Monday, April 05, 2010

AP Economics: 6 April 2010

Prayer
Current Events:
Lardy Says Geithner's Currency Report Delay `Creative'

April 5 (Bloomberg) -- Nicholas Lardy, senior fellow at the Peterson Institute for International Economics, talks with Bloomberg's Margaret Brennan about Treasury Secretary Timothy Geithner's move to delay a report on global currency policies. In an April 3 statement, Geithner announced the delay of the report, scheduled for April 15, and urged China to move toward a more flexible currency. (Source: Bloomberg)



We will pick up where we left off in Chapter 23.
Chapter Overview
This chapter discusses how the federal government is financed and includes material on public choice. Different approaches to a balanced budget are described as is the role of the Federal Reserve. The federal government budget deficit’s relationship to the trade deficit is explained, as are the implications of deficit financing in an open economy. The chapter concludes with a section on the burden of the public debt, considering to whom it is owed, the interest paid on it, and the crowding out effect.

Chapter Outline


Crowding Out & Lags, 5:52


Public Investment and Crowding Out, 7:07

Does the economy self-adjust? If so, what is the role for the government if the economy is not where we'd like it to be? This video takes a brief look at two different schools of economic thought.


Intergenerational Burdens of Fiscal Policy
Fiscal Sustainability of the Federal Budget
Checkpoint: The Burden of the Public Debt
How Much Debt Can We Carry?
Ideas for Capturing Your Classroom Audience
Exactly how large is the national debt? Find out at the Web site called The Debt
to the Penny, which is part of the site of the U.S. Department of the Treasury. The site is located at: http://www.treasurydirect.gov/NP/BPDLogin?application=np.

Your students may be creditors of the U.S. government! You can assess the value of any U.S. savings bonds they may have been given over time on the Web site at: http://www.treasurydirect.gov/indiv/tools/ tools_
savingsbondcalc.htm.

For data and other information on the government's budget, visit the sites of the
Office of Management and Budget at: http://www.whitehouse.gov/omb/ and the
Congressional Budget Office at: http://www.cbo.gov/.

Chapter Checkpoints
Financing the Federal Government
Question: Is the absolute size of the national debt or the national debt as a percent of gross domestic product the best measure of its importance to our economy? Why?

The point is to check that students can: comprehend that the amount a country
owes should be viewed in terms of its national output or income, GDP.

Financing Debt and Deficits
Question: Assume the federal government decided to increase spending and lower
tax rates.running ever larger deficits.and got the Federal Reserve to agree to buy
all of the new bonds that the Treasury issued. What would be the impact on our
economy?

The point is to check that students can: integrate the material in the chapter with the effect on the economy when the Fed buys bonds (from previous chapters).

The Burden of the Public Debt
Question: Is crowding-out an inevitable result of deficit spending if the Federal
Reserve does not buy back an equivalent amount from the market?

The point is to check that students can: understand the different impacts of deficit spending when the economy is slack as opposed to when it is at or close to full employment.

Extended Example in the Chapter

How Much Debt Can We Carry?

Alan Greenspan, former Chairman of the Federal Reserve Board, cautioned about
the future threat from growing budget deficits, and at other times backed away from that position. The reason seems to be that his views changed as to how much debt the government can comfortably take on. The higher level of that “danger point” may in part be due to lower interest rates and improved financial markets.

This section references an article by Edmund Andrews titled “Greenspan Shifts
View on Deficits,” from The New York Times (March 16, 2004, pages A1 and C2).

Examples Used in the End-of-Chapter Questions
Question 3 refers to the Laffer curve. You may wish to review the material from the chapter on fiscal policy.
Question 5 references the history of the U.S. government’s budget position, noting
that it has been in surplus on average about one year in every decade. You can illustrate the history of the deficit with the graph from the Web at:
http://www.uuforum.org/deficit.htm.
Question 11 references an open letter from Ben Stein to Henry Paulson after
Paulson was appointed as U.S. Treasury Secretary. The piece is titled “Everybody’s
Business: Note to the New Treasury Secretary: It’s Time to Raise Taxes,” and it
appeared in The New York Times on June 15, 2006. For more on Secretary Paulson,
see the Web site of the U.S. Department of Treasury at: http://www.ustreas.gov/.
Question 14 refers to the roles of Congress and the Executive Branch in managing
the budget. For more about the agencies involved, visit the sites of the Office of
Management and Budget at: http://www.whitehouse.gov/omb/ and the Congressional
Budget Office at: http://www.cbo.gov/.
For Further Analysis
Understanding Crowding-Out
This example can be used as an in-class small group exercise or as an individual inclass exercise. It is designed to complement the text’s material on crowding-out by examining the effect of the deficit on interest rates through the workings of the money market and the bond market. This treatment ties the topic back to the analysis used in Chapter 21, and you may wish to expand the assignment by delving more deeply into the effects in the money market.

Web-Based Exercise
This example can be used as a small group exercise or as an individual exercise.
The exercise provides an opportunity for students to apply the material in the chapter about the Federal Reserve and the government’s budget deficit to an analysis of comments by the current Fed Chairman, Ben Bernanke. The third question provides an opportunity to reinforce students’ understanding of the role of the Fed with regard to Congress and the Executive Branch.
Boomers and the Budget Deficit
In an AP story from January 18, 2007, titled “Bernanke Warns of ‘Vicious Cycle’ in
Deficits: Wave of Retiring Boomers Will Put Growing Strain on Budget, Fed Chief
Says” (available on the MSNBC site at http://www.msnbc.msn.com/id/16688089/)
the Fed Chairman outlines his concerns about future deficits. (Note that he was testifying to the Senate Budget Committee.)
After reading the article, answer the following:
1) Why is the retirement of the baby boomers a problem for the budget deficit?

