louisiana: the history of an american state chapter 3 louisianas economy: resources and rewards...
TRANSCRIPT
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Louisiana: Louisiana: The History of an American StateThe History of an American State
Chapter 3Chapter 3
Louisiana’s Economy: Louisiana’s Economy: Resources and RewardsResources and Rewards
Study PresentationStudy Presentation
©2005 Clairmont Press
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Chapter 3Chapter 3Louisiana’s Economy: Louisiana’s Economy:
Resources and RewardsResources and Rewards
Section 1: Section 1: Basic Economic ConceptsSection 2: Section 2: Louisiana’s Economic HistorySection 3: Section 3: Louisiana’s ResourcesSection 4: Section 4: Providing Louisiana’s Goods and Services
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ESSENTIAL QUESTION:
–How do people satisfy their wants and needs in our economic system?
Section 1: Basic Economic Section 1: Basic Economic ConceptsConcepts
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Section 1: Section 1: Basic Economic ConceptsBasic Economic Concepts
What words do I need to know?1. goods 2. services3. consumer4. producer5. natural resources 6. human resources 7. capital resources8. scarcity
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Section 1: Section 1: Basic Economic ConceptsBasic Economic Concepts
9. opportunity cost
10. supply
11. demand
12. profit
13. traditional economy
14. command economy
15. market economy
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Wants and NeedsWants and Needs
• goods: physical items – food, clothing, cars, housing, etc.
• services: activities people do for a fee
• producer: person or business – makes goods or provides a service
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Resources and ScarcityResources and Scarcity
• natural resource: gift of nature – part of the natural environment, - water, trees, minerals
• human resources: people – those who produce goods & provide services
• capital resources: money & property – used to produce goods and services
• scarcity: available resources – demand greater than supply
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Making Choices
• Scarcity vs. producers & consumers
• Unlimited needs vs. wants
• Limited resources vs. limited amounts of goods & services
• Basis of an economic system – choosing how to use resources
• Those making choices in United States – individuals, businesses, & communities
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Costs and Benefits
• Opportunity benefit– Choices (getting a job vs. going to college)– Immediate salary vs. getting an education
• Opportunity cost – cost of choice not taken
• Other choices of opportunity benefits & costs– Using resources or using time– Value of non-chosen alternative
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Trade-Offs
• Either/or choice: not always the best
• May combine parts of choices as trade-off
• Trade-off choices to get wants & needs
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Supply and Demand
• supply: quantity of a good or service offered for sale
• demand: quantity of a good or service consumers are willing to buy– Lower prices: consumers buy more,
producers make less $ per item– Higher prices: consumers buy less,
producers make more $ per item• profit: amount left after costs are
subtracted from price (motivator for producers)
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Basic Economic Questions
Four basic economic questions: 1) What do we produce?2) How can it be produced?3) How much will it cost to produce?
4) For whom will we produce?
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What to Produce
• Making the necessary decisions–Meeting needs & wants
–How to make the capital resource (money)
–Human resources
–Natural resources
• Finally, deciding what to produce
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How to Produce
• Plan of action:– How to carry out plan
– Process of implementation
– Supplies needed
• Overall production schedules:– When to start production
– When to end production
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How Much to Produce
• Items to consider for plan–Time involved –Resources needed–Market demand for product (s)
and/or service (s)
• Decisions affected by scarcity
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For Whom to Produce
• Develop knowledge of consumers
• Study needs of consumers
• Consider supply & demand
• Analyze & plan for competitors
• Consider advertising
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Economic Systems
• economist: one who studies the economy
• Three basic kinds of economies 1. Traditional Economy
2. Command Economy
3. Market Economy
• Economy may function as combination
of all three
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Traditional Economy
• Customs, habits, & beliefs determine and answer the four basic economic questions
• Continues in the way it has always been done
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Command Economy
• The government … controls the economy answers the four basic questions makes the decisions has power & authority negotiates input & output controls competition
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Market Economy
• Individuals… Answer the four basic economic
questions based on supply & demand
Also known as free enterprise Based on private ownership Freedom of choice
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Section 2: Louisiana’s Section 2: Louisiana’s Economic HistoryEconomic History
ESSENTIAL QUESTION:–What were Louisiana’s early
economic systems?
