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Your task is to offer a detailed critique of a peer-reviewed article you locate in the CSU Online Library. The article must be related to explaining how the needs of certain groups of individuals or institutions (e.g., veterans, the elderly, the poor, hospitals, or clinics) can determine how government on the local, state, or federal level spends their money. Using the first few pages of Chapter 1 as a guide, select a specific group of individuals or institutions in our society as part of your search. In your critique, address the following questions/points:

  • What are the main points and arguments of the author(s)?
  • What is your opinion of the article? How does the article relate to your experience or current job in the public or nonprofit sector?
  • How can the points and arguments of the author(s) be applied to the public sector in a practical sense?
  • Describe how positive and negative externalities could affect the efficiency with which governments can allocate their resources to provide for the needs of citizens.

The critique should be roughly 500 words in length (approximately two double-spaced pages). Be sure to cite all borrowed, quoted, and paraphrased material appropriately in APA style. Your professor is most interested in your opinion (the second and third bullet points above).


Hyman, D. N. (2014). Public finance: A contemporary application of theory to policy (11th ed.). Cengage Learning.

Please read before offering a bid..BUSINESS and FINANCE Your task is to offer a detailed critique of a peer-reviewed article you locate in the CSU Online Library. The article must be related to explai
Textbook: Hyman, D. N. (2014). Public finance: A contemporary application of theory to policy (11th ed.). Cengage Learning. Chapter 1 The role of government in society has been and will always be controversial. Some believe government does too much while others believe it needs to do more. Many look to government to solve problems they believe to be important to them but would rather not have it engage in activities that benefit others. No matter what your view of government, it is clear that its programs and scope have grown significantly from a small share of the economy in the early 1900s to between 30 and 60 percent of the economy in modern industrial nations today. Citizens give up substantial amounts of their income each year to pay the taxes necessary to finance government expenditures. This book is about the government sector of the economy. A framework for analyzing the role of government will be developed. That framework will be used understand why government has grown and the consequences of future growth. We will study both the economic and political aspects of government. Major gov- ernment expenditure programs will be analyzed. Alternative mechanisms for financ- ing government activity and their economic effects will be discussed, as will issues relating to the government budget deficits and debt. Since 2000, government spending in the United States as a share of gross domestic product (GDP) has increased. Federal expenditures for national defense and health care by governments have both gone up as a share of the economy. The recession of 2007–2009 and its aftermath of slow economic growth and high unemployment in the United States resulted in increased federal government spend- ing to stabilize the economy. The recession and anemic economic growth from 2009 through 2011 has adversely affected tax collections for the federal, state, and local governments. Many state and local governments have been forced to curtail spending and raise taxes to balance budgets from 2008 to 2011. The federal gov- ernment’s budget deficit and debt outstanding has been soaring. Some of the growth in federal spending and the increase in government bor- rowing is due to the extraordinary circumstances resulting from the financial crisis and recession. The federal government has provided assistance to state and local governments to help them cope with the effect of the recession on their budgets and has also acquired ownership shares in struggling businesses in the banking, financial, and automotive sectors of the economy. Although these shares can be sold in the future, they do pose the risk that economic losses could be borne by tax- payers. The federal government’s budget deficit in 2010 was the largest as a share of GDP since the end of the World War II. As federal deficits have increased, so has the level of federal debt as a share of GDP. Rising levels of government debt both in the United States and nations in Europe using the euro as their currency has been a factor of concern in financial markets. In the United States, political bickering between the president and Congress about the ceiling on federal debt caused one leading credit rating agency to down- grade its rating for U.S. government securities in 2011. And the risk of default on sovereign debt in such euro zone nations as Greece, Italy, Spain, Portugal, Ireland, and even France has caused interest rates to rise on government securities in those nations. Many of these European nations have embarked on “austerity” programs to cut government spending and raise tax revenues that could adversely affect their economic growth rates. A major factor influencing the growth of government spending in the United States is the expanding role of governments in financing health care. Government expenditures for health care have been rising rapidly in recent years. If current trends continue federal government spending on health care through its two major health insurance programs, Medicare and Medicaid, could account for more than 50 percent of federal government spending by 2080 as the population ages. State government expenditures for health care have also been increasing significantly. Either tax rates will increase in the future to finance growth in government spend- ing or increased federal budget deficits