476 War+and+Business+and+Government+Regulatory+Agencies Q&A1.pdf

War & Business Government Regulatory Agencies BA/History 476 Professor Hinesly Man your Battle Stations! Lusitania v. USS Arizona Military Industrial Complex What is the “military industrial complex” and who popularized the term? Military Industrial Complex • Dwight D. Eisenhower coined the...

War & Business Government Regulatory Agencies BA/History 476 Professor Hinesly Man your Battle Stations! Lusitania v. USS Arizona Military Industrial Complex What is the “military industrial complex” and who popularized the term? Military Industrial Complex • Dwight D. Eisenhower coined the term “military industrial complex” in his farewell address in 1961. • He was referring to the connections between military establishments and the arms industry that pervaded the economic political and spiritual aspects of society. http://www.youtube.com/watch?v=8y06NSBBRtY Ralph Nader Where did Ralph Nader gather most of his information from for his book? Ralph Nader Department of Labor. Nader was a consultant for the DL and used the materials found. He later used this information to open his own product-testing laboratory and a marketinganalysis group. Health Care The public portion of health-care expenditures rose from about ____ percent in 1940 to over _____ percent in 1970. A. B. C. D. 52; 78 10; 32 13; 42 33; 57 Health Care C: The public portion of health-care expenditures rose from about 13 percent in 1940 to over 42 percent in 1970. The expenditures were largely due to Medicare and Medicaid programs which were approved by President Lyndon Johnson in July 1965. War and Business What three factors reflected the rise of imperialism in the late nineteenth century? War and Business • colonial acquisitions, efforts to dominate trade routes, need for protected coaling stations • US Naval arms race with Great Britain, German, France, and Japan Shipbuilding and Steel Which of the following was not a major player in the creation of armored steel plates at the turn of the 20th century? A. Carnegie Steel B. Bethlehem Steel C. U.S. Steel D. Midvale Steel Shipbuilding and Steel C. U.S. Steel • Only Bethlehem Steel, Carnegie Steel, and Midvale Steel participated in making armored plating at the turn of the 20th century • Relied on Canadian nickel as a major ingredient • In the early 1900’s Morgan acquired Carnegie Steel, gained control of the Canadian Nickel output, got involved with Bethlehem Steel and acquired Midvale steel (1915) to create an armament trust Extended Authority of the FDA • The FDA has received extended authority since WWII through legislation to include medical devices as well as drugs. Which was NOT an act that enlarged the FDA’s authority? – A. Food Additives Amendment of 1985 – B. Prosthetic and Implant Standards Act of 1980 – C. Fair Packaging and Labeling Amendment of 1966 – D. Radiation Control for Health & Safety Act of 1968 Extended Authority of the FDA • Ans. B • Background: Other acts and amendments that enlarged the FDA’s scope were the Color Additives Amendment (1960), Drug Amendments of 1962. Since 1970, FDA annual budgets have risen from $168 million to about $350 million. Business Effects on Environment In the 1950s and 1960s, business started becoming increasingly concerned with the impact of business endeavors on the environment. Air and water pollution were particularly targeted. What were the main culprits of the city of Ann Arbor’s air and water pollution problems back in the day, and what did the city do to remedy them? Business Effects on Environment • Ann Arbor air pollution chief culprit: coal burning furnaces – Spewed smoke from almost all commercial and residential buildings, on top of the university’s huge powerhouse behind the Power Theater. • Air pollution remedy: Commercial interests and residents, along with the university converted to clean gas in the late 1940s and 1950s. • Ann Arbor water pollution culprit: dumped garbage/waste in the Gallup pond • Water pollution remedy: banning windsurfing because of health hazards associated with people falling into the polluted water. Dollar a Year Man What was a “dollar a year” man? Dollar a Year Man • experts from industry that provided government with advice without requiring the individuals to make undue financial sacrifice • army appropriations act of 1916 created Council for national defense that organized civilian advisory boards to help with mobilization • determined private companies should supply munitions rather than expand federal munition facilities • dollar a year men served on advisory committees leading the way in mobilization planning Industrial Mobilization Plan What was the Industrial Mobilization plan? Industrial Mobilization Plan • plan for mobilization and the massive purchasing a major war would require • approved by congress in 1930 • relied on joint military-civilian committees to control the economy • recognized that modern warfare required total planning of the economy and the subordination of the military to civilian mobilization agencies Bureaucracy Run Amuck What is the