Article IV of the Constitution

WEBVTT
Kind: captions
Language: en

00:00:00.150 --> 00:00:02.190
- [Kim] Hey this is Kim from Khan Academy

00:00:02.190 --> 00:00:04.730
and today I'm learning about Article IV

00:00:04.730 --> 00:00:06.480
of the U.S. Constitution.

00:00:06.480 --> 00:00:08.370
Article IV lays out the nuts and bolts

00:00:08.370 --> 00:00:11.060
of how federalism, the
system of shared governance

00:00:11.060 --> 00:00:12.860
between the states and
the federal government

00:00:12.860 --> 00:00:14.180
works in practice.

00:00:14.180 --> 00:00:16.590
Article IV has four sections.

00:00:16.590 --> 00:00:17.550
The first two,

00:00:17.550 --> 00:00:19.280
the Full Faith and Credit clause

00:00:19.280 --> 00:00:22.040
and the Privileges and Immunities clause

00:00:22.040 --> 00:00:23.590
talk about how states will

00:00:23.590 --> 00:00:25.590
treat each other's citizens

00:00:25.590 --> 00:00:28.550
as well as they treat the
citizens of their own states.

00:00:28.550 --> 00:00:31.770
Then the third section,
is an admissions clause

00:00:31.770 --> 00:00:34.540
discussing how new states
will be added to the union

00:00:34.540 --> 00:00:37.800
and the fourth section
is the guarantee clause,

00:00:37.800 --> 00:00:39.940
which guarantees every state in the union

00:00:39.940 --> 00:00:41.940
a republican form of government.

00:00:41.940 --> 00:00:43.480
To learn more about Article IV,

00:00:43.480 --> 00:00:45.560
I sought out the help of two experts.

00:00:45.560 --> 00:00:48.410
Erin Hawley is an
associate professor of Law

00:00:48.410 --> 00:00:49.910
at the University of Missouri.

00:00:49.910 --> 00:00:52.120
Her scholarship focuses
on the federal courts

00:00:52.120 --> 00:00:54.540
and she teaches constitutional litigation,

00:00:54.540 --> 00:00:56.820
tax policy and agricultural law.

00:00:56.820 --> 00:00:59.850
Professor Gabriel Chin is the
director of clinical legal

00:00:59.850 --> 00:01:02.440
education at the UC Davis School of Law.

00:01:02.440 --> 00:01:05.020
He's a teacher and scholar
of immigration law,

00:01:05.020 --> 00:01:07.280
criminal procedure and race and law.

00:01:07.280 --> 00:01:09.100
So professor Hawley can
take us a little bit

00:01:09.100 --> 00:01:12.190
through why the framers
included Article IV.

00:01:12.190 --> 00:01:14.010
What was its purpose?

00:01:14.010 --> 00:01:15.580
- [Erin] The founders of the Constitution

00:01:15.580 --> 00:01:17.100
were very concerned

00:01:17.100 --> 00:01:19.600
that the federal government
be one of limited powers

00:01:19.600 --> 00:01:22.760
and because of that they saw the states

00:01:22.760 --> 00:01:25.260
as having an active and critical role

00:01:25.260 --> 00:01:27.890
in placing a check on
the federal government.

00:01:27.890 --> 00:01:30.500
So we've got the three
branches and their own checks

00:01:30.500 --> 00:01:32.714
and balances and then we've
got the federal government

00:01:32.714 --> 00:01:36.570
and the state government
also playing a role

00:01:36.570 --> 00:01:38.390
in checking and balancing each other.

00:01:38.390 --> 00:01:41.150
They wanted to establish a
strong central government

00:01:41.150 --> 00:01:43.540
but also to ensure that it
didn't have too much power

00:01:43.540 --> 00:01:45.930
and the states were
critical to this effort.

00:01:45.930 --> 00:01:48.940
Also, they very much wanted
the states to act collectively

00:01:48.940 --> 00:01:50.750
not individually.

00:01:50.750 --> 00:01:51.870
As you'll recall,

00:01:51.870 --> 00:01:53.750
the states had not been doing so well

00:01:53.750 --> 00:01:55.760
under the loose articles
of the confederation.

00:01:55.760 --> 00:01:58.740
They've sort of being going it
alone on critical issues like

00:01:58.740 --> 00:02:01.870
trade and defense as to
the detriment of the union.

00:02:01.870 --> 00:02:04.940
So Article IV is also a
sort of key to making sure

00:02:04.940 --> 00:02:07.360
that the states act sort
of as a unified whole

00:02:07.360 --> 00:02:09.220
rather than going it alone.

00:02:09.220 --> 00:02:11.970
- [Gabriel] It's one country
made up of diverse states.

00:02:13.406 --> 00:02:17.480
And if you prefer the way things are done

00:02:17.480 --> 00:02:18.710
in Nevada

00:02:19.730 --> 00:02:20.880
you can move there.

00:02:20.880 --> 00:02:24.570
And if you think that some
other state has a better set of

00:02:24.570 --> 00:02:26.581
answers to

00:02:26.581 --> 00:02:29.330
the problems of modern life,

00:02:29.330 --> 00:02:30.930
you can move.

00:02:30.930 --> 00:02:32.530
What the Full Faith In Credit clause,

00:02:32.530 --> 00:02:34.250
and the Privileges and Immunities clause

00:02:34.250 --> 00:02:37.040
are designed to do is to facilitate

00:02:37.040 --> 00:02:39.700
transactions, to facilitate moving,

00:02:39.700 --> 00:02:40.740
to facilitate

00:02:42.530 --> 00:02:44.950
communications and commerce

00:02:44.950 --> 00:02:48.180
and trade and travel among the states.

00:02:48.180 --> 00:02:50.230
But that doesn't mean that what's going on

00:02:50.230 --> 00:02:53.080
in each of the states can't
be very, very different.

00:02:53.080 --> 00:02:54.540
- [Kim] We often think of checks

00:02:54.540 --> 00:02:56.420
and balances as being something

00:02:56.420 --> 00:02:58.550
that was designed to
be kind of horizontal.

00:02:58.550 --> 00:03:02.520
That the legislature
and the executive branch

00:03:02.520 --> 00:03:04.210
and the judicial branch kind of all

00:03:04.210 --> 00:03:05.820
at the same level checking each other.

00:03:05.820 --> 00:03:08.850
But there is also kind of this
vertical checks and balances

00:03:08.850 --> 00:03:11.460
happening too between the power
of the federal government,

00:03:11.460 --> 00:03:14.470
power of the states and the
power of the local governments.

00:03:14.470 --> 00:03:17.910
- [Erin] Absolutely so we've
got the three branches,

00:03:17.910 --> 00:03:19.040
and their checks and balances.

00:03:19.040 --> 00:03:21.670
We also have a strong central government,

00:03:21.670 --> 00:03:25.410
that's checked in large part
by strong independent sovereign

00:03:25.410 --> 00:03:27.500
governments in each of the 50 states.

00:03:27.500 --> 00:03:29.690
And these states traditionally
have what are known

00:03:29.690 --> 00:03:33.140
as police powers so they have
a lot of inherent authority

00:03:33.140 --> 00:03:36.320
to govern the people in those states,

00:03:36.320 --> 00:03:38.220
subject to federal law.

00:03:38.220 --> 00:03:41.070
But it really does sort
of place a check on

00:03:41.070 --> 00:03:43.210
federal authority and I
think this is precisely

00:03:43.210 --> 00:03:44.770
what the framers wanted
because they did want

00:03:44.770 --> 00:03:47.800
a strong government,
but they also were very

00:03:47.800 --> 00:03:50.390
much of the view that
states were important.

00:03:50.390 --> 00:03:51.700
That their own states we're important

00:03:51.700 --> 00:03:56.250
and they didn't want to lose
that in the new constitution

00:03:56.250 --> 00:03:57.690
and new federal government.

00:03:57.690 --> 00:04:01.210
- [Kim] There are four
sections in Article IV

00:04:02.537 --> 00:04:04.790
and the first section deals
with full faith and credit,

00:04:04.790 --> 00:04:07.090
it says full faith and
credit shall be given

00:04:07.090 --> 00:04:09.240
in each state to the public Acts, Records

00:04:09.240 --> 00:04:12.030
and Judicial proceedings
of every other state.

00:04:12.030 --> 00:04:15.230
So what does full faith
and credit actually mean?

00:04:15.230 --> 00:04:18.550
- [Gabriel] It's designed
to make in a certain sense,

00:04:18.550 --> 00:04:20.510
all of the states of the United States

00:04:20.510 --> 00:04:22.110
part of a single system.

00:04:22.110 --> 00:04:24.280
And so, full faith and credit means

00:04:25.588 --> 00:04:29.330
that a court judgment
for example in one state

00:04:29.330 --> 00:04:33.020
will be recognized in every state.

00:04:33.020 --> 00:04:34.470
- [Erin] So if you have a value judgment

00:04:34.470 --> 00:04:36.170
in New York for example,

00:04:36.170 --> 00:04:37.900
and you move to California,

00:04:37.900 --> 00:04:40.380
the California courts are
required to give effect to

00:04:40.380 --> 00:04:42.129
that judgment, to that same court judgment

00:04:42.129 --> 00:04:44.950
so long as it was validly issued.

00:04:44.950 --> 00:04:47.370
There was a federal statue known as

00:04:47.370 --> 00:04:49.700
The Defense of Marriage Act or DOMA

00:04:49.700 --> 00:04:51.950
that was passed under president Clinton,

00:04:51.950 --> 00:04:54.300
and recently the Supreme
Court struck that down

00:04:54.300 --> 00:04:56.100
as unconstitutional.

00:04:56.100 --> 00:04:57.950
So now under full faith and
credit, if you're married

00:04:57.950 --> 00:05:01.077
in one state you're married
in another state as well.

00:05:01.077 --> 00:05:02.046
- [Gabriel] You can see the kinds

00:05:02.046 --> 00:05:03.471
of problems that would exist if

00:05:03.471 --> 00:05:08.160
states didn't honor the
legal decision that were made

00:05:08.160 --> 00:05:10.910
by other states such as who is married

00:05:12.119 --> 00:05:14.110
or who is divorced

00:05:14.110 --> 00:05:16.700
or who owns a particular piece of property

00:05:17.718 --> 00:05:20.810
or whether a particular child

00:05:20.810 --> 00:05:23.320
is going to be in the
custody of one parent

00:05:23.320 --> 00:05:24.880
rather than another.

00:05:24.880 --> 00:05:27.440
And the full faith and credit clause

00:05:27.440 --> 00:05:30.690
is designed to say, in order for

00:05:30.690 --> 00:05:31.920
our system to work

00:05:31.920 --> 00:05:33.760
as a unified whole,

00:05:33.760 --> 00:05:36.250
while it's true that the courts of Georgia

00:05:36.250 --> 00:05:39.240
are distinct from the
courts of New York, etc.

00:05:39.240 --> 00:05:41.580
They're separate systems,

00:05:41.580 --> 00:05:43.310
but they have to treat the work

00:05:43.310 --> 00:05:46.740
that each other does with respect.

00:05:46.740 --> 00:05:49.430
- [Kim] If we move onto section II.

00:05:49.430 --> 00:05:52.950
This says that the citizens of each state

00:05:52.950 --> 00:05:57.220
shall be entitled to all
privileges and immunities

00:05:57.220 --> 00:05:59.350
of citizens in the several states.

00:05:59.350 --> 00:06:02.670
So what are these
privileges and immunities?

00:06:02.670 --> 00:06:04.950
- [Erin] So the privileges
and immunities clause

00:06:04.950 --> 00:06:07.800
has been one that's subject to a number of

00:06:07.800 --> 00:06:10.660
sort of debates in the courts,

00:06:10.660 --> 00:06:12.860
in the academic literature.

00:06:12.860 --> 00:06:14.470
But basically privileges and immunities

00:06:14.470 --> 00:06:17.040
have been construed to
be those sorts of things

00:06:17.040 --> 00:06:18.900
that would go with citizenship.

00:06:18.900 --> 00:06:20.930
So the right to travel for example,

00:06:20.930 --> 00:06:22.260
is a privilege and immunity.

00:06:22.260 --> 00:06:24.010
Those sorts of things.

