U.S. History/american economics
hi mike thanks for your last answer and it helped me loads.may i respectably ask to what extent is american economics a cultural and social process and is it allways neccessary for the government to use economical events as part of their political strategy please reply can you give me a long answer for this answer god bless and happy new year you are the best expert ever abd are very important to me ...
My friend who is a University Professor of Economics is of the opinion that economics has nothign to do with politics, culture, or social processes. It is the study of how some actions effect or correlate with others, with the focus on producing the maximum output. In other words, trying to figure out the most efficient system to maximize wealth.
But of course economics as tied to the real world also has social and political components. If the most efficient economic system provided virtually all the benefits to a very small minority of the population, that would not be tolerated for long and would lead to political upheaval. Therefore the political system that distributes of the benefits derived from an efficient economic system remain a critical component of the system overall.
That is where the cultural and social processes come into the mix. In the US, there is a good deal of social acceptance for the idea that there need to be a small number of wealthy elites in industry to keep the economy running efficiently and making the overall economic pie bigger. This differs from much of European thinking that it is better to have wealth more widely distributed, even if it makes the economic system less efficient overall.
This was not always the case. During the Great Depression, the US government took a much stronger redistributive role, taxing the wealthy minority more heavily and distributing more wealth to the poorer majority. This is the common reaction in times of recession or depression.
During good times, people feel like their personal wealth and security is getting better. They generally don't resent that the elites are getting even wealthier than they are at a much greater rate because they know that trying to change that balance might tank the economy and make things worse for everyone, including themselves. Therefore, government and private elites have an interest in keeping the economy growing and stable, leading to a happy and satisfied electorate.
But when there is an economic downturn, the electorate turns to blame political leaders for failing to maintain a strong economy and to the business elite for allowing the situation of the workers to become worse while they largely retain their great wealth. In that situation, the politicians tend to through the elites under the bus, laying the blame on them in order to avoid the wrath of the voters.