OSHA, and why is it so controversial in the business world today? Bureaucracy Run Amuck • Regulatory agency in the Department of Labor Occupational Safety and Health Administration, created from the Occupational Safety and Health Act of 1970. • Sets standards to protect workers in businesses against safety and health hazards. • Require certain reporting and posting procedures, conduct workplace inspections without prior notification. • OSHA is viewed by many as “mindless bureaucracy, or bureaucracy run amuck.” The costs of the regulation were less for the agency doing the regulating than for the industries regulated. • Success or failure of a business now hinges on decisions by federal regulatory agencies Overman Act The passage of the Overman Act on May 20, 1918 made what new federal agency the most powerful in conducting war? A. Committee on Public Information B. Food and Fuel Administration C. War Industries Board D. Food and Drug Administration Overman Act C. War Industries Board • Dollar-a-year business leaders worked to organize each industry to maximize production • Coordinated business and forced former competitors to cooperate • Included Bernard Baruch of Wall Street, Rober S. Lovett of of Union Pacific, and Robert S. Brookings Government Intervention Name three ways the Federal Government assumed an obligation to intervene in the economy as a result of legislation passed during the Great Depression, the New Deal, and the Progressive Era. Government Intervention 1. Large-scale public spending (i.e. FDR alphabet agencies & programs) 2. Creating incentives and opportunities for private investment 3. Taxation policies 4. Establishing and enforcing guidelines for business transactions and the uses of private property (i.e. Railroad track land allotment) The Federal Food, Drug and Cosmetic Act of 1938 The Federal Food, Drug and Cosmetic Act of 1938 sought to prevent public-health disasters such as the 1938 sulfanilamide elixir incident, by…. • A. Obliging drug companies to declare a product impure after it has entered the market • B. Enabling Government inspectors from the FDA to inspect over-the-counter drugs • C. Creating a more rigorous test that all chemists producing drugs must pass before experimenting in producing new medication • D. Requiring extensive pre-market testing of new drugs before clearance • E. Answers B and D The Federal Food, Drug and Cosmetic Act of 1938 • Ans. D. • Background: Under original legislation, regulation of food and drug products involved “ex post facto” action – a product could only be declared impure or mislabeled after it entered the market. • Pros: Reduced the number of “mistakes” by drug companies • Cons: Pre-market clearance has increases lag time between the point when new drugs and products are developed and when they enter the market. This increases costs of R&D and defers profits for the firm. Aviation and WII Why did the Aviation industry struggle as a result of World War I? Aviation and WWI demands for war resulted in construction of more than 14,000 planes in 1918, the same year that the Armistice was signed and production was abruptly cancelled and government planes flooded the market War and Business True or False? Until Pearl Harbor, most businesspersons favored American involvement in war. Why? War and Business False! • most businesses, especially small businesses, did not favor American involvement in war as they saw it as an interruption of economic recovery. Center for Disease Control By the end of 1990, the CDC estimated how many deaths were caused by AIDS? A. 24,412 B. 42,354 C. 179,000 D. 279,000 Center for Disease Control C: 179,000 Deaths AIDS became the number one health priority of the Public Health Service in the 1980’s. Now, the CDC now is part of a major AIDS prevention and control program. They have been somewhat politicized for COVID National Defense During early efforts to build up the nations defense after 1938, ______ percent of basic military contracts went to the nation’s _______ largest firms A. 75%, 100 B. 75%, 10 C. 50%, 50 D. 85 %, 100 National Defense A. 75, 100 • Between June 1940 and December 1941 three fourths of the basic military contracts awarded went to the nations one hundred largest firms • small businesses lacked capital and experience needed to mobilize effectively • government small war plants corporation lent 150 million to small businesses to help them respond to defense requirements when corporations reached capacity. Medicare Medicare is incorporated under the ______ _______ _______. A. Social Security Administration B. Health Care Administration C. Red Cross Foundation D. Federal Drug Administration Medicare A: Medicare is incorporated under the Social Security Administration. Since 1977, Medicare has been administered by the Health Care Financing Administration which provides hospital and medical insurance paid for by workers and employers. Henry J. Kaiser Pre World War II, what did Henry J. Kaiser help build? Henry J. Kaiser • • • • • Hoover (boulder) Dam Bonneville Dam San Francisco- Oakland Bay Bridge Tunnels in the Rockies Dry