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ECONOMIC SYSTEMS AND THE BATTLE OF PHILOSOPHIES

ECONOMIC SYSTEMSAND THE BATTLE OF PHILOSOPHIES

• WHAT IS AN ECONOMIC SYSTEM ?• HOW DO THEY WORK ?• WHAT TYPES ARE THERE ?• WHAT ARE THE ADVANTAGES AND

DISADVANTAGES OF EACH ?• GOALS FOR AN

ECONOMIC SYSTEM

CHAPTER CONTENTS

ECONOMIC SYSTEMS

WHAT ARE ECONOMIC SYSTEMS AND HOW DO THEY WORK ?

ECONOMIC SYSTEMS

WHAT IS AN “ ECONOMIC SYSTEM ” ?

WHAT IS A “ SYSTEM ” ?

A WAY OF DOING SOMETHING

A METHOD USED BY A SOCIETY TO PRODUCE AND DISTRIBUTE GOODS AND SERVICES

A SOCIETY CAN NOTEXIST WITHOUT AN

ECONOMIC SYSTEM !!

ECONOMIC SYSTEMSWHAT IS ITS PLACE IN HUMANISTIC SYSTEMS ?

ECONOMIC SYSTEMHOW WE SURVIVE

SOCIAL SYSTEM WHAT WE VALUE

GOVERNMENTSYSTEM

PHILOSOPHYWE LIVE BY

•DECISION MAKING•RESOURCE USE•GOODS DISTRIB .•TRADE

•CULTURE•LANGUAGE•RELIGION•FAMILY

•SOCIAL CONTRACT •LAWS •POLICIES •INSTITUTIONS

ECONOMIC SYSTEMS

• WHAT GOODS AND SERVICES SHOULD BE PRODUCED ?

• HOW SHOULD THE GOODS AND SERVICES BE PRODUCED ?

• WHO SHOULD GET TO CONSUME WHAT TYPE AND HOW MUCH OF THE GOODS AND SERVICES ?

• WHO SHOULD MAKE THESE DECISIONS ?

IN SELECTING A SYSTEM EVERY SOCIETY MUST ANSWER FOUR

FUNDAMENTAL QUESTIONS :

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ECONOMIC SYSTEMS

PRODUCE WHAT GOODS AND SERVICES ?

•CONSUMER GOODS•CAPITAL / INDUSTRIAL •DEFENSE•EDUCATION•PUBLIC HEALTH •WELFARE

ECONOMIC SYSTEMS

HOW SHOULD THEY BE PRODUCED ? WITH WHAT RESOURCES ? •OIL•ELECTRIC•SOLAR•NUCLEAR•COAL•WIND

ECONOMIC SYSTEMS

• CONTROL HOW THE SOCIETY DISTRIBUTES GOODS AND SERVICES ?

• CONTROL HOW THE SOCIETY DISTRIBUTES INCOME -FACTOR PAYMENTS

WHO GETS TO CONSUME AND HOW ?

THERE ARE 2 IMPORTANT PARTS TOUNDERSTANDING THIS > DOES THE GOVERNMENT OR OPEN MARKET ………

ECONOMIC SYSTEMSWHO SHOULD MAKE THE DECISIONS ?

• THERE ARE 3 OPTIONS :– LEAVE IT UP TO THE OPEN

MARKET > THE CONSUMERS– CONSUMERS AND GOVERNMENT

SHARE IN MAKING THE DECISIONS

– THE GOVERNMENT MAKES ALL THE DECISIONS

ECONOMIC SYSTEMS

ALL ECONOMIC SYSTEMS ALSO REQUIRE THE “ FACTORS OF PRODUCTION ” -

LAND , LABOR , AND CAPITAL

REMINDER !!!!