00:06:24.010 --> 00:06:26.000
- [Gabriel] Occasionally
in American history

00:06:26.000 --> 00:06:28.930
there have been moments where states

00:06:28.930 --> 00:06:32.320
didn't want to let citizens
of other states come through.

00:06:32.320 --> 00:06:36.310
So during the depression there
was an effort by some states

00:06:36.310 --> 00:06:39.170
to limit the migration

00:06:39.170 --> 00:06:41.670
of people from out of state to in-state.

00:06:41.670 --> 00:06:45.360
And the Supreme Court said,
that's not permissible.

00:06:45.360 --> 00:06:47.700
It also protects the right to travel.

00:06:47.700 --> 00:06:50.240
In 1999 the Supreme Court

00:06:50.240 --> 00:06:53.060
dealt with a case called Saenz v. Roe.

00:06:53.060 --> 00:06:56.080
And what that case was
about is that California

00:06:56.080 --> 00:07:00.400
had relatively generous welfare benefits.

00:07:00.400 --> 00:07:04.220
And California wanted to set up its law

00:07:04.220 --> 00:07:06.100
in such a way that it
wouldn't encourage people

00:07:06.100 --> 00:07:08.380
from other states to move to California

00:07:08.380 --> 00:07:11.060
just to get the welfare benefits.

00:07:11.060 --> 00:07:12.150
So what they did is,

00:07:12.150 --> 00:07:14.120
they said that if you
don't live in California.

00:07:14.120 --> 00:07:15.650
If you're moving from out of state

00:07:15.650 --> 00:07:18.160
and you apply for welfare benefits

00:07:18.160 --> 00:07:20.330
then we're going to give
you the welfare benefits

00:07:20.330 --> 00:07:22.870
that you would have gotten in
your state for the first year.

00:07:22.870 --> 00:07:25.470
We're not going to give you
the higher California benefits.

00:07:25.470 --> 00:07:28.080
We're going to give you
whatever you would of gotten

00:07:28.080 --> 00:07:29.640
where you came from.

00:07:29.640 --> 00:07:31.980
That's unconstitutional
and the Supreme Court

00:07:31.980 --> 00:07:35.400
said that violates the
privileges and immunities clause.

00:07:35.400 --> 00:07:36.760
We're one country.

00:07:36.760 --> 00:07:38.080
One nation.

00:07:38.080 --> 00:07:41.490
People are allowed to cross
the borders whenever they want.

00:07:41.490 --> 00:07:43.330
- [Kim] Interesting but there
is this second part of it

00:07:43.330 --> 00:07:47.190
that says no person
held to service or labor

00:07:47.190 --> 00:07:50.140
in one state, under the laws
thereof, escaping into another,

00:07:50.140 --> 00:07:53.570
shall, in consequence, of
any law or regulation therein

00:07:53.570 --> 00:07:55.580
be discharged from service or labor.

00:07:55.580 --> 00:07:57.970
So what is that all about?

00:07:57.970 --> 00:07:59.520
- [Erin] So that is one
of the most unfortunate,

00:07:59.520 --> 00:08:01.600
probably the most unfortunate clauses

00:08:01.600 --> 00:08:02.570
in our Constitution,

00:08:02.570 --> 00:08:04.320
it's known as the fugitive slave clause

00:08:04.320 --> 00:08:06.610
and that title is pretty descriptive.

00:08:06.610 --> 00:08:10.850
So if you have a slave
who is validly owned

00:08:10.850 --> 00:08:13.690
as it were in those days,
under one state's law

00:08:13.690 --> 00:08:17.330
and that person escaped to a free state

00:08:17.330 --> 00:08:20.170
this clause gave the owner the right to

00:08:20.170 --> 00:08:24.190
reclaim that slave and put them back

00:08:24.190 --> 00:08:26.260
into sort of ownership in their own state.

00:08:26.260 --> 00:08:29.010
- [Gabriel] It is a sneaky
way of talking about slavery

00:08:30.074 --> 00:08:34.210
and this compromise with
slavery was necessary to create

00:08:34.210 --> 00:08:35.480
the United States.

00:08:35.480 --> 00:08:39.890
Slavery, the word, isn't
used in the Constitution.

00:08:39.890 --> 00:08:42.740
They only use these euphemisms.

00:08:43.940 --> 00:08:46.690
These sort of complicated circumlocutions

00:08:47.550 --> 00:08:49.940
and there is an argument that
there is a reason for that.

00:08:49.940 --> 00:08:52.930
And the reason for that is
that a lot of the framers

00:08:52.930 --> 00:08:55.210
of the Constitution
didn't support slavery.

00:08:55.210 --> 00:08:56.600
Opposed slavery.

00:08:56.600 --> 00:08:58.980
They did think that it
was important to have

00:08:58.980 --> 00:09:01.620
a United States and to
have a Constitution.

00:09:01.620 --> 00:09:06.030
So they wanted to do what
was necessary to achieve that

00:09:06.030 --> 00:09:07.660
but they did the absolutely minimum

00:09:07.660 --> 00:09:09.460
and they did it in such a way

00:09:09.460 --> 00:09:13.730
that consciously doesn't recognize

00:09:13.730 --> 00:09:17.140
and legitimize the institution of slavery.

00:09:17.140 --> 00:09:19.630
- [Kim] Alright so, then we get into

00:09:19.630 --> 00:09:22.900
new states and territories.

00:09:22.900 --> 00:09:25.650
So, I think it was very forward looking

00:09:25.650 --> 00:09:28.720
of the framers to
recognize that new states

00:09:28.720 --> 00:09:30.100
might want to join the Union

00:09:30.100 --> 00:09:31.790
and then to provide a process for that.

00:09:31.790 --> 00:09:33.140
So can you tell us a little bit about

00:09:33.140 --> 00:09:34.700
what that process was like?

00:09:34.700 --> 00:09:37.460
- [Erin] So article IV
section three clause one

00:09:37.460 --> 00:09:40.150
provides the process for
admitting new states.

00:09:40.150 --> 00:09:42.840
Again it recognizes that
new states might want to

00:09:42.840 --> 00:09:46.100
join the Union and it
gives wide latitude to

00:09:46.100 --> 00:09:48.190
congress for admitting new states,

00:09:48.190 --> 00:09:51.380
so basically the process
was that a territory

00:09:51.380 --> 00:09:53.040
would indicate to the
congress that it wished

00:09:53.040 --> 00:09:54.330
to become a state.

00:09:54.330 --> 00:09:56.540
Then they would submit a constitution

00:09:56.540 --> 00:09:58.580
and congress would approve the new state.

00:09:58.580 --> 00:10:01.300
But the constitution
itself in article IV places

00:10:01.300 --> 00:10:02.599
some limitations on that.

00:10:02.599 --> 00:10:05.820
Some of the eastern states
we're concerned that the large

00:10:05.820 --> 00:10:09.450
western territories might
become too influential

00:10:09.450 --> 00:10:10.960
so they had a couple of provisions

00:10:10.960 --> 00:10:14.510
that no new states could be
created out of an old state

00:10:14.510 --> 00:10:18.460
nor could parts of states be
combined to form a new state

00:10:18.460 --> 00:10:21.360
unless there was consent from
all of the involved states.

00:10:21.360 --> 00:10:26.360
- [Gabriel] And it's not so
clear that purchase of territory

00:10:27.620 --> 00:10:31.120
from foreign governments was a power that

00:10:31.120 --> 00:10:34.100
was granted in the Constitution to anyone.

00:10:34.100 --> 00:10:36.340
Thomas Jefferson who was
the president at the time

00:10:36.340 --> 00:10:38.820
of the Louisiana Purchase had doubts

00:10:38.820 --> 00:10:41.810
that the Louisiana Purchase
was constitutional.

00:10:41.810 --> 00:10:44.150
He thought that it was
a great idea to purchase

00:10:44.150 --> 00:10:46.570
all that land from France,

00:10:46.570 --> 00:10:48.750
but he thought that it would
require a constitutional

00:10:48.750 --> 00:10:51.840
amendment for the United
States to have that power.

00:10:51.840 --> 00:10:54.920
This is different from
Texas joining the Union.

00:10:54.920 --> 00:10:58.400
But the House and the
Senate didn't have the same

00:10:58.400 --> 00:11:02.080
qualms that President Jefferson did.

00:11:02.080 --> 00:11:07.020
And so they agreed to approve
the Louisiana Purchase

00:11:07.020 --> 00:11:07.880
and to fund it.

00:11:07.880 --> 00:11:11.250
When the bill got to Thomas
Jefferson's desk he signed.

00:11:11.250 --> 00:11:12.920
- [Kim] Moving on to section IV,

00:11:12.920 --> 00:11:15.910
there is this promise here
that the federal government

00:11:15.910 --> 00:11:19.830
will guarantee every state a
republican form of government

00:11:19.830 --> 00:11:22.470
and shall protect each
of them against invasion

00:11:22.470 --> 00:11:24.000
or domestic violence.

00:11:24.000 --> 00:11:25.660
What does this mean?

00:11:25.660 --> 00:11:28.840
- [Erin] So we see here in
Article IV the end of Article IV

00:11:28.840 --> 00:11:32.590
a really sort of famous, an
important promise to each

00:11:32.590 --> 00:11:34.240
of the individual states.

00:11:34.240 --> 00:11:36.520
The federal government is promising,

00:11:36.520 --> 00:11:39.600
to basically aid them in keeping

00:11:39.600 --> 00:11:41.470
a republican form of government.

00:11:41.470 --> 00:11:43.360
As well remember, Benjamin Franklin

00:11:43.360 --> 00:11:47.470
famously said we've given you
a republic if you can keep it.

00:11:48.340 --> 00:11:51.270
- [Gabriel] So when we talk
about invasion in section IV,

00:11:51.270 --> 00:11:53.120
it talks about invasion,

00:11:53.120 --> 00:11:54.760
it's pretty clear that
what they're talking about

00:11:54.760 --> 00:11:57.340
is invasion by some hostile state.

00:11:57.340 --> 00:11:59.030
And of course during this period

00:11:59.030 --> 00:12:01.590
there was continuing conflict with England

00:12:01.590 --> 00:12:04.720
and the idea is that if New York

00:12:05.784 --> 00:12:07.210
or South Carolina

00:12:07.210 --> 00:12:11.490
gets invaded by England,
that's not just that particular

00:12:11.490 --> 00:12:14.350
state's problem it's the nation's problem

00:12:14.350 --> 00:12:17.180
and the national government
has an obligation

00:12:17.180 --> 00:12:19.650
to protect against invasion.

00:12:19.650 --> 00:12:22.780
- [Kim] I imagine it also
prevents someone from

00:12:22.780 --> 00:12:26.000
for example declaring
themselves the King of Maryland.

00:12:26.000 --> 00:12:27.470
- [Gabriel] The republican
form of government

00:12:27.470 --> 00:12:29.000
clause does that.

00:12:29.000 --> 00:12:31.920
It leaves the details to the states

00:12:31.920 --> 00:12:35.080
but the basic idea is that there has,

00:12:35.080 --> 00:12:38.870
the concept of republican
government that's embodied

00:12:38.870 --> 00:12:42.280
in article IV is majority rule.

00:12:42.280 --> 00:12:46.360
That even if there were
free and fair elections

00:12:46.360 --> 00:12:49.330
the state could not
choose to have military

00:12:49.330 --> 00:12:51.070
or hereditary government.

00:12:51.070 --> 00:12:53.820
So even if everybody in
California got together,

00:12:53.820 --> 00:12:54.653
and said you know,

00:12:54.653 --> 00:12:56.844
what we really need is

00:12:56.844 --> 00:13:00.600
a good family that
generation after generation

00:13:00.600 --> 00:13:02.750
will lead us and they will be

00:13:03.670 --> 00:13:06.430
the kings and queens of California,

00:13:06.430 --> 00:13:09.440
and this is what we want so we're going to

00:13:09.440 --> 00:13:13.190
amend our constitution
to provide for hereditary

00:13:13.190 --> 00:13:15.420
leadership in our state
and we're going to find

00:13:15.420 --> 00:13:17.340
somebody great and this
is what we want to do.

00:13:17.340 --> 00:13:21.410
Article IV would say, we
can't choose to do that

00:13:21.410 --> 00:13:23.160
even through democratic means.

