Unit: Microeconomic Issues
Issue: Are Profits the Only Business of Business?
YES: Milton Friedman, from “The Social Responsibility of Business Is to Increase Its Profits,” The New York Times Magazine, 1970
NO: Mindy S. Lubber, from “Corporate Responsibility: Without Outside Pressure, Corporations Will Not Take Meaningful Action on Sustainability,” The Economist, 2013
Free-market economist and Nobel Laureate Milton Friedman contend that the sole responsibility of business is to increase its profits. Mindy S. Lubber, president of Ceres, argues that activist involvement is necessary for business to take sustainability seriously, but also believes that businesses should be socially responsible and help develop creative solutions.
Issue: Should the Compensation of Executives Be Subject to Government Regulation?
YES: Joseph E. Stiglitz, from “Testimony before the U.S. House of Representatives Committee on Financial Services,” U.S. House of Representatives, 2010
NO: Kevin J. Murphy, from “Testimony before the U.S. House of Representatives Committee on Financial Services,” U.S. House of Representatives, 2009
Joseph Stiglitz, the winner of the Nobel Prize in economics, argues that flawed incentive compensation systems played an important role in the financial crisis. He believes that better regulation including regulations that affect incentive structures are likely to produce a better alignment of private rewards and social returns and better innovation. University of Southern California professor Kevin J. Murphy argues that “there is nothing inherent in the current structure of compensation in financial service firms that leads to obvious incentives to take excessive risk.” He believes that government-imposed regulations are “highly unlikely” to improve compensation policies of these firms.
Issue: Has the Supreme Court Made It Possible for Corporations to Buy Elections?
YES: Mary G. Wilson, from “Testimony before the U.S. House of Representatives Committee on House Administration,” U.S. House of Representatives, 2010
NO: Steven M. Simpson, from “Testimony before the U.S. House of Representatives Committee on House Administration,” U.S. House of Representatives, 2010
Mary G. Wilson, the president of the League of Women Voters, believes that the Supreme Court’s decision in Citizens United v. FEC that allows corporations to spend unlimited amounts of money in elections was “fundamentally wrong and a tragic mistake.” She calls upon Congress to enact legislation that will reverse this decision. Steven M. Simpson, the senior attorney at the Institute for Justice, supports the Supreme Court’s decision. In making his case, he argues that the decision does not reverse 100 years of precedent; the decision does not mean corporations will buy elections; and the decision recognizes that corporations must be protected under the free speech First Amendment.
Issue: Should the United States Stop All New Offshore Drilling for Oil?
YES: Michael F. Hirshfield, from “Testimony before the U.S. House of Representatives Committee on Natural Resources,” U.S. House of Representatives, 2010
NO: Michelle Michot Foss, from “Testimony before the U.S. House of Representatives Committee on Natural Resources,” U U.S. House of Representatives, 2010
Michael F. Hirshfield, the Oceana vice president and chief scientist, believes that offshore drilling is a “dirty and dangerous business.” He argues that the Deepwater Horizon drilling disaster is not a one-time occurrence: in 2007 alone there were 39 blowouts worldwide. Among other things, he calls on Congress to “suspend all approvals, activities, and processes—other than current production—related to offshore drilling.” Michelle Michot Foss, the University of Texas energy economist, provides estimates of the consequences of stopping oil and gas exploration and production. Among other things, such a ban would increase energy costs to consumers by an annual average rate of 5 percent and lead to a decrease in jobs in energy-intensive industries by 13 million by the year 2030. She believes there are “outstanding and almost immeasurable benefits associated with the discovery and utilization of oil and natural gas resources in our deep water provinces in the U.S. and around the world.”
Issue: Are Health Savings Accounts Working Effectively?
YES: American Benefits Council, from “Statement before the Subcommittee on Health of the House Committee on Ways and Means,” U.S. House of Representatives, 2008
NO: Linda J. Blumberg, from “Statement before the Subcommittee on Health of the House Committee on Ways and Means,” U.S. House of Representatives, 2008
The American Benefits Council, a national trade association, believes that “HSAs are working as intended” for the vast majority of the 6.1 million Americans covered by “HSA-eligible plans.” Linda J. Blumberg, Urban Institute research associate identifies a number of problems associated with medical care and argues that “HSAs are not the solutions to these pressing national concerns.”
Issue: Should NBC and Comcast Be Allowed to Merge?
