Government Regulation: Crash Course Government and Politics #47
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Government Regulation: Crash Course Government and Politics #47


Hello, I’m Craig and this is Crash Course
Government and Politics and today I’m going to talk a bit more about economic policy.
Ran into the table there a little bit. Whoo! Economic policy can be dangerous. Specifically, we’re going to look at some
of the broad goals of economic policy and some of the things that the government does
to try to accomplish those goals. And we may even provide some examples of times
when the government DID accomplish them, so take that, skeptics. But, I have to admit,
a lot of the time the goals are just goals. [Theme Music] So all people have goals and aspirations (except
me) and the government, since it’s made up of people is no different. Well I do have one goal:
to punch the eagle again. And I did it. Accomplished. Well, actually the government’s different
because it’s economic goals are much bigger and more important than, say my goal of punching
the eagle again. Although I would argue my goal is pretty important. So what are these,
goals of economic policy? The first goal is promoting stable markets.
We talked about how the government structures the market system in the last episode,
so I probably don’t need to repeat it. At least I hope I don’t. You should’ve been
paying attention. But since nobody wants a malfunctioning market,
most of the things the government does to create a market system also work to make the
system stable and predictable. Maintaining law and order and minimizing monopolies
are examples of government actions that make the market system stable. I didn’t know the government
maintained Law and Order – oh not the tv show, OK. One of the more interesting ways – ok interesting
to me – that the government keeps markets predictable is through national regulations
of things like automobile fuel efficiency standards. If there were no national regulations, and
states were allowed to set the rules, then it might be possible for car makers in Detroit
to build cars that live up to the mileage standards in Michigan, but not in California,
and that would be anarchy. Well, maybe not anarchy exactly, but it wouldn’t
be good, and it’d make it much more difficult for manufacturers to know what kind of cars
to make. Also, do you really want California, the state with the biggest population, making
rules for the rest of us? Of course you don’t. The second major goal of economic policy is
promoting economic prosperity. Here’s another example of a situation where many people will tell
you that the best way for the government to promote prosperity is to get out of the way, and they may
have a point, but the government doesn’t stop trying. So what does the government do to promote
prosperity? For one thing, it tries to keep a positive investment climate and build
confidence in the economy. One way the federal government can accomplish
this is through regulating financial markets through the Securities and Exchange Commission
since people won’t want to invest in the securities markets if they think the game’s
fixed. Another thing the government can do, if it’s
feeling particularly Keynesian, is to spend money on public investment in things like
highways and the internet. While not actually built by Al Gore, it did begin with a government
program out of the Defense Department. The government also pays for research through
the National Institutes of Health and the National Science Foundation, and enhances
the workforce through education policy and immigration policy, all of which contribute
to national prosperity. Another, and by no means the last, way that
the government can try to make the country more prosperous is by keeping inflation low.
You can find out more about inflation from Crash Course: Economics, but the main tool
the government uses to control inflation is the Federal Reserve, which is so complicated
that it gets it’s own episode. A third goal of government economic policy, one
closely related to the first two, is promoting business development. Many people would probably argue that promoting
business development and promoting prosperity are the same thing but policies aimed at helping
businesses are slightly different and more focused than those targeting the broader goal
of promoting prosperity. The main ways that the federal government
promotes business development are through tariffs and subsidies. Since the Great Depression,
the U.S. has pretty much pursued a policy of free trade, which means lowering tariffs
on most things, which by forcing them to compete can hurt businesses, at least in the short
run. In the past, however, high tariffs allowed
American businesses to develop free from foreign competition and this helped to make the U.S.
the most powerful industrial nation in the world! Can we use that Libertage from US History?
I think Yes! [Libertage] Subsidies are very controversial and they
come in two forms. Grants in aid for things like transportation – building those superhighways
again – provide an indirect subsidy to businesses who don’t have to pay for the roads they
use to ship the goods they make. Most people don’t complain about this type of subsidy,
because they can also be looked at as a public good. Direct subsidies are another issue. These
include direct assistance to businesses through the Small Business Administration and government
investment in firms like Sematech and, more recently and more controversially, Solyndra. Many people don’t think that the government
should be in the business of investing in business and that these subsidies provide the
businesses that receive them with an unfair advantage. Farm subsidies are probably just as controversial.
They were put in place to help farmers during The Great Depression, but these days, critics worry
that most of the subsidies go to corporate farms. The fourth goal of government economic policy
is to protect consumers and employees. A lot of people will tell you that the federal government
doesn’t do much to protect employees these days, and those people are probably right,
but in the past it certainly did. The government made unionization easier with
the National Labor Relations Act and setting labor standards, especially overtime
rules with the Fair Labor Standards Act. Both of these were passed in the 1930s, by the way. Probably the most notable thing that the government
does to protect workers these days is set the federal minimum wage, but since that topic
is being hotly debated as this episode is being produced in 2015, I can’t really comment
on how it’s going to turn out. On the other hand the Occupational Safety
and Health Administration does set up regulations to prevent workers from breathing in hazardous
fumes and protect them from other potentially life threatening workplace conditions, and