could impact the economy in ways that either slow economic growth or cause inflation. Of course, another alternative would be to attempt to reduce the rate of growth of federal government spending. Given the projected importance of health care spending in the budget, this is unlikely to be possible without some curbs on spending for health care by govern- ments and significant changes in the health care system in the United States. The government’s role in health care is likely to remain a divisive issue. Between 2000 and 2010, total government spending in the United States increased significantly from 30 to 38 percent of GDP. Since 2007 much of that increase resulted from extraordinary expenditure to stabilize the economy while slow growth in GDP also contributed to increased share of government spending in the economy. However, because of rising levels of federal debt and concern about the negative impact of chronic federal budget deficits on the economy, politi- cal pressure has now emerged to reduce the share of government in the economies of both the United States and other major industrial nations—particularly those in western Europe. INDIVIDUALS, SOCIETY, AND GOVERNMENT What would it be like to live in a nation without government? There would be no system of courts to administer justice. Provision of national defense and homeland security would be difficult or disorganized with no central government to maintain and supply the armed forces. You could forget about such programs as Social Secu- rity, unemployment insurance, and welfare that provide income support to the elderly, the unemployed, and the poor or disabled. How would police and fire pro- tection be provided? Driving on roads and over bridges that we take for granted could also be a problem because virtually all the highways, streets, and other public transportation infrastructure we use every day are supplied and maintained by gov- ernments or their agencies. There would be no publicly funded elementary and sec- ondary schools. Higher education, which is heavily subsidized by both the federal and state governments, also would be in trouble. Our system of health care depends on government programs to pay the medical bills of many of the poor, the elderly, and veterans. Institutions ranging from medical schools to public clinics and hospi- tals would have their operations impaired without government support. Now that you have finished reflecting on what your life would be like without governments, you can better appreciate how much you rely on government services each day. We all benefit from government activities and expenditures. Since 1980, annual government expenditures in the United States averaged one third of GDP. In economics, we study the ways individuals make choices to use scarce resources to satisfy their desires. If you have taken an introductory economics course, you studied the role of markets as a means of establishing prices that influ- ence individual choices to use resources. In this book, you will study the role gov- ernments play in allocating resources and how individual choices influence what governments do. You also will study how government policies affect the incentives of workers, investors, and corporations to engage in productive activities. If you have completed an introductory economics course, one lesson you have been taught already is that nothing of value can be obtained without some sacrifice. There are costs as well as benefits associated with the activities of governments. The role of government in society is so hotly disputed because we differ in our assessments of the costs and benefits of government programs. Many people think the role of government in the economy needs to be expanded and look to government to help solve their own problems. Others think the role of government in the economy is already excessive and would like to see its scale of influence reduced. Government expenditures are financed mainly by taxes. U.S. taxpayers give up more of their income each year to support government activities than they do to satisfy their desires for such basic items as food, clothing, and shelter. Taxes col- lected by governments in the United States are nearly three times the annual expen- ditures on food, nearly eight times the annual expenditures on clothing, and more than three times the annual expenditures on housing. The average U.S. household devotes nearly four months of annual earnings to meet its total yearly federal, state, and local government tax obligations. Citizens benefit from the many goods and services made available by governments, but they also pay the costs of these services. We differ in our views about what governments should and should not be doing in part because our valuations of the benefits we get from government dif- fer. We also disagree because of variation in the amount of taxes and other costs each of us pay. GOVERNMENTS AND POLITICAL INSTITUTIONS Public finance is the field of economics that studies government activities and the alternative means of financing government expenditures. As you study public finance, you will learn about the economic basis for government activities. A crucial objective of the analysis is to understand the impact of government expenditures, regulations, taxes, and borrowing on incentives to work, invest, and spend income. This text develops principles for understanding the role of government in the econ- omy and its impact on resource use and the well-being of citizens. Governments are organizations formed to exercise authority over the actions of people who live together in a society and to provide and finance essential services. Many citizens and resources are employed in the production of government ser- vices. Individuals pay taxes and, in many cases, are recipients of income financed by those taxes. For example, Social Security pensions, unemployment insurance compensation, and subsidies to the poor are financed by taxes. The extent to which