00:13:23.160 --> 00:13:25.240
- [Kim] So as we've learned Article IV

00:13:25.240 --> 00:13:26.460
requires states to give

00:13:26.460 --> 00:13:28.690
full faith and credit
to the legal proceedings

00:13:28.690 --> 00:13:31.370
of other states and to treat the citizens

00:13:31.370 --> 00:13:34.280
of other states as well as
they treat their own citizens.

00:13:34.280 --> 00:13:36.290
It provides a process
for adding new states

00:13:36.290 --> 00:13:39.140
into the mix and guarantees
a republican form

00:13:39.140 --> 00:13:41.620
of government to the
citizens of all the states.

00:13:41.620 --> 00:13:44.720
Article IV binds the
United States together

00:13:44.720 --> 00:13:47.730
so it's not just a collection
of independent states

00:13:47.730 --> 00:13:49.620
but rather a unified nation.

00:13:49.620 --> 00:13:51.280
To learn more abour article IV

00:13:51.280 --> 00:13:53.200
visit the National Constitution Centers

00:13:53.200 --> 00:13:56.360
in Directive Constitution
and Khan Academy's resources

00:13:56.360 --> 00:13:58.220
on U.S. government and politics.


Constructing hypotheses for a significance test about a proportion

WEBVTT
Kind: captions
Language: en

00:00:00.332 --> 00:00:02.280
- [Instructor] We're told
that Amanda read a report

00:00:02.280 --> 00:00:05.820
saying that 49% of teachers
in the United States

00:00:05.820 --> 00:00:08.370
were members of a labor union.

00:00:08.370 --> 00:00:10.910
She wants to test whether this holds true

00:00:10.910 --> 00:00:12.910
for teachers in her state,

00:00:12.910 --> 00:00:16.270
so she is going to take a
random sample of these teachers

00:00:16.270 --> 00:00:18.390
and see what percent of them

00:00:18.390 --> 00:00:21.160
are members of a union.

00:00:21.160 --> 00:00:23.930
Let P represent the proportion of teachers

00:00:23.930 --> 00:00:26.960
in her state that are members of a union.

00:00:26.960 --> 00:00:29.760
Write an appropriate set of hypotheses

00:00:29.760 --> 00:00:31.380
for her significance test.

00:00:31.380 --> 00:00:34.460
So, pause this video and
see if you can do that.

00:00:34.460 --> 00:00:35.370
And let's do it together.

00:00:35.370 --> 00:00:37.530
So, what we want to do
for this significance test

00:00:37.530 --> 00:00:40.520
is set up a null hypothesis

00:00:40.520 --> 00:00:43.330
and an alternative hypothesis.

00:00:43.330 --> 00:00:45.069
Now, your null hypothesis

00:00:45.069 --> 00:00:48.520
is the hypothesis that
hey, there's no news here,

00:00:48.520 --> 00:00:50.410
it's what you would expect it to be

00:00:50.410 --> 00:00:52.420
and so, if you read a report saying

00:00:52.420 --> 00:00:54.780
that 49% of teachers in the United States

00:00:54.780 --> 00:00:56.490
were members of labor unions,

00:00:56.490 --> 00:00:57.890
well, then it would be reasonable to say

00:00:57.890 --> 00:00:59.700
that the null hypothesis,

00:00:59.700 --> 00:01:02.200
the no news here is
that the same percentage

00:01:02.200 --> 00:01:05.440
of teachers in her state are
members of a labor union,

00:01:05.440 --> 00:01:09.150
so that percentage, that proportion is P,

00:01:09.150 --> 00:01:11.140
so this would be the null hypothesis,

00:01:11.140 --> 00:01:13.120
that the proportion in her state

00:01:13.120 --> 00:01:15.880
is also 49%

00:01:15.880 --> 00:01:18.480
and now what would the alternative be?

00:01:18.480 --> 00:01:21.310
Well, the alternative is that
the proportion in her state

00:01:21.310 --> 00:01:23.360
is not 49%.

00:01:23.360 --> 00:01:25.390
This is the thing that
hey, there'd be news here,

00:01:25.390 --> 00:01:27.150
there'd be something
interesting to report,

00:01:27.150 --> 00:01:30.570
there's something
different about her state.

00:01:30.570 --> 00:01:32.440
And how would she use this?

00:01:32.440 --> 00:01:35.240
Well, she would take a sample
of teachers in her state,

00:01:35.240 --> 00:01:37.350
figure out the sample proportion,

00:01:37.350 --> 00:01:40.550
figure out the probability of
getting that sample proportion

00:01:40.550 --> 00:01:44.160
if we were to assume that
the null hypothesis is true.

00:01:44.160 --> 00:01:45.840
If that probability is lower

00:01:45.840 --> 00:01:48.270
than a threshold which she
should have said ahead of time,

00:01:48.270 --> 00:01:49.740
her significance level,

00:01:49.740 --> 00:01:52.670
then she would reject the null hypothesis

00:01:52.670 --> 00:01:55.290
which would suggest the alternative.

00:01:55.290 --> 00:01:56.990
But let's do another example here.

00:01:59.370 --> 00:02:02.390
According to a very large poll in 2015,

00:02:02.390 --> 00:02:04.760
about 90% of homes in California

00:02:04.760 --> 00:02:07.030
has access to the internet.

00:02:07.030 --> 00:02:08.730
Market researchers want to test

00:02:08.730 --> 00:02:11.030
if that proportion is now higher,

00:02:11.030 --> 00:02:14.460
so they take a random sample
of 1,000 homes in California

00:02:14.460 --> 00:02:18.340
and find that 920 or 92% of homes sampled

00:02:18.340 --> 00:02:20.190
have access to the internet.

00:02:20.190 --> 00:02:23.300
Let P represent the proportion
of homes in California

00:02:23.300 --> 00:02:25.540
that have access to the internet.

00:02:25.540 --> 00:02:27.870
Write an appropriate set of hypotheses

00:02:27.870 --> 00:02:29.440
for their significance test.

00:02:29.440 --> 00:02:30.790
So, once again, pause this video

00:02:30.790 --> 00:02:32.900
and see if you can figure it out.

00:02:32.900 --> 00:02:36.270
So, once again, we want
to have a null hypothesis

00:02:36.270 --> 00:02:39.020
and we want to have an
alternative hypotheses.

00:02:39.020 --> 00:02:42.860
The null hypothesis is that
hey, there's no news here

00:02:42.860 --> 00:02:45.620
and so, that would say that
it's kind of the status quo.

00:02:45.620 --> 00:02:48.650
That the proportion of
people who have internet

00:02:48.650 --> 00:02:51.290
is still the same as the last study.

00:02:51.290 --> 00:02:53.520
It's still the same at 90%

00:02:54.490 --> 00:02:55.740
or I could write 90%

00:02:56.596 --> 00:03:01.490
or I could write 0.9 right over here.

00:03:01.490 --> 00:03:02.980
Now, some of you might have been tempted

00:03:02.980 --> 00:03:05.360
to put 92% there

00:03:05.360 --> 00:03:06.630
but it's very important to realize

00:03:06.630 --> 00:03:08.680
92% is the sample proportion,

00:03:08.680 --> 00:03:10.140
that's the sample statistic.

00:03:10.140 --> 00:03:11.678
When we're writing these hypotheses,

00:03:11.678 --> 00:03:15.490
these are hypotheses
about the true parameter.

00:03:15.490 --> 00:03:20.240
What is the true proportion
of homes in California

00:03:20.240 --> 00:03:21.770
that now have the internet?

00:03:21.770 --> 00:03:24.120
And so, this is about the true proportion.

00:03:24.120 --> 00:03:25.850
And so, the alternative here

00:03:25.850 --> 00:03:29.060
is that it's now greater than 90%

00:03:29.060 --> 00:03:32.170
or I could say it's greater than 0.9,

00:03:32.170 --> 00:03:33.470
I could have written 90%

00:03:33.470 --> 00:03:35.750
or 0.9 here

00:03:35.750 --> 00:03:37.290
and so, they really in this question

00:03:37.290 --> 00:03:39.190
they wrote this to kind of distract you

00:03:39.190 --> 00:03:40.850
to make you think maybe
I have to incorporate

00:03:40.850 --> 00:03:42.300
this 92% somehow

00:03:42.300 --> 00:03:46.220
and once again, how will
they use these hypotheses?

00:03:46.220 --> 00:03:48.750
Well, they will take the sample

00:03:48.750 --> 00:03:50.880
in which they got 92% of homes sampled

00:03:50.880 --> 00:03:52.060
had access to the internet,

00:03:52.060 --> 00:03:53.160
so this right over here

00:03:53.160 --> 00:03:55.250
is my sample proportion

00:03:55.250 --> 00:03:56.640
and then they're gonna figure out

00:03:56.640 --> 00:03:57.610
well, what's the probability

00:03:57.610 --> 00:03:59.360
of getting this sample proportion

00:03:59.360 --> 00:04:00.850
for this sample size

00:04:00.850 --> 00:04:01.950
if we were to assume

00:04:01.950 --> 00:04:04.360
that the null hypothesis is true?

00:04:04.360 --> 00:04:07.580
If this probability of getting
this is below thresholds,

00:04:07.580 --> 00:04:09.980
below alpha, below our significance level,

00:04:09.980 --> 00:04:12.250
then we'll reject the null hypothesis,

00:04:12.250 --> 00:04:14.440
which would suggest the alternative.


Gerrymandering

WEBVTT
Kind: captions
Language: en

00:00:00.220 --> 00:00:01.970
- [Instructor] What we
see here are two maps

00:00:01.970 --> 00:00:03.170
of congressional districts.

00:00:03.170 --> 00:00:05.190
On the left we see some
congressional districts

00:00:05.190 --> 00:00:07.030
in and around Austin, Texas.

00:00:07.030 --> 00:00:09.140
This black line shows us Travis County

00:00:09.140 --> 00:00:10.780
where Austin, Texas is.

00:00:10.780 --> 00:00:13.980
And on this right map we see
the congressional districts

00:00:13.980 --> 00:00:16.780
in and around Chicago, Illinois.

00:00:16.780 --> 00:00:18.830
What I'd like you to
do is pause this video

00:00:18.830 --> 00:00:20.430
and see if you see anything interesting

00:00:20.430 --> 00:00:23.670
about the shapes of these
congressional districts.

00:00:23.670 --> 00:00:26.400
Well some things might
immediately jump out at you.

00:00:26.400 --> 00:00:28.980
Here in Chicago, Illinois,
this fourth district

00:00:28.980 --> 00:00:31.780
in particular seems kind of fishy.

00:00:31.780 --> 00:00:33.690
It's often known as the earmuff district.

00:00:33.690 --> 00:00:36.610
It has this northern part
and this southern part,

00:00:36.610 --> 00:00:39.280
and then it's actually
connected just by an interstate,

00:00:39.280 --> 00:00:42.590
not by the things on either
side of that interstate.

00:00:42.590 --> 00:00:44.480
So that doesn't seem like a natural shape

00:00:44.480 --> 00:00:46.120
for a congressional district.

00:00:46.120 --> 00:00:48.450
And then here in Austin, Texas,

00:00:48.450 --> 00:00:51.130
you see that the votes in Travis County

00:00:51.130 --> 00:00:54.300
are split amongst many
congressional districts.

00:00:54.300 --> 00:00:56.680
And so the question
that should be surfacing

00:00:56.680 --> 00:00:57.890
in your brain is,

00:00:57.890 --> 00:01:01.220
why are these districts shaped that way?

00:01:01.220 --> 00:01:03.237
And the answer that many
people will give you

00:01:03.237 --> 00:01:06.232
is it's because of a gerrymandering.

00:01:06.232 --> 00:01:07.590
Gerrymandering,

00:01:09.440 --> 00:01:13.160
which is the idea of shaping districts

00:01:13.160 --> 00:01:17.330
to benefit one political party or another.

00:01:17.330 --> 00:01:19.850
Every 10 years there's a U.S. Census,

00:01:19.850 --> 00:01:22.254
and based on that census,
different states will

00:01:22.254 --> 00:01:24.330
might get a few more representatives

00:01:24.330 --> 00:01:26.040
or a few less representatives,

00:01:26.040 --> 00:01:29.570
and so state legislatures
will often have to redistrict.

00:01:29.570 --> 00:01:32.262
And so that's when this occurs.