ECONOMIC SYSTEMS

TYPES OF ECONOMIC SYSTEMS

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ECONOMIC SYSTEMS

• BARTER ECONOMY – DIRECT EXCHANGE OF ONE GOOD FOR ANOTHER WITHOUT USING MONEY > 3 CHARACTERISTICS :– ANCIENT SYSTEM WITH NO ADVAN -

TAGES IN A MODERN WORLD > FOUND IN MOST UNDERDEVELOPED“ THIRD WORLD COUNTRIES ”

4 TYPES OF ECONOMIC SYSTEMS :Underdeveloped > Adjective . Industrially or economically backward .

Synonym Related AntonymBackward Archaic AdvancedPrimitive Unprogressive Evolved

A lack of investment will cause a company or a country to be underdeveloped .

ECONOMIC SYSTEMS

• BARTER ECONOMY > 3 CHARCTERISTICS :– VERY DIFFICULT TO SET

VALUES FOR GOODS AND SERVICES

– RETARDS INNOVATION AND GROWTH • CAPITALISM ( A FREE MARKET

ECONOMY ) - AN UNCONTROLLED PRICE BASED SYSTEM THAT USES MONEY WHERE PRIVATE CONSUMERS ..

4 TYPES OF ECONOMIC SYSTEMS :Retard > Verb . To slow the progress of .

Synonym Related AntonymDelay Detain AdvanceImpede Decrease Accelerate

When the water sprinkler went on it retarded the fire’s progress .

Innovation > Noun . Something newly introduced .

Synonym Related AntonymInvention Deviation StagnantChange Introduction Old

Apple’s Ipad was considered a great innovation .

ECONOMIC SYSTEMS

• …. MAKE THE DECISIONS REGARDING PRODUCTION AND CONSUMPTION

• SOCIALISM ( A MIXED ECONOMY ) - A PARTIALLY CONTROLLED PRICE BASED SYSTEM THAT USES MONEY WHERE MAJOR PRODUCTION AND CONSUMPTION DECISIONS ARE SHARED BETWEEN THE GOVERNMENT AND CONSUMERS

4 TYPES OF ECONOMIC SYSTEMS :

ECONOMIC SYSTEMS

• COMMUNISM ( A CENTRALLY PLANNED ECONOMY ) - SYSTEM THAT USES CONTROLLED PRICES , MONEY , AND ALL PRODUCTION AND CONSUMPTION DECISIONS ARE MADE BY THE GOVERNMENT

4 TYPES OF ECONOMIC SYSTEMS :

WHERE DID THE IDEAS FOR THESE SYSTEMS COME FROM ??

ECONOMIC SYSTEMSDO YOU KNOW ANY OF US ??

CAPITALISMSMITH BENTHAM

SOCIALISMMARX

COMMUNISMA CLOSER LOOK AT THESE THREE

ECONOMIC SYSTEMS

CAPITALISMSMITH BENTHAM

SOCIALISMMARX

COMMUNISM

TWO IMPORTANT CONSIDERATIONS :• NO “ PURE ECONOMIC SYSTEM ” EXISTS !

ELEMENTS OF THE FOUR EXIST IN EACH OTHER !!

• PASSIONATE DEBATE OVER THESE ……

LATE 1700 s EARLY 1800 s MID 1800 s

HAYEK

EARLY 1900 s

FRIEDMAN

LATE 1900 s

KEYNES

EARLY 1900 s

LENIN

EARLY 1900 s

Passionate > Adjective . Capable of or having intense feelings , showing or expressing strong emotions .

Synonym Related AntonymPeppery Fiery PassionlessArdent Hot Cold

You could see that she was passionate about the subject .

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ECONOMIC SYSTEMSTWO IMPORTANT CONSIDERATIONS :• … IS ROOTED IN ARGUMENTS

ABOUT THE SAME FUNDAMEN -TAL BELIEFS THAT HAVE FUELED DEBATES OVER GOV -ERNMENTAL PHILOSOPHIES = THE NATURE OF MAN :– EVIL OR GOOD ??– MOTIVATED OR LAZY ??– NEED TO BE CONTROLLED

OR ABLE TO MANAGE HIMSELF ??

