SOC352OutlineforChapter6

HowLargeCompaniesandtheirOwnersGotDisproportionatePowerintheU.S.Economy:
+First,theyaccumulatedpowerinownershipofcorporatestocksandsecurities.In1983the
upper10%ofwealthholders(2%ofpopulation)owned72%ofallthestocktobeown.Real
controloftheAmericaneconomyislargelyinthehandsofasmallnumberofpeople(2%).
+Second,theyaccumulatedpowerinmarketcontrol,monopolies,marketsforparticularproducts
aredominatedbyasmallnumberoflargefirms.MCwasalwaysstrongerinmanufacturingrather
thanretailfirms,butthesefirmshavebecomemuchmoreconcentratedalso(WalMart).
SmallFirms,Entrepreneurs&theBimodalEconomy:
+Whatfactorshavecontributedtotheriseinsmallfirmsandentrepreneurialismsincethe80s?
Thestrugglingperformanceofthegiants
Thestrugglebyenterprisingindividualsandsmallfirmstoadaptandsurviveintheservice
economywithpervasivedownsizing,outsourcing,subcontracting,andgrowthofcontingent
labormarkets.
Thedevelopmentofdotcomandtheecommerceeconomy(unmeasuredarmyof
consultantsandsmallbusinesseswhospecializeinelectronicmarketing,webdesign,and
logistics.
+Inwhatwaysdosmallfirmshaveanadvantageoverlargecompanies?
Theyoperateinmarketsthatarehighlycompetitive,unstable,andwithprofitsthatoften
fluctuatewildlyfromyeartoyear.
Fewergovernmentsubsidiesandregulations
Theyareamajorsourceofemploymentandcreationofnewjobsandaccountfora
significantproportionofAmericaneconomicproductivity.
Thecapabilitytoinnovatemorequicklyandlessexpensivelythanlargebureaucratic
organizations.
3typesofsmallfirms:
1)Satellitefirms:whichengageinsubcontractingwithlargerones.
2)LoyalOppositionfirms:whichprovidecompetitiontolargerfirmsintheirownmarkets.
3)FreeAgents:whicharediversegroupsoffirmsthatspringupinuncontestedmarket
spaces.
TheGlobalMarketEconomy:
+Withwho/whatsortsofentitiesarelargemultinationalcompanieshookingup?
Vastnetworksofindependentcontractors,consultants,subsidiaryfirms,andmidsized
companiesindifferentnations.
+Whatsortsofworkersarelikelytomakethemostmoney?
Factoryworkersandtheirunionsduetooutsourcing
+Whatsortsofjobsaregettingoutsourced?
Financing,expertise,andcreativityinarranginghighvalueproductsandservices
GrowthintheScopeandScaleofGovt:
+Whataresomeofthewaysinwhichgovernmentregulationcontrolsyourpersonallife?
Requiredbuildingpermits,occupationsthatrequiregovtlicensing,Govtpermitsthat
determinewhatyoucandowithyourtrash,howmanfishyouareallowedtocatch,where
andwhathoursofthedayyouareallowedtodrinkalcohol,howmanypetsyouareallowed
tokeepandhowtheyareconfined,custodyofchildren,etc.
+Whohasbenefittedfrommostofthesocialspendingsince1950?
Thosethatdidnthavealotofmoneybutwerenotofficiallypoor
+Accordingtothetext,whichoneofourpastU.S.presidentsdidthemosttoincreaseour
nationaldebtduringhisterminoffice?
RonaldReagan

