ECON 1740-F13 ePortfolio Assignment

Adam Sweeney 11/12/13

I.

The Three Essential Roles of Government per Adam Smith, and the Fourth per the Friedmans: Role #1: To protect its society from the violence and invasion of other independent societies. In other words, in order for freedom to occur, constant threat of invasion or subjugation from a foreign power must be protected against (i.e. military). Role #2: To protect (as far as possible) every member of its society from the injustice or oppression of every other member of that society. This is also referred to as establishing an exact administration of justice or, in other words, establishing a domestic police force. Role #3: To erect and maintain certain public works and public institutions, for which it can never be for the interest of any individual (or small number of individuals) to erect and maintain. Examples of the public facilities that are operated (though not for a profit) could be roadways/highways, though whether these are truly for the interest of any individual is debated. Role #4: To protect members of the community who cannot be regarded as responsible individuals. According to the authors, this is owed to the fact that freedom is a tenable objective only for responsible individuals. An example of irresponsible persons are children or individuals deemed insane.

II. The four arguments in favor of tariffs are: Argument #1: The national security argument is the first argument made for tariffs. The authors argue that this argument is more often a rationalization for particular tariffs than a valid reason for them. However, the authors discuss the feasibility of occasions where the maintenance of facilities that would otherwise not be profitable may be necessary. A tariff may be justifiable if it is introduced to protect a manufacturer of defense-related supplies from foreign competitors so that the nation is not reliant on foreign nations for national defense. Argument #2: The second argument for tariffs is the infant industry argument. The argument is that if tariffs were implemented to protect a countrys developing economy until it is competitive, [the country] could compete on equal terms in the world market when it can stand on its own feet. The authors argue that the so-called infants never grow up. Once imposed, tariffs are seldom lifted. The developing economy gets used to the tariffs and so ultimately never functions without them. Argument #3: The third argument is the beggar-thy-neighbor argument. This scenario entails a major producer (or conglomeration of several smaller producers that would effectively become a major producer) that raises its price to take advantage of the monopoly position it holds. However, the producer would not raise the price directly but rather impose an export tariff. In turn, the primary buyer of the product could drive a hard bargain and impose an overly low price on the product by imposing a tariff on the import of the product. In the end, the tariff is paid by the foreigner and the approach would likely promote retaliation. Argument #4: The fourth argument, which the authors state has no validity whatsoever, either in principle or in practice, is that free trade would be suitable if all other countries practiced it, but that the U.S. could not afford to as long as they dont. The argument against this case is that countries that impose restrictions not only hurt the U.S. but also themselves.

ECON 1740-F13 ePortfolio Assignment

Adam Sweeney 11/12/13

III. The two essential components of the welfare program reform are: Component #1: The welfare system should be reformed by replacing the ragbag of specific programs with a negative income tax that is linked to the positive income tax, or a single allinclusive program of income supplements in cash. Essentially, if a citizens income was less than the allowances attached to the governments tax rate, the citizen would receive a subsidy consisting of a determined fraction of the unused allowances. If the citizens income was higher than the allowances, then the citizen would pay taxes at the appropriate income-level tax rate. Component #2: Social Security should be unwound while concurrently meeting the present commitments and gradually requiring participants to make their own arrangements for their retirement. In other words, a transition program should be implemented to bring about this change. IV. The following countries were affected by hyperinflation at the following times in history: The United States, specifically the Confederate States, was affected by hyperinflation in the 1860s during the Civil War. The South effectively financed the war (for a large part) by printing more money, producing inflation that averaged 10% a month for approximately 2.5 years. Russia and Germany experienced hyperinflations after World War I. Prices sometimes doubled (or more than doubled) from one day to the next. This laid groundwork for communism in Russia and Nazism in Germany. Due to hyperinflation after World War II, the defeat of Chinas Chiang Kai-shek by Chairman Mao was eased and inflation in Brazil continued to rise until about 100% a year in 195 and brought a Military government. An extreme inflation in Chile contributed to Allende being overthrown in 1973. Also, extreme inflation contributed to the overthrow of Isabel Pern in Argentina in 1976. V. The action of redistributing the wealth of grade point averages is not a method of calculation I agree with. It is my belief that real rewards in life, regardless of the nature of the rewards (e.g. fiscal, religious/philosophical, educational, etc.) are earned through the effort and use of talent and/or resources of an individual. Some might say that luck could be a factor, such as winning the lottery, though even that windfall takes some action and preparation (e.g. purchasing a lottery ticket, monitoring announced information, etc.). Preparing for success not only helps you to achieve it, but it also helps you to deal with the results of that success. In a classroom environment, a sampling of different cultural backgrounds, work ethics, victims or beneficiaries of random chance, etc. is present. Each person is a culmination of life lessons, personal beliefs in success, and the steps necessary to achieve success, which in the context of a classroom is related to grades. Some might achieve success due to natural talent, large amounts of time and effort studying and practicing material, or even by luck in some cases such as guessing answers in a multiple choice environment. Others may not achieve success due to laziness, lack of resources (money, textbooks, time), or inability to grasp material. Some people will have the admirable trait of compassion for their fellow classmates and may be willing to sacrifice portions of their grade for others. Many people may feel sympathetic for a hypothetical single mother attempting to learn more for a better career and feel that helping the mother is an acceptable reason to give her grade points. Those same people may have no

