Economic Policy Essay Example for Free

Economic Policy Essay The essence of economic policy in the areas of urban housing, urban education, and urban transportation in the United States National Government is cored on the achievement of trade targets. Boosting its market efficiency and redistribution of supply and services grounded on public values are its primary interest (Feldstein, 1999). These economic policies make up a part of the body of agenda. These are of regulated policies prepared by the Federal Reserve System headed by the President of the United States of America and the legislative branch of government (Poole 1999). Body At the outset, economic policies are decisions. President Harry Truman was a decision maker of the land in his time (Mankiw, 1998). He mentioned of his need to find one-armed economist (Mankiw 1998). This is a manifestation that the concept of economic information is ambivalent (Mankiw, 1998). Decisions are taken initially based on individual principles of: trade offs in efficiency and equity, cost of something versus opportunity cost, marginal changes to a plan, and response of people to trade offs (Mankiw, 1998). Subsequently, societal interactions principles are considered based on: trade, markets, and governmental market policy (Mankiw, 1998). Finally, national economy is considered upon the principles of: production of goods and services, inflation, and tradeoff between inflation and unemployment (Mankiw, 1998). Three of the economic policies Of the United States of America National Government are in the areas of urban housing, urban education, and urban transportation. These are parts of the regulated competitive industries (Feldstein, 1999). The urban housing policy covers private and social benefits of homeownership (Haurin, 2003). Bush said, homeownership is the core American values of individuality, thrift, responsibility, and self-reliance (Haurin, 2003). It represents a pathway to pride and prosperity for many families, encourages values of responsibility and sacrifice, creates stability for neighborhoods and communities and generates economic growth that helps strengthen the entire nation (Haurin, 2003) Dietz and Haurin (2003) however showed that 25% more of spouses in owner-occupied households work or are employed. They also have to face up to inevitable tax revenues through mortgage deductions (Haurin, 2003). While the data presumes that the rest of the population in owner-occupied households does not work, this would mean, this group is above average income in the strata of society. The next issue then is to know why were governmental supports for homeownership projects in the scale of billions of dollars far exceeded expenditure on education (Haurin, 2003) when most homeowners have beyond workers financial capabilities. Were the determinants of families becoming homeowners covered by public policy (Haurin, 2003)? What economic public policy would justify lumping up of burdens on homeowners who are mere workers? What economic public policy would explain governmental support to boost the status of those who can afford a home? Would this public policy be in consistent with the targets of government as pronounced by the President? Enhancement of market efficiency is focused on: developing performances of industries by eliminating anticompetitive elements; providing consumer protection like making informed choices possible; and ensuring product cost would include externalities (Feldstein 1999). While redistribution of resources and services anchored on the policy of collecting higher taxes from those who earn more to provide for those who earn less (Feldstein 1999). These policies however are often influenced by international institutions like the International Monetary Fund or World Bank as well as political beliefs and the consequent policies of parties. Housing Policy for example is usually analyzed in economic industry, as a form of market. Market leads to efficient allocation through a complex process of matching supply and demand. This depends on competition, good information, the existence of multiple suppliers, and the existence of different multiple purchasers. At the beginnings of the 21st century the demographical changes in the United States shaped housing consumption (Masnick, 1990). This is marked though by the big problem in urban housing policy which became inadequate for the increased number of houses required to support increasing population (Masnick, 1990). The number of homeless people is constantly increasing annually (Masnick, 1990). Homelessness became a very complex problem (Masnick, 1990). This means, if there were not enough places for people to live, then there are really those who does not have any shelter of their own (Masnick, 1990). The housing market bloated beyond previous policy allocations (Masnick, 1990). As a consequence, those who were not originally included generally became the poorest constituents of society (Masnick, 1990). Subsequent to demographical changes is the alternative of the homeless to find shelter in temporary shanties on unoccupied lands (Dunleavy, 1981). This led to problems of land entitlements (Dunleavy, 1981). Squatters over time on squatted settlements built more stable houses (Dunleavy, 1981). Homelessness often led to development of individual characteristics such as alcoholism, psychiatric illness, unemployment, and marital breakdown (Dunleavy, 1981). The situation is further aggravated by the decrease in privately owned housing programs (Dunleavy, 1981). The local governmental systems then were obligated to absorb the market (Dunleavy, 1981). As it turned out, it is cheaper to buy houses than to rent (Dunleavy, 1989). Housing conditions in many cities which were particularly unsatisfactory being old and in poor condition were improved (Dunleavy, 1989). Looking back, series of policies since the late 1960s focused on the problems of deprivation in inner city areas (Dunleavy, 1989). Much of the concern was with the inner cities growth which was an attempt to produce an acceptable racial policy. Despite this, ethnic minorities have had no proportionate share of resources from policies for the inner cities (Dunleavy, 1989). However, local government economic policies today are more focused, and greatly in consistent with constant changes in the societal demographics regardless of ethnicity (Gabriel, 1990). Another consideration however must be made. This is because of: the limited availability of affordable rental units, mortgage finance, reduced housing and income assistance to very low income populations, problems of public housing, low income housing preservation, issues of equal opportunities in housing and housing finance market (Gabriel, 1990). Thus it could be said that housing trends are developed largely because of statistical increase in the number of people as well as their movements for relocation needs (Masnick, 1990). The individual household needs were then used as the foundation for the modification of housing policy. This is in addition to the different economic changes which were built-in, in the shifting demographic landscape (Masnick, 1990). In the area of education, improvements must be made in urban education policy (Hess, 2001). Urban districts are now facing hazardous problems in educating young people because of the lack of support from the local government (Hess, 