that’s a good thing. As far as consumers are concerned, there are
thousands of regulations that protect us to make sure that the things we buy don’t kill
or maim us. The Food and Drug Administration makes sure that our medicines aren’t poison,
and the Department of Agriculture inspects meat, which I think is really good a idea,
actually. The National Traffic and Motor Vehicle Safety
Act of 1966 made cars safer, and the Consumer Products Safety Commission helps keep lead
paint out of our toys and saves us from exploding toasters. I like explosions as much as the
next guy, but not with breakfast. All of these goals of economic policy, promoting stable
markets, promoting economic prosperity, fostering business development and protecting employees
and consumers are interrelated and important. I’ll leave it up to you to decide if one
is more important than the other three, because that makes for excellent dinner conversation.
If your dinner parties are mostly about the role the government plays in our economy.
Please invite me to those dinner parties. I’m hungry, for roast beef and political
debate. So, to shift gears a little, let’s talk
history, and how the government’s role in regulating the economy has changed in the
last 240 years or so. So you probably remember from back when we
talked about the transition from congressional to presidential government that began with
Teddy Roosevelt and really came into its own with Franklin Roosevelt, that before the 20th century
the federal government didn’t really do that much. A lot of that has to do with fiscal policy
and taxation, which we’re going to discuss in another episode, and maybe that dinner
you’re going to invite me to, but some of it was certainly because of the way that the Supreme
Court had interpreted the Commerce Clause to mean that government regulation was suspect,
and by suspect, I mean generally not allowed. But by the end of the 19th century the Federal
government’s regulatory power had begun to change, and a lot of that has to do with
one of my favorite subjects – no not Star Wars. And no not the protection of endangered species.
(punches eagle) I’m talking about railroads (Yeah!).
Let’s go to the Thought Bubble. So, with the completion of the transcontinental
railroad in 1869, travel and communication across the U.S. became much easier and it was possible
for the first time to have a national market for goods. If you raised cattle in Kansas, you could now
easily ship beef to New York or San Francisco. Railroads were, almost by definition, interstate
entities, so it was pretty clear that Congress could regulate them. And they needed regulation
because railroads had a nasty habit of discriminatory pricing, charging much, much more for some
shippers than for others. Something had to be done and Congress stepped in with the Interstate
Commerce Act in 1887, which created the Interstate Commerce Commission
to regulate railroads. The period of time around the turn of the
20th century in the U.S. is known as the Gilded Age and is associated with runaway capitalism
and the creation of modern corporate structures and industrial capitalists like Andrew Carnegie
– or Carnegie, if you will – and John D. Rockefeller who are heroes to some and
villains to others. In response to some of the abuses of the Gilded Age, Congress passed
its first wave of regulatory legislation. In addition to the ICC, Congress created the
Federal Trade Commission to regulate trade and the Sherman and Clayton Acts to try to
counter the problem of monopolies. These anti-trust laws are the basis of modern anti-trust regulation and
have been used against Standard Oil and Microsoft. This first wave of economic regulation didn’t
have huge effects on the economy, certainly not greater than the effects of, say World
War I. In the 1920s the federal government returned to a more traditional laissez faire
approach, which lasted until the Great Depression swept Herbert Hoover and the Republicans out
of office and Franklin Roosevelt into it. And with Franklin Roosevelt came the New Deal
and the advent of what law schools sometimes like to call the administrative and regulatory
state. Thanks Thought Bubble. We’re not going to
get into details about the various laws and regulations of the New Deal here, but luckily I think
John talked about them in Crash Course: U.S. History. John, he talks about stuff. But in general, those regulations meant that
the federal government would take an active role in regulating certain sectors of the
economy, like agriculture and transportation. Sometimes technology played a part. There
really wasn’t a need for a Federal Aviation Administration until there were airplanes. The next big wave of government regulation happened
in the early 1970s under, of all people, president Nixon. These new regulatory laws were different from
their New Deal predecessors in that they focused on the economy as a whole. For example the
Occupational Safety and Health Administration dealt with ALL occupations, or at least most
of them, and the EPA was created to protect the whole country’s environment. Beginning in the 1980s with Ronald Reagan,
or actually before him under Carter, the federal government has undertaken various initiatives
to de-regulate the economy, but we already talked about deregulation in our episode on taming
the bureaucracy so we don’t need to re-hash that here. The point to remember is that, despite attempts
at deregulation, the administrative regulatory state appears to be here to stay. So why do we have an administrative regulatory
state now, even though so many people complain about it? Part of the reason has to do with
the remarkable staying power of bureaucracies, which are harder to kill than Wolverine. Nowadays the federal government not only has
economic goals, goals like increasing prosperity that most of us agree upon, it also has a
sense, maybe even a belief that it should try to achieve those goals. This is a long way from the view of the federal
government that persisted through the 19th century, one which many people say was handed
down by the framers. But times change, and the world and the U.S. has gotten much more
complex. Economic concerns take up an increasingly
large part of our lives and many of them, especially big macroeconomic policies require
big solutions. And for many Americans, but certainly not all of them, the best solution
we have is government. Thanks for watching. See you next time. Crash Course Government and Politics is produced
in association with PBS Digital Studios. Support for Crash Course: U.S. Government
comes from Voqal. Voqal supports nonprofits that use technology and media to advance social
equity. Learn more about their mission and initiatives at Voqal.org. Crash Course was made with the help of all
these occupational safety and health hazards. Thanks for watching.

