Promoting The General Welfare

Promoting the General
Welfare

Democracy Under
Pressure
Chapter 18
Promoting the General Welfare

• During the presidential campaign of 2004, both
candidates talked repeatedly of the public's concern
over the fate of social security.
• The managers of the Social Security program warned
that by 2018, payroll taxes would not be large enough
to cover payments to retirees. By 2042, theprogram
would be broke if changes were not made.
– Democrat John Kerry insisted that the structure of the
program should remain unchanged.
– Republican George W. Bush proposed sweeping overhauls.
He called for privatizing Social Security, with workers
creating "personal retirement accounts".

Promoting the General
Welfare

Promoting the General
Welfare

• The central idea of the NewDeal was simple-that the
federal government could solve the country's social
and economic problems. This idea had come under
scrutiny.
• During the 1980s, the Reagan and Bush
administrations sought to restrict the government's
role by eliminating or cutting back social programs.

• Although the presidential candidates in 2004 battled
over diverse issues, at the heart of the campaign was
adebate over the proper role of government. The
rhetoric doesn't always match the reality: The
responsibility of the national government to make
social policy was recognized at the beginning of the
nation.
• Government regulation is a source of potential and
actual tension in a free enterprise capitalistic
economy. Many of the conflicts concern the degree to
which the government shouldintervene.

Promoting the General
Welfare
• To "promote the general welfare," the federal
government fills several major roles: regulator,
promoter, manager, and protector.
• The government does not necessarily perform all of
its roles well-by 2004, 35.9 million people were
struggling below the poverty level.
• Many Americans take a dim view in the governments'
ability to manage theeconomy

Democracy Under
Pressure
Government as Regulator and Promoter

• The government is often described as a welfare
state, a term often used as a criticism.

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Government and Business
• From the late 1880s until 1937, the Supreme Court
generally interpreted the Constitution in such a way
as to prevent government from regulating industry.
– It adopted the laissez-faire philosophy ofminimal
governmental intervention.
– In the 1905 Lochner case, the Supreme Court struck down
the New York state law limiting bakery employment to 60
hours in a week.

Government and Business
• Regulating business: antitrust policy.
– The Sherman Antitrust Act (1890) was designed to
encourage competition in business and prevent the growth
of monopolies, but was severely limited by theSupreme
Court.

• Since 1937 the Court has upheld laws policing
business; the right of government to regulate wages,
hours, and working conditions of employees is now
firmly established.

Government and Business

Government and Business

– The Clayton Act and subsequent legislation strengthened
federal antitrust law. The antitrust divisions of the Justice
Department and the FederalTrade Commission have
blocked many large corporate mergers.

– Although government regulation has had some success at
blocking monopoly, it has not been able to prevent oligopoly.
– In recent years, conglomerates-large multi-interest, and
often multinational, corporations-have emerged. They are
often considered exempt from most antitrust regulation
because of their diversity.
– Of the 100largest economic units in the world, only 49 were
countries, and 51 were multinationals. It is increasingly
difficult for citizens to fix responsibility for corporations.
– Government regulation is a source of potential and actual
tension in a free-enterprise system.

• Government has changed the shape of major industries in
several landmark cases, including the du Pont/General Motors...