2001). Many buildings in urban public schools are very old (Hess, 2001). Because of this, despite the big number of public schools in the United States, only one-fourth of the country’s students are attending the classes throughout districts (Hess, 2001). These are the main problems of the district official in the urban public area (Hess, 2001). They are unable to comply with the needs of their student population Hess, 2001). The rates of dropout students are also increasing (Hess, 2001). The urban education policy that would most likely fit implementation will be one that is site-based management throughout the district (Hess, 2001). This will allow officials and teachers at the school level to focus more on the specific needs of the students (Hess, 2001). Educational reform efforts and policy initiatives are now under way that shows commitment in improving the quality of education. It will include the proper raising of the student outcomes in the urban districts (Hess, 2001). A key issue though in urban education policy is the potential impact of market-based reforms (Hess, 2001). It will require more than the application of additional money in improving the quality of urban education (Hess, 2001). Allocations of school funds must be centered on the functions of instruction, administration, operations, and maintenance of almost the same statistical number of clients (Picus, 1996). Urban transportation policies must likewise be modified as societal demographics evolved (Norton, 1955-1970). Many states have still no urban freeways (Norton, 1955-1970). The ever increasing numbers of privately owned cars warrants improvement in policies (Norton, 1955-1970). Evolving Americans have to face up to transport problems in the cities (Norton, 1955-1970). The Federal-Aid Highway Act of 1944 made a beginning at bringing highways to the city (Barranda, 2004). It set aside 25 percent of federal highway funds for urban projects and called for the designation of a National System of Interstate Highways† (Barranda, 2004). Although funding of these projects in the late 1940s and early 1950s was at more than two and a half times the prewar levels, total annual federal highway appropriations remained a half billion dollars or less (Barranda, 2004). The problem was that while government and industry both wanted highways, neither wanted to foot the bill (Barranda, 2004). Industry opposed excise taxes and tolls, while government opposed special bond issues and debt increases (Barranda, 2004). Divisions between pro-highway industries impeded their ability to lobby for an effective highway program (Barranda, 2004). However, eventually, the highway system that the government-industry partnership built was urban (Barranda, 2004). The unique degree of private participation in U. S. ransportation policymaking, and a federal policy treated all transportation problems as matters for highway engineers to solve (Barranda, 2004). In 1954, President Eisenhower suggested that metropolitan area congestion be solved by a grand plan for a properly articulated highway system (Larsen, 1995). In 1956, the House Committee on Public Works urged drastic steps, warning that otherwise traffic jams will soon bring down our growing economy (Larsen, 1995). The demise of the highways-only policy stemmed also from serious flaws in the policy itself (Larsen, 1995). At the end of World War II, the federal government began a significant intervention in urban transportation (Larsen, 1995). It was one which had increased to enormous proportions by 1960 (Larsen, 1995). But the funds were provided exclusively for the construction of urban highways (Larsen, 1995). Thus, urban transportation systems necessarily became imbalanced in favor of automotive transport (Larsen, 1995). Even the automotive transport systems were imbalance too (Larsen, 1995). Inequality was brought about by the ways in which federal dollars were allocated (Larsen, 1995). For example, while new freeways were providing automobiles unprecedented ease of access to cities, substantially, less federal allocations was provided for the downtown streets that had to bear the increased load (Larsen, 1995). No budgets were also allocated to provide the record numbers of cars for parking areas (Norton, 1955-1970). The US new urban transportation policy serves greater idea in resolving congestion problems in the cities (Barranda, 2004). Highway-Only Policy is one of those new integrated ideas (Barranda, 2004). Industry, not government, took the initiative in proposing that highways go downtown (Barranda, 2004). Eisenhowers coalition was composed of industries associated with the highway problem and interested in highway development, in the words of the Clay Committee report (Barranda, 2004). Although the Clay Committee conferred with the American Railway Association in drafting its report, this group was the only one of twenty-two trade organizations consulted which had an interest in rail transport (Barranda, 2004). Fourteen of the groups consulted were expressly concerned with roads (Barranda, 2004). But these industries were not simply developing a highway policy (Barranda, 2004). This is their foundation in creating a new national transportation policy (Barranda, 2004). However, many cities in the United States have recently built light-rail systems to combat congestion problems and at the same time avoid pollution (Barranda, 2004). To some critics oppose this policy is not fit because of the function in some small downtown areas (Barranda, 2004). The application of this light-rail however, after its almost universal domination in the 20th century is one of the greatest twists in transportation history. This application policy is an exclusive idea whose time appears to have come (Barranda, 2004). Local government now hopes that the light-rail will gain moderate transportation that will reduce the traffic problems around the country (Barranda, 2004). Fighting congestion was the main rationale for making American highways enter cities to a degree unmatched elsewhere in the world (Barranda, 2004). The consequences of the improved policies ultimately transformed U. S. urban transportation system (Barranda, 2004). Critics of the policy, in government, and outside of the government circles achieved broad bases of support by confronting this problem (Barranda, 2004). Expertise in urban transportation matters, which had been the exclusive domain of highway industry, emerged in other institutions, both governmental and private (Barranda, 2004). The road builders promises to end congestion, to keep downtowns vital visibly failed to pan out (Barranda, 2004). In brief, the vigor of the government-industry partnership that brought the freeways into the cities did not last, but is envisioned to trigger interest on alternative prospective partners (Barranda, 2004). Conclusion The basic portfolio principles of economics provides conceptual structures underlining maintenance of flexibility of economic policies whether it is in housing, education, or transport, or even in prices where speculators are left with the liberty to discern and give value to market stocks so long as it is within the economic parameters of the United States of American government, its Federal Reserve System, its legislature as well as its executive governmental administrators that works within the framework of Federal Democracy.