Capitalism and Economic Freedom Day 2 Subtitle

Warm Up Explain how economic freedom leads to economic growth and in turn, creates a wealthy nation.

Economic Freedom Individuals can choose: jobs, employers, how to spend money Businesses can choose: best workers, choose most profitable goods and services to produce, what to charge Voluntary exchange: Buyers and sellers engage in transactions freely Both are better off after the exchange Private property rights: allows people to own and control Includes houses, cars, skills, talents Provides incentive to work, save, invest

Profit: people, organizations better off than before Profit Motive: Entrepreneurs – start new businesses in search of profit Many fail, very few become extremely wealthy Profit: people, organizations better off than before Competition: Attract consumers while lowering costs Results in goods/services being produced at the lowest cost for those willing and able to pay for them

Role of Government Protector: Laws against false advertising, unsafe food and drugs, discrimination Provider and consumer: Provides defense, education, welfare Regulator: Preserves competition, regulates insurance rates, etc Promoter of national goals: Mixed economy in the U.S.

Trade-offs Among Goals Example: banning foreign cars 1. Benefit: Keeps full employment in the American car industry 2. Cost: Consumers have fewer choices Example: raising minimum wage 1. Benefit: Workers have more money, more equality 2. Costs: Increases cost of production; restricts freedom to set wages

Read: Should We Raise the Minimum Wage? Fill out your Building an Argument Outline—Due tomorrow!