Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
62 Cards in this Set
- Front
- Back
what is businesses/corporations responsibility for the common good?
|
1. supporting
2. preserving 3. not depleting |
|
what did stock options incent CEO's to do and not to do?
|
Do- consider themselves
accounting shinanigans buyback options anything to increase share price not do- not report honestly |
|
compensation
|
gain, return that is proportionally greater than contribution, benefit, value added is theft/profit
|
|
Invisible hand theory
|
in a free market, a person persuing only his/her own self interests benefits the whole although having no intention to do so.
|
|
two advocates of the invisible hand encourage deliberate amorality in the executive suite. how do they jusify this
|
they contend that this results in systemic morality due to the action of the invisible hand
|
|
what does milton friedman see as teh social responsibility of corporations?
|
to only pursue profit but within the law
|
|
according to bishop, when corporations combine to restrict wages, does smith see this as an infringement on the free market
|
yes
|
|
how did adam smith view international investment as opposed to investing in one's own country?
|
only by investing in one's own country can one achieve the free market benefit of maximizing revenue as predicted by the invisible hand
2. there was no international free market nor did he believe one would ever exist |
|
what did adam smith say about foreign trade
|
trade for what you can buy cheaper than you can make it
|
|
did he believe that foreign trade could increase the wealth of a nation?
|
yes to a point, provided the profit made is rolled back into domestic production
|
|
did adam smith assume that profits made from foreign trade would be invested in the trader's own country creating more domestic production and jobs? basic for this assumption>
|
smith believed that profits made from foreign trade would be invested back in the traders own country where she/he could watch over it and manage what is done with it
|
|
are profits tha are made today from US corporate foreign trade being invested more in the US or more abroad? is the wealth in the US increasing?
|
most accounts would indicate that such profits are being invested abroad adn often as a strategy to further reduce taxes
|
|
what did adam smith say about tariffs and duties imposed on imported gods that are intended to protect domestic industry?
|
he said they aided in creating domestic monopolies that end up raising prices
|
|
under what two circumstances does adam believe tariffs are justified?
|
1. to protect defense industries
2. to impose tariffs or duties to imports equal to any taxes or fees imposed domestically on domestically produced goods. |
|
define common good
|
that which benefits all, is available to all, can be shared by all
|
|
list five things that could be considered as elements of the common good
|
1. infrastructure
2. security 3. justice 4. civil community life 5. economic system |
|
how does the concept of common good differ from the concept of private gain?
|
private gain is only for the individual; common good is shared by all
|
|
which of these is emphasized in the US today?
|
private gain
|
|
current business practices differ from those in early colonial america. name 3 ways that change may have affected the common good.
|
1. polluted the environment
2. left many without adequate health care 3. depleted the nations natural resources |
|
the commons
|
shared land (public resources, parks, minerals, etc.)
|
|
security
|
actual and psychological
|
|
community life
|
civil, harmonious relations between individuals and groups
|
|
family life
|
good environment for families raising children
|
|
justice
|
resolving disputes and injuries
|
|
infrastucture
|
roads, waste disposal, water and utilities
|
|
governance and public service
|
effective, honest, answerable
|
|
enterprise
|
conducive conditions for gaining the means of life
|
|
welfare
|
protection from poverty
|
|
environment
|
clean, attractive air, water, land
|
|
social security
|
for teh aging
|
|
public education
|
schooling for all that prepares for life and career
|
|
assistance for needy
|
neighbors, charities, government helping disabled, mentally handicapped, elderly
|
|
for what purposes does the constitution empower congress to lay and collect taxes, duties, imposts, and excises
|
1. pay national debts
2. provide for teh common defense 3. provide for general welfare |
|
what powers does teh last paragraph of section 8 give congress?
|
to make all laws necessary and proper for carrying into execution the foregoing powers vested by the constitution in the government and anky department thereof
|
|
what does the constitution say about interstate commerce
|
it gave power to the federal gov to regulate interstate commerce and prohibited the states from charging duties or taxes for commerce flowing across state lines.
|
|
section 10 grants the states an exception that allows them to impose duties and imposts. for waht purpose?
|
to collect only whta is absolutely necessary for executing inspections
|
|
given that exception what does the constitution stipulate the use of any duties or imposts laid by the states on imports or exports
|
that the proceeds be for the use of the treasury of the US
|
|
what govermental body has jurisdiction of public federal lands within the various states
|
US congress
|
|
amendment 1
|
prohibits establishment of a national religion, protects free speech, assembly, petition, etc.
|
|
amendment 2
|
right to keep and bear arms
|
|
amendment 3
|
no quartering of troops
|
|
amendment 4
|
protection against unreasonable search and seizure; search warrants required; probable cause required
|
|
amendment 5
|
cannot be compelled to testify against self, no double jeopardy, requires due process
|
|
amendment 6
|
speedy trial, impartial jury, right to be confronted by witnesses, righ to counsel
|
|
amendment 7
|
common law suits, right to trial by jury
|
|
amendment 8
|
prohibits excessive bail and cruel and unusual punishment
|
|
amendment 9
|
powers and rights given to congress do not preclude others retained by the people
|
|
amendment 10
|
the powers not delegated to the US congress, nor prohibited to the states are reserved to the states or to the people
|
|
amendment 13
|
frees the slaves, emancipation
|
|
amendment 24
|
freed slave shall not be deprived life, libery or property with due process; equal proteciton of the laws
|
|
what is the name of the economic theory that justified the CEO stock option practices described in the article
|
principal-agent theory
|
|
describe that theory
|
to incent the agent(CEO) to act in the interest of the principal(shareholder) by providing a type of compensation that gave CEOs a stake in the game similar to that of shareholders, in this case, stock options.
|
|
how does the principle of shareholder return relate to other stakeholders interests? what stakeholders are likely to benefit and which harmed?
|
the principle of maximize shareholder returns tends only to benefit the major shareholders (today, mostly financial fund managers). Small shareholders are often hurt as are customers, employees, and communities.
|
|
in practice what kind of shareholder return was emphasized by the incentive that stock options gave CEO's
|
increasing share prices
|
|
how did CEO stock options contribute to the recent corporate corruption? what are some possible corrections
|
CEOs of major banks and fund managers were incented to make very risky investments and to cash in despite the crashe they caused
|
|
what is the name and type of business of the company that bogle founded?
|
founder and CEO of the vanguard group inc. the 2nd largest mtual fund
|
|
what did bogle think about the wall streeet banking and investment industries?
|
they subtract from the value created by ur productive businesses
|
|
what strategies did bogle say tha the nations economy had passed through over the past two centuries? what is the current stage and does it add to or subtract from the value created by our productive businesses?
|
-agricultural
-manufacturing -service -financial |
|
how much money did bogle say was being drained from the economy by these industries in 2007 and 2008
|
2007- 500 billion
2008- 650 billion |
|
what did bogle say is the likely percentage of S&P annual profits generated by the finance sector? How does that compare to the energy, health care, and IT sectors?
|
-33%
-larger than combined profits of energy and health care; 3x as much as manufacturing and IT |
|
does bogle suggest that the US economy is healthy and making things that the world will buy or simply trading pieces of paper, swapping stocks and bonds back and forth
|
simply trading pieces of paper back and forth
|
|
does bogle seem to agree with keynes that the financial markets are like a casino? what doe sthe word croupier mean?
|
-yes
-croupier-someone who collects and pays money at the gaming table |