docks on the pacific coast. Henry J. Kaiser Which of Henry Kaiser’s ventures was his only major failure? A. Automobile B. Steel C. Ship building D. Home construction Henry J. Kaiser A. Automobiles • • • • During WWII Kaiser developed an incredible efficient shipbuilding operation eventually producing a ship a day Kaiser opened the first steel plant west of the Rockies in Fontana California Kaiser also dabbled in cement production, military installations, production of munitions, aluminum (at his steel plant), home construction, and healthcare plans. Grouped together Kaiser’s ventures would have been the nations 30th largest industry Medical Care Growth True or False: Concern has grown that the rapid escalation in the costs of medical care, both public and private, has yielded too many commensurate benefits. Medical Care Growth False: Concern has grown that the rapid escalation in the costs of medical care, both public and private, has not yielded commensurate benefits. It is hard to prove the benefits of of healthcare, but there is some evidence that public policy has contributed to the misallocation of expenditures. Federal Power Commission In 1920, the Federal Power Commission was established to do what? Federal Power Commission To regulate interstate distribution of hydroelectric power. It had authority to license privately hydroelectric facilities and regulate the service and rates of public utilities selling electricity in interstate commerce as a wholesale prices as a primary distributor. Aluminum Industry What was the effect of WWII on the makeup of the aluminum industry? Aluminum Industry • Before WWII Alcoa held a monopoly on the aluminum industry despite an attempted federal antitrust suit in 1937 • With the soaring demand of aluminum in WWII Alcoa could not meet all the federal needs • Defense Plant Corporation built aluminum plants and leased them to Alcoa, Reynolds and other competitors ending Alcoa’s monopoly. Government-Business Relationship As a result of heavy-industry companies devoting themselves and their resources to the war effort, which industry grew enormously? Government-Business Relationship Ans. Aerospace/Electronics Industry • Airplanes - while aircraft output in 1914 was a meager 49 planes, the demands for war (first from the Allies, then from the US Army for American flyers) • Led to the construction of more than 14,000 planes in 1918. Hundreds of small plants built motors and airplane parts and assembled the components. • In all, the industry received $365 million in contracts before production was abruptly cancelled in 1918 with the Armistice (end of WWI). Aluminum Industry At the end of the 1960’s _______ held about ______ percent of the aluminum market. A. Kaiser, 41% B. Alcoa, 54% C. Reynolds, 37% D. Alcoa, 34% Aluminum Industry D. Alcoa, 34% • At the end of the 1960’s Alcoa held about 34 % percent of the aluminum market. • Reynolds held about 25% and Kaiser held about 20% Wartime Agencies As was mentioned earlier, WWII brought about an increase in government participation in the economy. Part of this increase was a result of FDR’s Emergency Wartime agencies created to help facilitate the war. In 1943, the Office of War Mobilization became the parent agency to coordinate all government agencies involved in the war effort. Name three of these wartime agencies. *BONUS* what are their individual functions? Wartime Agencies • 1. War Production Board (1942) – allocated the use of raw materials and industrial facilities. Replaced the Supply Priorities and Allocation Board and the Office of Production Management. • 2. War Shipping Administration (1942) – assigned shipping quotas and made actual consignments of freight to American and British merchant ships. Tasked with purchasing and operating the civilian shipping tonnage the US needed for fighting the war. • 3. Office of Price Administration (1941) – within the Office for Emergency Management, established wage and price controls and rents after the outbreak of WWII. Ralph Nadar’s Crusade What was the prime example that Ralph Nadar spearheaded in the 1960’s, demonstrating the need for government regulation? Ralph Nadar’s Crusade • Ans. Regulation of vehicle safety design. • Background: Prior to the mid-1960s, the auto industry was not very concerned with vehicle safety (more so on profits and style), so government (with the help of Nadar), responded to public pressures, setting in place automobile engineering and safety standards. • Nadar pushed through legislation, such as the National Traffic and Motor Vehicle Safety Act in 1966 and continued to wage PR campaigns highlighting defective seat belts, fuel tanks, and emission-system designs. Aviation Industry During WW2, it was necessary to transform the aviation industry from a ________ to an ________. Aviation Industry “job-shop mentality” to an “assembly line concept” • Because of the vast array of parts, subassemblies, and firms involved, one aircraft might require 20,000 or more drawings and blueprints. Yet the nation needed an incredible number of planes, and very quickly Aviation Industry