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Section 2: Louisiana’s Section 2: Louisiana’s Economic HistoryEconomic History
What words do I need to know?1. barter2. mercantilism3. smuggling4. indigo5. tobacco6. commerce
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Louisiana’s Economic Louisiana’s Economic HistoryHistory
• 1st economic system: barter (trading goods & services without money)
• Then mercantilism: command economy controlled by the government
• Next, smuggling: illegal trade with colonies of other nations
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Louisiana’s Economic Louisiana’s Economic HistoryHistory
• Louisiana Purchase: – end of colonial period – end of earliest crops tobacco & indigo– beginning of agricultural market
• New market: sugar cane & cotton • New Orleans:
– became a major port for North America – 1801 described as “the grand mart of
business, Alexandria of America”
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Louisiana’s Economic Louisiana’s Economic HistoryHistory
• Early years of statehood: a continuing agricultural economy
• 20 years before Civil War: a booming economy
• End of Civil War till after WWII: a struggling economy
• Growth and survival of war-developed industries
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Louisiana’s Economic Louisiana’s Economic HistoryHistory
• New equipment & machines brought by technology
• Human labor replaced by machines
• Many farms deserted by workers
• 1880 – 1920: most old growth trees cut or gone
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Louisiana’s Economic Louisiana’s Economic HistoryHistory
• Oil (another resource)
– Became valuable in early 20th century
– Economy base changed by new industry
– Agricultural economy changed due to WWII & demands for oil
– New economic direction: interdependent global economy
– 21st century: seeks diversity & less dependence on oil industry
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Section 3: Louisiana’s Section 3: Louisiana’s ResourcesResources
ESSENTIAL QUESTION:–What roles do natural resources,
capital resources, and human resources play in the economy of Louisiana?
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Section 3: Louisiana’s Section 3: Louisiana’s ResourcesResources
What words do I need to know?
1. mineral resources
2. nonrenewable
3. lignite
4. biological resources
5. renewable
6. pulpwood
7. labor union
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Natural ResourcesNatural Resources
• Economy supported by abundant natural resources
• Examples: air, water, & rich soil
• 21st century: agricultural shift from small farms/plantations to huge agribusiness systems
• Fewer people on farms
• Amount of crops not decreased
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Natural ResourcesNatural Resources
• State ranking: 2nd in sugar cane & sweet potatoes
• Vital crops: rice, cotton, soybeans • Soil & climate good for raising beef &
dairy cattle (dairy farming diminished)• Abundant water supply good for
agriculture, industry, human use, transportation, & recreation
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Mineral Resources
• Oil
• Natural Gas
• Salt
• Sulfur
• Lignite
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Mineral Resources
• minerals: inorganic substances formed by Earth’s geological processes
• Important to Louisiana’s economy• nonrenewable: not replaced by nature
once extracted (taken) from the environment
• Mineral resources found in Louisiana oil (“black gold”), natural gas, salt, sulfur, lignite
• Construction resources in Louisiana sand, gravel, limestone
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Oil
• Oil for today’s energy created by decayed plants from millions of years ago
• 10% of US oil reserves in Louisiana
• Louisiana: one of top oil-producing states in United States
• 1901 – 1st oil well in Louisiana
• 1947 – 1st platform in Gulf of Mexico
• More oil deposits beneath Gulf of Mexico
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Natural Gas
• Larger deposits than oil
• ¼ of the nation’s supply
• 1st burned as waste
• 1917: “carbon black” developed
–used in making tires, ink, & more
• Important energy for homes & industry
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Salt• Needed for human & animal survival• Used by Native Americans in trade• A form of money, later• Relied on by the Confederacy during
the Civil War• Used in chemicals & other products
–polyvinyl chloride plastic –PVC pipe for plumbing
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Sulfur
• Major ingredient in:
• matches, gunpowder, medicine, plastic & paper
• 1869 – “richest 50 acres in the world”
• town of Sulphur in Calcasieu Parish
• Decrease in value
• foreign import changed importance
• unprofitable to mine in Louisiana
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Lignite
• Soft, brownish-black coal
• Burns poorly
• Mined since 1970s
• Found mostly in DeSoto Parish
• Used for electric power station near Mansfield
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Biological ResourcesBiological Resources
• Biological resources– Common term: plants & animals– Scientific term: flora & fauna
• renewable: replenish over time
• Main divisions:– Forests– Wildlife – Fish
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Forests
• 50% of Louisiana in forests
• 2nd largest income producer
• 90% pine trees
• 75% trees cut for pulpwood
• Large trees cut for sawtimber
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Forests
• Hardwood sawtimber used for furniture & flooring
• Paper mills, lumber mills, & plywood plants
• Christmas tree farms started by the Office of Forestry in the LA Dept. of Agriculture
