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SOC 352 – Outline for Chapter 6

How Large Companies and their Owners Got Disproportionate Power in the U.S. Economy:

+First, they accumulated power in ownership of corporate stocks and securities. In 1983 the

upper 10% of wealth holders (2% of population) owned 72% of all the stock to be own. Real

control of the American economy is largely in the hands of a small number of people (2%).+Second, they accumulated power in market control, monopolies, markets for particular products

are dominated by a small number of large firms. MC was always stronger in manufacturing rather

than retail firms, but these firms have become much more concentrated also (Wal-Mart).

Small Firms, Entrepreneurs & the Bimodal Economy:

+What factors have contributed to the rise in small firms and entrepreneurialism since the 80’s?

-The struggling performance of the “giants”

-The struggle by enterprising individuals and small firms to adapt and survive in the service

economy with pervasive downsizing, outsourcing, subcontracting, and growth of contingent

labor markets.

-The development of dotcom and the e-commerce economy (unmeasured army of

consultants and small businesses who specialize in electronic marketing, web design, and

logistics.+In what ways do small firms have an advantage over large companies?

-They operate in markets that are highly competitive, unstable, and with profits that often

fluctuate wildly from year to year.

-Fewer government subsidies and regulations

-They are a major source of employment and creation of new jobs and account for a

significant proportion of American economic productivity.

-The capability to innovate more quickly and less expensively than large bureaucratic

organizations.

3 types of small firms:

1) Satellite firms: which engage in subcontracting with larger ones.

2) Loyal Opposition firms: which provide competition to larger firms in their own markets.

3) Free Agents: which are diverse groups of firms that spring up in uncontested marketspaces.

The Global Market Economy:

+With who/what sorts of entities are large multinational companies hooking up?

-Vast networks of independent contractors, consultants, subsidiary firms, and mid-sized

companies in different nations.

+What sorts of workers are likely to make the most money?

-Factory workers and their unions due to outsourcing

+What sorts of jobs are getting outsourced?

-Financing, expertise, and creativity in arranging high value products and services

Growth in the Scope and Scale of Gov’t:

+What are some of the ways in which government regulation controls your personal life?

-Required building permits, occupations that require gov’t licensing, Gov’t permits that

determine what you can do with your trash, how man fish you are allowed to catch, where

and what hours of the day you are allowed to drink alcohol, how many pets you are allowed

to keep and how they are confined, custody of children, etc.

+Who has benefitted from most of the “social spending” since 1950?

-Those that didn’t have a lot of money but were not officially “poor”

+According to the text, which one of our past U.S. presidents did the most to increase our

national debt during his term in office?

-Ronald Reagan

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+Why has it been difficult to reduce the growth and expansion of government functions?

-Most Americans are actually ambivalent about the expansion of governments and the

benefits it brings along

-More theoretically, large states with regulatory powers seem necessary to maintain

public order and civility, are important problem solvers in complex modern societies.

Changing Bases of Political Mobilization:

+Decline in the effectiveness of political parties –-A steady weakening of power and influence of parties themselves

-The dependency of party support among voters declined as the inclination of voters to

shift parties between elections increased. Voters splitting votes between parties

-Voters were more fickle and less predictable in their party loyalties.

-Growing distrust in public institutions

-Lower voter turnout

+Political reforms and the increased use of technology in political campaigns –

-Reforms to get politics away from the control by corrupt political machines included (1)

the introduction of secret ballots that reduced poll workers’ ability to influence voters, (2)

replacing party-printed ballots with government-printed ones that increased “split ticket”

voting, and (3) the creation of primary elections before general elections that reduced the

control of party bosses and elites over nomination process.+Impact of a candidate’s physical (TV screen) appearance –

-Technology reduced the power and public responsiveness of political parties as

organizations. Mobile technologies (TVs) increasingly reduced politics to images and

sound bites so that a candidate’s looks, style, and stage presence are perhaps as

important as his or her political ideas.

- Candidates for political office are less dependent on previous political experience, party

connections, roots in the community, or bonds to the people they seek to represent; they

mainly need the ability to use television, to follow the advice on consultants, and to pay

for the services rendered (most important).

+In what ways do political parties have less control over elections these days? –

-They are greatly impaired because they have less control over:

1) The selection of candidates

2) The grooming of political leadership

3) The formulation of policy

+What factors prevent PACs from usurping control of elections, per the text? –

-When publicity makes the role of PACS visible in debates about political issues, their

ability to control outcomes depends more on their capability to arouse majority sympathy

for a just cause rather than by covert influence peddling. They have greater influence on

narrow and obscure issues rather than broad and visible ones

- The dramatic grown of competing PACS over the last 30 years means that

congressional committees and government agencies rarely hear from just one organized

group without input from opposing groups and independent experts as well.

Inequality, Wealth and Living Standards:

+Characteristics of Anglo-American model – Creates lots of jobs, many with lousy wages,

with huge pools of poverty at the bottom and huge pools of wealth at the top.

-Disadvantages: The very real social cost of vast inequality, high levels of anxiety and

despair, predatory criminal and gang activities in cities, and homegrown terriorist.

+Characteristics of Continental-European model – Creates fewer jobs but better ones and

relies on powerful states to redistribute sufficient benefits to people and groups to preserve

social peace.

-Disadvantages: powerful governments, large bureaucracies, higher taxes, and

sometimes and inclination for authoritarian “solutions” in hard times.

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Trends in the U.S. re: the distribution of wealth among its workers:

+Gradual redistribution of America’s economic resources

+Between WWII and 1975 the rising economy resulted in benefits of continuous economic

expansion being widely distributed.

+From the 60’s into the 70’s we saw decreasing number of “poor” people and those living in

poverty+Since the 70’s income inequality has increased. As the GNP continually increases, the

higher 5-10% of earns have made huge gain in their “share” of national income, while the

share of the middle 60% and lowest 20% have both seen decreases (1973-1993).

+Wealth is becoming more unevenly distributed since those at the bottom possess only their

disposable income, while those nearer to the top own most of the property and corporate

bonds and securities.

+This fundamental redistribution of economic assets among Americans has taken place in

periods of economic recessions and in the sustain economic expansion of the 1990’s

What forces are driving the growing income inequality in the U.S.?

1) Family demography and culture- Growing acceptance of divorce and growth of female-

headed households fuels inequality because it produces poorer female-headed families.

Also an aging society means a decrease in average income as people retire. Alsodecrease in work ethic.

2) The transformation of the economy, work, and policy- Driven by the shift to an

information-based service economy that rewards those with high-technology job skills

and punishes those without such skills with less human labor, fewer permanent

employees, fewer benefits. Also businesses that are systems of temporary strategic

alliances, and globalization of economies.

3) Government policies that explicitly favor investment and finance capital over earnings

and transfer payments- Lowered taxes on the wealthy while maintaining or raising taxes

on the middle class. Taxes seem designed to soak the middle class to the benefit of

finance and investment interests.

3 Components of the “Middle-Class Squeeze”:

1) Privatize government regulations and taxes, let private markets dominate, and hope

that economic benefits “trickle” down through the system.

2) Economic nationalism: using government-industry partnerships to protect domestic

industries and jobs

3) Use public money to invest in human capital that is the skills of Americans, making us

more competitive producers of high-value products in the global economy.