AVIATION Aviation Industry President Roosevelt initially proposed that the aviation industry develop the capacity to produce 50,000 planes per year, but in 1943 _____ were built and over _______ in 1944. Aviation Industry 86,000 and 110,000 • The industry terminated competition as demand greatly exceeded productive capacity. Ralph Nadar Consumerism During all of his pro-consumerism crusades, Nadar was hit with heavy criticism and even harassment and intimidation by large corporations such as GM. As a result, some perceived Nadar as anti-business. But he did not, in fact, attack the business system. What did he attack? Ralph Nadar Consumerism • Ans. Nadar championed the individual against the arbitrary use of power by government or large corporations. • Nadar also campaigned against the hazards of the mining industry, the safety standards of natural gas pipelines, the indiscriminate use of xrays in dental examinations, and health standards in meat-processing plants not inspected under the interstate commerce authority. Aviation Industry Describe the conflicts of interest that arose between the aviation industry leaders and the federal government/military that arose during the cold war. Aviation Industry • Military planners feared civilian control over procurement • Industry’s leaders often ignored military needs as long as the civilian market kept their facilities active. • The issue of defense spending and the aviation industry became involved in local and regional politics because of the impact of federal contracts on business and employment. Government Spending Government spending accounted for ____% of the GNP in 1940 and ____% in 1960. • • • • A. 25%, 20% B. 12%, 30% C. 33%, 15% D. 9%, 20% Government Spending • Ans. D: 9%, 20% • Despite it’s expanded role of economic intervention in the New Deal, most American’s were hardly affected by government in their everyday lives. WWII affected the daily activities of consumers and businesses more than the New Deal did. Growth of Government True or False. The growth of government during WWII (1939-1945) and shortly after outpaced private sector growth. Growth of Government • Ans. False. • Background: Although Government spending rose from 9% in 1940 to 20% in 1960, this increase was largely due to the necessity of increased spending in defense during the war. Though the private sector was still growing quite rapidly, a new era of regulatory expansion beginning in the 1960s would soon put a check on American businesses. Military Expenditures Of the one trillion dollars spent for military purposes between 1945 and 1971, about ____ was appropriated between 1961 and 1969. A 20% B 40% C 50% D 80% E 90% Military Expenditures C 50% this was during the presidencies of JFK and LBJ the Department of defense and pentagon decided to increase the number of combat divisions, intercontinental ballistic missiles, and carrier task force groups in 19611963, which required vast new expenditures. Kennedy use the so-called “missile gap” as a major issue in the 1960 election -the Sputnik scare of 1957 led to a spur in military spending as well Military Expenditures What led to the substantial reduction in defense appropriations under Presidents Nixon, Ford, and Carter? Military Expenditures • • • • Severe criticisms of the appropriates for the expanding war in Vietnam, as well as civilian needs at home, led to a substantial reduction in defense appropriations Failed to gain the same level of fiscal support from congress, an enormous shift of priorities have taken place. The proportion of the national budget for defense spending fell from 32% in 1970 to 24% in 1979 The so-called warfare state economy waned after 1963 as military and defense spending as a percentage of GNP decline from 14% in 1953 to 9.1% in 1963, and to 5.8% in 1974 Failed Gov. for Health-Care An example of the failure government regulations had on health-care output would be: A. B. C. D. The lack of available polio vaccines Largely untreated elderly and youth Doctors are only in rural areas Too many nursing homes Failed Gov. for Health-Care B. Failures are large proportions of untreated elderly citizens and the very young, the concentration of doctors in urban centers rather than rural areas, and lack of safe nursing homes. Also, there can be problems when people receive more medical care than necessary. Department of Energy Which of these groups is NOT under the Department of Energy? A. B. C. D. Energy Policy and Conservation Act National Environmental Policy Act Clean Air Act Atomic Energy Act Department of Energy D: In the 1960’s and 70’s, the FPC received new functions from acts such as the Clean Air Act (1967), National Environmental Policy Act (1969), Energy Policy and Consecration Act (1975) and many more which were all constructed under the newly constructed Department of Energy in 1977. This created a greater role by federal government in the development and distribution of energy. Military-Industrial Complex Which of the following was not a result of the National Defense Act of 1920? A. A joint Army-Navy munitions board coordinated