1. The government’s role in the US Economy:

2. Economic Functions of Government Providing a Legal Structure –Enforcing laws and contracts Maintaining Competition Redistributing Income –Providing a safety net Reallocating Resources –Providing Public goods –Correcting Market Failure Promoting Stability

3. The U.S. Constitution As an Economic Document

4. Provide a Legal Structure Sets legal status of business enterprise Ensures rights of private property Allows and enforces contracts Sets legal “rules of the game” –Controls relationships among Businesses, Resource Suppliers, Consumers –Referees the game of trade Seeks out foul play Imposes penalties

5. Promoting Growth; What widens markets and fosters specialization? Setting legal “rules of the game” Supplying a medium of exchange Ensuring product quality Defining ownership rights Enforcing contracts Increases the volume of and safety of exchange

6. Section 2, Clause 3: Apportionment Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three fifths of all other Persons. Who’s included? Contractual Indentured Servants Institutionally Race Based non- contract servants (Slaves)

7. Section 8: Powers of Congress - to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the … general welfarelay and collect taxes, duties, imposts and excises, to pay the debtsgeneral welfare –To borrow money on the credit of the United States –To regulate commerce with foreign nations, and among the several statescommerce –To establish …uniform laws on the subject of bankruptcies bankruptcies –To coin money, regulate the value thereof, and of foreign coincoin money –To provide for the punishment of counterfeiting the securities and current coin of the United States;counterfeiting –To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries; exclusive right –To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;piracieshigh seaslaw of nations Collect taxes to pay debts –Public goods Deficit spend!!!! Referee “Rules of the Game” –Enforce contracts More rules –obligations Medium of exchange –Regulate the value domestically –Regulate the foreign exchange rate Punish counterfeiters Ownership –Intellectual property rights as incentives Foul Play –Punish pirates

8. Section 9: Limits on Congress –No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.capitationdirect –No tax or duty shall be laid on articles exported from any state. –No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another: nor shall vessels bound to, or from, one state, be obliged to enter, clear or pay duties in another. –No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time. Twice, no less Free trade among states Fair trade among states Transparency – the GAO

9. Section 10: Limits on the states No State shall … pass any … Law impairing the obligation of contracts Allows and enforces contracts –a compact between two parties

10. Fifth Amendment No person shall be … deprived of … liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. Ensures rights of private property Due Process of Law Eminent Domain

11. Fourteenth Amendment Section 1. …nor shall any State deprive any person of … liberty, or property, without due process of law Ensures rights of private property Due Process of Law The Constitutional Protections apply to all US citizens