Mixed Economies

The Rise of Mixed Economies Laissez Faire- Government generally should not intervene in the marketplace. Some needs that markets could meet fall to governments so that all members of society can participate. Education Healthcare Mass transit Private Property- Property that is owned by individuals or companies, not by the govnt or people as a whole Constitution protects this fundamental right

Opportunity Cost (what are you willing to give up?) Governments create laws protecting property rights and enforcing contracts. Patent Laws laws insisting on competition Some goals are better met by the open market and some better met by the government. Opportunity Cost (what are you willing to give up?) Pay taxes to fund the Army? To give money to people without jobs? Give all people an education? To subsidize farms? Should government make minimum wage?

PHYSICAL FLOW Monetary Flow Govnt Purchases TAXES Firms Households GOVERNMENT EXPENDITURES EXPENDITURES TAXES Govnt Owned Factories Monetary Flow PHYSICAL FLOW

Mixed Economies (govnt dominates) The foundation of the U.S. economy is the free market. Free Enterprise- An economic system characterized by private or corporate ownership of capital goods. Investments are determined by private decision rather than by state control China is in a transition (a period of change in which an economy moves away from central planning toward a market-based system. To make this transitions, state firms must be privatized (sold to individuals) and allowed to compete with one another in the marketplace.

Mixed Economies- Market Dominates Hong Kong- one of the world’s freest markets. United States has a free enterprise economy, but the government still intervenes to keep order, provide vital services, and to promote the general welfare. We enjoy a high level of economic freedom! U.S. law protects private property We have a low level of government intervention Foreign investment encouraged Free trade encouraged (U.S. protects some domestic industries and retaliates against trade restrictions imposed by other nations.) Banking industry operates under relatively few restrictions Foreign owned banks have few additional restrictions.

CONTINUUM OF MIXED ECONOMIES CONTINUUM- a range with no clear divisions UNITED KINGDOM IRAN MEXICO FRANCE HONG KONG NORTH KOREA CHINA SOUTH AFRICA CANADA SINGAPORE CUBA RUSSIA POLAND JAPAN UNITED STATES