YES: Brian L. Roberts and Jeff Zucker, from “Testimony before the U.S. Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy, and Consumer Rights,” U.S. House of Representatives, 2010
NO: Mark Cooper, from “Testimony before the U.S. Senate Judiciary Committee, Subcommittee on Antitrust, Competition Policy, and Consumer Rights,” U.S. House of Representatives, 2010
Company presidents Brian L. Roberts (Comcast) and Jeff Zucker (NBC) support the merger of their companies; they believe the merged firm “will benefit consumers and will encourage much needed investment and innovation in the important media sector.” Consumer Federation of America Research Director Mark Cooper opposes the merger because it will give the merging firms “the incentive and ability to not only preserve and exploit the worse aspects of the current market, but to extend them to the future market.”
Unit: Macroeconomic Issues
Issue: Is Obamacare a Disaster for the Economy?
YES: Kathryn Nix, from “Top 10 Disasters of Obamacare,” Heritage Foundation WebMemo, 2010
NO: John Holahan, from “Will Health Care Reform Hurt the Economy and Increase Unemployment?” Timely Analysis of Immediate Health Policy Issues, 2010
Heritage Foundation Researcher Kathryn Nix identifies 10 major problems with Obamacare (the Patient Protection and Affordable Care Act). Among other things, she argues that the legislation will hinder growth, increase the federal deficit, place new burdens on state governments, and, at the same time, discriminate against low-income workers. John Holahan, the director of the Health Policy Center at the Urban Institute, argues that Obamacare is “not likely to have a significant direct effect on the U.S. economy or on employment.” More specifically, he states that state and local governments as well as small businesses should benefit from the legislation.
Issue: Will Health Reform’s Pilot Programs Lead to the Control of Health Care Costs?
YES: Atul Gawande, from “The Health-Care Bill Has No Master Plan for Curbing Costs. Is That a Bad Thing?” The New Yorker, 2009
NO: Alain C. Enthoven, from “Would Reform Bills Control Costs? A Response to Atul Gawande,” Health Affairs, 2009
Atul Gawande, a Surgeon, an associate professor in the Department of Health Policy and Management at the Harvard School of Public Health, who served as a senior health policy advisor in the White House from 1992 to 1993, argues that the transformation of American agriculture began with a pilot program, and the numerous pilot programs to test ways to curb costs and improve quality contained in the health care legislation could similarly transform health care. Alain C. Enthoven, an economist and a Professor emeritus at Stanford University’s Graduate School of Business, who served as a consultant to the Carter administration and researched unsustainable growth in national health expenditures and costs of health insurance and market-based universal health insurance in the United States, responds that Gawande’s analysis is flawed and the agriculture analogy is “inapt”—while farmers wanted better crops and “generally welcomed or tolerated pilots to show the better ways,” the “Medical Industrial Complex does not want such pilots and often strangles them in the crib.”
Issue: Did the American Recovery and Reinvestment Act of 2009 Create Jobs?
YES: Josh Bivens, from “Testimony before the U.S. House of Representatives Budget Committee,” U.S. House of Representatives, 2010
NO: Veronique de Rugy, from “Testimony before the U.S. House of Representatives Budget Committee,” U.S. House of Representatives, 2010
Josh Bivens of the Economic Policy Institute argues that the American Recovery and Reinvestment Act (ARRA) was badly needed, it worked, it was cheap, and that another similar effort is needed. Veronique de Rugy of George Mason University believes that ARRA, in spite of claims made on its behalf, “appears to have lost money by destroying growth.”
Issue: Do American Consumers Need a Financial Protection Agency?
YES: Janis Bowdler, from “Testimony before the U.S. House of Representatives Committee on Financial Services,” U.S. House of Representatives, 2009
NO: Bill Himpler, from “Testimony before the U.S. House of Representatives Committee on Financial Services,” U.S. House of Representatives, 2009
Janis Bowdler, the deputy director, Wealth-Building Policy Project, National Council of La Raza, supports the creation of a Consumer Financial Protection Agency (CFPA). She identifies three specific ways in which existing regulatory agencies have failed consumers, including the failure to create and promote tools that will allow consumers to make “true apples-to-apples comparisons” of credit products. She and her organization believe a new agency is needed to redress these failures, and it would be a strong vehicle for improving the way financial markets serve their Latino clients. Bill Himpler, the executive vice president of the American Financial Services Association, opposes the creation of a CFPA. His argument takes several forms, including the fact that finance companies are already heavily regulated at the state level. He also believes that the creation of a CFPA is likely to mean “higher prices and reduced product choice for financial services customers.”