+Whyhasitbeendifficulttoreducethegrowthandexpansionofgovernmentfunctions?
MostAmericansareactuallyambivalentabouttheexpansionofgovernmentsandthe
benefitsitbringsalong
Moretheoretically,largestateswithregulatorypowersseemnecessarytomaintain
publicorderandcivility,areimportantproblemsolversincomplexmodernsocieties.
ChangingBasesofPoliticalMobilization:
+Declineintheeffectivenessofpoliticalparties
Asteadyweakeningofpowerandinfluenceofpartiesthemselves
Thedependencyofpartysupportamongvotersdeclinedastheinclinationofvotersto
shiftpartiesbetweenelectionsincreased.Voterssplittingvotesbetweenparties
Votersweremorefickleandlesspredictableintheirpartyloyalties.
Growingdistrustinpublicinstitutions
Lowervoterturnout
+Politicalreformsandtheincreaseduseoftechnologyinpoliticalcampaigns
Reformstogetpoliticsawayfromthecontrolbycorruptpoliticalmachinesincluded(1)
theintroductionofsecretballotsthatreducedpollworkersabilitytoinfluencevoters,(2)
replacingpartyprintedballotswithgovernmentprintedonesthatincreasedsplitticket
voting,and(3)thecreationofprimaryelectionsbeforegeneralelectionsthatreducedthe
controlofpartybossesandelitesovernominationprocess.
+Impactofacandidatesphysical(TVscreen)appearance
Technologyreducedthepowerandpublicresponsivenessofpoliticalpartiesas
organizations.Mobiletechnologies(TVs)increasinglyreducedpoliticstoimagesand
soundbitessothatacandidateslooks,style,andstagepresenceareperhapsas
importantashisorherpoliticalideas.
Candidatesforpoliticalofficearelessdependentonpreviouspoliticalexperience,party
connections,rootsinthecommunity,orbondstothepeopletheyseektorepresent;they
mainlyneedtheabilitytousetelevision,tofollowtheadviceonconsultants,andtopay
fortheservicesrendered(mostimportant).
+Inwhatwaysdopoliticalpartieshavelesscontroloverelectionsthesedays?
Theyaregreatlyimpairedbecausetheyhavelesscontrolover:
1)Theselectionofcandidates
2)Thegroomingofpoliticalleadership
3)Theformulationofpolicy
+WhatfactorspreventPACsfromusurpingcontrolofelections,perthetext?
WhenpublicitymakestheroleofPACSvisibleindebatesaboutpoliticalissues,their
abilitytocontroloutcomesdependsmoreontheircapabilitytoarousemajoritysympathy
forajustcauseratherthanbycovertinfluencepeddling.Theyhavegreaterinfluenceon
narrowandobscureissuesratherthanbroadandvisibleones
ThedramaticgrownofcompetingPACSoverthelast30yearsmeansthat
congressionalcommitteesandgovernmentagenciesrarelyhearfromjustoneorganized
groupwithoutinputfromopposinggroupsandindependentexpertsaswell.
Inequality,WealthandLivingStandards:
+CharacteristicsofAngloAmericanmodelCreateslotsofjobs,manywithlousywages,
withhugepoolsofpovertyatthebottomandhugepoolsofwealthatthetop.
Disadvantages:Theveryrealsocialcostofvastinequality,highlevelsofanxietyand
despair,predatorycriminalandgangactivitiesincities,andhomegrownterriorist.
+CharacteristicsofContinentalEuropeanmodelCreatesfewerjobsbutbetteronesand
reliesonpowerfulstatestoredistributesufficientbenefitstopeopleandgroupstopreserve
socialpeace.
Disadvantages:powerfulgovernments,largebureaucracies,highertaxes,and
sometimesandinclinationforauthoritariansolutionsinhardtimes.

TrendsintheU.S.re:thedistributionofwealthamongitsworkers:
+GradualredistributionofAmericaseconomicresources
+BetweenWWIIand1975therisingeconomyresultedinbenefitsofcontinuouseconomic
expansionbeingwidelydistributed.
+Fromthe60sintothe70swesawdecreasingnumberofpoorpeopleandthoselivingin
poverty
+Sincethe70sincomeinequalityhasincreased.AstheGNPcontinuallyincreases,the
higher510%ofearnshavemadehugegainintheirshareofnationalincome,whilethe
shareofthemiddle60%andlowest20%havebothseendecreases(19731993).
+Wealthisbecomingmoreunevenlydistributedsincethoseatthebottompossessonlytheir
disposableincome,whilethosenearertothetopownmostofthepropertyandcorporate
bondsandsecurities.
+ThisfundamentalredistributionofeconomicassetsamongAmericanshastakenplacein
periodsofeconomicrecessionsandinthesustaineconomicexpansionofthe1990s
WhatforcesaredrivingthegrowingincomeinequalityintheU.S.?
1)FamilydemographyandcultureGrowingacceptanceofdivorceandgrowthoffemale
headedhouseholdsfuelsinequalitybecauseitproducespoorerfemaleheadedfamilies.
Alsoanagingsocietymeansadecreaseinaverageincomeaspeopleretire.Also
decreaseinworkethic.
2)Thetransformationoftheeconomy,work,andpolicyDrivenbytheshifttoan
informationbasedserviceeconomythatrewardsthosewithhightechnologyjobskills
andpunishesthosewithoutsuchskillswithlesshumanlabor,fewerpermanent
employees,fewerbenefits.Alsobusinessesthataresystemsoftemporarystrategic
alliances,andglobalizationofeconomies.
3)Governmentpoliciesthatexplicitlyfavorinvestmentandfinancecapitaloverearnings
andtransferpaymentsLoweredtaxesonthewealthywhilemaintainingorraisingtaxes
onthemiddleclass.Taxesseemdesignedtosoakthemiddleclasstothebenefitof
financeandinvestmentinterests.
3ComponentsoftheMiddleClassSqueeze:
1)Privatizegovernmentregulationsandtaxes,letprivatemarketsdominate,andhope
thateconomicbenefitstrickledownthroughthesystem.
2)Economicnationalism:usinggovernmentindustrypartnershipstoprotectdomestic
industriesandjobs
3)UsepublicmoneytoinvestinhumancapitalthatistheskillsofAmericans,makingus
morecompetitiveproducersofhighvalueproductsintheglobaleconomy.