00:01:32.262 --> 00:01:35.240
And so the first question
you might ask is,

00:01:35.240 --> 00:01:37.480
well that's a very strange word,

00:01:37.480 --> 00:01:39.200
where does it come from?

00:01:39.200 --> 00:01:41.710
And that goes all the way back to 1812

00:01:41.710 --> 00:01:44.370
when the then governor of Massachusetts,

00:01:44.370 --> 00:01:47.380
Elbridge Gerry, Gerry was
how you pronounced his name

00:01:47.380 --> 00:01:49.570
although now it's gerrymandering.

00:01:49.570 --> 00:01:52.800
He decided to sign the
bill that would reapportion

00:01:52.800 --> 00:01:54.450
the state senate districts.

00:01:54.450 --> 00:01:57.290
And you have this one really
strangely shaped district

00:01:57.290 --> 00:01:59.010
right over here that
people said hey that looks

00:01:59.010 --> 00:02:00.390
like a salamander.

00:02:00.390 --> 00:02:02.240
And so they created a
portmanteau which is really

00:02:02.240 --> 00:02:05.500
just a combination of
words around Elbridge Gerry

00:02:05.500 --> 00:02:07.580
and the back half of salamander.

00:02:07.580 --> 00:02:09.590
So you have gerrymander,

00:02:09.590 --> 00:02:12.060
which is creating these
districts to advantage

00:02:12.060 --> 00:02:13.310
one party or the other.

00:02:13.310 --> 00:02:17.090
Elbridge Gerry did it for the
Democratic Republican party

00:02:17.090 --> 00:02:19.160
against the Federalist,

00:02:19.160 --> 00:02:23.180
but now it's Republicans versus Democrats.

00:02:23.180 --> 00:02:25.690
So now let's go back to the two districts

00:02:25.690 --> 00:02:27.740
that we looked at and think about what are

00:02:27.740 --> 00:02:28.770
the implications of it?

00:02:28.770 --> 00:02:32.650
Who will, who does the
gerrymandering benefit?

00:02:32.650 --> 00:02:34.750
So in the case of Austin, Texas,

00:02:34.750 --> 00:02:36.950
Austin, Texas is an urban area.

00:02:36.950 --> 00:02:40.290
Urban areas tend to lean more left.

00:02:40.290 --> 00:02:42.980
And it does lean more Democratic.

00:02:42.980 --> 00:02:46.980
It's actually more liberal
than most urban areas in Texas.

00:02:46.980 --> 00:02:49.500
But it's surrounded by more rural areas

00:02:49.500 --> 00:02:51.120
that lean right.

00:02:51.120 --> 00:02:53.860
And so it would be advantageous
and it is advantageous

00:02:53.860 --> 00:02:57.210
for Republicans to split
those Democratic votes

00:02:57.210 --> 00:03:00.330
amongst these Republican districts.

00:03:00.330 --> 00:03:03.840
In the case of Chicago, it's
a little bit less obvious.

00:03:03.840 --> 00:03:06.240
This type of gerrymandering was done

00:03:06.240 --> 00:03:07.760
by a Democratic legislature,

00:03:07.760 --> 00:03:09.780
but it's a little bit less
obvious what's going on

00:03:09.780 --> 00:03:10.900
here with the fourth district

00:03:10.900 --> 00:03:13.290
because it is actually
surrounded by districts

00:03:13.290 --> 00:03:15.350
represented by Democrats.

00:03:15.350 --> 00:03:17.510
What you need to appreciate
is when this gerrymandering

00:03:17.510 --> 00:03:21.410
is done it's often done by
sophisticated computer algorithms

00:03:21.410 --> 00:03:22.860
and there's all sorts of implications

00:03:22.860 --> 00:03:24.770
of stretching one district or another.

00:03:24.770 --> 00:03:26.810
This is just one tactic that you see here

00:03:26.810 --> 00:03:29.040
is taking a bunch of Democratic votes

00:03:29.040 --> 00:03:32.020
and diluting them amongst a
bunch of Republican districts.

00:03:32.020 --> 00:03:33.660
You might see it the other way.

00:03:33.660 --> 00:03:35.780
You could have situations
where you redistrict

00:03:35.780 --> 00:03:38.690
so that an incumbent no
longer lives in their district

00:03:38.690 --> 00:03:40.810
and so they wouldn't be
the incumbent anymore.

00:03:40.810 --> 00:03:43.820
You might see redistricting
to force two incumbents

00:03:43.820 --> 00:03:45.460
to go against each other.

00:03:45.460 --> 00:03:47.780
You might see redistricting
where you're collecting

00:03:47.780 --> 00:03:50.500
pockets from certain
constituencies so that

00:03:50.500 --> 00:03:52.100
you can make a district so that they would

00:03:52.100 --> 00:03:53.620
have representation and that's the one

00:03:53.620 --> 00:03:56.420
that's often cited for the
district four right over here.

00:03:56.420 --> 00:03:58.900
Because these are heavily Hispanic areas

00:03:58.900 --> 00:04:00.760
around or in Chicago.

00:04:01.600 --> 00:04:04.360
Now I'll leave you with
a newspaper article

00:04:04.360 --> 00:04:07.150
from the Salem Gazette in 1813

00:04:07.150 --> 00:04:09.310
that talks about at least
how the Federalists felt

00:04:09.310 --> 00:04:11.910
about that first official gerrymandering.

00:04:13.460 --> 00:04:17.280
This is in response to Elbridge
Gerry's signing of the bill

00:04:17.280 --> 00:04:19.970
to allow for that
salamander shaped district

00:04:19.970 --> 00:04:22.278
that advantaged the Democratic Republicans

00:04:22.278 --> 00:04:25.120
against the Federalists.

00:04:25.120 --> 00:04:28.040
Federalists, followers of Washington.

00:04:28.040 --> 00:04:30.650
Again behold and shudder at the exhibition

00:04:30.650 --> 00:04:32.630
of this terrific dragon,

00:04:32.630 --> 00:04:35.800
brought forth to swallow
and devour your liberties

00:04:35.800 --> 00:04:36.880
and equal rights.

00:04:36.880 --> 00:04:38.180
You can see in the
picture it actually does

00:04:38.180 --> 00:04:40.950
look like a dragon, they put wings on it.

00:04:40.950 --> 00:04:44.860
Unholy party spirit and
inordinate love of power

00:04:44.860 --> 00:04:46.300
gave it birth.

00:04:46.300 --> 00:04:48.890
Your patriotism and hatred of tyranny

00:04:48.890 --> 00:04:52.240
must by one vigorous struggle strangle it

00:04:52.240 --> 00:04:54.020
in its infancy.

00:04:54.020 --> 00:04:57.270
The iniquitous law
which cut up and severed

00:04:57.270 --> 00:05:00.170
this Commonwealth into
districts is kindred

00:05:00.170 --> 00:05:02.850
to the arbitrary deeds of Napoleon

00:05:02.850 --> 00:05:05.584
when he partitioned the
territories of innocent nations

00:05:05.584 --> 00:05:07.700
to suit his sovereign will.

00:05:07.700 --> 00:05:09.870
You gotta remember this
is right around the time

00:05:09.870 --> 00:05:12.470
of Napoleon conquering much of Europe.

00:05:12.470 --> 00:05:16.880
This law inflicted a grievous
wound on the Constitution.

00:05:16.880 --> 00:05:21.280
It in fact subverts and
changes our form of government,

00:05:21.280 --> 00:05:25.480
which ceases to be Republican
as long as an aristocratic

00:05:25.480 --> 00:05:28.400
House of Lords under the form of a Senate

00:05:28.400 --> 00:05:32.500
tyrannizes over the people
and silences and stifles

00:05:32.500 --> 00:05:34.340
the voice of the majority.

00:05:35.235 --> 00:05:36.710
And then it goes on to say,

00:05:36.710 --> 00:05:41.550
will you then permit a party
to disfranchise the people,

00:05:41.550 --> 00:05:45.000
to convert the Senate
chamber into a fortress

00:05:45.000 --> 00:05:48.750
in which ambitious office-seekers
may entrench themselves

00:05:48.750 --> 00:05:52.240
and set at defiance the
frowns of the people?

00:05:52.240 --> 00:05:57.230
No, this usurping
faction must be dislodged

00:05:57.230 --> 00:05:58.540
from its stronghold.


Representatives as delegates, trustees, and politicos

WEBVTT
Kind: captions
Language: en

00:00:00.270 --> 00:00:02.100
- [Instructor] What we're
going to do in this video

00:00:02.100 --> 00:00:06.320
is talk about congressional roles.

00:00:06.320 --> 00:00:09.106
Now, what do I mean by
congressional roles?

00:00:09.106 --> 00:00:11.470
Well, whether someone is a member of

00:00:11.470 --> 00:00:14.640
the house of representatives,
or the senate,

00:00:14.640 --> 00:00:16.730
or even one of the state legislatures,

00:00:16.730 --> 00:00:18.800
there's different ways that they can act

00:00:18.800 --> 00:00:22.570
on behalf of the people
that they are representing.

00:00:22.570 --> 00:00:25.310
One way is to just be a delegate.

00:00:25.310 --> 00:00:27.990
And that's to say, okay,
what would my people

00:00:27.990 --> 00:00:29.810
that I'm trying to
represent want me to do,

00:00:29.810 --> 00:00:32.780
and then to do exactly that.

00:00:32.780 --> 00:00:36.560
The other role is to be a trustee.

00:00:36.560 --> 00:00:39.440
And this is the idea of,
well there's some issues

00:00:39.440 --> 00:00:42.990
where either the people in my
district don't have an opinion

00:00:42.990 --> 00:00:45.050
or maybe if they
superficially looked at it

00:00:45.050 --> 00:00:46.660
they would want to vote one way,

00:00:46.660 --> 00:00:50.710
but I, as a representative, as a trustee,

00:00:50.710 --> 00:00:52.890
I can dig a little bit
deeper into the nuances

00:00:52.890 --> 00:00:54.930
and realize what's actually
better for the people

00:00:54.930 --> 00:00:57.860
that I represent, or for
a country as a whole.

00:00:57.860 --> 00:00:59.000
So, one way to think about it,

00:00:59.000 --> 00:01:01.720
a delegate would get a sense of the people

00:01:01.720 --> 00:01:03.140
that they represent, and
what they would want,

00:01:03.140 --> 00:01:04.070
and just do that.

00:01:04.070 --> 00:01:07.380
While a trustee would say,
okay what do I believe is best

00:01:07.380 --> 00:01:09.360
either for the people
that I'm representing

00:01:09.360 --> 00:01:11.050
or for the country as a whole.

00:01:11.050 --> 00:01:13.670
And sometimes they
obviously could coincide.

00:01:13.670 --> 00:01:16.845
And the third type of role is politico.

00:01:16.845 --> 00:01:21.610
Now, the everyday definition
for politico is a politician.

00:01:21.610 --> 00:01:25.060
And sometimes it's used in
the not-so-favorable sense.

00:01:25.060 --> 00:01:27.660
But in the context of,
especially in a government class,

00:01:27.660 --> 00:01:31.260
a politico is a representative who does

00:01:31.260 --> 00:01:33.760
a little bit of both
depending on the situation.

00:01:33.760 --> 00:01:36.280
If there's something that the
people that they represent

00:01:36.280 --> 00:01:38.180
care a lot about, something
that the constituents

00:01:38.180 --> 00:01:39.980
care a lot about, well
there they would say,

00:01:39.980 --> 00:01:41.010
okay, you know what, I'm just gonna vote

00:01:41.010 --> 00:01:41.950
the way they want me to vote,

00:01:41.950 --> 00:01:43.560
even if I don't necessarily agree with it,

00:01:43.560 --> 00:01:45.090
because it matters to them a lot,

00:01:45.090 --> 00:01:46.227
so there I'm gonna be a delegate.

00:01:46.227 --> 00:01:48.470
But on the things that really matter to me

00:01:48.470 --> 00:01:50.910
or that don't matter so
much to my constituents,

00:01:50.910 --> 00:01:52.920
well, there I'm going to be a trustee.

00:01:52.920 --> 00:01:56.520
So you could view a politico
as a bit of a hybrid.