individuals have the right to participate in decisions that determine what governments do varies from society to society. What governments do, how much they spend, and how they obtain the means to finance their func- tions reflect political interaction of citizens. Political institutions constitute the rules and generally accepted procedures that evolve in a community for determining what government does and how government outlays are financed. Through these mediums, individual desires are translated into binding decisions concerning the extent and functions of government. Such democratic institutions as majority rule and representative government offer citizens an opportunity to express their desires through voting and through attempts to influence the voting of others. Under majority rule, one alternative (such as a political candidate or a referendum to increase spending for education) is chosen over others if it receives more than half the votes cast in an election. Just as economic theory is usefully applied to analysis of market interaction and individual choice, so can it be applied to political interaction and choices. Modern economics bases the study of government activity on a theory of individual behavior. THE ALLOCATION OF RESOURCES BETWEEN GOVERNMENT AND PRIVATE USE Government provision of goods and services requires labor, equipment, buildings, and land. The real cost of government goods and services is the value of private goods and services that must be sacrificed when resources are transferred to govern- ment use. When citizens pay taxes, their capacity to purchase goods and services for their own exclusive use (such as automobiles, clothing, housing, cameras, and din- ing out) is reduced. Resources that are thereby diverted from private use are pur- chased or otherwise obtained by government. Taxes also have indirect costs because they distort choices. Taxes affect prices of goods and services and the incentive to work, save, and allocate expenditures among goods and services. Taxes impair the operation of the economy by inducing individuals to make choices based not only on the benefits and costs of their actions but also on the tax advan- tages or disadvantages of their decisions. The distortion in resource use and loss in output that results from the effect of taxes on incentives is also part of the cost of government activity. The resources governments obtain are used to provide citizens with goods and services, such as roads, police and fire protection, and national defense. These gov- ernment goods and services are shared by all; they cannot be used by any one citi- zen exclusively. Other goods and services provided by government are limited in availability to certain groups, such as the aged or children, as with Social Security pensions and public primary and secondary schooling. The trade-off between government and private goods and services can be illus- trated with the familiar production-possibility curve. As shown in Figure 1.1, this curve gives the alternative combinations of government goods and services and pri- vate goods and services that can be produced in an economy, given its productive resources and technology and assuming that resources are fully employed. Private goods and services are those items, such as food and clothing, that are usually made available for sale in markets. Government goods and services, such as roads, schooling, and fire protection, usually are not sold in markets. At point A in Figure 1.1, MX1 units of private goods and services are forgone by individuals so that government can provide 0G1 units of goods and services. Resources that would have been employed in producing private goods and services are used by the government to provide services and exercise its functions. An increase in the amount of government goods and services provided per year from 0G1 to 0G2 requires a reduction in the amount of private goods avail- able per year. In Figure 1.1, the annual amount of private goods available declines from 0X1 to 0X2 as the economy moves from point A to point B on the production-possibility curve. For example, suppose that individuals demand more environmental protection services. To make these services available, governments Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require
Please read before offering a bid..BUSINESS and FINANCE Your task is to offer a detailed critique of a peer-reviewed article you locate in the CSU Online Library. The article must be related to explai
PUA 5305, Public Finance and Budgeting 1 Cou rse Learning Outcomes for Unit I Upon completion of this unit, students should be able to: 1. Assess the relationship of historical and contemporary finance -budgeting theory to real -world public administration issues. 1.1 Explain the relationship between externalities and efficiency. 6. Consider the impact of citizen influence on the budgetary process at various levels of governance. 6.1 Explain how the needs of certain groups of individuals can determine how government spends its money. Required Unit Resources Chapter 1 : Individuals and Government Chapter 2 : Efficiency, Markets, and Governments Chapter 3 : Externalities and Government Policy In order to access the following resource, click the link below. The Idea Channel (Producer). (2018). Externalities from transaction costs (Segment 5 of 10) [Video file] . Retrieved from https://libr aylists.aspx?wID=273866&xtid=138076&loid=485365 The transcript for this video can be found by clicking the “Transcript” tab to the right of the video in the Films on Dem and database. Unit Lesson Welcome to the course! You have made a huge commitment to improve the community around you by utilizing a comprehensive approach to the use of public funds in such a way as to improve the quality of life for your neighbors and businesses. This course will help you understand the various theories regarding public finance and budgeting and realize the real -world application of these theories. You are