ECO 550 Week 8 Discussion Question – Strayer New
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Week 8 Discussion
” Moral Hazard”
The managerial economist runs into moral hazard issues frequently. It is also in our political system. Just listen to Donald Trump as he describes contributing to all sorts of campaigns of people with both parties so he could get favors later on. He knows how the system works, and says correctly it is filled with moral hazard, and he wishes to put a damper on it. He says our system is broken. WATCH THIS VIDEO . https://www.youtube.com/watch?v=BtvPewHoXtM
Robert Reich interesting observations–Corporate tax “reform” is high on the Republican agenda because the GOP’s corporate patrons are demanding payoff from their investments in the 2014 election. Watch your wallets. Here are the four biggest right-wing whoppers about corporate taxes:
1. The U.S. corporate tax rate of 35% is one of the highest among advanced countries. True but misleading. The effective corporate income-tax rate – what corporations actually pay after all deductions, credits, and loopholes – is 27.7%, close to the average of all rich countries (27.2%).
2. Today’s corporate tax rate is high by historic standards. Baloney. In the 1950s it was over 50%.
3. The corporate tax reduces corporate profits, which makes it harder for corporations to hire. Wrong. Corporate profits today are the highest they’ve been since World War II as a percentage of the economy.
4. Lowering the corporate income-tax would spur economic growth. Baloney. There’s no relation between corporate tax rates and growth. In the 1950s and 60s, when the corporate tax was over 50%, the economy grew faster (at an annual average rate of 3.9%) than it has since the rate was reduced.
Moral Hazard–4 short but fascinating videos on President Andrew Jackson, as well as various U.S. founding fathers, on fearing the actions and corruptions of big bankers!!! Sound familiar to today!!
1 President Andrew Jackson and Big Banks–sounds like today!!!) –(from History Channel)-http://www.youtube.com/watch?v=Knf8KA5aAjw&feature=related
2 (Also Thomas Jefferson) — http://www.youtube.com/watch?v=3cnItVN1Gk0 and
4 ( from HBO film mini series on President John Adams– (Watch at the dinner table–George Washington, Thomas Jefferson- who had just returned from Paris, Alexander Hamilton, our first Secretary of the Treasury, and John Adams) http://www.youtube.com/watch?v=UrxKOO0nKwc