00:01:56.520 --> 00:01:59.210
So with that out of the way,
let's look at some scenarios,

00:01:59.210 --> 00:02:01.180
and think about whether
these are describing

00:02:01.180 --> 00:02:05.543
a representative as a delegate,
a trustee, or a politico.

00:02:05.543 --> 00:02:08.238
So let's start with this first one.

00:02:08.238 --> 00:02:11.750
It says, there is a vote on a bill in the

00:02:11.750 --> 00:02:14.500
House of Representatives that
would increase environmental

00:02:14.500 --> 00:02:16.820
regulations on major businesses.

00:02:16.820 --> 00:02:20.110
Several citizens in Illinois'
9th congressional district

00:02:20.110 --> 00:02:23.260
have contacted their
representative to influence him

00:02:23.260 --> 00:02:26.430
to vote in favor of the bill.

00:02:26.430 --> 00:02:29.610
However, Representative Wallin thinks that

00:02:29.610 --> 00:02:33.290
these regulations will cost
businesses too much money,

00:02:33.290 --> 00:02:37.020
which will lead businesses
to firing his constituents,

00:02:37.020 --> 00:02:39.700
so he decides to vote against it.

00:02:39.700 --> 00:02:43.100
So pause this video, and so,
is Representative Way-lin,

00:02:43.100 --> 00:02:45.360
or Wall-in, acting as a delegate,

00:02:45.360 --> 00:02:48.210
a trustee, or a politico?

00:02:49.210 --> 00:02:53.070
So the key clues here are,
that Representative Way-lin,

00:02:53.070 --> 00:02:56.760
or Wall-in, decides to
vote against the bill

00:02:56.760 --> 00:02:59.260
despite the fact that
some of his constituents

00:02:59.260 --> 00:03:02.860
have contacted him to
vote in favor of the bill.

00:03:02.860 --> 00:03:07.030
And so here is clearly acting
based on his own beliefs,

00:03:07.030 --> 00:03:09.970
so he is acting as a trustee.

00:03:09.970 --> 00:03:13.390
He's doing what he thinks is
best for his constituents,

00:03:13.390 --> 00:03:15.870
even though they might not agree with him.

00:03:15.870 --> 00:03:17.420
Let's look at another scenario.

00:03:19.197 --> 00:03:22.250
In the Senate, there is a vote on a bill

00:03:22.250 --> 00:03:24.390
that would eliminate the penny.

00:03:24.390 --> 00:03:27.110
Citizens in Indiana reach
out to their Senator

00:03:27.110 --> 00:03:29.930
to encourage her to support the bill.

00:03:29.930 --> 00:03:32.190
Even though Senator Portela thinks

00:03:32.190 --> 00:03:34.250
the penny is incredibly useful,

00:03:34.250 --> 00:03:36.960
she decides to vote for the bill.

00:03:36.960 --> 00:03:38.450
So pause this video, think about

00:03:38.450 --> 00:03:40.610
how is Senator Portela acting?

00:03:40.610 --> 00:03:42.620
As a delegate, trustee, or politico?

00:03:43.750 --> 00:03:45.280
Well, it's pretty clear that she's doing

00:03:45.280 --> 00:03:47.360
exactly what her
constituents want her to do.

00:03:47.360 --> 00:03:49.550
The constituents are encouraging her

00:03:49.550 --> 00:03:51.930
to support the bill
and she votes the bill.

00:03:51.930 --> 00:03:53.510
And she's doing this despite what

00:03:53.510 --> 00:03:55.530
she thinks is the better option.

00:03:55.530 --> 00:03:56.790
Even though she likes the penny,

00:03:56.790 --> 00:03:59.270
she's going to vote to eliminate the penny

00:03:59.270 --> 00:04:01.220
because that's what her constituents want.

00:04:01.220 --> 00:04:04.870
So she is clearly acting as a delegate.

00:04:04.870 --> 00:04:07.290
And to be clear, and
this is often the case,

00:04:07.290 --> 00:04:09.348
many times the representative will agree

00:04:09.348 --> 00:04:12.390
with their constituents
and then in that situation

00:04:12.390 --> 00:04:15.290
they're acting as both a
delegate and a trustee.

00:04:15.290 --> 00:04:17.090
Now let's look at one more scenario.

00:04:18.140 --> 00:04:20.100
There are two major bills up for a vote

00:04:20.100 --> 00:04:21.820
in the Indiana state senate.

00:04:21.820 --> 00:04:24.020
One bill will change the
name of a high school

00:04:24.020 --> 00:04:26.430
in Indianapolis to Larry Bird High School.

00:04:26.430 --> 00:04:28.210
The other bill would set aside 100-acres

00:04:28.210 --> 00:04:29.580
for a new state park.

00:04:29.580 --> 00:04:32.620
Senator Kamath has
received about 1200 calls

00:04:32.620 --> 00:04:34.270
from her constituents asking her

00:04:34.270 --> 00:04:36.700
to support the bill to
rename the high school,

00:04:36.700 --> 00:04:38.810
but no calls about the park bill.

00:04:38.810 --> 00:04:41.630
Senator Kamath is incredibly
passionate about parks,

00:04:41.630 --> 00:04:42.930
but has not decided her vote

00:04:42.930 --> 00:04:44.870
on the renaming of the high school.

00:04:44.870 --> 00:04:47.980
Senator Kamath decides to vote
in favor of the park bill,

00:04:47.980 --> 00:04:50.460
using her better judgement
to decide her vote,

00:04:50.460 --> 00:04:53.050
and in favor of changing
the name of the high school

00:04:53.050 --> 00:04:56.140
to represent her constituents' interests.

00:04:56.140 --> 00:04:58.410
So you, once again,
should pause this video,

00:04:58.410 --> 00:05:00.310
and figure out is Senator Kamath acting

00:05:00.310 --> 00:05:02.350
as a delegate, trustee, or politico?

00:05:03.210 --> 00:05:07.030
Well, you can see on the park
bill, which she supports,

00:05:07.030 --> 00:05:09.510
so she votes in favor of the park bill.

00:05:09.510 --> 00:05:12.270
She does that because that's
just what she thinks is better,

00:05:12.270 --> 00:05:14.316
she's using her better judgement.

00:05:14.316 --> 00:05:19.060
So in that scenario she's
acting as a trustee.

00:05:19.060 --> 00:05:20.930
She's doing what she thinks is right.

00:05:20.930 --> 00:05:23.570
And then on the naming the high school

00:05:23.570 --> 00:05:25.100
Larry Bird High School,

00:05:25.100 --> 00:05:26.390
there she just says, hey, you know what,

00:05:26.390 --> 00:05:27.870
I don't have a strong opinion of it,

00:05:27.870 --> 00:05:31.530
I am just going to represent
my constituents interests.

00:05:31.530 --> 00:05:34.960
And so there she's clearly
acting as a delegate.

00:05:34.960 --> 00:05:37.860
And so the scenario where
sometimes you act as a delegate,

00:05:37.860 --> 00:05:39.366
sometimes you act as a trustee,

00:05:39.366 --> 00:05:42.168
this is sometimes categorized,
or often categorized,

00:05:42.168 --> 00:05:45.140
especially in a government
class, as a politico,

00:05:45.140 --> 00:05:47.650
which as I mentioned before
is really just a term

00:05:47.650 --> 00:05:49.650
often used for a politician.

00:05:49.650 --> 00:05:51.280
And you can imagine it's very natural

00:05:51.280 --> 00:05:53.270
for a politician to
sometimes act as a delegate,

00:05:53.270 --> 00:05:54.920
hey I've got to make
my constituents happy,

00:05:54.920 --> 00:05:56.900
let me do exactly what they want me to do.

00:05:56.900 --> 00:05:59.040
But every now and then
my constituents either

00:05:59.040 --> 00:06:00.170
might not care about an issue,

00:06:00.170 --> 00:06:02.520
or they might not realize
all of the details

00:06:02.520 --> 00:06:05.120
or all of the implecations,
and so I might do something

00:06:05.120 --> 00:06:07.620
that's maybe not exactly what they want.

00:06:07.620 --> 00:06:09.410
And in those scenarios,
well then I'm just gonna,

00:06:09.410 --> 00:06:10.950
I'm just gonna vote my conscience.

00:06:10.950 --> 00:06:12.448
And if I do a little bit of both,

00:06:12.448 --> 00:06:14.122
on different types of issues,

00:06:14.122 --> 00:06:16.210
well then I'm acting as a politico.


Tax multiplier, MPC, and MPS

WEBVTT
Kind: captions
Language: en

00:00:00.500 --> 00:00:02.160
- [Instructor] So in this
video we're going to revisit

00:00:02.160 --> 00:00:04.330
another super simple economy that only has

00:00:04.330 --> 00:00:06.290
a farmer and a builder on an island.

00:00:06.290 --> 00:00:08.040
And we're gonna review
what we learned about the

00:00:08.040 --> 00:00:11.500
multiplier and the marginal
propensity to consume,

00:00:11.500 --> 00:00:13.830
but we're gonna do it a
little bit more abstractly.

00:00:13.830 --> 00:00:16.910
So just as a bit of a review,
the marginal propensity

00:00:16.910 --> 00:00:20.820
to consume, this is a number
usually between zero and one

00:00:20.820 --> 00:00:23.640
that says if you were
to get an extra dollar,

00:00:23.640 --> 00:00:25.490
how much of that would you spend?

00:00:25.490 --> 00:00:27.470
And so your marginal propensity to consume

00:00:27.470 --> 00:00:31.070
if it is 0.25, that means that
if you were to get a dollar

00:00:31.070 --> 00:00:32.960
you would spend 25 cents of it.

00:00:32.960 --> 00:00:35.650
If your marginal propensity
to consume is 0.6,

00:00:35.650 --> 00:00:38.370
that means that if you were to get $1,000,

00:00:38.370 --> 00:00:39.870
you would spent six tenths of it,

00:00:39.870 --> 00:00:42.190
you would spend $600.

00:00:42.190 --> 00:00:45.440
And so using this idea, and I'm gonna keep

00:00:45.440 --> 00:00:48.270
it abstract, let's just say that we start

00:00:48.270 --> 00:00:52.630
with the farmer, she spends
X dollars on products

00:00:52.630 --> 00:00:55.060
or services from the builder.

00:00:55.060 --> 00:00:58.720
So X dollars goes to the builder,

00:00:58.720 --> 00:01:00.250
now what's the builder going to do?

00:01:00.250 --> 00:01:03.180
And we talked about this
in the previous video.

00:01:03.180 --> 00:01:04.660
The builder's gonna say, I have X dollars,

00:01:04.660 --> 00:01:05.940
we're gonna assume everyone on this island

00:01:05.940 --> 00:01:08.220
has the same marginal
propensity to consume,

00:01:08.220 --> 00:01:10.170
he's now going to spend some of it.

00:01:10.170 --> 00:01:11.460
And he only has one place to spend it,

00:01:11.460 --> 00:01:14.590
it's a very simple economy,
what's he going to spend?

00:01:14.590 --> 00:01:18.130
Well he's going to spend
X times the marginal

00:01:18.130 --> 00:01:20.030
propensity to consume.

00:01:20.030 --> 00:01:22.070
If this seems very
abstract, think about it.

00:01:22.070 --> 00:01:25.500
If X was $1,000, and if
the marginal propensity

00:01:25.500 --> 00:01:27.740
to consume is let's say 25 hundredths,

00:01:27.740 --> 00:01:31.940
or 0.25, now he's going to spend $1,000

00:01:31.940 --> 00:01:35.350
times 0.25, which would be $250.

00:01:35.350 --> 00:01:37.930
But now all of a sudden, the
farmer has this much money,

00:01:37.930 --> 00:01:39.430
and what's she going to do?

00:01:39.430 --> 00:01:42.850
Well she's going to spend this times

00:01:42.850 --> 00:01:45.180
the marginal propensity to consume.

00:01:45.180 --> 00:01:50.110
So she is now going to
spend X times the marginal

00:01:50.110 --> 00:01:51.760
propensity to consume, which is how much

00:01:51.760 --> 00:01:53.530
she got from the builder, and how much of

00:01:53.530 --> 00:01:54.490
that is she going to spend?

00:01:54.490 --> 00:01:56.250
Well that times the marginal propensity

00:01:56.250 --> 00:01:57.360
to consume again.

00:01:57.360 --> 00:01:59.750
So it would be the marginal
propensity to consume squared.

