Sw 220 Midterm

Front 1

Compare how individualists and collectivists would allocate social benefits? Would it be in the form of cash, vouchers, in-kind benefits etc?

Back 1

- individualists: pro cash, conservative, free market
- collectivists: pro in-kind benefits, liberal, unregulated market= inequalities

Hint 1

Individualists are pro cash. Politically they are conservative and believe in small government. By providing cash benefits it allows for increased freedom of the public with limited government oversight. Individualists believe that in-kind benefits undermine personal responsibility. Collectivists are pro in-kind benefits because they allow for the redistribution of basic social goods. This is the philosophy of liberals and progressives. They believe that socio-economic barriers reduce opportunity and that the unregulated market leads to inequalities.

Front 2

What are the 3 basic principles of the English Poor Law of 1601?

Back 2

- worthy poor
- children
- able bodied power

Hint 2

1. local responsibilities of parish to support the worthy poor
2. training the children of the poor, creating productive citizens through apprenticeships
3. Providing employment to the able bodied poor

Front 3

3. Describe the parallels between the Spleenhamland Act of 1795 and the modern EITC. What is an example of modern legislation that helps to eliminate the worst consequences of Spleenhamland?

Back 3

- Spleenhamland: supplemental earnings, decline in wages and work ethic
- EITC: cash refund based on low income
- Modern safeguards= minimum wage, working requirements

Hint 3

Both Speenhamland and the EITC were designed to supplement people's earnings for all who's income fell below the poverty level. The govt would provide a "relief allowance" to raise their income up to the minimum cost of living. The consequences were that employers lowered wages and people stopped working as hard/much. EITC gives people a cash refund if their income falls below a designated level, cash. Mechanism of providing cash is through the tax code.
Minimum wage is a modern legislation that combats the worst consequences of Speenhamland bc it prevents employers from lowering wages to an unlivable wage. Another check in EITC is that you can only receive the tax credit if you are earning and declaring income.

Front 4

4. The 1662 Law of Settlement and the Speenhamland Act of 1975 were designed to address 2 issues that continue to plague modern day policy makers. Describe these issues.

Back 4

- Law of settlement: prevent migration to more services, modern day CA
- Speenhamland: cash subsidies for low income, modern day EITC w/ min. wage

Hint 4

The Law of Settlement addressed the issue of migration to areas that provided higher benefits. It restricted movement from one parish to another. These issues of migration are evident in today's CA politics. Counties like SF where high rates of homelessness could be contributed to the large amount of homeless services.
Speenhamland provided cash subsidies for low wage workers earning under the livable income. Employers lowered wages which disincentivised ppl to look for work. EITC is the modern day version in the form of tax refund, requires that individuals work and min. wage safeguards against failures of Speenhamland act.

Front 5

Compare EITC and the housing mortgage interest deduction in terms of the socioeconomic groups that gained the most from these benefits.

Back 5

- EITC: working poor
- Mortgage deduction: upperclass

Hint 5

EITC is designated for low-middle income wage workers, ie working poor.
Housing mortgage interest deduction is designed for the middle to upper classes. It is a tax break for home owners, implying those above poverty level. This policy is designed to serve the upper classes and exclude the poor.

Front 6

6. What are the 6 questions that form the basic framework for analyzing social policies in Dimensions?

Back 6

1. What are the bases of allocations? (who will benefit)
2. What type of social provisions will be allocated? (What do they get? Cash, in-kind)
3. What are the strategies for the delivery of these provisions?
4. What are the ways to finance these provisions?
5. What are the social values that support these social allocations?
6. What are the theories and assumptions that underlie these programs?

Front 7

7. What is social welfare policy according to the analytic framework in Dimensions?

Back 7

- Exists outside the market place
- Based on need, not greed (individual incentive)
- Redistribution of resources

Hint 7

"A benefit allocation mechanims functioning outside the economic marketplace." Welfare controls the operations of goods and services to provide a result that the market would not produce itself. Social welfare policy allocates goods and services based on financial need, dependency, altruistic sentiments, social obligations, charitable motives, and wish for communal security. Public assistance programs represent an effort to alter the distribution of resources in society. The economic market (capitalism) provides goods and the transfer of allocations is increasingly joined to individual responsibilities.

Front 8

8. What did Durkheim mean when arguing that "mechanical solidarity" was the basis for social cohesion in pre-industrial society?