going to grow and stretch and become a better le ader because of your work he re. In this unit, the economic role of government is explored. Major economic government activities and services include provision for national defense, Social Security, unemployment insurance, court systems, Medicare and Medicaid, public education, infrastructure, and health care. These annual government expenditures and many others would be virtually unobtainable without the assistance of the government. For example, it would cause an extreme financi al burden for one individual to fund a public expenditure such as education. Similarly, it would be difficult for an individual to provide 24 -hour protection of his or her property. Therefore, conventional wisdom suggests government can better supply these non -market rationings. The government sector has an enormous impact on UNIT I STUDY GUIDE Economic Basis for Government Roles Front of U. S. Capitol Building (Noclip, 2007) PUA 5305, Public Finance and Budgeting 2 UNIT x STUDY GUIDE Title the economy. Subsequently , resources are needed to finance government functions, activities, and services. Government expenditures are financed mainly by taxes (Hyman, 2014). This sys tem of financing illustrates how all parts of society , such as health, education, family, economy, and politi cs, fit together and are interdependent. The supply of individuals’ demands through the payment of taxes (reducing private goods) creates a relatio nship between individuals and government organizations. Collectively, individuals make up a society. Democratic societies determine government functions and allocations of resources through a political process. Therefore, government’s role represents a dic hotomy of providing goods and services as well as regulating private economic activity (Hyman, 2014). Government’s role is necessary to provide more services easier to individuals, while redistributing income, reducing waste, and increasing society’s healt h and longevity of life. The role of government lessens the impact of market fallacies and increases market efficiency. For example, President Obama’s 2014 education budget proposal incorporated an increase of Pell Grant and work -study revenue to be awarde d to universities serving minorities. However, due to budget shortfalls, congressional leaders continue considering cuts to Pell Grants (De rvarics, 2013). Debates and recommendations for streamlining eligibility guidelines place this as a front -burner issu e for some members of Congress as well members of society (Gay, 2014) . Chapter 2 provides insights into approaches that can be utilized to evaluate economic performance and market efficiency , measured through po sitive and normative theories. The p ositive approach asserts a cause and effect relationship linking to economic activity objectively. The positive approach has the ability to make recommendations that will achieve certain outcomes , while the normative approach cannot. In contrast, the non -objective , normative approach can define relevant issues and policy, while the positive cannot. Therefore, each approach has a dependency on the other. For example, let’s assume congressional leaders want to test the a rgument that increases in Pell Grant funding are needed by less -affluent college students to achieve their goals. Utilizing a positivist approach , the argument could be supported by analyzing statistical data (quantitative) and measuring the income eligibility of current students receiving Pell Grant s. The use of statistical data implies that one can be positive or sure of the objective results. In contrast, a normative argument supporting the need for the Pell Grant strives to describe the benefits (qualitative) of creating diverse populations in educ ational environments. Normative arguments can include supporting statements of the benefits and practices that foster collegiate success of underrepresented students. Normative theories rely on opinions and value judgments, while positivist theories can be utilized to test efficiency. Characteristics of efficiency include avoiding waste in production, thereby achieving optimality . Additionally, efficiency promotes freedom to trade in the market. The criterion of efficiency is based on the idea that individ uals should be allowed to pursue their self -interest as long as no one is harmed (Hyman, 2014). Conditions required for market efficiency include establishing benefits and costs analys es. Markets are organized for the purpose of allowing mutually gainful trades between buy ers and sellers (Hyman, 2014). Characteristics of perfectly competitive markets include privately owned resources, market transactions, economic power dispersion, information, and unrestricted resources . However, inefficiency in markets e xists , resulting in other options needed to provide goods and services. This inefficiency requires government intervention. Governments can employ numerous instruments to affect private market outcomes , including creating and disseminating information, reg ulating private activity, mandating actions by individuals or firms, and financing/delivering public services through public facilities and staff (Reksulak & Shughart , 2012). Let’s consider the impact of the housing bubble of 2009. This dilemma resulted i n many homeowners being dislocated as well as an increas e in bankruptcy filings. Homeowners found themselves virtually unprotected against subprime mortgages in the market (Escobari, Damianov, & Bello, 2015). Spillover effects impacted the value of other h omeowners residing in the neighborhoods. This market inefficiency resulted in government intervention. The intervention created a new mortgage product that pr even ts the abuse of home purchasers. The loss of efficiency or market failure can result from mon opolistic power, taxes, and government subsidies. The market activities of dominant players, altering market participation, and distortions in market behavior trickle