00:01:59.750 --> 00:02:03.840
And then this just keeps
going on and on and on.

00:02:03.840 --> 00:02:05.690
And so he's gonna get this amount,

00:02:05.690 --> 00:02:06.530
what's he gonna spend?

00:02:06.530 --> 00:02:09.610
Well he's gonna spend
that times the marginal

00:02:09.610 --> 00:02:12.580
propensity to consume again,
so it's going to be that,

00:02:12.580 --> 00:02:14.550
and we could just keep
going on and on and on,

00:02:14.550 --> 00:02:17.010
but if we wanna figure out
how much increased output

00:02:17.010 --> 00:02:19.440
is there in this economy
because of that initial

00:02:19.440 --> 00:02:22.190
expenditure of X dollars, well you would

00:02:22.190 --> 00:02:23.620
just sum everything up.

00:02:23.620 --> 00:02:28.240
It would be X plus X times
the marginal propensity

00:02:28.240 --> 00:02:31.919
to consume plus X times
the marginal propensity

00:02:31.919 --> 00:02:35.010
to consume squared, goes on and on and on.

00:02:35.010 --> 00:02:37.100
If we want, we can factor out an X,

00:02:37.100 --> 00:02:41.350
so X times one plus marginal
propensity to consume

00:02:41.350 --> 00:02:43.970
plus marginal propensity
to consume squared

00:02:43.970 --> 00:02:46.480
on and on and on, and you might recognize

00:02:46.480 --> 00:02:49.210
from your algebra class,
or maybe your pre-calculus

00:02:49.210 --> 00:02:51.880
class that this is an
infinite geometric series

00:02:51.880 --> 00:02:54.380
that we cover in other
videos, and you can actually

00:02:54.380 --> 00:02:56.010
sum this up, it's one of the cooler things

00:02:56.010 --> 00:02:57.320
in mathematics.

00:02:57.320 --> 00:03:00.750
This can be summed up
as being equal to one

00:03:00.750 --> 00:03:05.290
over one minus the marginal
propensity to consume.

00:03:05.290 --> 00:03:07.800
And so you have that
initial expenditure of X,

00:03:07.800 --> 00:03:11.260
but the total amount of output
is X times this expression,

00:03:11.260 --> 00:03:14.250
and so that's why this
expression right over here

00:03:14.250 --> 00:03:16.530
is known as the multiplier.

00:03:16.530 --> 00:03:19.480
If the farmer spent $1
initially on the builder,

00:03:19.480 --> 00:03:23.040
well it's going to be $1
times this expression,

00:03:23.040 --> 00:03:25.700
in terms of how much
increased output there is

00:03:25.700 --> 00:03:26.830
in the simplified economy.

00:03:26.830 --> 00:03:29.590
So this is the multiplier.

00:03:31.210 --> 00:03:33.100
Now let's do something interesting

00:03:33.100 --> 00:03:35.610
and something new that
we hadn't done before.

00:03:35.610 --> 00:03:38.190
Let's imagine that somehow
some magic government

00:03:38.190 --> 00:03:42.230
shows up on this island and
decides to tax the farmer.

00:03:42.230 --> 00:03:43.970
Just says, hey, we're
gonna take some money

00:03:43.970 --> 00:03:46.490
from this farmer for whatever it might be,

00:03:46.490 --> 00:03:49.200
and so this magic government, the amount

00:03:49.200 --> 00:03:52.300
that they take away, we
will call that delta T,

00:03:52.300 --> 00:03:54.600
you could sometimes do that
as your change in taxes.

00:03:54.600 --> 00:03:57.040
So this is positive, that
means that the government

00:03:57.040 --> 00:03:59.300
is getting money, and
money's being taken away

00:03:59.300 --> 00:04:00.870
from the farmer.

00:04:00.870 --> 00:04:04.260
So what's gonna be, what's
the farmer going to do?

00:04:04.260 --> 00:04:06.530
Well, from the farmer's point of view,

00:04:06.530 --> 00:04:11.160
they, she now has the
delta T less dollars,

00:04:11.160 --> 00:04:13.380
and so that's going to
affect her consumption.

00:04:13.380 --> 00:04:15.510
It's going to decrease her consumption.

00:04:15.510 --> 00:04:18.170
How much is it going to
decrease her consumption by?

00:04:18.170 --> 00:04:20.260
Well it's gonna be the
amount she has to give

00:04:20.260 --> 00:04:22.730
to the government, times
her marginal propensity

00:04:22.730 --> 00:04:24.560
to consume.

00:04:24.560 --> 00:04:26.320
Times the marginal propensity to consume.

00:04:26.320 --> 00:04:27.610
Why does this make sense?

00:04:27.610 --> 00:04:30.400
Well in the situation where
if I give the farmer a dollar,

00:04:30.400 --> 00:04:32.320
let's say the marginal
propensity to consume

00:04:32.320 --> 00:04:37.320
is 0.5, if I gave her a dollar,
she would spend 50 cents.

00:04:38.600 --> 00:04:40.530
If I took a dollar away from her,

00:04:40.530 --> 00:04:42.580
she would spend 50 cents less.

00:04:42.580 --> 00:04:45.400
The amount I take away,
times the marginal propensity

00:04:45.400 --> 00:04:47.060
to consume.

00:04:47.060 --> 00:04:50.290
But if this is the effect on the farmer,

00:04:50.290 --> 00:04:53.410
what's going to be the
total effect on output?

00:04:53.410 --> 00:04:56.880
Well, this is the situation
where essentially X

00:04:56.880 --> 00:04:58.010
is equal to that.

00:04:58.010 --> 00:05:00.150
If I take away delta T from the farmer,

00:05:00.150 --> 00:05:02.440
that's essentially saying
X is equal to this thing

00:05:02.440 --> 00:05:03.840
right over here.

00:05:03.840 --> 00:05:06.150
So X is equal to this
thing right over here,

00:05:06.150 --> 00:05:08.150
and so what's going to be the impact?

00:05:08.150 --> 00:05:10.930
Well, the total output
is going to be equal

00:05:10.930 --> 00:05:15.930
to X, which is negative delta T times the

00:05:17.440 --> 00:05:19.790
marginal propensity to consume,

00:05:19.790 --> 00:05:21.400
marginal propensity to consume,

00:05:21.400 --> 00:05:25.660
that part right over here, that is that,

00:05:25.660 --> 00:05:28.220
times this, time the multiplier.

00:05:28.220 --> 00:05:32.010
Times one over one minus
the marginal propensity

00:05:32.010 --> 00:05:33.370
to consume.

00:05:33.370 --> 00:05:35.480
Or if you wanna express this multiplier

00:05:35.480 --> 00:05:38.650
as something multiplying
by that increase in taxes,

00:05:38.650 --> 00:05:43.650
this would be equal to delta T times

00:05:44.980 --> 00:05:49.940
the negative of your marginal
propensity to consume

00:05:49.940 --> 00:05:54.730
over one minus the marginal
propensity to consume.

00:05:54.730 --> 00:05:57.630
And so this expression,
what seems all fancy

00:05:57.630 --> 00:05:59.880
and technical, but all
it's doing is saying,

00:05:59.880 --> 00:06:03.170
alright look, if you take
money away from the farmer,

00:06:03.170 --> 00:06:06.450
this would be the effect
on her initial spend,

00:06:06.450 --> 00:06:09.180
and so then you get this
multiplier on the taxes,

00:06:09.180 --> 00:06:12.340
and this negative is because
if you have a positive

00:06:12.340 --> 00:06:14.330
taxation right over here, it would have a

00:06:14.330 --> 00:06:18.780
decrease in output
because of the multiplier.

00:06:18.780 --> 00:06:21.380
And some of you might have seen something

00:06:21.380 --> 00:06:22.740
where the denominator looks different,

00:06:22.740 --> 00:06:24.830
you might see something called an MPS,

00:06:24.830 --> 00:06:26.830
or marginal propensity to save.

00:06:26.830 --> 00:06:28.900
And that just comes out of the simple idea

00:06:28.900 --> 00:06:31.453
that if I have, let's say
that I have a marginal

00:06:31.453 --> 00:06:35.590
propensity to consume of 0.3,

00:06:36.890 --> 00:06:38.680
well that means for every dollar I get,

00:06:38.680 --> 00:06:40.750
I'm gonna spend 30 cents of it.

00:06:40.750 --> 00:06:42.850
Well how much am I going to save?

00:06:42.850 --> 00:06:45.050
Well if I spend 30 cents,
I'm gonna save the rest,

00:06:45.050 --> 00:06:47.720
so my marginal propensity
to save in this situation

00:06:47.720 --> 00:06:49.640
would be 70 cents.

00:06:49.640 --> 00:06:51.610
Or another way of thinking about it,

00:06:51.610 --> 00:06:53.680
your marginal propensity to consume

00:06:53.680 --> 00:06:55.610
plus your marginal propensity to save

00:06:55.610 --> 00:06:58.370
is equal to one, or another
way of thinking about it,

00:06:58.370 --> 00:07:00.440
subtract the marginal
propensity to consume

00:07:00.440 --> 00:07:03.190
from both sides, your
marginal propensity to save

00:07:03.190 --> 00:07:06.810
is equal to one minus your
marginal propensity to consume.

00:07:06.810 --> 00:07:10.610
And so that's why this
thing is the exact same

00:07:10.610 --> 00:07:12.880
thing as this thing, and so sometimes,

00:07:12.880 --> 00:07:15.260
you might see a formula
for the tax multiplier,

00:07:15.260 --> 00:07:16.506
let me write this down.

00:07:16.506 --> 00:07:21.506
Tax multiplier, that looks like this,

00:07:23.520 --> 00:07:25.471
where they write the
negative of the marginal

00:07:25.471 --> 00:07:28.520
propensity to consume
over, instead of one minus

00:07:28.520 --> 00:07:30.240
the marginal propensity to consume,

00:07:30.240 --> 00:07:33.340
they write the marginal
propensity to save.

00:07:33.340 --> 00:07:35.010
And when you're learning
this in economics,

00:07:35.010 --> 00:07:37.270
it all seems so cryptic,
where did this come from,

00:07:37.270 --> 00:07:39.920
MPS, MPC, people try to
memorize these things,

00:07:39.920 --> 00:07:42.300
but as you can see, it's
coming out of reasonably

00:07:42.300 --> 00:07:43.810
straightforward algebra.

00:07:43.810 --> 00:07:45.648
Economists sometimes have a knack for

00:07:45.648 --> 00:07:47.820
making straightforward
algebra seem a little bit

00:07:47.820 --> 00:07:50.070
more complicated than it needs to.

00:07:50.070 --> 00:07:52.130
In the next video, I'll
do some worked examples

00:07:52.130 --> 00:07:54.740
so that we can actually
apply these formulas

00:07:54.740 --> 00:07:56.990
to see, and see that it makes sense.


Natural, cyclical, structural, and frictional unemployment rates

WEBVTT
Kind: captions
Language: en

00:00:00.190 --> 00:00:01.230
- [Instructor] We've already discussed

00:00:01.230 --> 00:00:05.890
the notion of unemployment
at length in other videos.

00:00:05.890 --> 00:00:07.360
And what we're going to do in this video

00:00:07.360 --> 00:00:08.450
is dig a little bit deeper

00:00:08.450 --> 00:00:12.710
and think about what makes
up the unemployment rate?

00:00:12.710 --> 00:00:15.780
And just as a review,
the unemployment rate,

00:00:15.780 --> 00:00:19.780
it's the percentage of
people in the labor force

00:00:19.780 --> 00:00:22.820
who are actively looking for a job.

00:00:22.820 --> 00:00:25.280
And on this chart that you
see here, or this graph,

00:00:25.280 --> 00:00:27.300
from the St. Louis Federal Reserve,

00:00:27.300 --> 00:00:30.640
this brown color is the unemployment rate.

00:00:30.640 --> 00:00:32.450
And you can see how it jumps around,

00:00:32.450 --> 00:00:34.390
along with the economic cycles.

00:00:34.390 --> 00:00:36.340
These gray areas, right over here,

00:00:36.340 --> 00:00:37.590
these show recessions,

00:00:37.590 --> 00:00:39.460
and then the white areas are expansion.