Back 8

- Commonalities of labor
- similarities in life, same values
- industrialization = division of labor
- shift towards organic connections

Hint 8

Durkheim believed that pre-industrial social cohesion was formed around labor. Mechanical solidarity refers to the homogeneous norms and values that resulted from people having the same life. This was a direct result of being part of a common work force. The social cohesion, a sense of solidarity, was based on these common norms and values. Industrialization created a division of labor and interdependence among community members. The break down of social cohesion due to industrialization resulted in new forms of social cohesion that were more organic.

Front 9

9. What was in-door relief? How would it compare to modern forms of public assistance (SSI, AFDC, TANF)?

Back 9

- indoor = institution/almhouses
- outdoor = perpetuation of poverty
- Welfare to work
- Disability

Hint 9

Indoor relief is institutional relief traditionally in the form of almhouses. This form of relief would have both a therapeutic and economic effect to help bring people out of poverty. Outdoor relief, especially public relief, in the early 19th cent. was seen to aggravate poverty. Modern day public assistance is a form of relief that carries stipulations of employment. These welfare to work criteria address the fear of dependence on programs and the perpetuation of poverty. SSI is a cash program that is provided to the public sector that cannot contribute labor to the market place. AFDC became TANF in 1996 and with it came "workfare" criteria. TANF has a lifetime limit of 5 yrs, and a 2 yr consecutive limit w/o employment. These provisions address the fears of outdoor relief that in early 19th cent. prompted a movement towards indoor relief.

Front 10

10. Describe 3rd party purchase of service arrangements. What are the potential challenges with such arrangements?

Back 10

- govt contracted private agency
- market economy motivations
- creaming, preferential selection
- economic motive v. need
- powerless consumers

Hint 10

Third party purchase of service arrangements is when the govt hires a private agency (for profit or nonprofit) to manage social services for welfare recipients. The third party exists in the market and therefore is not motivated by client needs. The third party is motivated by cost, profit, efficiency and performance contract. This could lead to creaming which means preferential selection of clients based on how easy they are to serve or how successful they will be, not based on their need. While the third party agency acts as if in the economic market, normal market incentives are not created because the consumers do not have a say in the services they receive. They are not able to demand better cost or quality by taking their business elsewhere. The consumer has little power.

Front 11

11. How is the official poverty line measured according to the formula developed in the mid 1960s by the social security administration? How does this calculation of poverty like treat the cash value of in-kind benefits and earned income tax credits and the cost of income taxes and work related expenses?

Back 11

- food x 3
- Does not include in-kind value
- poverty line is relative: include below, include above

Hint 11

The poverty line of the 60s was created by taking the minimum amount of money necessary to sustain a nutritional diet and multiplying that by 3. The value is then adjusted for family size and inflation. This calculation does not take into account in-kind benefits, earned income tax credits, income taxes or work related expenses. Critics have argued that excluding the cash value of these benefits inflates the poverty statistics. The poverty line a relative measure. Those who are below the line are relative to those above it.

Front 12

12. Government intervention in the free market of a capitalist society is often justified under the conditions in which the allocation of goods and services has “neighborhood effects” (or involves externalities). Explain and give an example of this condition.

Back 12

- Public goods/ externalities
- no control over who benefits
- cost does not reflect the number of users
- streets, parks

Hint 12

There are 3 agreed upon roles of the govt. One of them is the neighborhood effect, also called externalities or public goods. This public good cannot be controlled by the market bc you cannot control who benefits. The cost of the good is relatively the same regardless of who uses it. Examples of this are parks, local streets. These items are best funded when everyone pays for them in the form of taxes.

Front 13

How does Galbraith’s argument about the “dependence effect” and Buchanan’s theories of “public choice” answer the question of whether in general public spending is too high or too low? Explain why.

Back 13

Galbraith: not high enough,
- wasteful spending on production "needs"
Buchanan: too high
- public has no say in allocation of public dollars
- politicians and public interest groups

Hint 13

Galbraith believes that the general public is not spending enough on social welfare bc the majority of our spending goes to "needs" that are contrived. The dependence effect states that production creates the wants it seeks to satisfy; this creates a waste and more public demands that are not being met. Buy less for yourself, and spend more on social welfare. He would support tax increases.
Buchanan believes that public spending is too high due to the public choice theory. This states that the public spending doesn't go where it needs to but rather it is at the whim of politicians who don't say no to spending bc their personal cost of saying no to public interest groups is too high. This leads to public dollars being wasted.

