1. THIS MORNING:
1. The general welfare component of the public philosophy
2. The relationship between the "state" and society



2. GENERAL-WELFARE COMPONENT - AS HELD BY THE PUBLIC:
1. There is agreement that the national government manage the economy to lessen, if not eliminate, depressions, recessions and inflation.
1. The memory of the Great Depression.
2. Public acceptance of a government role in promoting the general welfare.
1. Health, safety, environment, education
2. Doubts about the public? Check NES Guide to Public Opinion or General Social Survey for public opinion polls.
3. The reaction to the federal government shutdown and apparent attacks on the environment and so forth illustrate the public's fondness for specific functions.



3. THE GENERAL-WELFARE COMPONENT - STATE CAPITALISM:
1. Here the term state means:
2. More is involved than making life bearable for the average citizen.
1. There is a very specific way the U.S. government and private economic actors, especially large ones, work together to attempt to achieve growth with social harmony
3. Proposition: policy making in is dominated by corporate-government partnership.
4. Goals of this partnership:
1. Promote economic growth but not redistribute wealth.
2. Management of the economy to promote price stability and investment security
1. Fiscal and monetary policy attempt to take the "rough edges off capitalism."
3. Social peace and harmony
1. Management of social relations
1. Labor-management conflict
1. Example par excellence: American Airlines strike
2. Corporate-citizen conflict
3. Promote economic growth but not redistribute wealth.
2. Defuse social conflict
4. Legitimize the economic and social order.
5. Proposition: undertaking these tasks requires a corporate-government partnership.
6. One can attribute the political battles in Washington partly to the government's inability to finance and enforce these goals
4. STATE CAPITALISM IN PRACTICE:
1. Macroeconomic policy: fiscal and monetary policy
1. The Federal Reserve system
2. Regulation as promotion of business interests
1. What seems to be a regulation sometimes turns out differently
1. Warning labels often protect industries from lawsuits and other government action.
1. Tobacco and now television "warning labels"
2. Some examples of the economic uses of regulation:
1. Transportation, communications
3. Direct and indirect support of business
1. Subsides and direct aid to specific industries
2. Industrial policy
1. Research and development
2. "Infrastructure" (e.g., roads, harbors, airports)
3. Protection (tariffs)
3. "Human capital" (schools, health, job training)
1. Functions:
1. Supply of trained, "disciplined" labor to enhance productivity
2. Legitimation
3. Stabilize economy and create a market for goods and services
5. SUMMARY:
1. Conflict between liberalism and the general-welfare is what is at the heart of the current debate in Congress over the role of government.
2. Manifestations of liberalism
1. Term-limits, balanced budget
3. Manifestation of general-welfare
1. The budget impasse: what to cut?



6. NEXT TIME:
1. The constitution
2. Reading:
1. You should finish Bernstein and Heilbroner, Debt and Deficits (Look for sample questions)
2. Start Squire and others, Dynamics of Democracy, Chapter 2.

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