Chapter 4: Historical Development in Public Policy
RISE OF INDUSTRIAL
SOCIETY
Role of sources of
energy: people, animals, and wind prior to Civil War.
Population growth
significant 3.9 million to 17.1 million, but small artisan businesses with
competition.
After Civil War
change toward industrial society.
Civil war impacted
on the form of the economy and society.
Development of
intracostal transportation system, RR
Increase in
agricultural productivity
Increase in large
scale production facilities
Trusts, gentlemen's
agreements, pools, holding companies used to control competition and promote
stability. Standard Oil Trust.
Advantages of large
scale production and vertical integration versus disadvantages of large power
concentration, predatory competitive practices and loss of competitions.
Competitive market
system was destroying itself through concentration and predatory practices.
Antitrust Legislation began with the Sherman Act in 1890. Antitrust Division
lost seven of first eight cases until 1911 when Standard Oil and American
Tobacco were found guilty and order to dissolve into several separate firms.
ICC in 1887 became
the pattern for industry regulation when a natural monopoly existed.
THE GREAT
DEPRESSION
On the heels of
whole new industries, such as automobiles, during the early twentieth century.
The Crash (debate
over cause) resulted in the New Deal following Franklin Roosevelt's election in
1932. The federal government assumed responsibility for stimulating business
activity. It sought to relieve the distresses of businesses, farmers, workers, homeowners,
consumers, and investors. In first two years, 93 major pieces of legislation
passed. (Exhibit 5.1)
Was Roosevelt the
enemy of the free market system or its savior?
Areas of public
policy that emerged:
1. Economic
Management: initially in the form of social welfare designed to help victims of
the depression. Later use for economic stability not established until Keynes'
General Theory. (Full Employment Act of 1946 formalized government role for
stability.
2. Labor-Management
Relations. Development of collective bargaining procedure. National Industrial
Recovery Act (found unconstitutional in 1935) led to Wagner Act followed by
Taft-Harley Act of 1947 and Landrum Griffin Act of 1959.
3. The Welfare
State. Social Security and beginning of a philosophy of entitlements. Aid to
Family with Dependent Children and Medicaid have grown much faster than the
overall economy. Slowed during the Reagan Administration (food stamps, AFDC,
student loans.
THE
POSTINDUSTRIAL SOCIETY
Three
Characteristics:
1. Affluence
throughout much of the population
2. Service-based
economy
3. Knowledge-based
economy.
Movements by groups
in society: Civil Rights, Feminist, Consumerism.
Hugh buildup in
private sector debt during the 80s, the development of indexes to inflation
(Social Security, COLA, Tax brackets)
Threats for
continued growth and prosperity: Federal deficit, trade deficit, inflation and
interest rates, competitiveness in world markets, growth in services that
reduces skews wage earners toward lower paying jobs.
The development of
a new type of functional regulation in response to social costs of production
and distribution.
Should there be a
national industrial policy (some type of planning mechanism)?
Save basic industries
for national security? Government help in transition in time of economic and
social change? Government help in allocating the burdens of change throughout
the society? What about persistent trade deficit?