Front 14

14. Explain how “diagnostic differentiation” compensation and means-testing each provide a different basis for determining eligibility for social welfare?

Back 14

- Diagnostic differentiation: prof judgement of special needs
- Means-testing: economic need

Hint 14

Diagnostic differentiation determines eligibility based on professional judgment of technical diagnostic criteria and individual allocations of need. Means-testing determines eligibility based on evidence regarding an individual's inability to purchase goods and/or services. Individual allocations that are based on economic need

Front 15

15. Compare General Assistance and SSI in terms of who they serve and the sources of their funding.

Back 15

- Poor individuals
- SSI: federal, mitigating circumstances of poverty
- GA: state, able-bodied poor

Hint 15

Both forms of assistance provide cash to individuals based on means-testing. SSI is federally financed and administered. It provides cash assistance to those who are poor based on mitigating circumstances such as the elderly, blind, disabled. GA is state funding that provides assistance to "able bodied" poor who do not qualify for federal assistance. GA varies from state to state, and does not exist in all states.

Front 16

16. Numerical equality and proportional equality (i.e. equity) are two concepts that inform efforts to achieve a just distribution of resources in society. If you were designing an old age pension benefit, how would the cash value of this benefit be determined according to each of these concepts?

Back 16

- Numerical: equal
- Proportional: equity
- Capitalism: merit= proportional

Hint 16

Numerical equality is equal distribution to all regardless of status, income or classification. Proportional equality (equity) implies the same treatment of similar persons according to their merit. Proportional equality represents the capitalist ethos bc of the belief that people should get benefits if they contribute or deserve it.

Front 17

17. Is the payroll tax that finances social security generally considered progressive or regressive. Give 2 reasons why?

Back 17

- Progressive: proportional to income
- Regressive: equal payments
- Payroll: progressive

Hint 17

Progressive tax is proportional to a person's income, proportionally higher for the wealthy than for the poor (income tax). Tax is levied in accordance with ability to pay.
Regressive tax is when everyone pays the same amount regardless of income (sales tax).
Payroll tax is progressive in that those earning and contributing the smallest amount receive proportionally more benefits than those earning and contributing more.

Front 18

18. How does “proxy shopping” introduce the discipline of market competition into purchase-of-service contracts between governement contractors and for profit providers of service?

Back 18

- Proxy shopping: attract paying customers
- combats unresponsiveness of private services to the market
- regulates cost and quality

Hint 18

One of the problems that results from for-profit companies providing social welfare services through third party purchase of service contracts is that these arrangement are unresponsive to normal market signals. Proxy shopping is an effort to mitigate this problem. This method involves contracting only with providers who are able to attract paying customers, the logic being that if certain clientele are willing to pay for services then cost and quality will be regulated and therefore competitive with the market.

Front 19

19. What did the research findings suggest about the impact of the Seattle and Denver Income Maintenance Experiments (SIME/DIME) on the incentive to work and family stability?

Back 19

- Found that guaranteed income = decline in work
- guaranteed income= increase in divorce

Hint 19

SIME/DIME- largest and most carefully controlled income maintenance experiment in history. Research indicated that compared to the control group, families receiving the guaranteed income grant, worked significantly fewer hours per year. Also showed that those families were twice as likely as the control group to end in divorce.

Front 20

20. What is the difference between “elite philanthropy” and “bourgeois philanthropy” identified by Karger and Stoez?

Back 20

- Bourgeois: modest, specific goals
- Elite: greater expectations, big money

Hint 20

Bourgeois philosophy pursues relatively modest goals. For example, United Way, foundation that funds smaller non-profits organizations focusing on specific tasks.Elite philanthropy refers to extremely wealthy individual foundations that have much "grander expectations". For example Bill and Melinda Gates Foundation, pledging over $1 billion towards stopping spread of malaria, TB, AIDS.

Front 21

21Describe four allocative principles for determining conditions of eligibility for social provisions. .