2) What is the “vicious cycle” about which Bernanke is concerned?

3) What suggestions, if any, does Bernanke make about what Congress and the
administration should do?

Tips from a Colleague
Students are often unclear about the relationship between an annual budget deficit
and the accumulated debt. Using data to illustrate the changes that have occurred
over time helps clarify this. Also, students are not likely to grasp how much they
hear about the deficit at any point in time is based on projections. Comparing the
information on the Web sites of the Office of Management and Budget and the
Congressional Budget Office can point out the differing assumptions being made.
Finally, be sure that students understand the process. The media give presidents too much credit and too much blame.


Email HW to gmsmith@shanahan.org

After tonight, do not do any HW or school work so that you can attend church services during the Easter holiday.

1. Be sure to review Chapters 20-22 (we will have Tests on this material as well, TBA). Some students have asked to be tested as close as possible after covering the material.

2. For data and other information on the government's budget, visit the
Congressional Budget Office at: http://www.cbo.gov/.

Consider the tool located at:
http://www.cbo.gov/ftpdocs/108xx/doc10871/BudgetOutlook2010_Jan.cfm

The tool is interactive thus you can try various options.

The CBO states:

Beyond the 10-year projection period, growth of spending for Medicare, Medicaid, and Social Security will speed up from its already rapid rate. To keep federal deficits and debt from reaching levels that would substantially harm the economy, lawmakers would have to significantly increase revenues, decrease projected spending, or enact some combination of the two.

If you were drawing up the national budget what would you recommend?

Chapter Checkpoints

Financing the Federal Government
Question: Is the absolute size of the national debt or the national debt as a percent of gross domestic product the best measure of its importance to our economy? Why?

The point is to check that students can: comprehend that the amount a country
owes should be viewed in terms of its national output or income, GDP.

3. As review for HW, typical questions that you may encounter on the actual AP Economics Macro Test are included daily:

Open Economy: International Trade and Finance, Review Questions
5. The price of one country's currency in terms of another country's currency is the

a) balance of trade
b) exchange rate
c) balance of payments
d) currency appreciation
e) trade deficit

6. When one currency increases in value relative to another, economists say that the currency that increased in value has

a) depreciated
b) appreciated
c) expanded
d) floated
e) fixed

7. Which of the following increases the price of the dollar relative to the Mexican peso?

a) An increase in the supply of dollars
b) A decrease in Mexican demand for American imports
c) An increase in the demand for dollars
d) A decrease in the supply of pesos
e) An increase in American demand for Mexican imports

8. The balance of payments is calculated as the sum of the

a) current account and the trade account
b) current account and the capital account
c) trade account and the capital account
d) trade account and the reserve account
e) current account and the reserve account

WH II Honors: 6 April 2010

Prayer
Current Events:

Russia-Venezuela - United


Be sure to consider the Ch. 16 Test Study Prep Page before Thursday.

Preview: Chapter 17 The West Between the Wars 1919-1939


Section 1

Reading Check

Explaining

What did John Maynard Keynes think would resolve the Great Depression?

John Maynard Keynes and the Great Depression, 2:10

Hughes Rudd narrates:



Preview
An image from a magazine of Benito Mussolini leading his nation to war; Italian national flag during Mussolini’s rule.

Section 2 The Rise of Dictatorial Regimes

By 1939 most European democracies had collapsed. Only France and Great Britain remained democratic. Benito Mussolini began his political career as a Socialist, but he abandoned socialism for fascism, which glorified the state and justified the suppression of all political dissent. In Italy, Mussolini outlawed most political opposition, but also compromised with powerful groups and never achieved totalitarian control. After the Russian civil war, Lenin restored capitalist practices to prevent economic and political collapse. After Lenin's death, Joseph Stalin emerged as the most powerful Communist figure. Stalin sidelined the Bolsheviks of the revolutionary era and established totalitarian rule. His program of rapid industrialization and collectivization forced horrendous sacrifices on the population. His political purges caused millions to be arrested, imprisoned, and executed. Elsewhere in Eastern Europe and in Francisco Franco's Spain, authoritarian regimes were mainly concerned with preserving the existing social order.

When Mussolini visited Berlin in September 1937 one million people crowed the Olympic Stadium and adjoining Mayfield to hear Il Duce (The Leader) address them in German, 2:27.


The Rise of Dictators
Note Taking

Reading and Listening Skill: Identify Main Ideas

Find the main points of the Mussolini section under the first two headings and record them in a flowchart like the one below.


In the early 1920s, a new leader named Benito Mussolini arose in Italy. The Italian people were inspired by Mussolini’s promises to bring stability and glory to Italy.

“[Only joy at finding such a leader] can explain the enthusiasm [Mussolini] evoked at gathering after gathering, where his mere presence drew the people from all sides to greet him with frenzied acclamations. Even the men who at first came out of mere curiosity and with indifferent or even hostile feelings gradually felt themselves fired by his personal magnetic influence. . . .”

