EconDebates - Government and the Economy

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EconDebates Online keeps you informed on today's most crucial economics policy debates. Each EconDebate, created by John Kane (SUNY-Oswego), provides a primer on the issues and links to background information and current, in-depth commentaries from experts around the world. Review the brief introductions and, for EconDebates of interest, select the full debate.

Government and the Economy

Title

Introduction

Should the U.S. reinstitute a military draft?

Full Debate
Shortly before the start of the Iraqi war, Senator Ernest Hollings and Rep. Charles Rangel called for the re-instatement of a military draft in the U.S. This helped lead to renewed public discussion of the arguments for and against a draft. This proposal has helped spur renewed public debate concerning the advantages and disadvantages associated with an all-volunteer army.

Does U.S. immigration policy harm domestic workers?

Full Debate

Most U.S. residents today are the descendants of immigrants who arrived in the U.S. during the past 150 years. Concern over the effect of immigration on domestic workers, however, have resulted in the passage of several laws designed to restrict immigration. Unions, in particular, have argued for more restrictive immigration policy on the grounds that immigration lowers the wage and employment levels for domestic residents.

Has Deregulation Caused the Energy Shortage in California?

Full Debate

California began experiencing a serious energy shortage in the summer of 2000. Power blackouts became relatively frequent in many areas of the state. These problems appeared to have begun with the deregulation of the electrical power industry in California. Are these problems the result of deregulation? Or are they the result of regulations that result in inefficient outcomes? This question is of particular importance since many other states are in the process of following California's path to deregulation.

Should Medicare Provide Prescription Drug Coverage?

Full Debate
Recent advances in medical care have resulted in the development of many new pharmaceutical therapies for a variety of health conditions. Many of these newly introduced drug therapies, though, are relatively expensive due to the high costs associated with developing and testing these drugs. Medicare, however, does not currently provide prescription drug coverage. Instead, retired individuals either have no prescription drug coverage, or purchase relatively expensive "Medigap" insurance coverage to cover the medical expenses not covered by Medicare.

Should the Strategic Petroleum Reserve be used to Reduce Fluctuations in Oil Prices?

Full Debate
The Strategic Petroleum Reserve (SPR) was created as a result of the Energy Policy and Conservation Act in December 1975 in response to the 1973-74 oil embargo. This Act allowed the U.S. to store up to 1 billion barrels of petroleum in salt caverns located near the Gulf of Mexico. Oil has been added to these salt caverns from June 1977 to the present. The SPR now holds over 500 million barrels of crude oil.

Should Napster and similar MP3 distribution mechanisms be banned?

Full Debate
For decades, individuals have made tape recordings of live musical performances or musical performances sold on records, tapes, or CDs. Taped copies, however, were of a lower quality than the original. The introduction of the MP3 recording format, however, made it possible to encode and compress musical recordings into a compact file that can be played back at near-CD quality. These files are small enough that they can be quickly downloaded from the internet, even by those using modem connections. The development of MP3 players that can store hundreds of songs has also encouraged the widespread use of this storage format.

Should there be a market for human organs?

Full Debate
Advances in medical treatments have resulted in a dramatic increase in the number of organ transplants performed each year. A limited supply of organs, however, prevents many individuals from receiving organ replacements that could either save a life or substantially improve the recipient's quality of life.

Does Public Investment in Municipal Sports Stadiums Pay Off?

Full Debate
There has been an extensive amount of public investment in the construction of municipal sports stadiums in recent years. Cities wishing to either attract or keep a professional sports team are often forced to provide new stadiums as a result of competition with other cities.

Is Workfare Working?

Full Debate
In the last few years, welfare caseloads and expenditures have declined substantially. Advocates of workfare argue that this is the direct result of workfare requirements. Opponents of workfare suggest that much of this reduction in welfare expenditures is the result of the prolonged expansion that has substantially reduced unemployment. They express concern about whether workfare can survive when the expansion ends and a recession begins.

Should the Death Tax Be Abolished?

Full Debate
The current federal estate tax, less formally know as the "death tax", was introduced in 1916 to help provide revenue to support military expenditures during World War I. While the federal estate tax was originally introduced to provide a source of wartime revenue, it has been kept primarily as a means of redistributing wealth.

Will Social Security survive into the 21st century?

Full Debate
The online resources listed below provide a wide range of opinions concerning the magnitude of the problems facing the social security system. Part of the reason for this is that forecasts of future social security revenue depend on factors such as future rates of economic growth, the level of future unemployment and labor force participation rates, and similar factors. Small differences in rates of economic growth can have dramatic effects on the level of output (and tax revenue) over the course of a 20-30 year period. Different assumptions about such future outcomes result in very different conclusions about the future solvency of the social security system.