• MAN IS GOOD• MAN IS SELF MOTIVATED• A SOCIETY’S INTERESTS ARE BEST SERVED WHEN

MAN IS FREE

• MAN IS EVIL• MAN IS LAZY• A SOCIETY’S INTERESTS ARE BEST SERVED WHEN

MAN IS CONTROLLED BY AUTHORITY

ECONOMIC SYSTEMSDEMOCRACY AND CAPITALISM

MONARCHY / TOTALITARIAN AND COMMUNISM

LIMITED DEMOCRACY AND SOCIALISM • MAN IS GOOD• MAN CAN NOT HELP HIMSELF• SOCIETY MUST BE HELPED BY AN AUTHORITY

ECONOMIC SYSTEMS

• INSPIRED BY THE ECONOMIC ABUSES OF FEUDALISM & MONARCHIAL RULE

• THE ECONOMIC PART OF ENLIGHTENMENT PHILOSOPHY

• ORIGINALLY CALLED LIBERALISM BECAUSE IT PROMOTED INDIVIDUAL LIBERTIES AND FREEDOMS

CAPITALISMADAM SMITH TAUGHT US ABOUT IT IN HIS BOOK WEALTH OF NATIONS IN 1776ORIGINS AND HISTORY > 6 FACTS :

ECONOMIC SYSTEMS

• CAUSED THE INDUSTRIAL REVOLUTION TO TAKE PLACE IN THE 1800 s > THE SECOND GREATEST GLOBAL STANDARD OF LIVING INCREASE IN HISTORY

• CAME UNDER ATTACK AND FELL OUT OF FAVOR IN THE EARLY 1900 s > LED TO ECONOMIC STAGNATION AND MASSIVE LOSSES OF INDIVIDUAL FREEDOMS

CAPITALISMORIGINS AND HISTORY > 6 FACTS :Stagnate / Stagnation > Verb . Fail to progress or develop .

Synonym Related AntonymVegetate Stifle AdvanceConstipate Static Grow

If you do not read , or listen to , the news you will stagnate as a citizen .

ECONOMIC SYSTEMS

• RETURNED TO FAVOR OVER THE PAST 28 YEARS AND HAS PRODUCED THE GREATEST ADVANCEMENT IN GLOBAL PRODUCTIVITY AND STANDARDS OF LIVING IN HISTORY !!! THANKS TO

CAPITALISMORIGINS AND HISTORY > 6 FACTS :

ECONOMIC SYSTEMS

• PEOPLE HAVE AN INATE DESIRE TO BETTER THEIR POSITION IN LIFE

• PEOPLE RESPOND TO INCENTIVES• BY PURSUING ONE’S OWN INTERESTS

THE INDIVIDUAL WILL HELP SOCIETY FAR MORE EFFECTIVELY THAN WHEN HE , OR THE GOVERNMENT , FOCUSES ON TRYING TO HELP THE SOCIETY

CAPITALISM4 BELIEFS :

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ECONOMIC SYSTEMS

• THAT THE “ INVISIBLE HAND ” WOULD GUIDE THE CAPITALIST SYSTEM > A COMBINATION OF 3 FACTORS THAT MUST EXIST AND WORK TOGETHER :

– PROMOTION OF SELF INTEREST AND PERSONAL GAIN IN THE FORM OF PROFIT - THE FINANCIAL GAIN MADE IN A TRANSACTION ( EXCHANGE ) OF GOODS OR SERVICES

CAPITALISM4 BELIEFS :

ECONOMIC SYSTEMS

• THE “ INVISIBLE HAND ” > 3 PARTS :– INCENTIVE - THE HOPE OF REWARD

AND FEAR OF PUNISHMENT THAT ENCOURAGES STABLE BEHAVIOR

– COMPETITION - THE STRUGGLE AMONG PRODUCERS FOR THE DOLLARS OF CONSUMERS > THE MARKET REGULATOR

CAPITALISM4 BELIEFS :