Back 21

1. Attributed need
2. Compensations
3. Diagnostic differentiation
4. Means tested

Hint 21

1. Attributed need: group; a specific group that society is in agreement of need (ex: elderly)
2. Compensations: group; normative agreement based on service (soc and econ contributions) to society (ex vets)
3. Diagnostic differentiation: individual; conditional on professional judgments where special goods and services may be needed (ex special needs children)
4. Means-tested: conditional on evidence regarding an individual's inability to purchase goods and/or services. Individual allocations based on economic need (ex SSI)

Front 22

22. Efforts to design welfare policies that advance distributive justice must come to grips with three values. Briefly describe.

Back 22

1. Equality
2. Equity
3. Adequacy

Hint 22

1. Equality: the value prescribes that benefits should be allocated so as to equalize the distribution of resources and opportunities.
2. Equity: Proportional equality, based on merit and contributions to society.
3. Adequacy: the desirability of providing a decent standard of physical and spiritual well-being. Vary according to time and circumstance.

Front 23

23. What was the Aramony Scandal about? How did it impact social philanthropy?

Back 23

- Corruption and fraud of public money
- suspicion transferred to other organizations affiliated/ or similar

Hint 23

In 1992 United Way CEO was supplementing his salary with the United Way funds. Found guilty if conspiracy, fraud, filing false tax returns. Contributors doubted United Way and were reluctant to donate, this financially affected United Way and the smaller non-profits served.

Front 24

24. T.H. Marshall’s theory interpreted the emergence of social welfare in terms of the history evolution of the meaning of citizenship. Explain.

Back 24

- bound by rights
- traditions bonds broke down lead to common ground citizenship

Hint 24

What makes an American? Post-industrial citizens are connected by their common civic, political, and social rights. These rights create a sense of cohesion ,social solidarity and belonging. With industrialization came greater geographic and social mobility, creating a space for new structures of social cohesion. Civil rights came first (trial by jury), followed by political rights (voting), then social rights (education, social welfare). According to Marshall citizenship was the new social cohesion. Social welfare provisions gave people a stake in the system.

Front 25

25. What is the contemporary Marxist view of the welfare state and the capitalist society?

Back 25

- Equality
- Social welfare promotes capitalism
- SW pacifies the working class

Hint 25

The Marxist belief was that equality should trump everything else. We are all the same therefore we should all get the same. Marx viewed the welfare state as capitalist form of self-protection to subdue revolutionary tendencies, moderate class conflict and protect the interests of the elite. The welfare state assists capitalism in regulating and controlling the conditions under which work is organized and how wealth is distributed, seen as mechanism to pacify the working class and keep it subservient.

Front 26

26. What are the differnces among social, occupational, and fiscal welfare?

Back 26

- Social: publicly sponsored goods and services
- Occupational: workplace benefits
- Fiscal: tax systems that advances explicit social objectives

Hint 26

Social welfare corresponds to "direct expenditure" and is equated with the provision of a range of publicly sponsored goods and services- income support, health, social services.
Occupational welfare is associated with employment and workplace benefits
FIscal welfare involves the income side of the budget, identifies features of the tax system (deduction, credit) that advance explicit social objectives.

Front 27

27. Explain 3 shifts from pre to post industrialization: Civil, politial and social rights.

Back 27

1. Durkheim: shift from mechanical to organic
2. Tonnies: shift from Gemienschaft to Gesellschaft
3. Marshall: Civic, political, social rights

Hint 27

Durkheim:
- pre-industrial social cohesion formed around labor, mechanical solidarity
- industrialization division of labor new forms of social cohesion, organic solidarity
Tonnies:
- pre-industrial, Gemienschaft (community), ppl connected to larger association
- industrialization, Gesellschaft (society), ppl act on self-interest, relationships contractual. Social control based on public opinion now based on affinity groups
Marshall:
-pre-industrial, traditional group bonds
-post-industrialization, citizens connected by political, civil and social rights. Citizenship is the new social cohesion

Front 28

What is one general reason usually given in favor of the means-test and one general reason given that is in opposition to this approach? What are the benefits of means testing?

Back 28

In favor: ensures ppl who need it receive it
Opposition: degrading

Hint 28

In favor
• Ensures that funds are used efficiently.
• Means testing ensures that only people who truly need government aide are receiving it. If upper class and high class people are receiving social services that they can afford, it would be a waste of limited resources.
Opposition
• Universalists say that means testing is stigmatizing. They also say that it is administratively costly.
• The way that means testing is administered can be degrading (i.e., late night phone calls to ensure that no man is in the house)

Front 29

Who is favored most by the dependent’s benefits under social security, the non-working wife of a high income husband, the non-working wife of a low-income husband, or the working wife in a two earner middle income family?