—Margherita G. Sarfatti, The Life of Benito Mussolini (tr. Frederic Whyte)

Mussolini and the People

An excited crowd of women and children greets the Italian leader in 1940.

“I hated politics and politicians,” said Italo Balbo. Like many Italian veterans of World War I, he had come home to a land of economic chaos and political corruption. Italy’s constitutional government, he felt, “had betrayed the hopes of soldiers, reducing Italy to a shameful peace.” Disgusted and angry, Balbo rallied behind a fiercely nationalist leader, Benito Mussolini. Mussolini’s rise to power in the 1920s served as a model for ambitious strongmen elsewhere in Europe.

Reading Check

Summarizing

What is the goal of a totalitarian state?

Fascism in Italy

Rise of Fascism

When Italy agreed to join the Allies in 1915, France and Britain secretly promised to give Italy certain Austro-Hungarian territories. When the Allies won, Italy received some of the promised territories, but others became part of the new Yugoslavia. The broken promises outraged Italian nationalists.

Disorders within Italy multiplied. Inspired in part by the revolution in Russia, peasants seized land, and workers went on strike or seized factories. Amid the chaos, returning veterans faced unemployment. Trade declined and taxes rose. The government, split into feuding factions, seemed powerless to end the crisis.

Into this turmoil stepped Benito Mussolini. The son of a socialist blacksmith and a teacher, Mussolini had been a socialist in his youth. During the war, however, he rejected socialism for intense nationalism. In 1919, he organized veterans and other discontented Italians into the Fascist party. They took the name from the Latin fasces, a bundle of sticks wrapped around an ax. In ancient Rome, the fasces symbolized unity and authority.

The fasces is an ancient symbol of authority and power derived from the Romans. A Roman official called a lictor carried the fasces. The elm whips could be removed from the bundle and used to punish and the ax could be used to execute thus the symbolism should be clear from the illustration.


The association with Rome was deliberately chosen by Mussolini to identify himself with the glory of ancient Rome.


Nonetheless, the fasces symbol appears also in some unexpected places.

Mussolini was a fiery and charismatic speaker. He promised to end corruption and replace turmoil with order. He also spoke of reviving Roman greatness, pledging to turn the Mediterranean into a “Roman lake” once again.

Mussolini organized his supporters into “combat squads.” The squads wore black shirts to emulate an earlier nationalist revolt. These Black Shirts, or party militants, rejected the democratic process in favor of violent action. They broke up socialist rallies, smashed leftist presses, and attacked farmers’ cooperatives. Fascist gangs used intimidation and terror to oust elected officials in northern Italy. Many Italians accepted these actions because they, too, had lost faith in constitutional government.

In 1922, the Fascists made a bid for power. At a rally in Naples, they announced their intention to go to Rome to demand that the government make changes. In the March on Rome, tens of thousands of Fascists swarmed towards the capital. Fearing civil war, King Victor Emmanuel III asked Mussolini to form a government as prime minister. Mussolini entered the city triumphantly on October 30, 1922. He thus obtained a nominally legal, constitutional appointment from the king to lead Italy.

People in History

Benito Mussolini

Benito Mussolini — History.com Video, (2:36)

For a quarter of a century, Italy is controlled by the Fascist dictator known as "I1 Duce."

Warning: some of these scenes may make some people uncomfortable; please feel free to excuse yourself from the room if need be.

http://www.history.com/videos/benito-mussolini

Benito Mussolini — History.com Video

Reference:

“Benito Mussolini,” The History Channel website, http://www.history.com/videos/benito-mussolini (accessed Apr 5, 2010).

The Fascist State

At first, Fascists held only a few cabinet posts in the new government. By 1925, though, Mussolini had assumed more power and taken the title Il Duce (eel doo chay), “The Leader.” He suppressed rival parties, muzzled the press, rigged elections, and replaced elected officials with Fascist supporters. In 1929, Mussolini received support from Pope Pius XI in return for recognizing Vatican City as an independent state, although the pope continued to disagree with some of Mussolini’s goals. In theory, Italy remained a parliamentary monarchy. In fact, it was a dictatorship upheld by terror. Critics were thrown into prison, forced into exile, or murdered. Secret police and propaganda bolstered the regime.

To encourage economic growth and end conflicts between owners and workers, Mussolini brought the economy under state control. However, he preserved capitalism. Under Mussolini’s corporate state, representatives of business, labor, government, and the Fascist party controlled industry, agriculture, and trade. Mussolini’s system favored the upper classes and industrial leaders. Although production increased, success came at the expense of workers. They were forbidden to strike, and their wages were kept low.

In Mussolini’s new system, loyalty to the state replaced conflicting individual goals. To Fascists, the glorious state was all-important, and the individual was unimportant except as a member of the state. Men, women, and children were bombarded with slogans glorifying the state and Mussolini. “Believe! Obey! Fight!” loudspeakers blared and posters proclaimed. Men were urged to be ruthless, selfless warriors fighting for the glory of Italy. Women were pushed out of paying jobs. Instead, Mussolini called on women to “win the battle of motherhood.” Those who bore more than 14 children were given a medal by Il Duce himself.

Shaping the young was a major Fascist goal. Fascist youth groups toughened children and taught them to obey strict military discipline. Boys and girls learned about the glories of ancient Rome. Young Fascists marched in torchlight parades, singing patriotic hymns and chanting, “Mussolini is always right.” By the 1930s, a generation of young soldiers stood ready to back Il Duce’s drive to expand Italian power.

