Economy refers to all of the activities by humans and exchanges between humans that are necessary to sustain and improve life. Etymologically, the word economy comes from the Greek oikos (home) and nomos (managing). While ecology has similar origins, too often they are not directly linked. Economy is conventionally treated as the summary of the current soundness of financial indicators like jobs and job growth, economic productivity and output, and can be measured by a wide range of other factors such as the national debt and the trade deficit, unemployment rates, and GDP.
Employment is the single most important economic indicators for politicians. Quantity and quality both matter. Unemployment is a serious problem, but so are under-employment and a decline in the quality of jobs (such as whether they provide Employee Benefits or good pay.)
Often when laying off employees companies find the stock market approves of this and raises the value of their companies, even though theoretically a loss of labor means a loss of productive capacity. Of course, the measure for the market is the productive capacity per dollar, and on this theory the markets react in many cases.
Furthermore, a labor market, like all markets, is driven by demand, therefore, zero unemployment would make such a market unstable, with prices for labor shooting through the roof. The question from a liberal perspective has to be do we therefore need to solve the puzzle to provide for full employments or do we commit to sustaining people in a state of unemployment to provide a margin of negotiation to facilitate a healthy labor market? People so sustained, of course, have to be kept in the job market for this particular justification to hold, such as with unemployment insurance.
Close related to the issue of jobs is the relationship between Labor and management in union shops.
Poverty and Income Distribution
Central economic issues for progressives are poverty and income distribution. Progressives generally feel that current economic arrangements unduly favor the rich and try to determine the economic root causes of poverty so that sustainable ways of preventing hardship for the millions who are poor can be established. Conservatives tend to see poverty as inevitable and focus on growth in production, even if that growth is shared only by a small portion of the total workforce.
Inflation and Interest Rates
Inflation is a general reduction in the purchasing power of money. Its main, but not exclusive cause, is an increase in the money supply relative to the supply of goods and services in the marketplace. The most common measure of inflation in the United States is the Consumer Price Index, although a more accurate method of determining it called the GNP price deflator is also used.
Interest rates are what lenders charge for the use of their money for a period of time. Part of this charge reflects the risk that the lender will not be repaid, part of this reflects the fact that inflation may cause money to be worth less when they money is repaid (i.e. inflation) and part of this reflects simply the market's value of having money over a time period. The last part is commonly called the "risk free real rate of return". "Real" means, after inflation is considered, and the main measure of risk free is the rate changed by the United State government on its debts, as the United States government has the best credit rating in the world of any individual, or corporation, and a better credit rating than all but a handful of governments (the Swiss might be marginally safer).
Inflation and interest rates tend to vary in predictable ways over the course of the "business cycle" (i.e. recessions and economic booms). Interest rates, especially short term interest rates, are heavily influenced by the actions of the Federal Reserve, an independent agency in the Executive Branch of government with a Board appointed by the President and approved by the U.S. Senate which has subtantial involvement in the quasi-private regional banks that make up the federal reserve system. Alan Greenspan is the current chairman of the federal reserve.
Low interest rates are believed to encourage economic growth. High interest rates are believed to restrain inflation.
While market interest rates for the economy as a whole, such as the "risk free rate of return" are determined by macroeconomic factors, individual interest rates are determined by individual creditworthiness situations closely related to bankruptcy law.
Corporations which are publicly held have vast economic power, due to their size, but the decisions they make are mostly controlled by a self-perpetuating management group, since, as described below, even wealthy shareholders and institutional investors have only modest influence on their actions. This creates concerns about corporate accountability.
The impression created by introductory economic texts in the United States notwithstanding, the American economy is not just a random and unstructured collection of firms and individuals each of which diligently pursues profit. The economy has evolved into a variety of industries in different sectrors which each play a role in how our economy works. Each has its own internal organization, is subject to its own sets of governmental regulation, and is affected by long term trends influencing our economy in different ways. The sectoral map of how the U.S. economy is organized into industries is set forth below with links to descriptions of individual industries. Note that this does not distinguish between industries producing capital goods and consumer goods.
Primary (Extractive) Industries
Tertiary (Service) Industries
- Health Care
- Public Utilities
- Wholesale Trade
- Retail Trade
- Finance, Insurance and Real Estate
- Business Services
- Personal Services
- Stock Markets
- Interest Rates
- New Home Sales
- Retail Reciepts
- First Time Home Buyers
- commodity prices
- Gas Prices
Here are some good places to find raw data:
- The Census Bureau
- The Office of Management and Budget
- The Bureau of Labor Statistics
- The Congressional Budget Office
Here are some results compiled in a convenient form:
- Data on Job Creation by President
- Data on Median Wage by President
- Data on National Debt by President
- Data on Spending by President
- Data on Upper-Class Wages by President
- Combined Data by President
Note: I'd like to see some historical data for some other wealthy nations: Germany, Japan, Norway, whatever. (The point is to view the effect of liberal vs conservative policy as they affect other nations as well.) I don't think you can meaningfully measure across nations because of wild differences in natural resources, but within a nation, you can meaningfully compare across time.
Some sources for data are link to in Economy_Under_George_W_Bush.
It's strange that the management of home can spawn such wild and varied theory. The worst sort of this theory is best illustrated with a joke:
Three eminent thinkers, a mathematician, a philosopher, and economist, were stranded on a desert isle. Only the economist survives the ordeal. How does this wiley thinker escape? The economist assumes a boat and navigates back to inhabited lands.
There are of course many economists worth the paper their theory is printed on. Paul Krugman for example has been an unequaled champion of the bait and switch meme. The following is a list of important economists (and hopefully growing context.)
- Adam Smith
- David Ricardo
- John Stuart Mill
- Henry George
- Thorstein Veblen
- John Kenneth Galbraith
- John Maynard Keynes
- Milton Friedman
- Herman Daly
- Richard Florida
- Michael Albert
Much of the focus of economics is on how government policies and laws impact the economy. Much of this focuses on Taxes and more generally on Public Finance (which includes government spending and borrowing as well as government revenue sources). Other examinations include Tort Reform, regulation of the Environment, Energy policy, and laws related to Intellectual Property.
Progressive think tanks
Economic Pattern Language
A new effort at developing a clear and concise communications framework for progressive economics, starting here: Economic Pattern Language.