Page 140 - Encyclopedia of Business and Finance

eobf_C 7/5/06 2:57 PM Page 117

Civil Rights Act of 1964

necessary to alter the circular flow model. It remains a
viable illustration of what happens in a macroeconomic
sense without microeconomic influences.
It is also considered by some to be a limitation when
money leaves the circular flow to be invested in savings,
stocks, bonds, and other financial investments. However,
the discussion here assumes that the money that is
invested does not really leave the circle, but rather is
passed on as a resource to others. It is true that some
money does leave the circle because banks and other
financial institutions are required by law to maintain a
certain amount of money on deposit. And because some
individuals in households do not trust banks or other
financial institutions, they use the coffee can approach to
saving their money—they simply keep their savings at
home.

SUMMARY U.S. President Lyndon Baines Johnson shakes hands with civil
The circular flow of goods and services is a simplified rights leader Martin Luther King, Jr., and hands him a pen to
illustration of basically two flows: the flow of incomes to sign the Civil Right Act, July 2, 1964. © BETTMANN/CORBIS
households from businesses and the flow of resources to
businesses from households. This model excludes the
more complex influences of microeconomic factors. In the unpopular war in Vietnam, an unknown but potentially
macroeconomic perspective, resources flow from house- cataclysmic relationship with the Union of Soviet Social-
holds to businesses, which change the resources into ist Republics, and the domestic time bomb of civil rights
goods and services for consumption in the product mar- in the United States.
kets. Households are rewarded for the resources they pro- The era of 1954 to 1970 is known for the struggle of
vide in the form of money. It is a circular process that African Americans to gain equality de facto and under the
flows in both directions. law. The spark of the civil rights movement was the 1954
U.S. Supreme Court decision Brown v. Board of Education
SEE ALSO Economics; Macroeconomics/Microeconomics
of Topeka, Kansas, when the Court decided that separate is
inherently unequal. This was a reversal of an earlier deci-
BIBLIOGRAPHY sion. By making this decision the Supreme Court required
Amacher, Ryan C., and Ulbrich, Holley, H. (1995). Principles of that all schools desegregate with all due speed. This was
Economics (6th ed.). Cincinnati, OH: South-Western Pub-
lishing. the first step toward integration for the general African
American population of the United States, but in many
Gitman, Lawrence J., and McDaniel, Carl (2005). The Future of
Business (5th ed.). Mason, OH: South-Western College Pub- areas, especially the southern states, there was opposition
lishing. to the idea of integration. Public accommodations often
had separate facilities for Caucasians and African Ameri-
McConnell, Campbell R., and Brue, Stanley L. (2005). Econom-
ics: Principles, Problems, and Policies (16th ed.). Boston: cans.
McGraw-Hill/Irwin. In order to address these issues, Kennedy had called
for new civil rights legislation to guarantee equal access to
all public accommodations and available goods and serv-
Roger L. Luft
ices. Upon his death, however, there was much concern
that the new civil rights law would never see the light of
day. Johnson used the situation to validate Kennedy’s
legacy and pass the Civil Rights Act of 1964.
CIVIL RIGHTS ACT OF
The Civil Rights Act of 1964 ended discrimination in
1964 all public forums based on race, color, religion, and
The assassination of President John F. Kennedy left the national origin. Public accommodations included hous-
United States of America in a period of turmoil and ing, entertainment, hotels, eating establishments, and
uncertainty, personified in the new and unknown Presi- businesses. The Civil Rights Act of 1964 is considered a
dent Lyndon Johnson. President Johnson was left with an major accomplishment for Johnson. Nevertheless, if it had

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 117