The Makings of a Totalitarian State

http://www.pearsonsuccessnet.com/ebook/products/0-13-133374-7/view1_WH07A02134.pdf

Reading Check

Examining

How did Mussolini gain power in Italy?

Rare Mussolini's Speech in English! (1929 Fox Movietone Newsreel), 1:24



A New Era in the Soviet Union

Lenin's New Economic Policy

The Rise of Stalin

People in History

Joseph Stalin

Five-Year Plans

Costs of Stalin's Programs

Reading Check

Summarizing

What was Lenin's New Economic Policy

Authoritarian States in the West

Eastern Europe

Spain

Reading Check

Explaining

How did Czechoslovakia maintain its political democracy?

Ch. 17 References

The Great Depression

Photo Essay on the Great Depression

Cf. http://www.pbs.org/wnet/historyofus/tools/browser12.html

Diaries of people who lived during the Depression

Cf. http://teacher.scholastic.com/activities/our_america/great_depression/

People and events of the Dust Bowl

Cf. http://www.pbs.org/wgbh/americanexperience/films/dustbowl/

Original photographs from the times

Cf. http://memory.loc.gov/ammem/fsahtml/fatop1.html

Cf. Click on links to view original documents from Mussolini's life and times.

Cf. http://www.nationalarchives.gov.uk/education/heroesvillains/g3/

Click on "Germany Image Gallery" for the slideshow.

Cf. http://www.worldwar2database.com/cgi-bin/slideviewer.cgi?list=preludegermany.slides

Read a detailed account of the life of Hitler

Cf. http://library.thinkquest.org/19092/hitler.html

Test yourself on how Hitler came to power

Cf. http://www.schoolhistory.co.uk/lessons/riseofhitler/index.htm

Nazi propaganda posters: Election, Sower of peace, 'One People, One Nation, One Leader,' Saving for a Volkswagen, Jews, Anti-Bolshevism.

Cf. http://www.bbc.co.uk/history/worldwars/wwtwo/nazi_propaganda_gallery.shtml

Soviet Russia

Stalin and Industrialization of the USSR
See original documents and learn more about Stalin's methods.

Cf. http://www.nationalarchives.gov.uk/education/heroesvillains/g4/

View Soviet posters

Cf. http://www.internationalposter.com/country-primers/soviet-posters.aspx

Review Stalin's takeover of power

Cf. http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/russia/stalinsact.shtml

Find out more about jazz

Cf. http://www.smithsonianjazz.org/class/whatsjazz/wij_start.asp








How To Take Effective Notes

Be sure to consider the Ch. 16 Test Study Prep Page before Thursday.

Email to gmsmith@shanahan.org

Tuesday: p. 532, History and You (either diagram or more simply just make a list as a reference)

p. 533, Preview Questions, #1-2

p. 534, Comparing Cultures

p. 535, #1-2

Wednesday: What did John Maynard Keynes think would resolve the Great Depression?

What is the goal of a totalitarian state?

Geography Skills, p. 541, #1

How did Mussolini gain power in Italy?

Thursday: Geography Skills, p. 544, #1-2

What was Lenin's New Economic Policy

Friday: How did Czechoslovakia maintain its political democracy?

p. 546, #2

WH II Honors: 5 April 2010

Prayer
Current Events:

Pope at Easter Mass

CBSNewsOnline — April 04, 2010 — At Easter mass, a senior Vatican official bolstered the Pope, who is under pressure from the worldwide pedophile priest scandal. As Allen Pizzey reports, the spotlight remains on the Pope regardless.
Preview: Chapter 17 The West Between the Wars 1919-1939


Section 1
Uneasy Peace, Uncertain Security
Responses to the Depression
Democratic States After the War
Germany

From its headquarters in Geneva, Switzerland, the League of Nations encouraged cooperation and tried to get members to make a commitment to stop aggression. In 1926, after signing the Locarno agreements, Germany joined the League. Later, the Soviet Union was also admitted.

France

Like Britain, France emerged from World War I both a victor and a loser. Political divisions and financial scandals plagued the government of the Third Republic. Several parties—from conservatives to communists—competed for power. The parties differed on many issues, including how to get reparations payments from Germany. A series of quickly changing coalition governments ruled France.

France’s chief concern after the war was securing its borders against Germany. The French remembered the German invasions of 1870 and 1914. To prevent a third invasion, France built massive fortifications called the Maginot Line along its border with Germany. However, the line would not be enough to stop another German invasion in 1940.

In its quest for security, France also strengthened its military and sought alliances with other countries, including the Soviet Union. It insisted on strict enforcement of the Versailles treaty and complete payment of reparations. France’s goal was to keep the German economy weak.

Great Britain

Britain disagreed with this aim. Almost from the signing of the Treaty of Versailles, British leaders wanted to relax the treaty’s harsh treatment of Germany. They feared that if Germany became too weak, the Soviet Union and France would become too powerful.

In Britain during the 1920s, the Labour party surpassed the Liberal party in strength. The Labour party gained support among workers by promoting a gradual move toward socialism. The Liberal party passed some social legislation, but it traditionally represented middle-class business interests. As the Liberal party faltered, the middle class began to back the Conservative party, joining the upper class, professionals, and farmers. With this support, the Conservative party held power during much of 1920s. After a massive strike of over three million workers in 1926, Conservatives passed legislation limiting the power of workers to strike.

