency, which affects the purchasing power of money.
But the formula for success that the government followed was exhausted by the 1970s, which saw unemployment and inflation take their toll on living standards.
An economy dominated by many small firms that produce for local markets.
During this classic era of competitive capitalism, when small firms competed in local markets, the federal government’s role was quite limited.
A theory that government can use its budgetary authority to tame the business cycle to maintain full employment.
In addition, the government applied the most conservative form of Keynesianism possible. For example, Keynes believed that full employment was essential to increasing aggregate—total—demand.
The period from 1945 to 1973 when wage, productivity, and economic growth all rose together. Inequality declined and the average American’s standard of living increased.
Many feared that the economy would slide back into recession once the artificial stimulus of World War II was removed. Instead, the United States experienced the most prosperous twenty-five years in its history, often dubbed the golden age of capitalism.
Median family income almost doubled between 1950 and 1970.
- The simultaneous appearance of high inflation and
Over the course of the 1970s, however, prosperity waned as the economy began to experience stagflation, an unprecedented situation in which unemployment and inflation occurred simultaneously.