ECONOMIC SYSTEMS

• ENCOURAGES FREEDOM , INDIVIDUAL RIGHTS , THE RULE OF LAW , AND DEMOCRATIC GOVERNMENTAL SYSTEMS

• PRIVATE OWNERSHIP OF GOODS , PROPERTY , BUSINESSES , AND THE FACTORS OF PRODUCTION

• VOLUNTARY EXCHANGES OF MONEY , GOODS , AND SERVICES

CAPITALISM5 CHARACTERISTICS :

ECONOMIC SYSTEMS

• ENCOURAGES COMPETITION AMONG PRODUCERS AND REWARDS DELIVERY OF VALUE

• BUSINESSES AND CONSUMERS MAKE THE DECISIONS ABOUT WHAT TO PRODUCE , HOW TO PRODUCE IT , AND WHO CONSUMES IT > A POLICY OF “ LAISSEZ FAIRE ” IS FOLLOWED = LIMITED GOVERNMENT INTERVENTION

CAPITALISM

5 CHARACTERISTICS :

ECONOMIC SYSTEMS

• HOUSEHOLDS - SUPPLY THE LABOR AND CAPITAL FOR THE SYSTEM

• FIRMS / COMPANIES - ORGANIZATIONS THAT USE RESOURCES TO PRODUCE PRODUCTS AND SERVICES THAT ARE SOLD

CAPITALISMTHE 2 FUNDAMENTAL PARTS OF THE SYSTEM ARE BOTH UNDER PRIVATE CONTROL :

NOTICE THE ABSENCE OF GOVERNMENT !!

ECONOMIC SYSTEMS

• THE FACTOR MARKET - WHERE RESOURCES , OR THE FACTORS OF PRODUCTION , ARE EXCHANGED AND GOODS ARE PRODUCED

• THE PRODUCT AND SERVICE MARKET- WHERE THE FINISHED GOODS AND SERVICES ARE EXCHANGED

CAPITALISMTHE 2 FUNDAMENTAL MARKETS WITHIN THE SYSTEM :

** JUST BE AWARE THAT THERE CAN BE A LITTLE OVERLAP BETWEEN THESE AT TIMES

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ECONOMIC SYSTEMS

BE AWARE THAT THE INTERACTIONBETWEEN THESE 2 MARKETS IS CALLEDTHE “ CIRCULAR FLOW ” BY ECONOMISTS

THE 2 MARKETS :

PRODUCTMARKET

FACTORMARKET

FIRMSHOUSEHOLDS

CIRCULARFLOW

CAPITALISM

ECONOMIC SYSTEMS

• ECONOMIC EFFICIENCY - ONLY THE ITEMS CONSUMERS WANT GET PRODUCED , WHEN THEY WANT THEM , AND WITH PRICES AT THE “ WILLING -NESS TO PAY ” THRESHOLD

• ECONOMIC FREEDOM - WORKERS WORK WHERE THEY WANT, PRODUCERS CAN PRODUCE WHAT THEY WANT, AND INDIVIDUALS CONSUME WHAT ……..

CAPITALISMTHE 3 ADVANTAGES :Threshold > Noun . The entrance or entry way .

Synonym Related AntonymVerge Edge InsideBrink Point Within

He stood at the threshold of the room .

ECONOMIC SYSTEMS

• …. THEY WANT• ECONOMIC GROWTH - COMPETITION

ENCOURAGES INNOVATION > THE ONLY WAY TO RAISE A SOCIETY’S STANDARD OF LIVING

CAPITALISMTHE 3 ADVANTAGES :

THE 2 DISADVANTAGES :• THE SYSTEM DOES NOT PROMOTE

EQUITY = EQUAL TREATMENT FROM …

ECONOMIC SYSTEMSCAPITALISM

THE 2 DISADVANTAGES :• …. A REWARD PERSPECTIVE AND DOES

NOT SPREAD WEALTH EVENLY• THE SYSTEM ENCOURAGES EXPLOIT –

ATION OF ALL RESOURCESCOUNTRIES BASED ON CAPITALISM :

Perspective > Noun . A view , or point of view .

Synonym Related AntonymOutlook Opinion PointlessVista Prospect Thoughtless

John was asked about his perspective regarding the program .