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Wildlife
• Variety of wildlife–History of trapping & hunting tradition
• Economic resourcesFur pelts: –Once sold more than a million pelts
annually
• Hunting regulations–State Department of Wildlife and
Fisheries
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Wildlife
• Hunting• Source of food
• Recreation
• Millions of dollars for state’s economy
• Timber cutting• Reduced forest land
• Forest animals decreased
• Increase in recent years
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Wildlife
• White-tailed dear –Population has increased
• Black bear–Largest wild animal in Louisiana–Endangered: not legal to hunt
• Wild turkey–Classified as a game bird–Efforts have been made to increase
its numbers
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Wildlife
• Dove
• Quail
• Migratory waterfowl
• Alligators 1963: placed on the federal protected
species list 1981: hunting under strict rules Millions of dollars in hides & meat
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Fish (Recreation)
• Freshwater bream, bass, perch, catfish
• Game fish: –trout, redfish, drum, mackerel, blue
marlin, amberjack, grouper, & tarpon (illegal to sell commercially)
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Fish (Commercial)
• Crawfish raised on crawfish farms
• Catfish sold: freshwater & farms
• Commercial fishing: tuna, sea trout, red snapper
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Capital ResourcesCapital Resources
• Human-made products used to produce goods or services
• Examples: rice mills, sugar refineries, oil refineries, cotton gins, & meat-packing plants
• Others include: transportation facilities – bridges, highways, & airports
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Human Resources• People who supply the labor
– Physical or mental– Paid for goods or services
• Requirements– new skills & specialization – education & training
• Labor unions – workers’ organization to protect workers’ rights
• 1976 – right-to-work law passed – workers could not be forced to join a union
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Section 4: Providing Section 4: Providing Louisiana’s Goods and Louisiana’s Goods and
Services Services
ESSENTIAL QUESTION: –What is Louisiana’s place in the
global economy?
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Section 4: Section 4: Providing Louisiana’s Providing Louisiana’s
Goods and ServicesGoods and Services What words do I need to know? 1. private goods & services 2. public goods & services 3. interdependent 4. Superport 5. tariff 6. economic indicators 7. gross domestic product (GNP) 8. consumer price index 9. inflation 10. unemployment rate
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Providing Louisiana’s Goods Providing Louisiana’s Goods and Servicesand Services
• free market: private goods & services• Limited services & benefits to the
owners• Provided by the government: public
goods & services• Usually available to everyone
– highways, police, education, libraries
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Louisiana-made goods include… • Ships, trucks, electrical equipment, glass
products, automobile batteries, & mobile homes
• Chemicals industry– Ranks 2nd in USA– Petrochemicals (chemicals made from
petroleum) – More than 100 chemical plants in LA– Fertilizers & plastics
ManufacturingManufacturing
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ManufacturingManufacturing
• Billions of gallons of gas from petroleum refineries each year
• Shipbuilding –transport ships & merchant
vessels–Coast Guard cutters, barges,
tugs, supply boats, fishing vessels, & pleasure craft
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Aerospace and AviationAerospace and Aviation
• Louisiana workers part of the United States space program
• Space shuttles assembled in New Orleans
• Lake Charles aircraft assembly for military use
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BiotechnologyBiotechnology
• Combines biological research with engineering
• Pennington Biomedical Center leader in research
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Service IndustriesService Industries• Adds billions of dollars to the economy• Tourism
– sightseeing– eating– shopping– fishing & hunting– Mardi Gras
• Movie-making– 1908 – 1st film made in Louisiana– 1917 – 1st Tarzan film made– More recent – “Steel Magnolias”
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Economic InstitutionsEconomic Institutions
• Joint effort to produce & sell goods and services
• Groups known as economic institutions
• Include– Businesses large and small– Corporations: owned by investors, banks, &
labor unions
• Banks important: allow producers & consumers to trade, save, & invest
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Louisiana in the U.S. and Louisiana in the U.S. and Global EconomiesGlobal Economies
• 1st economic systems: simple barter economies
• Today’s systems interdependent– overlap
– producers & consumers rely on each other
• Louisiana’s offshore port: Superport
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Trade Policies
• North American Free Trade Agreement (NAFTA) changes trade policies & agreements
• Trade restrictions removed• Foreign countries offer cheap labor abroad• Companies moving abroad• Tariffs lessened• Imported goods & low prices hurting
Louisiana
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Measuring the EconomyMeasuring the Economy
• Economic indicators
• Gross domestic product
• Consumer price index
• Inflation
• Unemployment rates
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