procurement for the services. B. Thousands of business leaders assisted the War department throughout the 1920s and 1930s as mobilization plans were drafted and redrafted C. Reduction of profitability of selling products to the government and less efficient use of national resources. D. Passage of the Industrial Mobilization Plan that was approved by Congress in 1930 Military-Industrial Complex C. reduction of profitability of selling products to the government and less efficient use of national resources. • Some business leaders felt that such service enhanced the profitability of selling products to the governmental others saw participation as an opportunity to make more efficient use of natural resources. Aviation Industry What was a major difference between the aviation industries in Western Europe and the United States? A. Companies in the U.S did not receive direct government subsidies despite the military importance of aircraft B. The aviation industry in Western Europe was technologically more advanced than in the United States C. Aviation companies in Western Europe had a lot of investment from the private industry D. The U.S government understood the military importance of aircraft and gave out many subsidies to the aviation industry Aviation Industry A. Companies in the U.S did not receive direct government subsidies despite the military importance of aircraft • While the federal government in 1926 did authorize 1,600 planes for the army and 1,000 for the navy, the limited funds for procurement led to much smaller acquisitions. Food and Drug Administration Explain the “exchange” or “tradeoff” Americans accepted with the creation of the FDA in 1906. Food and Drug Administration • Individuals and firms give up some of their “freedom” to buy or sell anything they want, in exchange individuals receive greater personal health security and firms benefit from consumer confidence in their products. • Ex. FDA requires correct labeling of food & drugs & inspection and certification of food industries. We stay healthy; drug companies don’t get sued for harming people with unsafe drugs Regulation in the Drug Industry Describe some of the speculative risks that drug companies endure as a result of the Food, Drug and Cosmetic Act of 1938, which required extensive pre-market testing of new drugs before clearance. Regulation in the Drug Industry • Drug companies invest in creating about 30,000 chemical compounds for each one approved for prescription use – a lot of capital. • Research, testing, and FDA approval frequently require a decade before a new product enters the market → returns on investment are extremely delayed. • Once on the market, the drug may only have 7 or 8 years left remaining in its 17 year life patent. • Also, competition may replace the drug with a better one. WWII Why were so many business leaders opposed to the Embargo act and involvement in WWII? A. It drastically limited trade with countries at war or in war zones B. It prevented preventing a laissez faire policy with regard to trading with belligerents C. It went against traditional isolationism and viewed war as an interruption to economic recovery in a time of ever-expanding federal control D. All of the above WWII D. All of the above • In 1931, As war loomed in Asia and Europe, many American business leaders opposed any involvement • “Net results of war always is a loss” • “private enterprise needs peace for profit” • A change in attitude started with a new national defense program in 1940-1941, but not until Pearl Harbor did opposition wane Military Expenditures Why did Reagan initiate an unprecedented peacetime arms buildup during his presidency and what was the consequence? Military Expenditures • He was elected on a pledge to enhance dramatically the American military presence around the globe and to modernize the armed forces • In fiscal year 1980 the military and veterans agencies received $155 billion, or 22.7% of federal spending. In fiscal year 1987 the amount was $308.9 billion, some 27.8 percent of the budget. • Congressional and public outcries against such huge sums grew louder by the end of the decade, and defense contractors again began to talk about diversification. Nuclear Power Where was there a radioactive leak in 1979 and why did it worry people? Nuclear Power Three Mile Island; Environmental hazards made nuclear power inherently dangerous and uneconomic, as well as put workers and consumers at risk of exposure to radioactivity. Consumerism Explain the concept of Consumerism? When did it originate and who popularized it more recently? Consumerism • Demands of consumers as a check on businesses - a way to make sure consumers are not getting “cheated.” • It is not a new concept - it originated in the early 1900s with muckraking journalists. • The movements modern-day popularity can be traced to Ralph Nadar’s crusading efforts in the mid-1960s. WWII The German I. G. Farben chemical combine lost control of _____ in the United States and the resultant seizure under the alien property law led to the______ WWII General Aniline and