100 Comments

  • Pentazoid111

    The video doesn't touch on regulatory capture theory at all. The theme promoted throughout this video is that people in government were strictly looking out for the public interests and wanted to create regulations to ensure their safety, instead of writing regulations to protect the economic interests of certain industries. Incumbent railroad industries wanted to the ICC law to be passed because the wanted to restrict competition in the rail road industry.

  • BUD7H357UD

    Government is sin. Anarcho-Capitalism is the one true way. I would give my life so that my loved ones could live on in the free market.

  • BUD7H357UD

    When does government regulation become absolute central command of the entire economy (aka Soviet communism where 60 million people starved to death)?

  • EozTheNew

    Minimum wage…yep, now that's a curious topic. In some countries, there is the minimum wage, which every employer MUST pay to their employees. Then there's the living wage, which is the government's estimate of the minimum amount of money a person needs to make in order to get by, it's slightly higher than the minimum wage and…employers are not forced to pay that much. Moreover, even when earning minimum wage (which we've already established is less than what the government says a person needs to earn in order to survive), you still pay tax on a small part of it.

    And people wonder why nobody is moving out of their parents' homes? If you want to stimulate the house market, give young people the resources to get their own place.

  • Evan's Easy Japanese

    Man, it sure would be difficult to know what kind of cars to make if there were no federal government!

    All that "customer feedback through the profit mechanism" sure would be difficult! Lord knows it has never worked for any other market!

    Before government regulations, people used to have to eat chairs and bicycles. But thank god Government came by and told all the food industries to make food be edible. I'm still not sure how humanity survived without Congress before 1776.