ECON 1740-F13 ePortfolio Assignment

Adam Sweeney 11/12/13

sympathy for the immature college student who failed because of poor priorities (partying vs. studying) and may not wish to share. However, by definition fair shares for all is nondiscriminatory and compulsory. Regardless of reason, both the mother and immature student should be entitled to the same grade, and regardless of a successful students choice, this sharing would occur. Effort, intent, motivation for success and reward are all irrelevant. Freedom, liberty, is diminished or removed. I believe that my assumed motivation for the fair shares for all approach, compassion, is a very worthwhile goal. However, I believe that the correct approach is not to directly and forcibly manipulate the rewards, but rather to take a give a man a fish, he will eat for a day, teach a man to fish and he will eat for life approach. Other students may choose to tutor the hypothetical over-worked mother who struggles with grasping certain concepts. Others could choose to coach the immature student who may not have ever learned how to learn. All, unfortunately, might not. However, freedom is not diminished. At any time, choices are made that prepare us and lead us to a success, though perhaps not the success intended. Thomas Edison, in my opinion, had it right: I have not failed. I've just found 10,000 ways that won't work. Choice, and the positive and negative rewards, is the definition of freedom and cannot be diminished. Whatever may be achieved by the forcible sharing of grades (or wealth) caused by an administrator (or government) is undermined by what is lost on the journey to that achievement. The ends would not justify the means. Reflective Writing Milton and Rose Friedmans Free to Choose: A Personal Statement discusses the authors beliefs regarding free-market economics across a variety of topics. I agree with the authors in many regards including the reduction of government interference with the U.S. and international markets, though not in all respects. However, despite any differences of opinion, I respect the authors efforts to not only provide the reader with reasons why differing approaches, in their opinion, do not work, but to also provide solutions and their supporting reasons. Indeed, I highly respect the authors challenge to the reader in the preface to take the large amount of information provided and to turn the issues over in your mind at leisure, consider the many arguments, let them simmer, and after a long time turn your preferences into convictions. Referring to Salt Lake Community Colleges learning outcomes, I believe arguments could be made that all four outcomes pertain to Free to Choose. However, I would like to focus on two in particular: Acquiring Substantive Knowledge and Thinking Critically. The Friedmans provide substantive, functional knowledge that, regardless of how my opinion relates to theirs, is of great benefit. Despite the relative age of the book, many (if not all) of the issues apply today, especially discussions regarding government spending, socialized medicine, and Social Security. The Friedmans provide a solid basic understanding of these issues as well as their history and development. This has allowed, and continues to allow, me to not only better understand their proposed alternatives to current economic policy, but to understand multiple sides of the discussion so that I may come to my own fully informed opinion. To find this opinion, I have needed (and still need) to think critically of the information and data points provided. Again, the authors blatantly urge the reader to perform critical thinking of all of the topics at hand. I believe this is an invaluable skill to develop and allows me to sift all

ECON 1740-F13 ePortfolio Assignment

Adam Sweeney 11/12/13

of the facts, opinions, and suggestions provided and truly decide what I believe to be appropriate. Critical thinking helps me to be a proactive participant in school, work, and civic duties such as voting or garnering support for my supported candidates. As my understanding has increased, I fell that I have been a more effective communicator regarding my beliefs and opinions.