Ch. #16 Equity in income distribution

Monday, January 6, 2020 – Monday, January 13, 2020

Essential question: How well do government policies of taxation and expenditure (transfer payments) promote equality in terms of their potential positive or negative effects on efficiency in the allocation of resources?

Monday
In class:

• Crashcourse: Income and wealth inequality 10m​​
• Key concepts of the chapter are the Lorenz Curve, the Gini Index (coefficient) which demonstrate the result of various government policies including types of taxation, expenditures (transfer payments)
  • Click here for a primer on the Lorenz Curve and Gini Index
    • PPT slides #32 - #36 Lorenz curve and Gini index 
      • Lorenz curve - Plots the percentage of national income against the population by quintile (20% breaks)
      • Gini coefficient - The ratio of the area below the line of equality (45 degrees) and the Lorenz curve to the entire area below the line of equality
        • The closer to zero the more equally income is distributed
• The fall and rise of US inequality, in 2 graphs
  • Phase 1 ~1920 - 1980 - Income inequity fell
    • Post war booms led to demand for low and mid skilled workers
    • High taxes (up to 90%) and social norms
  • Phase 2 ~ 1980 to present - Income inequality rises
    • Wage stagnation due to:
      • Globalization
      • Automation/information age
      • Declining union membership (less collective bargaining power)
  • However, globally, there is a different story unfolding
    • NPR: Inequality is falling on planet earth 
      • A wonky resource: Global income distribution: From the fall of the Berlin wall to the Great Recession

Homework:

• Read Ch 16
• Watch ACDC: Capitalism and The Hunger Games: EconMovies #10 6m

Tuesday (Period 5)
In class:

• PPT slides #37 - #40 
  • Taxes
    • Regressive - Rich pay more but as a percentage of their income they pay less
      • Examples: Sales (consumption) tax, gas tax (per gallon), social security tax, property taxes, sin taxes
        • Pro - Wealthy pay more absolute dollars
        • Con - Wealthy pay less as income rises
    • Proportional - Everyone pays same percentage (flat tax system)
      • Example: 
        • Pro - may be deemed "fair"
        • Con - does not increase equality or greater equity
    • Progressive - Increases exponentially as income rises
      • Example: US Federal income tax
        • Pro - Promotes equity and equality in income distribution
        • Con - Discourages hard work
  • Transfer payments
    • A redistribution of wealth via taxes (how the government spends it's tax receipts to promote equity)
      • Unemployment benefits - limit fall in income to those who lost their job
      • Social security - reduce poverty in the elderly
      • Nutritional subsidies - provide affordable food and improved health
      • Educational subsidies - assist in obtaining an education
      • Health care subsidies - promote health care
      • Welfare benefits - provide income for basic necessities
• Introduce project
  • In theory US income equality is possible, but it has not happened. Let's evaluate current candidate and our President's policies that are intended to promote equity (taxation, government expenditure and transfer payments) in terms of their potential positive or negative effects on efficiency in the allocation of resources and other economic outcomes.
    • Self selected small group (3) poster development work to be presented Monday
      • #1 What single most powerful piece of evidence can you present to demonstrate today's level of income inequality? (who are the poor, where are we today, what is the trend?)
        • These will vary for each group, so will be teacher approved. Your selection will carry through the next two prompts, so read ahead before deciding your groups direction!
          • Assessment based on wow factor, usage of facts, cause and effect, single graphic/picture/chart, use of economic language
      • #2 How is your candidate attempting to address your example of income inequality and what are your groups opinions on these initiatives? (what is being proposed? Explain)
        • Assessment based on accurate research, specific meaningful examples and clearly stated group opinions (agreements/disagreements) use of economic language
      • #3 Evaluate the specific policy's likelihood of improving inequality?​
        • Assessment based on depth of specificity, rationale and clarity of cause and effect, use of economic language
• Students not in class on Monday should schedule a time to take an alternative written assessment during flextime
  ​

Homework:

• ​Choice

Wednesday (Period 4)
In class:

• Same as Tuesday

Homework:

• Choice

Thursday
In Class:

• DECA Area

Homework:

• Choice

Friday
In class:

• Project work period

Homework:

• Choice

Monday
In class:

• Presentations

Homework:

• Read Ch 17

Key learning
Learning objectives​
Learning objectives answers
Vocabulary
Diagrams

Chapter resources
​Textbooks:
Jason Welker (interactive)
Alternative textbook

Lecture notes:
Macro notes by chapter

Video lectures:
Jason Welker (our textbook)
AC/DC
Khan
Crashcourse

PPT lectures:
Jason Welker (our textbook)

Economic writing:
How to structure your essays
Command terms
Glossary

​Diagramming:
Key diagrams
​How to read and interpret graphs
Comprehensive list

Course resources
​​Course overview
Syllabus (Skyline)
IB course guide (official IB syllabus)
LO's by page #
Chapter index
IBO Sub reports
OSPI framework
Module review guides:
  Micro
  Macro
  International
  Development