Film Company, Creation of a large independent giant in the chemical and dyestuffs industry. • GAF produced dyes and photographic supplies, second only to Eastman Kodak • Labeling GAF a Nazi Front, the government ceased the company • The government finally sold GAF at a auction for $329,141,926 in 1962, which by then was a major American industrial firm. Atomic Industry Who stated “The atomic industry was imposed upon the American people through a sequence of actions by the government, reactor manufacturers and utility monopolies.” A. B. C. D. Ralph Nader Dwight D. Eisenhower Captain Alfred Mahan The Nuclear Regulatory Commission Atomic Industry A: In the coauthored volume, The Menace of Atomic Energy, Ralph Nader and his coauthor John Abbotts expressed concern many Americans have over the development and utilization of atomic power. Aviation Industry In which Michigan City in the 1940s did the Federal government invest heavily in building a huge factory for production of airplanes through assembly lines and economies of scale? Aviation Industry The federal government built huge factories at Willow Run, MI; Oklahoma City; and elsewhere to produce planes on assembly lines. Government gained by economies of scale in the assembly line process. • http://www.youtube.co m/watch?v=sgLPJLtlpFI The Navy Which of the following groups did not advocate a modern fleet in regards to WWI? A. university and religious leaders B. congressmen C. business persons D. labor union representatives E. all of the above advocated the need for a modern fleet The Navy E. all of the above advocated the need for a modern fleet • The department of the navy and other interest helped form an alliance- a militaryindustrial complex-which would grow and mature during WW1 Modern Medicine Which war marked the beginning of modern medicine practices? Modern Medicine World War II; new drugs such as Sulpha, immunizations and new medical equipment saved lives and and drastically changed the quality of life of citizens. Most famous immunization of the time was the polio vaccine. WWI Which of the following was not a result of the Army Appropriations Act of 1916 and the subsequent creation of the council for national defense. A. Organization of civilian advisory boards to develop mobilization plans. B. Determination of private companies that should supply munitions rather than expand federal munitions facilities C. Effective implementation of an orderly mobilization plan and centralized economic planning in one body. D. Tapping hundreds of industrial leaders to serve on advisory committees as “dollar-a-year” men WWI C. Effective implementation of an orderly mobilization plan and centralized economic planning in one body. • • • The war industries board, created in July 1917, was an attempt to centralize all economic planning in one body, but that too failed Not until spring 1918 did President Wilson obtain sufficient authority from Congress to conduct the war effort with some degree of order. The passage of the Overman act in may 1918, the war industries board, became the most powerful agency for conducting the war. Role of Government in Economy Which of these was NOT a provision in the Employment Act of 1946? – A. The responsibility of government to promote free competitive enterprise and the general welfare and maximum employment, production and purchasing power. – B. The creation of Workforce Strategies, Inc. (WSI) to help young people find temporary work – C. The submission of an annual economic report to the President – D. The creation of a three-person Council of Economic Advisors – E. The establishment of a joint committee in Congress to supervise the economic report Role of Government in Economy • Ans. B. • Background: The act (post WWII) recognized the role of government in maintaining economic stability, and preventing market disasters such as the stock market crash in 1929, and helping ensure full employment and production levels. WWII All of the following are examples of federal programs that appeased the demands of war brought and bought an end to the great Depression, except: A. The Land Lease Program in March 1941 initiating shift to military output B. The War Management Commission 8 million unemployed of 1939 disappear C. The Naval Defense Committee funding massive shipbuilding projects in Philadelphia D. The Defense Plant Corporation, a federal agency, funded ⅔ of the new factories WWII C. The Naval Defense Committee funding massive shipbuilding projects in Philadelphia Even with 14 million men and women in uniform, construction, mining, and manufacturing more than doubled production between 1939 and 1944. In 5 years productivity increased by 25% -296,000 planes, 11,900 ships, 86,000 tanks, and almost 3 million vehicles Highly regulated and controlled economy exceeded all expectations of the military planners. CON Programs CON programs were established by which act? CON Programs “Certificate of Need” programs were established by the National Health Planning and Resources Development Act of 1973. The theory behind the program was to create greater cost efficiency