00:00:39.460 --> 00:00:41.050
You can see how the unemployment rate

00:00:41.050 --> 00:00:43.710
jumps during most of these recessions,

00:00:43.710 --> 00:00:46.010
or really all of these recessions here.

00:00:46.010 --> 00:00:47.860
But then we have other things graphed.

00:00:47.860 --> 00:00:49.950
We have this thing in blue,

00:00:49.950 --> 00:00:52.670
known as the natural rate of unemployment.

00:00:52.670 --> 00:00:53.750
What is that?

00:00:54.650 --> 00:00:56.800
Well, it is what the word describes.

00:00:56.800 --> 00:00:58.020
You could view this blue line,

00:00:58.020 --> 00:01:00.340
and it's really an approximation,

00:01:00.340 --> 00:01:04.040
of what would the unemployment rate be

00:01:04.040 --> 00:01:06.990
if you did not have these economic cycles.

00:01:06.990 --> 00:01:09.520
These periods of expansion
and then recession.

00:01:09.520 --> 00:01:11.080
In some ways, you can view it as

00:01:11.080 --> 00:01:13.690
the smoothed out unemployment rate.

00:01:13.690 --> 00:01:18.000
And so if this in brown,
is the unemployment rate,

00:01:18.000 --> 00:01:20.410
and then in blue, right over here,

00:01:20.410 --> 00:01:24.240
you have your natural
rate of unemployment.

00:01:24.240 --> 00:01:26.900
People will sometimes use NRU for that.

00:01:26.900 --> 00:01:28.900
The difference between the two,

00:01:28.900 --> 00:01:32.320
that's the unemployment
caused by the business cycle.

00:01:32.320 --> 00:01:35.790
So this is, so let's say
if we go right over here,

00:01:35.790 --> 00:01:37.720
where we had a high unemployment rate,

00:01:37.720 --> 00:01:40.030
this difference right over here,

00:01:40.030 --> 00:01:41.690
so you could view this as

00:01:41.690 --> 00:01:44.610
the unemployment rate minus

00:01:44.610 --> 00:01:46.900
the natural rate of unemployment,

00:01:46.900 --> 00:01:49.200
minus the natural rate of unemployment,

00:01:49.200 --> 00:01:53.400
that's the unemployment that's
caused by the business cycle.

00:01:53.400 --> 00:01:56.900
and so that's why it is called cyclical.

00:01:56.900 --> 00:02:00.310
Cyclical unemployment.

00:02:00.310 --> 00:02:02.220
And so you could see at,

00:02:02.220 --> 00:02:04.700
during recessions or shortly
after recession ends,

00:02:04.700 --> 00:02:05.950
when the unemployment rate,

00:02:05.950 --> 00:02:08.320
when the regular unemployment
rate is very high,

00:02:08.320 --> 00:02:09.760
your cyclical unemployment,

00:02:09.760 --> 00:02:12.370
the unemployment caused
due to the business cycle,

00:02:12.370 --> 00:02:13.890
is going to be positive.

00:02:13.890 --> 00:02:15.910
But when the economy is really humming,

00:02:15.910 --> 00:02:19.040
there, you can even have
negative cyclical unemployment.

00:02:19.040 --> 00:02:20.310
Right over here.

00:02:20.310 --> 00:02:22.320
Where the true unemployment rate

00:02:22.320 --> 00:02:25.000
is lower than the natural
rate of unemployment,

00:02:25.000 --> 00:02:26.330
maybe people who are hiring,

00:02:26.330 --> 00:02:28.320
maybe business just have to hire people

00:02:28.320 --> 00:02:31.440
that aren't fully qualified
for the jobs, or whatever else,

00:02:31.440 --> 00:02:36.190
just because things are so
hot at that moment in time.

00:02:36.190 --> 00:02:38.430
But then we can break
down things even further.

00:02:38.430 --> 00:02:40.290
We can break down this notion of

00:02:40.290 --> 00:02:43.780
natural rate of unemployment
into two components.

00:02:43.780 --> 00:02:46.410
You can break it down into structural,

00:02:46.410 --> 00:02:48.640
I will do that in this blue color,

00:02:48.640 --> 00:02:50.570
so structural.

00:02:50.570 --> 00:02:55.310
Structural unemployment and
frictional unemployment.

00:02:55.310 --> 00:02:57.640
Not fictional, frictional. (laughs)

00:02:57.640 --> 00:02:59.490
Frictional unemployment.

00:02:59.490 --> 00:03:01.620
And we don't have the
exact data that here,

00:03:01.620 --> 00:03:04.310
but let's, I'll just draw
something just to imagine.

00:03:04.310 --> 00:03:05.150
Let's just imagine,

00:03:05.150 --> 00:03:06.700
this isn't the exact,

00:03:06.700 --> 00:03:08.630
this isn't the exact information.

00:03:08.630 --> 00:03:10.880
But let's imagine that the
frictional unemployment rate

00:03:10.880 --> 00:03:12.910
would be this much right over here.

00:03:14.060 --> 00:03:16.150
And then the structural would be the rest

00:03:16.150 --> 00:03:20.440
to make it add up to the
natural rate of unemployment.

00:03:20.440 --> 00:03:22.350
And so one thing that
you might immediately say

00:03:22.350 --> 00:03:24.300
is okay, the natural rate is made up of

00:03:24.300 --> 00:03:26.280
structural plus frictional unemployment

00:03:26.280 --> 00:03:28.310
or if you add frictional plus structural,

00:03:28.310 --> 00:03:29.850
you get your natural rate.

00:03:29.850 --> 00:03:32.100
But what are these things?

00:03:32.100 --> 00:03:34.210
Well, structural unemployment,

00:03:34.210 --> 00:03:35.280
this is a situation

00:03:35.280 --> 00:03:39.090
where people are being counted
in the unemployment rate,

00:03:39.090 --> 00:03:40.580
but there's something about,

00:03:40.580 --> 00:03:42.310
a disconnect between their skills

00:03:42.310 --> 00:03:44.060
and what employers are looking for,

00:03:44.060 --> 00:03:46.990
that is making it difficult
for them to find a job.

00:03:46.990 --> 00:03:47.823
You could imagine

00:03:47.823 --> 00:03:49.970
when the car was replacing
the horse and buggy,

00:03:49.970 --> 00:03:51.900
if you are a horse and buggy driver,

00:03:51.900 --> 00:03:53.840
or you were good caring for horses,

00:03:53.840 --> 00:03:55.770
but now people were
looking for auto mechanics,

00:03:55.770 --> 00:03:57.140
or people who knew about cars,

00:03:57.140 --> 00:04:00.330
or people who could help
build roads for cars.

00:04:00.330 --> 00:04:01.410
Well then that would be a situation

00:04:01.410 --> 00:04:02.510
with structural unemployment.

00:04:02.510 --> 00:04:04.760
Where the skills did not match the jobs.

00:04:04.760 --> 00:04:06.890
And so over time, and there's,

00:04:06.890 --> 00:04:07.730
you might say, well over time

00:04:07.730 --> 00:04:09.790
those people would learn
to do things for cars.

00:04:09.790 --> 00:04:12.000
But there's always change in the economy.

00:04:12.000 --> 00:04:12.870
If you think about it right now,

00:04:12.870 --> 00:04:14.610
technology is constantly evolving.

00:04:14.610 --> 00:04:16.660
There's constantly new
needs in the economy,

00:04:16.660 --> 00:04:19.890
and so there will always
be some lack of fit

00:04:19.890 --> 00:04:23.410
between the skills that
people have right now

00:04:23.410 --> 00:04:26.750
and the skills that employers need.

00:04:26.750 --> 00:04:29.120
It might also relate to where people are.

00:04:29.120 --> 00:04:30.310
Where the people might not be

00:04:30.310 --> 00:04:33.210
in the place where the
jobs are, or vice versa.

00:04:33.210 --> 00:04:35.060
Now, frictional unemployment.

00:04:35.060 --> 00:04:36.610
Well, that comes out of the ideas

00:04:36.610 --> 00:04:39.520
that there are some frictions
when you look for a job.

00:04:39.520 --> 00:04:41.120
You've got to submit your resume,

00:04:41.120 --> 00:04:43.170
you have to interview around,

00:04:43.170 --> 00:04:46.490
everyone doesn't go directly
from one job to the next.

00:04:46.490 --> 00:04:47.680
It's a good situation to be in,

00:04:47.680 --> 00:04:50.330
but many times you might
have graduated from college,

00:04:50.330 --> 00:04:52.360
you are looking for a job.

00:04:52.360 --> 00:04:54.860
Employers are looking to fill a position.

00:04:54.860 --> 00:04:57.680
And so this is just a
natural state of affairs.

00:04:57.680 --> 00:04:59.920
Over time, if technology gets better,

00:04:59.920 --> 00:05:01.910
if there's better ways to match jobs,

00:05:01.910 --> 00:05:05.090
the frictional unemployment
could decrease.

00:05:05.090 --> 00:05:07.240
But it's unlikely it will ever go to zero.

00:05:07.240 --> 00:05:10.210
That there will always be some
people in the labor market

00:05:10.210 --> 00:05:12.740
who are actively looking for a job,

00:05:12.740 --> 00:05:14.700
who have the skills that
the labor market needs,

00:05:14.700 --> 00:05:16.870
so they wouldn't be counted in
the structural unemployment,

00:05:16.870 --> 00:05:19.780
but they haven't found that job yet.

00:05:19.780 --> 00:05:21.240
So I will leave you there.

00:05:21.240 --> 00:05:22.870
And hopefully this gives
you an appreciation

00:05:22.870 --> 00:05:25.210
that you often see the unemployment rate,

00:05:25.210 --> 00:05:27.740
but you can think about
it as being made up of

00:05:27.740 --> 00:05:29.550
the natural rate of unemployment

00:05:29.550 --> 00:05:31.560
and the cyclical unemployment.

00:05:31.560 --> 00:05:33.560
And then the natural rate
of unemployment itself,

00:05:33.560 --> 00:05:34.690
can be broken down further

00:05:34.690 --> 00:05:37.920
into structural and
frictional unemployment.


Limitations of GDP

WEBVTT
Kind: captions
Language: en

00:00:00.350 --> 00:00:02.750
- [Instructor] In other videos
we have already talked about

00:00:02.750 --> 00:00:06.630
the idea of GDP in some depth.

00:00:06.630 --> 00:00:08.850
Gross domestic product,

00:00:08.850 --> 00:00:11.700
a measure of the aggregate
goods and services

00:00:11.700 --> 00:00:14.760
produced in a country in a year.

00:00:14.760 --> 00:00:16.930
But what we're going to
discuss in this video

00:00:16.930 --> 00:00:20.140
is how good a measure GDP is

00:00:20.140 --> 00:00:22.740
and in particular some
of the things that GDP

00:00:22.740 --> 00:00:24.270
does not measure.

00:00:24.270 --> 00:00:26.991
So in general what's the
motivation for wanting to know

00:00:26.991 --> 00:00:30.950
the aggregate goods and
services produced by a country?

00:00:30.950 --> 00:00:34.350
Well you could view it as a
sign of economic activity,

00:00:34.350 --> 00:00:35.980
so it's economic,

00:00:36.850 --> 00:00:38.990
economic activity.

00:00:38.990 --> 00:00:43.070
You could view it as the size
or influence of an economy.

00:00:43.070 --> 00:00:45.480
Size/influence

00:00:46.850 --> 00:00:48.810
of economy.

00:00:48.810 --> 00:00:51.430
And then if you take GDP and you divide

00:00:51.430 --> 00:00:53.180
by the number of people in a country,

00:00:53.180 --> 00:00:56.370
you get things like GDP per capita.

00:00:56.370 --> 00:00:59.650
GDP per capita,

00:00:59.650 --> 00:01:02.600
what you could view
really as GDP per head.

00:01:02.600 --> 00:01:04.710
And this you could view as

00:01:04.710 --> 00:01:07.500
well that's an indicator of well-being,

00:01:08.520 --> 00:01:11.430
with the idea that well
if there's just more

00:01:11.430 --> 00:01:14.180
goods and services produced per person,

00:01:14.180 --> 00:01:15.810
that maybe people in
that country are going

00:01:15.810 --> 00:01:17.300
to be better off.

00:01:17.300 --> 00:01:18.310
But as we already touched on,

00:01:18.310 --> 00:01:20.550
what is it not measuring?