ECONOMIC SYSTEMSSOCIALISM ( MAY ALSO BE KNOWN AS “ COLLECTIVISM ” )ORIGINS AND HISTORY > 5 FACTS :• FOUNDER WAS JEREMY BENTHAM• CREATED IN RESPONSE TO THE

FOLLOWING :– WORKING CONDITIONS OF THE

INDUSTRIAL REVOLUTION > WHY ??– CAPITALISM AND SOCIAL DARWINISM– SOCIAL AND POLITICAL STRIFE IN

SOCIETIES UNDER MONARCHIES

ECONOMIC SYSTEMSSOCIALISM ( MAY ALSO BE KNOWN AS “ COLLECTIVISM ” )ORIGINS AND HISTORY > 5 FACTS :• GAINED FAVOR IN THE EARLY 1900 s

AND DOMINATED 2 / 3 OF THE WORLD• RESULTED IN :

– PRODUCTIVITY DECLINES AND ECONOMIC STAGNATION

– DECLINE IN THE STANDARD OF LIVING

– SIGNIFICANT LOSS OF INDIVIDUAL FREEDOMS AND SOCIAL UNREST

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ECONOMIC SYSTEMSSOCIALISM ( MAY ALSO BE KNOWN AS “ COLLECTIVISM ” )ORIGINS AND HISTORY > 5 FACTS :• FELL FROM FAVOR WHEN THE

RADICAL FORMS OF THIS SYSTEM ( FASCISM AND COMMUNISM ) FAILED IN THE MID TO LATE 1900 s

Radical > Adjective . Carried to an utmost extreme .

Synonym Related AntonymRevolutionary Rebel ConservativeExtreme Contrary Reserved

Her views on the subject were considered to be radical .

ECONOMIC SYSTEMSSOCIALISMFOOD FOR THOUGHT ! > DID THE UNITED STATES EVER SERIOUSLY CONSIDER SOCIALISM ?

YES , MANY TIMES !!!! ALL FAILURES !!

ECONOMIC SYSTEMSSOCIALISMFOOD FOR THOUGHT ! > DID THE UNITED STATES EVER SERIOUSLY CONSIDER SOCIALISM ?

YES , MANY TIMES !!!! ALL FAILURES !!

FAIR DEAL NEW FRONTIER

GREAT SOCIETY HAVEN’T WE SEEN THIS

MOVIE BEFORE ??

ECONOMIC SYSTEMSSOCIALISMTHREE BELIEFS : • SOCIETY SHOULD PROVIDE FOR

ECONOMIC EQUALITY BY ENSURING THE “ GREATEST HAPPINESS FOR THE GREATEST NUMBER OF PEOPLE AND THAT INDIVIDUAL RIGHTS SHOULD BE SACRIFICED FOR SOCIETY’S RIGHTS ”

• HUMAN NATURE IS BASICLY GOOD AND THE MAJORITY OF PEOPLE HAVE A CONCERN FOR SOCIAL JUSTICE

ECONOMIC SYSTEMSSOCIALISMTHREE BELIEFS :• IF SOCIETY WORKED FOR THE

BENEFIT OF ALL MEMBERS , POVERTY AND INJUSTICE WOULD DISAPPEAR

FOUR CHARACTERISTICS :• AT THE START , ENCOURAGES POLITI -

CAL FREEDOM AND CO-EXISTENCE WITH DEMOCRATIC FORMS OF GOVERNMENT

“ I may not know all the keys to success , but I do know that the key to failure is trying to please everybody . ” ~ Bill Cosby

ECONOMIC SYSTEMSSOCIALISM

FOUR CHARACTERISTICS :• ALLOWS SOME PRIVATE OWNERSHIP ,

HOWEVER SIGNIFICANT PORTIONS OF THE FACTORS OF PRODUCTION AND THE PRICING SYSTEM ARE OWNED / CONTROLLED BY THE GOVERNMENT

• GOVERNMENT TAKES THE DOMINANT ROLE IN “ MANAGING ” THE ECONOMY THROUGH SPENDING AND REGULATION

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ECONOMIC SYSTEMSSOCIALISMFOUR CHARACTERISTICS :• INEFFICIENT FOR TWO REASONS :

