Econ: Mixed Economies


mixed_economies

Pure forms of traditional, market, and command economic systems do not exist today. They are theoretical extremes. In the real world, most countries have mixed economies that fall somewhere in between those extremes. A mixed economy blends private ownership of property and individual decision making with government intervention and regulations. Every nation with a mixed economy forges its own balance between market freedom and government involvement. The degree of that involvement varies from country to country.

The United States has historically had a free market economy. Yet government plays a vital role in economic affairs. For example, government protects private property rights. It regulates the marketplace to protect both consumers and producers from unfair business practices. It also redistributes wealth to those in need through its social welfare policies.

China has had a command economy since the Communist Party took control of its government in 1949. For years, the communist government controlled every aspect of the Chinese economy. The result was economic stagnation. In the late 70s, the Chinese government moved from a strict command economy to a system called market socialism. This system mixes public and private ownership of businesses. It also encourages competition in the marketplace. At the same time, the Communist Party has remained in overall control of the economy.

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HGov: Federalist No. 10


Federalist 10In Federalist 10, Madison turned classical republican arguments upside down. He began with a central premise that factions posed the greatest danger to governments of the people. By faction, Madison meant any group, majority or minority, within a society that promoted its own self-interest at the expense of the common good. He did not define the common good or explain who decided what the common good was.

If a faction consisted of a minority, a democracy worked well because the majority could outvote the faction. But if the faction consisted of a majority, then the risk of majority tyranny arose. Democracy would fail the common good. A republic, in which citizens elected representatives to tend to the people’s business, might work better. However, in a small homogeneous republic, the type of society that classical republicanism prescribed, majority tyranny also could arise. Because people were relatively similar in occupations, habits, and manners, there would probably be no more than two sets of ideas on any question. If those opposed to the common good commanded a majority and the representatives simply reflected their constituents’ views, then the outcome would still defeat the common good and the people’s rights.

Madison next explained the benefits of a large diverse republic. Such a nation was likely to have so many different factions that none would be able to command a majority. Moreover, in a large nation there were likely to be more fit characters for leadership, in other words, more eminent citizens able to see the common good. Unlike Anti-Federalists who argued that good representatives reflected constituents’ views and characteristics, Madison and many other Federalists argued that good representatives enlarged or refined the public’s view by filtering out ideas that were based solely on self-interest. A large diverse republic would therefore defeat the dangers of faction. No single faction would emerge supreme and elected representatives would be most likely to see beyond the narrow views of ordinary citizens.

Madison wrote Federalist 10 at a time when people in geographically distant states were unlikely to know one another or one another’s passions and interests. Today modern technologies enable people in distant regions to know and communicate with one another. Have modern communication technologies contributed to a country that is at least as factional as in 1787?


Homework:
1) Read Chapter 6 pp.196-205

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Econ: Systems Strengths and Weaknesses


TraditionalSystem

One of the few advantages existing in a traditional economy is that the roles of individuals are clearly defined. Every member of the society knows exactly what they are to do and most don’t have any complaints about it. There are also many disadvantages to this type of society. These societies are often very slow to change and when new technologies are introduced, these ideas and techniques are discouraged.

CommandSystemCommand economies focuses on equality and the government tries to eliminate all private property and distribute its good equally. If done correctly no one is in poverty and no one is wealthier than another. Social services are also emphasized in this type of economy. The government will provide equal health care, education opportunities, and make sure all people are fed. Another strength pf this type of economy is that it is capable of rapid change for major problems. The government owns the companies, so if production needs need to be shifted into a different area, the government is capable of doing it rather quickly. Finally, command economies are very stable. Command economies will never have sudden depressions. Command economies also have many weaknesses. In a command economy there is very little freedom. The individual usually doesn’t have the opportunity to decide what they want to do for a career, and they have no control over the goods they receive. Another major problem is that there is little reason for innovations, hard work, or quality of the work. Since no one makes more money than everyone else, the people feel like there is no reason to work hard. Another weakness is that there is little focus on consumer wants. Finally, when it comes to minor day-to-day changes, the government has a hard time coping with them.