in federal health expenses. Low-Cost Fuel Throughout most of the twentieth century, government _______ and ________ the utilization of low-cost fuel. A. B. C. D. Disapproved; ignored Encouraged; ignored Disapproved; stopped Facilitated; encouraged Low-Cost Fuel D: Throughout most of the twentieth century, government facilitated and encouraged the utilization of low-cost fuel. When timber was the source of energy, the government promoted easy access and acquisition of land for the timber. Then coal took over, and government made entry into and exploitation of coal reserves easy. When petroleum began to replace coal in the early twentieth century, convocation acts and labor regulations began to control access to coal. Government Explain how federal fiscal policy helped maintain a dual civilian-military economy: Government • • • • War expenditures reached $350 billion, and the national debt rose to $260 billion, but most of the cost was paid for by higher taxes. These higher taxes held down inflationary pressures and helped to limit “excess” profits on defense contracts The taxes absorbed ¼ of the national income, and federal expenditures represented half of all spending the office of price administration effectively regulated consumer prices and rents, so that from 1939-1945, consumer goods prices rose only 28% despite the pressure created by shortages and the 50% rise in disposable income. Military-Industrial Complex What suggested the need for businessmilitary cooperation as defense needs became increasingly complex in the 20th century. A. Kaiser Warships B. Nike Hercules Missile System C. U.S Aircraft manufacturers D. XP-80A Jet Fighter Military-Industrial Complex B. Nike Hercules Missile System • Was built in the 1960’s requiring 1.5 million parts and 80,000 working drawings and blueprints. Later lead to the emergence of the Navy in the late 19th century • http://www.youtube.com/watch?v=kpHE 9O8ckno Ralph Nader Ralph Nader’s book, published in 1965 was called _______ and attacked which specific company: Ralph Nader Unsafe at Any Speed: The Designed-in Dangers of the American Automobile & General Motors. Nader went after auto companies for their emphasis on profits and the fact that they focused on style over safety. He attacked GM’s Chevrolet Corvair as a particularly unsafe car. Aviation Industry In a few sentences describe why the aviation industry was subject to such economic swings. Aviation Industry • Heavily reliant on military spending and the industry prospers during wartime. • “As a captive industry to its largest customer, it could not shelter itself from either vagaries of national defense policy changes or the tremendous ebb and flow of the civilian market. As a result there was little stability in the aerospace industry.” – Real Costs of Regulation In the 1970s, budgets of federal regulatory agencies skyrocketed from $866 million to over $5.5 billion, while the size of their staffs increased threefold. While government regulation plays an important role in the achievement of national and business objectives… What kinds of “real costs” are associated with regulations on business activity? Real Costs of Regulation • Enormous paperwork by both businesses and government; • Delays in obtaining permits or approvals for production, marketing, or construction • Expenditures for meeting pollution standards an occupational health and safety regulations; • Reduction in jobs and increased cost of goods and services to consumers as a result of minimum wage regulations “No, I didn’t. I never said that there should be NO government regulation!” Diminishing Returns of Regulation Name two factors that indicated a growing public belief that increased government programs and regulations can actually produce diminishing if not negative returns in the economy in the late 1970s and early 1980s? Diminishing Returns of Regulation • The proliferation of critics, especially by popular conservative economics (i.e. Milton Friedman) • The expansion of programs such as the Center for the Study of American Business, American Enterprise Institute, & the Center for Education and Research in Free Enterprise • The election in 1980 of a president who promised to cut costs and promoted deregulation (The Gipper!) Shift in Regulatory Agencies Describe the dramatic “shift” in purpose and scope of the federal regulatory agencies that sprang up in the 1960s and 1970s. Shift in Regulatory Agencies • The growth in regulation has constituted not merely a large increase in the number of federal agencies, but now – the agencies expanded their scope to include all aspects of the economy. • Example: the Environmental Protection Agency (EPA) extends to all areas of the economy. There are few human activities over which EPA does not have some authority. “EPA provides compliance assistance on a sector-by-sector basis in order to efficiently reach facilities with similar operations, processes or practices. Most business sectors are affected by a number of major environmental statutes and regulations.” Source: http://www2.epa.gov/regulatory-information-sector