00:01:20.550 --> 00:01:23.050
Well one thing that GDP does not measure

00:01:23.050 --> 00:01:25.600
is non-marketed goods.

00:01:25.600 --> 00:01:28.620
What do I mean by non-marketed goods?

00:01:28.620 --> 00:01:31.760
So let's say that I have
to go to the airport,

00:01:31.760 --> 00:01:34.200
so this is the airport
here, my best drawing.

00:01:34.200 --> 00:01:36.530
That's a terminal, there's a plane.

00:01:37.400 --> 00:01:39.560
That's the point of this
isn't to draw an airport,

00:01:39.560 --> 00:01:41.970
but you get the idea, that's an airport.

00:01:41.970 --> 00:01:45.240
And I need to go from
my house to the airport.

00:01:45.240 --> 00:01:48.110
If I call up a taxi or an Uber

00:01:48.110 --> 00:01:49.970
or Lyft or something like that

00:01:49.970 --> 00:01:53.200
and I take it to the airport,

00:01:53.200 --> 00:01:56.360
so they drive me to that airport,

00:01:56.360 --> 00:01:58.770
that fare that they charge me,

00:01:58.770 --> 00:02:02.810
that will be included in GDP.

00:02:02.810 --> 00:02:04.640
On the other hand if I were to get my wife

00:02:04.640 --> 00:02:06.400
to drive me to the airport,

00:02:06.400 --> 00:02:09.100
all of a sudden that would
not be counted in GDP,

00:02:09.100 --> 00:02:12.390
even though the exact same
service has been performed.

00:02:12.390 --> 00:02:14.870
Someone took me in their car from my house

00:02:14.870 --> 00:02:16.360
to the airport.

00:02:16.360 --> 00:02:19.210
And that's because my
wife or your roommate

00:02:19.210 --> 00:02:21.670
or your best friend giving you a ride

00:02:21.670 --> 00:02:23.550
is a non-marketed service.

00:02:23.550 --> 00:02:25.420
They're not trying to sell that service.

00:02:25.420 --> 00:02:27.540
They're just doing that to you as a favor.

00:02:27.540 --> 00:02:29.490
But it was a service provided to you,

00:02:29.490 --> 00:02:32.200
but it would not be captured in GDP.

00:02:32.200 --> 00:02:36.550
One that is often talked
about is child care.

00:02:36.550 --> 00:02:39.940
If, that's my best drawing
of a child really fast,

00:02:39.940 --> 00:02:44.130
if you hire a babysitter
or if you hire a nanny

00:02:44.130 --> 00:02:45.720
to take care of your child,

00:02:45.720 --> 00:02:48.640
that should be included in GDP.

00:02:48.640 --> 00:02:51.900
Although if you yourself
take care of your child,

00:02:51.900 --> 00:02:54.410
that will not be included in GDP

00:02:54.410 --> 00:02:55.243
because once again,

00:02:55.243 --> 00:02:57.350
you taking care of your child would be

00:02:57.350 --> 00:03:00.070
a non-marketed service.

00:03:00.070 --> 00:03:03.090
Now the other thing that
GDP does not include

00:03:03.090 --> 00:03:05.460
are illegal activity or you could even

00:03:05.460 --> 00:03:08.950
say under the table activity,
some of which is not illegal.

00:03:08.950 --> 00:03:12.410
For example if someone were
to pay their babysitter,

00:03:12.410 --> 00:03:15.340
and if it doesn't get
registered in taxes someplace,

00:03:15.340 --> 00:03:18.750
well even that will not be
reflected in the GDP number.

00:03:18.750 --> 00:03:20.560
It's not an illegal activity,

00:03:20.560 --> 00:03:23.973
but it should've officially
been registered with the IRS

00:03:23.973 --> 00:03:26.170
and then it would've been counted as GDP,

00:03:26.170 --> 00:03:27.900
but in this case, it wouldn't have.

00:03:27.900 --> 00:03:30.400
And also of course you have black markets,

00:03:30.400 --> 00:03:33.029
illegal activity that for sure would not

00:03:33.029 --> 00:03:35.720
be included in GDP.

00:03:35.720 --> 00:03:39.100
If someone were to illegally sell you

00:03:39.100 --> 00:03:41.710
fireworks, let's say they're
banned in your state,

00:03:41.710 --> 00:03:43.250
and of course they're not gonna report it

00:03:43.250 --> 00:03:44.083
to the government.

00:03:44.083 --> 00:03:46.940
Well of course that good and/or service

00:03:46.940 --> 00:03:49.760
is not going to be reflected in GDP.

00:03:49.760 --> 00:03:51.430
But you might say okay that's all right,

00:03:51.430 --> 00:03:53.250
you're gonna miss some things,

00:03:53.250 --> 00:03:55.760
but directionally if GDP is growing,

00:03:55.760 --> 00:03:57.950
especially if GDP per capita is growing,

00:03:57.950 --> 00:04:00.550
surely that is a good thing.

00:04:00.550 --> 00:04:02.070
And in general you're probably right.

00:04:02.070 --> 00:04:03.600
It probably is a good thing,

00:04:03.600 --> 00:04:06.720
but there's also things
that GDP is not capturing.

00:04:06.720 --> 00:04:09.300
It is not capturing even
if you were able to measure

00:04:09.300 --> 00:04:11.680
non-marketed goods and services

00:04:11.680 --> 00:04:14.660
or under the table or illegal activity,

00:04:14.660 --> 00:04:16.690
it doesn't capture things like

00:04:16.690 --> 00:04:19.150
let's say pollution.

00:04:19.150 --> 00:04:22.250
You could have a country whose GDP

00:04:22.250 --> 00:04:23.870
is growing very very fast,

00:04:23.870 --> 00:04:25.040
but in the process,

00:04:25.040 --> 00:04:27.320
the country gets very very polluted.

00:04:27.320 --> 00:04:29.520
Maybe that makes the
quality of life go down

00:04:29.520 --> 00:04:30.750
in certain areas.

00:04:31.610 --> 00:04:33.670
Health is another issue.

00:04:33.670 --> 00:04:36.900
In general countries with
a high GDP per capita

00:04:36.900 --> 00:04:39.370
usually do have good health care,

00:04:39.370 --> 00:04:42.140
mainly because they have more
resources for health care.

00:04:42.140 --> 00:04:43.410
But you wanna look at that.

00:04:43.410 --> 00:04:46.720
How is the health trending in a country?

00:04:46.720 --> 00:04:49.430
And then you could even
think about stuff like stress

00:04:49.430 --> 00:04:52.890
or a feeling of community or support.

00:04:52.890 --> 00:04:54.840
These are all things that would affect

00:04:54.840 --> 00:04:56.740
any human being's well-being,

00:04:56.740 --> 00:05:00.300
but they are not of
course captured in GDP.

00:05:00.300 --> 00:05:03.500
Now to appreciate the different ways

00:05:03.500 --> 00:05:07.780
of ranking countries in an
attempt to get at well-being,

00:05:07.780 --> 00:05:10.790
you could first of all
look at GDP rankings.

00:05:12.300 --> 00:05:16.230
So here are rankings by
the World Bank for 2016.

00:05:17.860 --> 00:05:19.540
You can see the United States is on top

00:05:19.540 --> 00:05:24.010
with 18.6 almost trillion dollars of GDP

00:05:24.010 --> 00:05:25.430
as measured by the World Bank,

00:05:25.430 --> 00:05:27.180
and you see the ranking.

00:05:27.180 --> 00:05:30.320
Now if you wanted to go by per capita,

00:05:30.320 --> 00:05:32.210
because you say hey this doesn't tell you

00:05:32.210 --> 00:05:33.490
how many people are there.

00:05:33.490 --> 00:05:36.390
What matters is how much
productivity divided

00:05:36.390 --> 00:05:38.610
by the number of people if
you really wanna measure

00:05:38.610 --> 00:05:40.380
per person well-being.

00:05:40.380 --> 00:05:42.530
Well then you might look
at something like this,

00:05:42.530 --> 00:05:44.170
GDP per capita.

00:05:44.170 --> 00:05:47.100
And notice here, the United
States is still quite high,

00:05:47.100 --> 00:05:49.370
but it's nowhere near
as high as Luxembourg.

00:05:49.370 --> 00:05:51.680
The reason why Luxembourg
didn't show up on the other list

00:05:51.680 --> 00:05:53.890
is it is a very very small country.

00:05:53.890 --> 00:05:56.180
It's population is very small compared

00:05:56.180 --> 00:05:57.060
to the United States.

00:05:57.060 --> 00:06:00.890
Same thing for Switzerland or for Macau.

00:06:00.890 --> 00:06:03.080
Now another thing to appreciate is,

00:06:03.080 --> 00:06:06.220
this GDP per capita just
takes the nominal GDP

00:06:06.220 --> 00:06:08.940
and divides it by the
number of people there are

00:06:08.940 --> 00:06:10.030
in a country.

00:06:10.030 --> 00:06:12.560
But it does not measure or indicate things

00:06:12.560 --> 00:06:14.060
like wealth inequality.

00:06:14.060 --> 00:06:16.610
It's not that every person in Luxembourg

00:06:16.610 --> 00:06:21.150
gets exactly $103,000 worth
of goods and services.

00:06:21.150 --> 00:06:22.670
Depending on the country,

00:06:22.670 --> 00:06:24.090
there might be more of a middle class

00:06:24.090 --> 00:06:25.070
or less of a middle class.

00:06:25.070 --> 00:06:27.060
There might be more wealth inequality

00:06:27.060 --> 00:06:28.510
or less wealth inequality,

00:06:28.510 --> 00:06:31.990
and once again that is
not captured by GDP.

00:06:31.990 --> 00:06:34.210
Also even the GDP per capita

00:06:34.210 --> 00:06:36.690
doesn't really tell you
how much you can buy

00:06:36.690 --> 00:06:38.660
with that per capita GDP.

00:06:38.660 --> 00:06:41.010
And so that's why people
look at things like

00:06:41.010 --> 00:06:42.890
purchasing power parity.

00:06:42.890 --> 00:06:45.540
This is a sense of per capita GDP,

00:06:45.540 --> 00:06:47.420
but adjusted for how much you could buy

00:06:47.420 --> 00:06:51.150
with those resources that
are measured in U.S. dollars.

00:06:51.150 --> 00:06:53.420
So now all of a sudden, Qatar at the top.

00:06:53.420 --> 00:06:54.930
Qatar was pretty high,

00:06:54.930 --> 00:06:57.880
but I guess you can buy
more and get more goods

00:06:57.880 --> 00:07:01.430
and services with that
nominal GDP per capita

00:07:01.430 --> 00:07:03.360
as measured in U.S. dollars in Qatar

00:07:03.360 --> 00:07:06.680
than you could say in the United States.

00:07:06.680 --> 00:07:08.540
So I will leave you there.

00:07:08.540 --> 00:07:11.860
There's no such thing as an
absolutely perfect measure

00:07:11.860 --> 00:07:15.440
of economic activity,
much less well-being,

00:07:15.440 --> 00:07:17.970
but GDP is the best measure that we have,

00:07:17.970 --> 00:07:20.320
although I encourage
you to think of others.

00:07:20.320 --> 00:07:23.905
For example, the UN has
tried to measure happiness.

00:07:23.905 --> 00:07:26.530
They have this ranking of happiness.

00:07:26.530 --> 00:07:29.000
They have an annual
World Happiness Report.

00:07:29.000 --> 00:07:31.510
And I'm not gonna go
into all of the details,

00:07:31.510 --> 00:07:33.120
but beyond GDP,

00:07:33.120 --> 00:07:36.130
it also considers things like health

00:07:36.130 --> 00:07:38.600
or other measures of well-being.

00:07:38.600 --> 00:07:39.850
And as you can see,

00:07:39.850 --> 00:07:42.110
the countries at the top here tend to have

00:07:42.110 --> 00:07:43.880
fairly high GDPs,

00:07:43.880 --> 00:07:46.290
but this ranking is not
the same as the ranking

00:07:46.290 --> 00:07:48.310
that we saw on the GDP per capita

00:07:48.310 --> 00:07:49.970
with the purchase power parity.

00:07:49.970 --> 00:07:53.100
And so these are all very
interesting things to think about.