MarketSystemA strength of a market economy is it can adjust to change easily. If there is a demand for one thing, companies have the ability to change what they produce instead of having to go through too much government. People have the ability to make as much money as they can and do what is in their best interest. Another strength of a market economy is that the government tries to stay out of the way of businesses. Although the government sets certain standards businesses must follow, for the most part businesses can do as they please, allowing them to produce what they want, how they want. The market economy produces a great variety of goods and services for consumers. If there is a demand for a good or service, the demand will almost always be met in a market economy. A weakness of a market economy is that it doesn’t always provide the basic needs to everyone in the society. The weak, sick, disabled, and old sometimes have trouble providing for themselves and often slip into poverty. Another problem is that it becomes hard for a government with so many private businesses to provide adequate defense, education, and health care to its people. Another weakness to this type of economy is that there is uncertainty in the business world. One company could easily be forced out of business causing all of its employees to become unemployed and lose their means of income. Finally, there are market failures. This can cause some companies to become too powerful and become a monopoly. If the government doesn’t step in, the monopoly can take advantage of the consumers and charge higher prices.

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HGov: Agents of Socialization


Agents of Socialization

The process by which individuals acquire their political opinions is called political socialization. During childhood, the family and schools are important sources of basic political attitudes, such as beliefs about the parties and the nature of the U.S. political and economic systems. Many of the basic orientations that Americans acquire during childhood remain with them in adulthood, but socialization is a continuing process. Adults’ opinions are affected mostly by prior beliefs, peers, political leaders, and the news media. Events themselves are also a significant short-term influence on opinions.

The agents of socialization are family, schools, mass media, peers, and political leaders and events. The family is a powerful agent of socialization because it has a near monopoly on the attention of a young child, who places great trust in what a parent says. Schools has its major impact on children’s basic political beliefs rather than on their opinions about specific issues. The themes and  images that prevail in mass media affect people’s perceptions of their world. Peer groups reinforce what a person already believes.Citizens look to political leaders and institutions as guides to opinion.Churches play a substantial role in shaping social and political opinions including ones related to society’s obligations to children, the poor, and the unborn.


Homework:
Read Chapter 6 pp.193-195

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Econ: Types of Systems


Types of EconomiesAll societies must make choices about what to have and what to give up because resources are always scarce compared to people’s wants. How those choices get made depends on a society’s economic system. Every society is faced with three economic questions:  What goods and services should be produced? How should they be produced? Who should get what is produced? How a society answers those questions depends on its economic goals. These goals include economic freedom, efficiency, equity, growth, security, and stability. Societies have developed three economic systems to answer these questions.

In a traditional economy, decisions are dictated by custom, tradition, and the ways of ancestors. The goals are economic security and stability.

In a command economy, a powerful ruler or government makes decisions. The goals are equity and security.

In a market economy, decisions are made by the interactions of producers and consumers. The goals are economic freedom and efficiency.

Most countries today have a mixed economy, in which both the government and individuals have a voice in economic decisions.

Americans describe their economy as a free enterprise system. This system has seven key characteristics.
• Economic freedom to buy and sell what we want and work where we want
• Competition among firms, which try to attract customers with new and better products
• Equal opportunity to make the best use of our talents, abilities, and education
• Property rights that allow us to buy, own, and sell goods and intellectual property
• Binding contracts, which give us confidence that others will abide by their agreements
• The profit motive, which provides an incentive to work and start new businesses
• Limited government that regulates without controlling individuals, firms, or the market


Homework:
1) Read Chapter 3.3 pp.41-46

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HGov: Political Socialization


Political Socialization

Opinions you have on political issues tend to be shaped by deeply held political beliefs and values. The formation of these beliefs and values begins early in life and continues throughout adulthood. This process is called political socialization. To socialize an individual means to teach that person to be a member of society. Political socialization involves learning about the values, beliefs, and processes that underlie a political system in order to participate in it effectively. The process of political socialization is important. No democracy could survive if its citizens did not share some fundamental beliefs about how their government should operate. However, this process does not produce people who think exactly alike. Political socialization involves all of the experiences that lead us to view political issues the way we do. And those experiences are never the same from one person to the next.


Homework:
1) Read Chapter 6 pp.191-195

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Econ: Economic Systems


Economic Systems Preview

Just as forms of government vary from one nation to the next, so do economic systems. People and societies organize economic life to deal with the basic problems raised by scarcity and opportunity cost through what is called an economic system. An economic system can be described as the collection of institutions, laws, activities, controlling values, and human motivations that collectively provide a framework for economic decision making. A nation’s values and goals influence its choice of economic systems. An economic system is a way of organizing the production and consumption of goods and services. Economic systems exist because people must meet certain needs to survive. These survival needs include food, clothing, and shelter. In addition, people have endless wants. Such wants may include things that make life more comfortable, more entertaining, or more satisfying in some way.


Homework:
1) Chapter 3 Vocab
2) Read Chapter 3.1-3.2 pp.37-41

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