down through the system and cause market failure. All give rise to government’s role in t he market to maintain efficiency and effectiveness. However, some argue that equity a nd efficiency should be evaluated PUA 5305, Public Finance and Budgeting 3 UNIT x STUDY GUIDE Title when analyzing resource allocation. Additionally, critics argue that the market system caters to those with the ab ility to pay (Hyman, 20 14). Chapter 3 demonstrates market base d approaches and the costs or benefits of transactions not reflected in prices , known as externalities (Hyman, 2014). Positive externalities are benefits not considered by buyers or sellers. Participants in the marke t sometimes fail to consider the ne gative impact on third parties. For example, environmental pollution can have negative impacts on public health . In 1990, the Exxon Valdez oil spill was visible, and the effects of it were immediate, resul ting in oily carcasses of wildlife along the beach shore. However, the reported long -term impact was that increased mortality of wildlife could linger on for four years or more , while other reports indicated some wildlife could be impacted up to 30 years. As a result, the Oil Pollution Act of 1990 set a liability cap of $75 million for damage caused by oil spills (Plummer, 2010). Therefore, government’s role in ext ernalities is to implement laws to protect the public from harmful market activity. Let us consider the Deepwater Horizon Gulf Oil Spill of 2010. This environmental incident exacerbated debates on removing the cap from the 1990 Oil Pollution Act (Plummer, 2010). Supporters of removing the cap ignited discussions comparing risks to benefit s of offshore drilling. Ultimately, BP agreed to pay $20 billion to repair damage and for clean -up for their negligence in the oil spill. Market activity that negatively impacts or costs members of society and is not considered by buyers or sellers hinder s efficiency. Therefore, internalization of externalities results in adjusting the goods, services, or prices (BP oil spill $20 billion vs. $75 million). Internalization allows changes in penalt ies to be reflect ed in the full marginal social cost of a serv ice or good (Hyman, 2014). For example, in the case of the Deepwater Horizon oil clean -up efforts, wildlife activists and others questioned whether or not the chemical dispersants BP used to clean up the oil spill will have long -term , toxic effects on mari ne life in the Gulf (Knudsen, 2014) . The Coase theorem, as discussed by Hyman (2014), is a method of internalization. This theorem suggests that government can internalize negative externalities by establishing rights to use resources, corrective tax es , an d corrective subsidies. A corrective tax or subsidy can be applied toward the loss of natural resources. For example, commercially harvested fish, oysters, or shrimp impacted by the BP oil spill may take years to recover and stimulate growth. Government ma y choose to implement a tax, subsidy, moratorium , or some form of equivalent public compensation of the natural resource s lost (Force, Davies, & Force, 2011). This unit establishes the economic basis for government activity and the concept of efficiency. Hyman (2014) asserts that public finance emphasizes the codependency between government and the people. Explanations of government functions, financing, and mark et approaches were identified in this unit. Payment of taxes sustains government efforts to allocate resources efficiently and redistribute goods and services. This process creates a mixed economy whereby government acts as a buyer and seller in the market . However, market inefficiencies occur tha t can be adjusted through cost benefit analyses. References Dervarics, C. (2013, April 25). 2014 Education budget proposal boosts Pell Grant, seeks interest rate changes. Diverse Issues in Higher Education , 30 (6), 7. Escobari, D., Damianov, D., & Bello, A. (2015). A time series test to identify housing bubbles. Journal of Economics & Finance , 39 (1), 136 -152 . doi:10.1007/s12197 -013 -9251 -5 Workers cleaning up after Exxon Valdez oil spill (National Oceanic and Atmospheric Administration, 2005) PUA 5305, Public Finance and Budgeting 4 UNIT x STUDY GUIDE Title Force, R., Davies, M., & Force, J. S. (2011). Deepwater Horizon: Removal c osts, civil damages, crimes, civil penalties, and state remedies in oil spill Cases. Tulane Law Review , 85 (4), 889 -982. Gay, G. H. (2014). Pell Grant program continues to be challenged. U.S. Black Engineer & Information Technology , 38 (3), 13 -14. Hyman, D . N. (2014). Public finance: A contemporary application of theory to policy (11th ed.). Stamford, CT: Cengage Learning Knudsen, S. H. (2014). The long -term tort: In search of a new causation framework for natural resource damages. Northwestern University Law Review , 108 (2), 475 -541. National Oceanic and Atmospheric Administration. (2005). Oil cleanup after Valdez spill [Photograph]. Retrieved from Noclip. (2007, April 3). Capitol building full view [Photograph]. Retrieved from Plummer, J. (2010, July 29). Who should pay for the Gulf oil spill? Liability and incentive issues raised By the Deepwater Horizon incide nt. CEI On Point, 169 . Retrieved from – %20W ho%20Should%20Pay%20for%20the%20Gulf%20Oil%20Spill.pdf Reksulak, M., & Shughart, W. (2012). What should government do? Problems of social cost, externalities and all that. Public Choice , 152 (1/2), 103 -114. doi:10.1007/s11127 -011 -9850 -7 Suggested Unit Resources Us ing the Business Source Ultimate database within the CSU Online Library, locate and read the following article that discusses whether or not the Pell Grant need s to utilize a base award formula that keeps pace with the rising cost of tuition. Hageman, A. M., Arnold, V., & Sutton, S. G. (2009). Starving the beast: Using tax policy and governmental budgeting to drive social policy. Accounting & the Public Interest , 9, 10 -38.

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