  • Kabuki Jo

    De-regulation has never worked. Allowing corporations to do what ever they want is a bad idea. Just look at China's slave wages and super polluted environment for proof. If that doesn't convince you De-regulation is bad, then you are beyond hope. I also find it funny ther Monopolies like Big Oiul & Microsoft came under attack, but cable companies remain untouched.

  • Levi Howell

    It seems like we keep on a pattern of deregulation then depression, regulation and growth, then more deregulation and depression

  • Daniel Ayala

    As crooked as Nixon was, he was actually a good President and did a lot of great things legislatively and in terms of regulations. Before the early 1970's, companies could just dump toxic waste into rivers and not be held accountable by anyone.

  • Ancor3

    Comment section is looking exactly as expected. There are some people who've just had their fact-free bubble busted, be wary of salty comments.

  • 4evadunkley

    I honestly don't even care what he has to care what he has to say anymore. I just come for the eagle punch. Glad that I stuck around though, I was pleasantly surprised by the libertage.

  • UsernameHere

    I like this video a lot but I'm disappointed that you didn't mention the massive Government deregulation over the past few decades and it's affects at least once.

  • John Humphreys

    This lesson might be useful for somebody looking for a very rough introduction to some broad concepts, but it is strikingly simplistic and built on an ultra-naive approach to public policy and public choice.

    I hope that anybody interested in these issues will continue searching for more nuanced information. There is a lot of great material out there, though it's not always as simple (and simplistic) as videos like this one.

  • Deadvalley76

    The 1% buy the politicians,
    The people vote for these politicians,
    The politicians create crippling regulations and taxes to eliminate and hinder the competition of the 1%,
    The people see the 1% grow stronger and richer,
    The people blame the already handcuffed "free market",
    The people cry for more regulations and taxes,
    WASH AND REPEAT.

  • RonPaul Revered

    Monopolize law and administrative services to protect us from monopolies? Steal money to protect us? Discriminatory pricing? Read Murray Rothbard's Power and Market. I would also like to point out that this episode was brought to you by government. Is anybody surprised it advocates for itself?

  • r red

    When Crash Course says good things about govenment:"You guys are so biased!"
    When Crash Course says bad things about govenment:"So true!"
    Guys he's not saying the government is good he's telling us what certain things it puts in place and what their purposes are.

  • BobWidlefish

    Gee without federal regulations on gas mileage there would be no way for consumers and manufacturers of cars to cope. This is obvious since only America creates and consumes cars…

  • BobWidlefish

    The government tries to keep inflation low?! Tell me again who creates inflation? Oh right it's Apple and Walmart. It couldn't possibly be The Federal Reserve which was created by the government.

  • Andrew BoddySpargo

    Okay, Craig, you – and your new wife – are officially invited to dinner with me – and my new wife – any time that's convenient for you and you happen to be in Milwaukee, Wisconsin. ๐Ÿ™‚ (we could probably meet you in Madison also) Topics for discussion would include, but not be limited to, Star Wars, endangered species, and the role of government in the economy.

  • sexyloser

    People who don't want to pay taxes should have the option to opt out of taxes in exchange for the right to use public roads, bridges, parks, schools, healthcare, law enforcement, fire departments, military protection, protection from discrimination and to vote. They should be required to have ID on them so tax paying citizens can choose to refuse service to them if they so choose. Tax paying citizens would also be allowed to steal, harm or kill them without fear of the law.

  • John Smith

    now i like john green as much as the next guy but this guy is much better in my opinion his little side jokes are much better and less time consuming and his episodes are more information packed and ive yet to come across one like john's alexander the great episode(it devolved into how history marginalized women for those that don't know)

  • starrychloe

    I actually want anarchy. I want choice and competition and lower prices and better quality. I don't know why you hate progress so much.

  • MadMage86

    We've been waaaaaay behind on the protection of Employees and Consumers for far too long.

    A large part of the problem is the [baseless and incorrect] association of such protection with socialism and communism.