Back 29

- non-working wife of a high income husband

Hint 29

● Social Security Act Amendment (1939)
○ Extended social security benefits to dependents (spouses, children)- Ensure reasonable standard of adequacy for entire families, not just indiv.
● Creates inequities among married couples w/ different work patterns
● Social security pension benefits rise with wage level
● Dependent wife in higher income families receive higher benefits than either dependent or employed wives in lower-income families.
● Ex: Non-working wife whose husband earns $60,000 is entitled to $7,470
○ $1,000 more than an employed wife making $11,4000 would be entitled to on her own as a primary beneficiary in a two-earner family with a husband earning $25,000 a year.
○ More than twice the dependent’s benefit granted to a nonworking wife whose husband earned $11,4000

Front 30

What are the 6 conditions that justify government intervention in capitalist society?

Back 30

1. Night watchmen/umpire
2. Technical monopoly
3. Stabilization
4. Paternalism
5. Redistributive
6. Neighborhood Effects

Hint 30

1. Night watchmen/umpire- protection from external enemies, government serves as an umpire or regulator and imposes rules so that the market operates fairly
2. Technical monopoly- to control goods that are monopolized, sewer, gas; Needed service that cannot have competition for reasons of practicality , and needs wouldn’t be met by free market because the service would not be provided at a reasonable price (i.e., mail delivery in Flint, Michigan)
3. Stabilization- Ensures stable economy, taxes, interest rate adjustments. Allows gvmt to stabilize economy in times of distress.
4. Paternalism- taking care of people who can’t care for themselves (orphans); Needed service for those who are designated to not be able to care for themselves and for which the market provides no service bcuz there is no incentive (profit) to do so.
5. Redistributive- allocation of goods and services based on market, can’t have extreme inequalities in power and influence,
6. Neighborhood effects- When the benefits of services can’t be limited and there is no way of controlling consumption (fire, police)

Front 31

Doctrine of less eligibility

Back 31

● People receiving gvmt aide should not get more money than the least paid worker. Promoted by Poor Law Reform.
● First expressed in Poor Law reform of 1834
● Condition of welfare recipients, regardless of need or cause, should be worse than that of the lowest paid worker
● Should provide work incentive
● Reflects punitive attitude to the poor, which is a change from previous Poor Laws and the attitude during the medieval times

Front 32

What are the 3 Pillars of the Welfare State?

Back 32

1. Economic security
2. Material Sufficiency
3. Basic services

Hint 32

1. Economic Security
● Goals: Protection of all citizens from common life risks by replacing lost income
● Policies: Social Security (unemployment, disability, retirement, etc.)
● Beneficiaries: working people, retirees, the family and dependents of workers and retirees

2. Material Sufficiency
● Goals: to provide basic floor of social protection
● Policies: Public Assistance (cash relief and social services)
● Beneficiaries: the poor and disadvantaged

3. Basic Services
● Goals: ensure access to critical goods and services
● Policies: education, health

Front 33

The nature of social provisions went from intangible and limited to concrete and diversified. Explain.

Back 33

intangible and limited: casework services, eligibility restrictions
concrete and diversified: programs, state choice

Hint 33

Intangible and Limited: Casework services that presumably would rehabilitate the poor, changing their behavior in ways that would help them become economically independent (advise and counseling) and the service was limited by eligibility restrictions. (Gilbert did this and said that he felt like a friendly visitor!)

Concrete and Diversified: Concrete programs like day care centers, or drug treatment centers, work training programs and were more widely available. The movement of diversification stated that each state was free to support whatever social services it wanted. Only requirement was that these services be directed to one of five federally specified goals which were very broad.

Front 34

Explain Social Darwinism and its implications for the development of social welfare policies offering public aide to the poor.

Back 34

Social Darwinism applied the theory of evolution to sociology. “Survival of the Fittest” claimed that the most evolutionarily fit person will procreate, and thus lead to the improvement of society and the gene pool at large. In its most gross interpretation, it was used to justify eugenics. In terms of public aide to the poor, it was argued that helping them survive would lead to a worsening of the gene pool, as these individuals were deemed “less fit”.

Front 35

29. The recognition of tax expenditures changes the prevailing conceptions of who gains from social welfare transfers. What are tax expenditures and how do they change our views on who benefits from Social Welfare Transfers?