• REDUCED PRIVATE OWNERSHIPLIMITS INCENTIVES AND DISCOUR -AGES INNOVATION = SLOWS GROWTH

• HIGH COSTS OF GOVERNMENT SPENDING AND SUPPORTING SOCIAL PROGRAMS - GOVERNMENT ECONOMIC ACTIONS TO ENCOURAGE A STABLE SOCIETY , DRIVES UP THE COST OF LIVING

ECONOMIC SYSTEMSSOCIALISMADVANTAGES :• PROMOTES GREATER ECONOMIC

EQUALITY ( SPREADS THE WEALTH )• LESS EXPLOITATIONDISADVANTAGES :• LIMITS FREEDOMS• TENDS TO BE VERY INEFFICIENT • TENDS TO BE VERY COSTLY AND

RETARDS GROWTH

COUNTRIES BASED ON SOCIALISM :

GREECE SPAIN

ECONOMIC SYSTEMSCOMMUNISM AN EXTREME FORM OF SOCIALISM THAT PUTS ALL ECONOMIC CONTROL IN THE HANDS OF THE GOVERNMENT = NO RULE OF LAWFOUR ADDITIONAL SOCIALIST BELIEFS :• ECONOMICS IS THE MOST POWERFUL

FORCE IN HISTORY AND A CLASS STRUGGLE BETWEEN EMPLOYERS AND THE PROLETARIAT - WORKING CLASS ( EMPLOYEES ) , WILL ALWAYS BE UNAVOIDABLE

ECONOMIC SYSTEMSCOMMUNISM FOUR ADDITIONAL SOCIALIST BELIEFS :• CAPITALISM CREATES PROSPERITY

FOR ONLY A FEW AND POVERTY FOR MANY

• THE WEALTHY ( EMPLOYERS ) HAVE ALWAYS OWNED THE FACTORS OF PRODUCTION AND HAVE NOT PROVIDED ECONOMIC EQUALITY

• THAT THE WORKERS OF THE WORLD WOULD DO 3 THINGS :

Prosper / Prosperity > Verb . To be fortunate , successful , or well off .

Synonym Related AntonymThrive Affluence PoorAbundance Wealth Destitute

Spock said , “ live long and prosper . ”

ECONOMIC SYSTEMSCOMMUNISM

• WORKERS WOULD DO 3 THINGS :• UNITE AND CREATE A CLASSLESS

SOCIETY• OVERTHROW CAPITALIST SYSTEMS

AND GOVERNMENTS > AND MANY DID !! > RUSSIA AND CHINA

• ESTABLISH GOVERNMENTS OF THE PEOPLE WITH CENTRALLY PLANNED ( GOVERNMENT CONTROLLED ) ECONOMIES

FOUR BELIEFS :

DO ANY COUNTRIES USECOMMUNISM TODAY ??

CUBA NORTH KOREA

ECONOMIC SYSTEMSCOMMUNISM

• OPERATES IN DIRECT CONTRAST TO CAPITALISM AND NEEDS A TOTALITARIAN FORM OF GOVERN -MENT TO MAINTAIN CONTROL

• CENTRAL GOVERNMENT MAKES ALL THE DECISIONS REGARDING PRODUCTION AND CONSUMPTION

• NO PRIVATE OWNERSHIP > THE ……

FOUR CHARACTERISTICS :Operates > Verb . To function effectively , or to work .

Synonym Related AntonymFunction Act StopPerform Conduct Close

Keep your car in good operating condition by changing the oil regularly .

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ECONOMIC SYSTEMSCOMMUNISM

• …. GOVERNMENT CONTROLS ALL PROPERTY , THE FACTORS OF PRO -DUCTION AND EVENLY SPREADS THE WEALTH

• USES COLLECTIVES - STATE OWNED FARMS AND FACTORIES THAT TRY TO MAXIMIZE PRODUCTIVITY THROUGH DIVISION OF LABOR AND SPECIALIZATION

FOUR CHARACTERISTICS :

ECONOMIC SYSTEMSCOMMUNISM

• TOTALITARIAN GOVERNMENT AND CENTRAL PLANNING ALWAYS FALLS VICTIM TO THE “ LAW OF INCREASING COSTS ” AS THEY MUST PRODUCE …….