Britain still faced the “Irish question.&r
dquo; In 1914, Parliament passed a home-rule bill that was shelved when the war began. On Easter 1916, a small group of militant Irish nationalists launched a revolt against British rule. Although the Easter Rising was quickly suppressed, it stirred wider support for the Irish cause. When Parliament again failed to grant home rule in 1919, members of the Irish Republican Army (IRA) began a guerrilla war against British forces and their supporters. In 1922, moderates in Ireland and Britain reached an agreement. Most of Ireland became the self-governing Irish Free State. The largely Protestant northern counties remained under British rule. However, the IRA and others fought for decades against the division.

Ireland 1916 - The Easter Rising, 4:45




The Irish Resist

Members of the Irish Republican Army prepare to resist the British occupation of Dublin in 1921 by erecting a barbed wire barricade. The Irish Free State, established in 1922, was a compromise between the opposing sides, but peace was short-lived. The conflict has continued since that time.
The United States

In contrast, the United States emerged from World War I in good shape. A late entrant into the war, it had suffered relatively few casualties and little loss of property. However, the United States did experience some domestic unrest. Fear of radicals and the Bolshevik Revolution in Russia set off a “Red Scare” in 1919 and 1920. Police rounded up suspected foreign-born radicals, and a number were expelled from the United States.

The “Red Scare” fed growing demands to limit immigration. Millions of immigrants from southern and eastern Europe had poured into the United States between 1890 and 1914. Some native-born Americans sought to exclude these newcomers, whose cultures differed from those of earlier settlers from northern Europe. In response, Congress passed laws limiting immigration from Europe. Earlier laws had already excluded or limited Chinese and Japanese immigration.

Reading Check

Explaining

What did John Maynard Keynes think would resolve the Great Depression?

John Maynard Keynes and the Great Depression, 2:10

Hughes Rudd narrates:



Preview
An image from a magazine of Benito Mussolini leading his nation to war; Italian national flag during Mussolini’s rule.

Section 2 The Rise of Dictatorial Regimes

By 1939 most European democracies had collapsed. Only France and Great Britain remained democratic. Benito Mussolini began his political career as a Socialist, but he abandoned socialism for fascism, which glorified the state and justified the suppression of all political dissent. In Italy, Mussolini outlawed most political opposition, but also compromised with powerful groups and never achieved totalitarian control. After the Russian civil war, Lenin restored capitalist practices to prevent economic and political collapse. After Lenin's death, Joseph Stalin emerged as the most powerful Communist figure. Stalin sidelined the Bolsheviks of the revolutionary era and established totalitarian rule. His program of rapid industrialization and collectivization forced horrendous sacrifices on the population. His political purges caused millions to be arrested, imprisoned, and executed. Elsewhere in Eastern Europe and in Francisco Franco's Spain, authoritarian regimes were mainly concerned with preserving the existing social order.

When Mussolini visited Berlin in September 1937 one million people crowed the Olympic Stadium and adjoining Mayfield to hear Il Duce (The Leader) address them in German, 2:27.


The Rise of Dictators
Note Taking

Reading and Listening Skill: Identify Main Ideas

Find the main points of the Mussolini section under the first two headings and record them in a flowchart like the one below.


In the early 1920s, a new leader named Benito Mussolini arose in Italy. The Italian people were inspired by Mussolini’s promises to bring stability and glory to Italy.

“[Only joy at finding such a leader] can explain the enthusiasm [Mussolini] evoked at gathering after gathering, where his mere presence drew the people from all sides to greet him with frenzied acclamations. Even the men who at first came out of mere curiosity and with indifferent or even hostile feelings gradually felt themselves fired by his personal magnetic influence. . . .”

—Margherita G. Sarfatti, The Life of Benito Mussolini (tr. Frederic Whyte)

Mussolini and the People

An excited crowd of women and children greets the Italian leader in 1940.

“I hated politics and politicians,” said Italo Balbo. Like many Italian veterans of World War I, he had come home to a land of economic chaos and political corruption. Italy’s constitutional government, he felt, “had betrayed the hopes of soldiers, reducing Italy to a shameful peace.” Disgusted and angry, Balbo rallied behind a fiercely nationalist leader, Benito Mussolini. Mussolini’s rise to power in the 1920s served as a model for ambitious strongmen elsewhere in Europe.

Reading Check

Summarizing

What is the goal of a totalitarian state?

Fascism in Italy

Rise of Fascism

When Italy agreed to join the Allies in 1915, France and Britain secretly promised to give Italy certain Austro-Hungarian territories. When the Allies won, Italy received some of the promised territories, but others became part of the new Yugoslavia. The broken promises outraged Italian nationalists.

Disorders within Italy multiplied. Inspired in part by the revolution in Russia, peasants seized land, and workers went on strike or seized factories. Amid the chaos, returning veterans faced unemployment. Trade declined and taxes rose. The government, split into feuding factions, seemed powerless to end the crisis.

Into this turmoil stepped Benito Mussolini. The son of a socialist blacksmith and a teacher, Mussolini had been a socialist in his youth. During the war, however, he rejected socialism for intense nationalism. In 1919, he organized veterans and other discontented Italians into the Fascist party. They took the name from the Latin fasces, a bundle of sticks wrapped around an ax. In ancient Rome, the fasces symbolized unity and authority.