Issue: Should Minimum Wage and Living Wage Laws Be Eliminated?
YES: D. W. MacKenzie, from “Mythology of the Minimum Wage,” Ludwig von Mises Institute, 2006
NO: Jeannette Wicks-Lim, from “Measuring the Full Impact of Minimum and Living Wage Laws,” Dollars & Sense, 2006)
Economics instructor D. W. MacKenzie believes that eliminating minimum wage laws would “reduce unemployment and improve the efficiency of markets for low productivity labor.” He also believes that the “economic case for a living wage is unfounded.” Economist Jeannette Wicks-Lim stresses the ripple effects of minimum and living wage laws; these effects increase the “effectiveness” of minimum and living wage laws as “antipoverty strategies.”
Issue: Does Immigration Benefit the Economy?
YES: George W. Bush White House, from “Immigration’s Economic Impact,” White Paper, 2007
NO: Steven A. Camarota, from “Testimony before the U.S. House of Representatives Committee on the Judiciary, Subcommittee on Immigration, Citizenship, Refugees, Border Security and International Law” U.S. House of Representatives, 2010
In its White Paper, the George W. Bush White House argues that immigration has a positive effect on the American economy because it increases overall economic activity, increases incomes of native-born Americans, and produces positive long-run fiscal effects. Steven A. Camarota, the director of research at the Center for Immigration Studies, argues that immigration is harmful to the economy in several different ways including wage losses for the existing population and an increase in net government costs.
Unit: The World Around Us
Issue: Is a Fair Trade Policy Superior to a Free Trade Policy?
YES: Ngaire Woods, from “Fair Trade: The Proposer’s Opening Remarks,” The Economist, 2010
NO: Jagdish Bhagwati, from “Fair Trade: The Opposition’s Opening Remarks,” The Economist, 2010
Ngaire Woods, international political economy professor and director of Global Economic Governance at Oxford University, feels that carefully deployed special preferences and protectionism could be used intelligently to help to catalyze growth in African countries, and to improve the lives of the bottom billion. Conversely, the dismantling of special preferences has levied some high costs. Jagdish Bhagwati, professor of economics and law at Columbia University, states that if the demand for fair trade in the sense of demanding reciprocity in openness leads to others reducing their trade barriers, which are good. But if it leads to closing of one’s own, because others do not yield to such demands that is bad.
Issue: Is Loan Mitigation the Answer to the Housing Foreclosure Problem?
YES: David G. Kittle, from “A Review of Mortgage Servicing Practices and Foreclosure Mitigation,” Statement before the House of Representatives Committee on Financial Services, 2008
NO: Julia Gordon, from “A Review of Mortgage Servicing Practices and Foreclosure Mitigation,” Statement before the House of Representatives Committee on Financial Services, 2008
Mortgage Bankers Association official David Kittle, after reviewing the cost of foreclosure and loan mitigation options, presents data to back his assertion that loan mitigation is working. Center for Responsible Lending policy Counsel Julia Gordon stresses both the direct costs and the spillover costs of foreclosures and believes that voluntary loan modifications “have done little to stem the overwhelming tide of foreclosures.”
Issue: Are Biofuels Like Ethanol the Answer to U.S. Energy Problems?
YES: Tom Buis, from “Testimony before the House Committee on Energy and Commerce Subcommittee on Energy and Power,” U.S. House of Representatives, 2013
NO: Charles T. Drevna, from “Testimony before the House Committee on Energy and Commerce Subcommittee on Energy and Power,” U.S. House of Representatives, 2013
Tom Buis argues that the Renewable Fuel Standard has been a success that has created jobs, revitalized rural America, increased competition in the vehicle fuels market, lowered prices at the pump, improved the environment, and increased American energy independence. Charles Drevna argues that the Renewable Fuels Standard has not worked as intended and should be repealed. It has led to higher food and fuel costs, increased pollution, harmed refiners, and lead to the creation of fuels that can damage engines.
Issue: Is Climate Change a Threat That Requires Urgent Action?
YES: Franklin W. Nutter, from “Testimony before the Senate Committee on Environment and Public Works,” Statement before U.S. Senate, 2013
NO: Diana Furchtgott-Roth, from “Testimony before the Senate Environment and Public Works Committee,” Statement before U.S. Senate, 2013
Franklin W. Nutter argues that anthropogenic climate change is real and the effects are already being felt. We need to consider mitigation action to reduce emissions of greenhouse gasses as well as adaptation efforts to avoid the predicted future impacts. Diana Furchtgott-Roth argues that climate change does not appear to be happening and even if greenhouse gasses are affecting the climate, unilateral action by the United States would not have any tangible effect and would instead harm the U.S. economy.