Should anti-pollution standards be strengthened?

Full Debate
Nearly everyone agrees that pollution is undesirable (the only likely exceptions are those individuals whose income depends on the provision of pollution abatement services). It is socially optimal, however, that some level of pollution be tolerated. The reason, of course, is that there is an opportunity cost associated with pollution abatement. A cleaner environment requires higher production costs and a lower level of output.

Is the death penalty an efficient crime deterrent?

Full Debate
The economic argument in favor of the death penalty is rather simple. Economists assume that individuals weigh the expected costs and benefits when deciding to undertake any activity. Thus, rational individuals considering criminal activities would weigh the expected benefits against the expected cost of the criminal endeavor. The expected cost of any given crime is affected by the probability of being detected, the probability of being convicted given detection, and the expected penalty that results from a conviction. Since the death penalty provides a higher cost than alternative punishments, it is expected to generate a larger deterrent effect, ceteris paribus.

Should marijuana be decriminalized?

Full Debate

Marijuana is a product derived from the cannabis sativa plant. This plant, also known as "hemp," was a major agricultural product in the United States from the colonial period until the early part of the 20th century. Hemp was used to produce rope, cloth, lacquer, and bird seed. There is evidence suggesting that hemp was grown on the plantations of George Washington and Thomas Jefferson.

How should we reform the current tax system?

Full Debate
While virtually everyone agrees the the current tax system is excessively complex, there is no tax simplification plan that is universally accepted. The major problem is that most proposed changes in the tax structure will benefit some taxpayers and harm others.

What accounts for recent increases in income inequality?

Full Debate
Recently, the United States has enjoyed a strong economy with low levels of inflation and unemployment. The strong economy, however, has not resulted in a steady rise in income for all Americans. In fact, for the last twenty years, the gap in income between rich and poor has increased. What accounts for the recent increases in income inequality in the United States?

Is more spending on infrastructure the key to economic growth?

Full Debate
U.S. Presidential elections are often won and lost on the basis of the state of the economy in the period leading up to the election. When people are asked to list the economic problems about which they are most concerned, unemployment and inflation generally top the list. Economic growth is rarely mentioned as one of the most pressing concerns. The importance of economic growth is often overlooked. While the effects of growth may be small in any one year, the cumulative effect of compound growth becomes rather dramatic over time.

Is there a need for health-care reform?

Full Debate
Health-care reform was one of the major issues in the 1992 U.S. Presidential campaign. While no major reform bill was passed during Bill Clinton's first term in office, health-care reform has remained a major topic of congressional debate.