The fasces is an ancient symbol of authority and power derived from the Romans. A Roman official called a lictor carried the fasces. The elm whips could be removed from the bundle and used to punish and the ax could be used to execute thus the symbolism should be clear from the illustration.


The association with Rome was deliberately chosen by Mussolini to identify himself with the glory of ancient Rome.


Nonetheless, the fasces symbol appears also in some unexpected places.

Mussolini was a fiery and charismatic speaker. He promised to end corruption and replace turmoil with order. He also spoke of reviving Roman greatness, pledging to turn the Mediterranean into a “Roman lake” once again.

Mussolini organized his supporters into “combat squads.” The squads wore black shirts to emulate an earlier nationalist revolt. These Black Shirts, or party militants, rejected the democratic process in favor of violent action. They broke up socialist rallies, smashed leftist presses, and attacked farmers’ cooperatives. Fascist gangs used intimidation and terror to oust elected officials in northern Italy. Many Italians accepted these actions because they, too, had lost faith in constitutional government.

In 1922, the Fascists made a bid for power. At a rally in Naples, they announced their intention to go to Rome to demand that the government make changes. In the March on Rome, tens of thousands of Fascists swarmed towards the capital. Fearing civil war, King Victor Emmanuel III asked Mussolini to form a government as prime minister. Mussolini entered the city triumphantly on October 30, 1922. He thus obtained a nominally legal, constitutional appointment from the king to lead Italy.

People in History

Benito Mussolini

Benito Mussolini — History.com Video, (2:36)

For a quarter of a century, Italy is controlled by the Fascist dictator known as "I1 Duce."

Warning: some of these scenes may make some people uncomfortable; please feel free to excuse yourself from the room if need be.

http://www.history.com/videos/benito-mussolini

Benito Mussolini — History.com Video

Reference:

“Benito Mussolini,” The History Channel website, http://www.history.com/videos/benito-mussolini (accessed Apr 5, 2010).

The Fascist State

At first, Fascists held only a few cabinet posts in the new government. By 1925, though, Mussolini had assumed more power and taken the title Il Duce (eel doo chay), “The Leader.” He suppressed rival parties, muzzled the press, rigged elections, and replaced elected officials with Fascist supporters. In 1929, Mussolini received support from Pope Pius XI in return for recognizing Vatican City as an independent state, although the pope continued to disagree with some of Mussolini’s goals. In theory, Italy remained a parliamentary monarchy. In fact, it was a dictatorship upheld by terror. Critics were thrown into prison, forced into exile, or murdered. Secret police and propaganda bolstered the regime.

To encourage economic growth and end conflicts between owners and workers, Mussolini brought the economy under state control. However, he preserved capitalism. Under Mussolini’s corporate state, representatives of business, labor, government, and the Fascist party controlled industry, agriculture, and trade. Mussolini’s system favored the upper classes and industrial leaders. Although production increased, success came at the expense of workers. They were forbidden to strike, and their wages were kept low.

In Mussolini’s new system, loyalty to the state replaced conflicting individual goals. To Fascists, the glorious state was all-important, and the individual was unimportant except as a member of the state. Men, women, and children were bombarded with slogans glorifying the state and Mussolini. “Believe! Obey! Fight!” loudspeakers blared and posters proclaimed. Men were urged to be ruthless, selfless warriors fighting for the glory of Italy. Women were pushed out of paying jobs. Instead, Mussolini called on women to “win the battle of motherhood.” Those who bore more than 14 children were given a medal by Il Duce himself.

Shaping the young was a major Fascist goal. Fascist youth groups toughened children and taught them to obey strict military discipline. Boys and girls learned about the glories of ancient Rome. Young Fascists marched in torchlight parades, singing patriotic hymns and chanting, “Mussolini is always right.” By the 1930s, a generation of young soldiers stood ready to back Il Duce’s drive to expand Italian power.

The Makings of a Totalitarian State

http://www.pearsonsuccessnet.com/ebook/products/0-13-133374-7/view1_WH07A02134.pdf

Reading Check

Examining

How did Mussolini gain power in Italy?

Rare Mussolini's Speech in English! (1929 Fox Movietone Newsreel), 1:24



A New Era in the Soviet Union

Lenin's New Economic Policy

The Rise of Stalin

People in History

Joseph Stalin

Five-Year Plans

Costs of Stalin's Programs

Reading Check

Summarizing

What was Lenin's New Economic Policy

Authoritarian States in the West

Eastern Europe

Spain

Reading Check

Explaining

How did Czechoslovakia maintain its political democracy?

Ch. 17 References

The Great Depression

Photo Essay on the Great Depression

Cf. http://www.pbs.org/wnet/historyofus/tools/browser12.html

Diaries of people who lived during the Depression

Cf. http://teacher.scholastic.com/activities/our_america/great_depression/

People and events of the Dust Bowl

Cf. http://www.pbs.org/wgbh/americanexperience/films/dustbowl/

Original photographs from the times

Cf. http://memory.loc.gov/ammem/fsahtml/fatop1.html

Cf. Click on links to view original documents from Mussolini's life and times.

Cf. http://www.nationalarchives.gov.uk/education/heroesvillains/g3/

Click on "Germany Image Gallery" for the slideshow.