Issue: Can U.S. Deficit and Debt Problems Be Solved Without Increases in Taxes?
YES: Chris Edwards, from “Statement before the National Commission on Fiscal Responsibility and Reform,” U.S. House of Representatives, 2010
NO: Robert Greenstein and Jim Horney, from “Statement before the National Commission on Fiscal Responsibility and Reform,” U.S. House of Representatives, 2010
Chris Edwards, the Director of tax policy at the Cato Institute, believes that “unless massive deficit spending is reduced, the nation is headed for fiscal calamity.” He proposes four types of reform that will make significant cuts in government spending. These include the restructuring of entitlements and the elimination of unneeded programs. Robert Greenstein, the executive director of the Center on Budget and Policy Priorities, and Jim Horney, the director of federal fiscal policy at the Center on Budget and Policy Priorities, believe that deficits need to be reduced and this requires tax increases as well as spending cuts. They support increases in corporate taxes and taxes on high-income taxpayers. They suggest that tax increases on taxpayers with incomes less than $250,000 per year will also be necessary.
Issue: Is China’s Currency Undervalued, and Should the United States Take Action to Correct This Undervaluation?
YES: Jack W. Shilling, from “Testimony before the U.S. Senate Banking, Housing, and Urban Affairs Committee, Subcommittee on Economic Policy,” U.S. House of Representatives, 2010
NO: Daniel J. Ikenson, from “Testimony before the U.S. Senate Banking, Housing, and Urban Affairs Committee, Subcommittee on Economic Policy,” U.S. House of Representatives, 2010
Jack W. Shilling, the executive vice president and chief technical officer, Alleghany Technologies, and the chairman, Specialty Steel Industry of North America, argues that China has intervened in foreign exchange markets to keep its currency undervalued. Since this is “undermining U.S. competitiveness,” he believes the United States should impose countervailing or antidumping duties on imports from China. Daniel J. Ikenson, the associate director of Cato Institute’s Center for Trade Policy Studies, claims that there is only a weak relationship between China’s undervalued currency and the U.S. trade deficit with China, on the one hand, and between the trade deficit and U.S. job losses, on the other. Rather than threatening China with sanctions, the United States should “allow China to appreciate its currency at its own pace.”
Issue: Do the Testing and Accountability Elements of the No Child Left Behind Act Prevent a Proper Cost-Benefit Evaluation?
YES: George Miller, from “Should Congress Make Fundamental Changes in the No Child Left Behind Act?” Congressional Digest, 2008
NO: Raymond Simon, from “Should Congress Make Fundamental Changes in the No Child Left Behind Act?” Congressional Digest, 2008
Chairman of the Education and Labor Committee of the United States House of Representatives, California Democrat George Miller states that schools and students are not making enough progress and significant changes must be made to the law so that its goals may be achieved. “America needs and must have an educational law that insists on accountability with high expectations and high-quality assessments; that closes the achievement gap; and helps all children to learn.” Deputy Secretary, U.S. Department of Education, Raymond Simon states that NCLB is working for students. Simon believes that there is consensus for a limited number of changes. He claims that NCLB’s insistence on scientifically based research and the gathering and usage of reliable data has been one of its major successes.
Issue: Is the Inequality in U.S. Income Distribution Surging?
YES: Steven J. Markovich, from “The Income Inequality Debate‚” Council on Foreign Relations Backgrounder, 2012
NO: Thomas A. Garrett, from “U.S. Income Inequality: It’s Not So Bad,” Inside the Vault, 2010
Steven J. Markovich, contributing editor for the Council on Foreign Relations, believes that the level of income and wealth inequality has increased in the United States as well as in every European country during the past few decades. However, the disparity in income inequality is much higher in the United States than in most other developed countries of Europe and North America. His analysis shows that the average real family income of the top 1 percent rose to 275 percent from 1979 to 2007. Thomas A. Garrett, assistant vice president and economist at the Federal Reserve Bank of St. Louis, does not deny the fact that income and wealth inequality has been rising in the United States since 1970. However, he rejects the notion that the United States is experiencing a surge in inequality. He cautions that the data used by economists to measure income inequality overstate the true degree of inequality for several reasons.