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Government and the Economy
Title	Introduction
Should the U.S. reinstitute a military draft? Full Debate	Shortly before the start of the Iraqi war, Senator Ernest Hollings and Rep. Charles Rangel called for the re-instatement of a military draft in the U.S. This helped lead to renewed public discussion of the arguments for and against a draft. This proposal has helped spur renewed public debate concerning the advantages and disadvantages associated with an all-volunteer army.
Does U.S. immigration policy harm domestic workers? Full Debate	Most U.S. residents today are the descendants of immigrants who arrived in the U.S. during the past 150 years. Concern over the effect of immigration on domestic workers, however, have resulted in the passage of several laws designed to restrict immigration. Unions, in particular, have argued for more restrictive immigration policy on the grounds that immigration lowers the wage and employment levels for domestic residents.
Has Deregulation Caused the Energy Shortage in California? Full Debate	California began experiencing a serious energy shortage in the summer of 2000. Power blackouts became relatively frequent in many areas of the state. These problems appeared to have begun with the deregulation of the electrical power industry in California. Are these problems the result of deregulation? Or are they the result of regulations that result in inefficient outcomes? This question is of particular importance since many other states are in the process of following California's path to deregulation.
Should Medicare Provide Prescription Drug Coverage? Full Debate	Recent advances in medical care have resulted in the development of many new pharmaceutical therapies for a variety of health conditions. Many of these newly introduced drug therapies, though, are relatively expensive due to the high costs associated with developing and testing these drugs. Medicare, however, does not currently provide prescription drug coverage. Instead, retired individuals either have no prescription drug coverage, or purchase relatively expensive "Medigap" insurance coverage to cover the medical expenses not covered by Medicare.
Should the Strategic Petroleum Reserve be used to Reduce Fluctuations in Oil Prices? Full Debate	The Strategic Petroleum Reserve (SPR) was created as a result of the Energy Policy and Conservation Act in December 1975 in response to the 1973-74 oil embargo. This Act allowed the U.S. to store up to 1 billion barrels of petroleum in salt caverns located near the Gulf of Mexico. Oil has been added to these salt caverns from June 1977 to the present. The SPR now holds over 500 million barrels of crude oil.
Should Napster and similar MP3 distribution mechanisms be banned? Full Debate	For decades, individuals have made tape recordings of live musical performances or musical performances sold on records, tapes, or CDs. Taped copies, however, were of a lower quality than the original. The introduction of the MP3 recording format, however, made it possible to encode and compress musical recordings into a compact file that can be played back at near-CD quality. These files are small enough that they can be quickly downloaded from the internet, even by those using modem connections. The development of MP3 players that can store hundreds of songs has also encouraged the widespread use of this storage format.
Should there be a market for human organs? Full Debate	Advances in medical treatments have resulted in a dramatic increase in the number of organ transplants performed each year. A limited supply of organs, however, prevents many individuals from receiving organ replacements that could either save a life or substantially improve the recipient's quality of life.
Does Public Investment in Municipal Sports Stadiums Pay Off? Full Debate	There has been an extensive amount of public investment in the construction of municipal sports stadiums in recent years. Cities wishing to either attract or keep a professional sports team are often forced to provide new stadiums as a result of competition with other cities.
Is Workfare Working? Full Debate	In the last few years, welfare caseloads and expenditures have declined substantially. Advocates of workfare argue that this is the direct result of workfare requirements. Opponents of workfare suggest that much of this reduction in welfare expenditures is the result of the prolonged expansion that has substantially reduced unemployment. They express concern about whether workfare can survive when the expansion ends and a recession begins.
Should the Death Tax Be Abolished? Full Debate	The current federal estate tax, less formally know as the "death tax", was introduced in 1916 to help provide revenue to support military expenditures during World War I. While the federal estate tax was originally introduced to provide a source of wartime revenue, it has been kept primarily as a means of redistributing wealth.
Will Social Security survive into the 21st century? Full Debate	The online resources listed below provide a wide range of opinions concerning the magnitude of the problems facing the social security system. Part of the reason for this is that forecasts of future social security revenue depend on factors such as future rates of economic growth, the level of future unemployment and labor force participation rates, and similar factors. Small differences in rates of economic growth can have dramatic effects on the level of output (and tax revenue) over the course of a 20-30 year period. Different assumptions about such future outcomes result in very different conclusions about the future solvency of the social security system.
Should anti-pollution standards be strengthened? Full Debate	Nearly everyone agrees that pollution is undesirable (the only likely exceptions are those individuals whose income depends on the provision of pollution abatement services). It is socially optimal, however, that some level of pollution be tolerated. The reason, of course, is that there is an opportunity cost associated with pollution abatement. A cleaner environment requires higher production costs and a lower level of output.
Is the death penalty an efficient crime deterrent? Full Debate	The economic argument in favor of the death penalty is rather simple. Economists assume that individuals weigh the expected costs and benefits when deciding to undertake any activity. Thus, rational individuals considering criminal activities would weigh the expected benefits against the expected cost of the criminal endeavor. The expected cost of any given crime is affected by the probability of being detected, the probability of being convicted given detection, and the expected penalty that results from a conviction. Since the death penalty provides a higher cost than alternative punishments, it is expected to generate a larger deterrent effect, ceteris paribus.
Should marijuana be decriminalized? Full Debate	Marijuana is a product derived from the cannabis sativa plant. This plant, also known as "hemp," was a major agricultural product in the United States from the colonial period until the early part of the 20th century. Hemp was used to produce rope, cloth, lacquer, and bird seed. There is evidence suggesting that hemp was grown on the plantations of George Washington and Thomas Jefferson.
How should we reform the current tax system? Full Debate	While virtually everyone agrees the the current tax system is excessively complex, there is no tax simplification plan that is universally accepted. The major problem is that most proposed changes in the tax structure will benefit some taxpayers and harm others.
What accounts for recent increases in income inequality? Full Debate	Recently, the United States has enjoyed a strong economy with low levels of inflation and unemployment. The strong economy, however, has not resulted in a steady rise in income for all Americans. In fact, for the last twenty years, the gap in income between rich and poor has increased. What accounts for the recent increases in income inequality in the United States?
Is more spending on infrastructure the key to economic growth? Full Debate	U.S. Presidential elections are often won and lost on the basis of the state of the economy in the period leading up to the election. When people are asked to list the economic problems about which they are most concerned, unemployment and inflation generally top the list. Economic growth is rarely mentioned as one of the most pressing concerns. The importance of economic growth is often overlooked. While the effects of growth may be small in any one year, the cumulative effect of compound growth becomes rather dramatic over time.
Is there a need for health-care reform? Full Debate	Health-care reform was one of the major issues in the 1992 U.S. Presidential campaign. While no major reform bill was passed during Bill Clinton's first term in office, health-care reform has remained a major topic of congressional debate.