Cf. http://www.worldwar2database.com/cgi-bin/slideviewer.cgi?list=preludegermany.slides

Read a detailed account of the life of Hitler

Cf. http://library.thinkquest.org/19092/hitler.html

Test yourself on how Hitler came to power

Cf. http://www.schoolhistory.co.uk/lessons/riseofhitler/index.htm

Nazi propaganda posters: Election, Sower of peace, 'One People, One Nation, One Leader,' Saving for a Volkswagen, Jews, Anti-Bolshevism.

Cf. http://www.bbc.co.uk/history/worldwars/wwtwo/nazi_propaganda_gallery.shtml

Soviet Russia

Stalin and Industrialization of the USSR
See original documents and learn more about Stalin's methods.

Cf. http://www.nationalarchives.gov.uk/education/heroesvillains/g4/

View Soviet posters

Cf. http://www.internationalposter.com/country-primers/soviet-posters.aspx

Review Stalin's takeover of power

Cf. http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/russia/stalinsact.shtml

Find out more about jazz

Cf. http://www.smithsonianjazz.org/class/whatsjazz/wij_start.asp






CCR Who'll Stop the Rain



Long as I remember the rain been comin down.
Clouds of mystry pourin confusion on the ground.
Good men through the ages, tryin to find the sun;
And I wonder, still I wonder, wholl stop the rain.

I went down virginia, seekin shelter from the storm.
Caught up in the fable, I watched the tower grow.
Five year plans and new deals, wrapped in golden chains.
And I wonder, still I wonder wholl stop the rain.

Heard the singers playin, how we cheered for more.
The crowd had rushed together, tryin to keep warm.
Still the rain kept pourin, fallin on my ears.
And I wonder, still I wonder wholl stop the rain.

Lyrics reproduced here for educational purposes only; copyright remains in the hands of the lawful owner.

How To Take Effective Notes



Email to gmsmith@shanahan.org





Monday: p. 528, #17-19

Tuesday: p. 532, History and You (either diagram or more simply just make a list as a reference)

p. 533, Preview Questions, #1-2

p. 534, Comparing Cultures

p. 535, #1-2

AP Economics: 5 April 2010

Prayer
Current Events:
Phelps Says U.S. Economy Still in `Structural Slump'

Bloomberg — April 02, 2010 — April 2 (Bloomberg) -- Edmund Phelps, a Nobel Prize-winning economist and Columbia University professor, talks with Bloomberg's Betty Liu about the March U.S. jobs report released today. Employment in the U.S. increased by 162,000 last month, less than anticipated, after a revised 14,000 decrease in February that was smaller than initially estimated, according to the Labor Department. The unemployment rate held at 9.7 percent. (Source: Bloomberg)



We will pick up where we left off in Chapter 23.
Chapter Overview
This chapter discusses how the federal government is financed and includes material on public choice. Different approaches to a balanced budget are described as is the role of the Federal Reserve. The federal government budget deficit’s relationship to the trade deficit is explained, as are the implications of deficit financing in an open economy. The chapter concludes with a section on the burden of the public debt, considering to whom it is owed, the interest paid on it, and the crowding out effect.

Chapter Outline

The Role of the Federal Reserve

Thomas E. Woods, The Economic crisis & The Federal Reserve, 5:24


Budget and Trade Deficits
Implications of Deficit Financing in an Open Economy
Checkpoint: Financing Debt and Deficits
The Burden of the Public Debt
Internally versus Externally Held Debt
Interest Payments
Crowding-Out Effect

Crowding Out & Lags, 5:52


Public Investment and Crowding Out, 7:07

Does the economy self-adjust? If so, what is the role for the government if the economy is not where we'd like it to be? This video takes a brief look at two different schools of economic thought.


Intergenerational Burdens of Fiscal Policy
Fiscal Sustainability of the Federal Budget
Checkpoint: The Burden of the Public Debt
How Much Debt Can We Carry?
Ideas for Capturing Your Classroom Audience
Exactly how large is the national debt? Find out at the Web site called The Debt
to the Penny, which is part of the site of the U.S. Department of the Treasury. The site is located at: http://www.treasurydirect.gov/NP/BPDLogin?application=np.

Your students may be creditors of the U.S. government! You can assess the value of any U.S. savings bonds they may have been given over time on the Web site at: http://www.treasurydirect.gov/indiv/tools/ tools_
savingsbondcalc.htm.

For data and other information on the government's budget, visit the sites of the
Office of Management and Budget at: http://www.whitehouse.gov/omb/ and the
Congressional Budget Office at: http://www.cbo.gov/.

Chapter Checkpoints
Financing the Federal Government
Question: Is the absolute size of the national debt or the national debt as a percent of gross domestic product the best measure of its importance to our economy? Why?

The point is to check that students can: comprehend that the amount a country
owes should be viewed in terms of its national output or income, GDP.
Financing Debt and Deficits
Question: Assume the federal government decided to increase spending and lower
tax rates.running ever larger deficits.and got the Federal Reserve to agree to buy
all of the new bonds that the Treasury issued. What would be the impact on our
economy?

The point is to check that students can: integrate the material in the chapter with the effect on the economy when the Fed buys bonds (from previous chapters).

The Burden of the Public Debt
Question: Is crowding-out an inevitable result of deficit spending if the Federal
Reserve does not buy back an equivalent amount from the market?