  • Fynn Gilbert

    Without government there wouldn't be roads… face palm
    The government is the reason why there are many roads, yes, but private companies could have done so as well, and more efficient i argue. the fact that you are forced to pay for roads no matter what, so that some idiots think they are for free, is the the reason why we have such a car dependent culture, why we are buying food from the other side of the world which is totally inefficient, which also destroys local jobs. Since the left in general is so "green" and cares so much about the environment and local jobs, then why the fck do you keep pushing for more government?

  • Coltsfan520

    1100 pages to prove a business is a qualified borrower. 10 yrs of red tape to build a housing subdivision. EPA regulations have send more business out of the country than all other reasons combined. The Federal Reserve is "so complicated" yet it has no oversight. Subsidies go to lobbyist. Crash course or indoctrination video.

  • vgman94

    "Also, do you really want California to make rules for the rest of us? Of course you don't!" In the topic of gun law, California is doing exactly that (with Oregon, Washington, Nevada and even Montana). I'm not a gun rights extremist like the more visible NRA types, but that is an area where CA is doing that, and probably is making rules in other ways for other states, as well.

  • Eye Pop Compilations

    The way I see it is that libertarians and fiscal conservatives are not big readers of 19th century history and the environment which brought in communism. Few if any read mainstream history by real academics, as is the case with creationists, and Jacob Riis Charles Dickens, Upton Sinclair are in general ignored. Their views are so simplistic in regards to the free market that you would think they were raised in the. pre industrial age and thus innocently ignorant of the abuses meted out to industrial workers.

  • Eye Pop Compilations

    As with creationists, libertarians are so entrenched in their pseudo scholarship that they will endlessly quote dubious source after dubious source to prove their point. The statement " the free market never errs" is just as unfounded in science as "the planet is only 6000 years old." Incidentally both statements are backed up by reams of garbage scolarship. The creationist museum is as great a monument to ignorance as is the various think tanks devoted to libertarianism

  • Ileana Romero

    Don't get me wrong I love this country. But lets call a a spade a spade. Sometime communism its at its worse when it is hidden in this country.

  • Olivia esddms

    Lol. My birthday party was basically political and psychological discussion.

    And I'm pro taxes. Well, fair taxes, anyway… and universal health care. And publicly funded infrastructure.

    But other that making sure citizens don't die, it's muddier…

  • John Banik

    California already does tell the rest of the country how things WILL be manufactured! Want proof? Look @ commercial trucking. Investigate "clean air standards"…

  • Leah Smo

    Thank you for helping me realize that I never want to go into US gov't!
    Seriously! Like your videos are good and they're really thorough
    And all the details helped me decide that I hate this government stuff๐Ÿ˜‚

  • Skool Wifi

    Anti-Government is simply not possible nowadays. However, too much government intervention can make people less independent and rely on the government for basic needs. This is exactly how corruption comes to exist and should be avoided at all costs. Either extreme is unrealistic and should be put behind us.

  • Anthony Rodriguez

    In the U.S., it seems many police supporters are against a lot of government regulation. The question , "Why?", is maybe brought to mind.

  • Lukas Buck

    Government regulation are put for the benefit of politicians, instead of the benefit of the citizens. If restaurants serve rat meat, then the people, not the government, can decide the fate of the restaurant. Same with cars. The government discourages entrepreneurship and diversity, because they want cars to not have a seat in the middle. The internet should be owned by the citizens of the United States, not by the government. If you think government is the reason why we have better working conditions, your wrong! Technology and the will of the workers is why we are having good working conditions.

  • Derek Seube

    Would you say career politicians who have been there decades have served their constituents more or have been more self serving. In other words: do you feel they work for you or you are subservient to them? Given all the perks and ability to vote they own raises. Don't think they ever deduct their pay if economy goes south or district they represent goes far into debt due to their spending. Funny how most politicians are more well of than those they represent. You'd think they'd want to give back more than they take in. If truly serving the people rather then be served by the people. Proof that power corrupts and absolute power corrupts absolutely.

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