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Capitalism & Economic Freedom. 2.3. Price Stability. Where on the graph was the U.S. economy the best?. INFLATION?. DEMAND-PULL COST-PUSH QUANTITY THEORY. GROWTH. The US stock market has always grown over a 10 year period. However, the type of TOP industries has changed considerably.
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Price Stability • Where on the graph was the U.S. economy the best?
INFLATION? • DEMAND-PULL • COST-PUSH • QUANTITY THEORY
GROWTH • The US stock market has always grown over a 10 year period. However, the type of TOP industries has changed considerably. • The chart below shows samples of the largest 100 U.S. companies. (Primary v. Secondary v. Tertiary)
CAPITALISM & FREE ENTERPRISE • Capitalism: Private citizens control the factors of production • Free enterprise: Competition w/o interference
ECONOMIC FREEDOM • Main idea—people and businesses can do what they want (work/shop/sell/etc.) when and where they want • On a scale of 1-100, how much economic freedom do people actually have? • Who in society has the MOST freedom? Why?
2008 Index of “Economic Freedom” http://www.heritage.org/index/countries.cfm
PRIVATE PROPERTY • Examples? • “Private property gives people the incentive to work, save, and invest.” (p. 48) • True or False? • The fact that people own goods such as cars, watches, and furniture is not really controversial. However, ownership of LAND can be quite controversial. How? • Which is better—private or public ownership of land? • Do people that own land tend to think in the long-term or the short-term? • Mr. Patel • Others
Profit and Profit Motive • Does profit mean “money earned”? • Let’s name some effects of profit motive? • On goods and services • On workers • On the environment • On Standard of living
3 Major Roles in a Capitalist Society Entrepreneur Consumer Government
“When an entrepreneur is successful, everybody benefits.” p. 49 • Here’s why! • Entrepreneur gets profits, a growing business, and the satisfaction of a job well done. • Workers are rewarded with more and better-paying jobs. • Consumers are rewarded with new and better products. • The government is rewarded with a higher level of economic activity and larger tax receipts which can be used to build roads, schools, and libraries for people not even connected with the original entrepreneur. • Successful entrepreneurs attract other firms to the industry who try to “grab a share” of the profit. To remain competitive, the original entrepreneur may have to improve the quality or cut prices which means that the customer can buy more for less.
Role #2: Consumer • How are dollars/won/etc. seen as economic “votes?” • Key concept: Consumer sovereignty • Why are consumers considered the most important of the 3 roles in a free market society? • “The customer is always right” • True or False: Consumers’ wants constantly change. • Today, more Americans purchase home computers than tvs though computers were barely known just 20 years ago. • Recent successes: SUVs, home video games, pcs • Recent failures: “New coke,” Celery flavored Jell-O, etc.
Role #3:The Good Ole Ye Ole Government • Role of the Government • Protector (against what?) • False/misleading ads, unsafe food/drugs, environmental hazards, unsafe automobiles, discrimination • Drug dilemma/FDA • http://www.jewishworldreview.com/0605/stossel060805.php3 (defnition: Snake Oil salesman) • Provider & Consumer (of what?) • Defense services • Education/Public welfare • Parks, libraries, public transportation • Gov’t becomes a large CONSUMER in order to PROVIDE • Regulator (of what?) • Preserving competition • Directly oversees some industries such as banking & nuclear power • Also regulates communications, insurance rates, building/zoning ordinances • Most controversial of the roles • Promoter of National Goals • Not really important