The point is to check that students can: understand the different impacts of deficit spending when the economy is slack as opposed to when it is at or close to full employment.

Extended Example in the Chapter

How Much Debt Can We Carry?

Alan Greenspan, former Chairman of the Federal Reserve Board, cautioned about
the future threat from growing budget deficits, and at other times backed away from that position. The reason seems to be that his views changed as to how much debt the government can comfortably take on. The higher level of that “danger point” may in part be due to lower interest rates and improved financial markets.

This section references an article by Edmund Andrews titled “Greenspan Shifts
View on Deficits,” from The New York Times (March 16, 2004, pages A1 and C2).

Examples Used in the End-of-Chapter Questions
Question 3 refers to the Laffer curve. You may wish to review the material from the chapter on fiscal policy.
Question 5 references the history of the U.S. government’s budget position, noting
that it has been in surplus on average about one year in every decade. You can illustrate the history of the deficit with the graph from the Web at:
http://www.uuforum.org/deficit.htm.
Question 11 references an open letter from Ben Stein to Henry Paulson after
Paulson was appointed as U.S. Treasury Secretary. The piece is titled “Everybody’s
Business: Note to the New Treasury Secretary: It’s Time to Raise Taxes,” and it
appeared in The New York Times on June 15, 2006. For more on Secretary Paulson,
see the Web site of the U.S. Department of Treasury at: http://www.ustreas.gov/.
Question 14 refers to the roles of Congress and the Executive Branch in managing
the budget. For more about the agencies involved, visit the sites of the Office of
Management and Budget at: http://www.whitehouse.gov/omb/ and the Congressional
Budget Office at: http://www.cbo.gov/.
For Further Analysis
Understanding Crowding-Out
This example can be used as an in-class small group exercise or as an individual inclass exercise. It is designed to complement the text’s material on crowding-out by examining the effect of the deficit on interest rates through the workings of the money market and the bond market. This treatment ties the topic back to the analysis used in Chapter 21, and you may wish to expand the assignment by delving more deeply into the effects in the money market.

Web-Based Exercise
This example can be used as a small group exercise or as an individual exercise.
The exercise provides an opportunity for students to apply the material in the chapter about the Federal Reserve and the government’s budget deficit to an analysis of comments by the current Fed Chairman, Ben Bernanke. The third question provides an opportunity to reinforce students’ understanding of the role of the Fed with regard to Congress and the Executive Branch.
Boomers and the Budget Deficit
In an AP story from January 18, 2007, titled “Bernanke Warns of ‘Vicious Cycle’ in
Deficits: Wave of Retiring Boomers Will Put Growing Strain on Budget, Fed Chief
Says” (available on the MSNBC site at http://www.msnbc.msn.com/id/16688089/)
the Fed Chairman outlines his concerns about future deficits. (Note that he was testifying to the Senate Budget Committee.)
After reading the article, answer the following:
1) Why is the retirement of the baby boomers a problem for the budget deficit?

2) What is the “vicious cycle” about which Bernanke is concerned?

3) What suggestions, if any, does Bernanke make about what Congress and the
administration should do?

Tips from a Colleague
Students are often unclear about the relationship between an annual budget deficit
and the accumulated debt. Using data to illustrate the changes that have occurred
over time helps clarify this. Also, students are not likely to grasp how much they
hear about the deficit at any point in time is based on projections. Comparing the
information on the Web sites of the Office of Management and Budget and the
Congressional Budget Office can point out the differing assumptions being made.
Finally, be sure that students understand the process. The media give presidents too much credit and too much blame.


Email HW to gmsmith@shanahan.org

After tonight, do not do any HW or school work so that you can attend church services during the Easter holiday.

1. Be sure to review Chapters 20-22 (we will have Tests on this material as well, TBA). Some students have asked to be tested as close as possible after covering the material.

2. Exactly how large is the national debt? Find out at the Web site called The Debt
to the Penny, which is part of the site of the U.S. Department of the Treasury. The site is located at: http://www.treasurydirect.gov/NP/BPDLogin?application=np.

3. As review for HW, typical questions that you may encounter on the actual AP Economics Macro Test are included daily:

Open Economy: International Trade and Finance, Review Questions

1. According to the theory of comparative advantage, a country

a) imports the goods in which it has a comparative advantage
b) exports the goods in which it has a comparative advantage
c) exports goods in which it has an absolute advantage
d) imports goods in which it has an absolute advantage
e) imposes trade restrictions if it does not have a comparative advantage

2. Country X has a comparative advantage over Country Y in the production of Good F, which implies that

a) Country X can produce Good F at a lower opportunity cost than Country Y
b) Country Y can produce Good F at a lower opportunity cost than Country X
c) both countries have the same opportunity costs of production
d) Country X has an unfair advantage over Country Y
e) Country Y has an absolute advantage in the production of Good F

3. A tariff is

a) a limit on the quantity of a good that can be imported into a country
b) a tax on imported goods
c) a government payment to domestic firms that aims at encouraging exports
d) the difference between the price a product sells for in the county in which it is produced and the price at which it is sold in another country
e) a trade imbalance created when countries sell large numbers of products on the world market

4. It costs a computer manufacturer $1,000 to produce a personal computer. This manufacturer sells these computers abroad for $750. This is an example of

a) a negative tariff
b) an export subsidy
c) dumping
d) a trade-related economy of scale
e) a quota