Back 35

Tax expenditures – deviation from the normal tax code that affects the private economy in ways that are normally achieve through government SW spending
● Consist of:
○ Deductions
○ Tax credits ($ that is subtracted from the taxes that you owe government)
○ Refundable tax credits (EITC)
○ Regulations that don’t allow for the taxing of work benefits like health insurance and pension funds
● If people recognized this as SW, it would show that EVERYONE receives SW, not just the needy

Front 36

List one similarity and one difference between TANF and GA.

Back 36

- Both provide economic assistance to those eligible for financial support based on means-testing
- TANF: Federally funded
GA: state
TANF: adults with children
GA: able-bodied adults w/o children

Front 37

What was the role of social casework under the 1962 Service Amendments? How has this changed since TANF?

Back 37

Early on everyone had case worker, delivery of benefits linked provision of serve and cash, your case worker insured that you weren't working, needs are met, and provided service

Early 70s split income maintenance and service part
Assumption is that poor people don't need service, just need $
By linking service and giving $ is hard, clts. Might not trust caseworker
The system did not work better that way!

Service Amendments of 1962
Case work the ppl out of poverty
Assumption that the problem was amenable to sitting and talking with people (reminiscent of COS) "friendly visitor"

Front 38

What is the main difference between fee-for-service, categorical grants, and general revenue sharing?

Back 38

Categorical Grants
Government gives money to state that must be spent for very narrowly specified service
General Revenue Sharing
Federal government makes grants to lower unity of government without specification of program priority

Front 39

What does the “Laffer Curve” suggest about the relationship between tax rates and government tax revenues?

Back 39

- Laffer believed that optimal economic policy would consist of minimal taxation so as not to impede capital formation and expansion
- Laffer curve suggests that there is an optimum amount of government tax revenues that can be collected at which individuals will still have incentive to work. If tax rates become too high, they may become a disincentive and deter people from working.

Front 40

The basis of social allocation changed from selective access to universal access. Explain.

Back 40

Basis of Social Allocation: Selective to Universal
In 1962 eligibility was means-tested, limited to:
AFDC
Aid to the Blind
Old Age Assistance
Aid to the Permanently and Totally Disabled

Support for 1962 amendments based on idea that intensive social service could reduce the size of SW recipients

1974
Title XX broadened eligibly to include middle income people

1981 Social Services block grant revised Title XX and gave states more freedom w/ eligibility criteria

Front 41

45. Technical Monopoly and paternalism are two conditions used to justify government intervention in a capitalist society. Explain these conditions.

Back 41

Technical monopoly
- to control goods that are monopolized, sewer, gas
- Needed service that cannot have competition for reasons of practicality , and needs wouldn’t be met by free market bcua the srecie would not be provided at a reasonable price (i.e., mail delivery in Flint, Michigan)
Paternalism
- taking care of people who can’t care for themselves (orphans
- Needed service for those who are designated to not be able to care for themselves and for which the market provides no service bcuz there is no incentive (profit) to do so.

Front 42

18. Explain the theories of Galbraith, Friedman and Buchannan.

Back 42

Galbraith:
- wasteful spending on production "needs"
Buchanan:
- public has no say in allocation of public dollars
- politicians and public interest groups
Friedman
-govt should responsible for money
-welfare spending altruistic

Hint 42

Galbraith believes that the general public is not spending enough on social welfare because the majority of our spending goes to “needs” that are contrived. The dependence effect states that production creates the wants it seeks to satisfy; this creates waste and more public demands that are not being met. Buy less for yourself, and spend more on social welfare. He would support tax increases.
Buchanan believes that public spending is too high due to the public choice theory. This states that the public spending doesn’t go where it needs to, but rather it is at the whim of politicians who don’t say no to spending because their personal cost of saying no to public interest groups is too high. This leads to public dollars being wasted.
Friedman:
- Father of modern conservative economics
- Using fiscal and monetary policy to smooth out business cycle is bad
- Depression not caused by people hoarding money, but there was less $ in circulation
- Role of government is to keep the money supply growing steadily at a rate consistent with stable prices and long-term economic growth
- Welfare spending is for altruistic not economic reasons
- no dependence effect, consumers create the demand. Advertising does not manipulate, it gives info
Ex: failed ford car and the new coke.