ADVANTAGE :MAO

STALINUSUALLY PRODUCES GOOD SHORT TERM RESULTSDISADVANTAGES > THESE HAVE CAUSED EVERY ATTEMPT AT A COMMUNIST ECONOMY TO FAIL :

ECONOMIC SYSTEMSCOMMUNISM

• …. “ GUNS OVER BUTTER ”( MILITARY NOT CONSUMER GOODS ) TO CONTROL SOCIETY = MASSIVE INEFFICIENCY

• TOTALITARIANISM SEVERELY LIMITS FREEDOM = UNMOTIVATED WORKERS = POOR QUALITY PRODUCTS , LOW PRODUCTIVITY , INEFFICIENCY , SHORTAGES , AND LITTLE GROWTH

MAO

STALIN

DISADVANTAGES :

THE SOCIETY FAILS TO SUSTAIN

GROWTH AND ROTS FROM THE INSIDE

ECONOMIC SYSTEMSCOMMUNISM - IMAGINE THIS !

• THE SOVIET UNION :– LARGEST COUNTRY IN THE WORLD– POLITICALLY CONTROLLED 2 / 3 OF

THE WORLD– NEAR THE TOP IN NATURAL

RESOURCES– ENOUGH NUCELAR WEAPONS TO

DESTORY THE WORLD 10 X OVER

AFTER 69 YEARS IT COLLAPSED ON DECEMBER 21 , 1991 WITHOUT THE

LOSS OF A SINGLE LIFE OR SHOT BEING FIRED !!

“ A REGIME BASED ON FEAR MUST MAINTAIN INCREASINGLY TIGHT CONTROL OVER ITS POPULATION TO REMAIN IN POWER , AND SUCH CONTROL INEVITABLY TRIGGERS A PROCESS OF DECAY .”

~ NATAN SHRANSKY

ECONOMIC SYSTEMSHERE IS THE “ BOTTOM LINE ”

“ Capitalism and democracy extend the sphere of individual freedom . Socialism restricts it .

Capitalism and democracy attaches all possible value to each man ; socialism makes each man a mere agent , a mere number .

Capitalism and democracy have nothing in common with socialism except for one word : equality . But notice the difference !! While capitalism and democ -racy seek equality in liberty , socialism seeks equality in restraint and servitude ! ” ~ Alexis De Tocqueville

ECONOMIC SYSTEMSTHIS IS YOUR SOLEMN RESPONSIBILITY !!

“ THE BATTLE FOR FREEDOM MUST BE WON OVER AND OVER AGAIN !!

SOCIALISTS MUST BE WON OVER AND OVER AGAIN !!

SOCIALISTS MUST CONTINUALLY BE PERSUADED , OR DEFEATED , IF THEY , AND WE , ARE TO REMAIN FREE MEN ” !!

~ MILTON FRIEDMAN

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ECONOMIC SYSTEMS

• CAPITALISM CAN BE THREATENED AND DEBILITATED WITHOUT A VIOLENT OVERTHROW OF GOVERNMENT > RECKLESS LAWS AND SPENDING

• ANTI - CAPITALIST IMPULSES ARISE FROM A LACK OF EDUCATION ABOUT THE ROLE OF BUSINESS IN A CIVIL SOCIETY > NO BUSINESS = NO WEALTH TO REDISTRIBUTE

VERY IMPORTANT THINGS TO KEEP IN MIND !!Debilitate > Verb . To make feeble or weak .

Synonym Related AntonymCripple Undermine StrengthenDisable Harm

The army debilitated its enemy by putting them under siege .

ECONOMIC SYSTEMS

• BUSINESSES ARE NOT ANTISOCIAL > IN A HEALTHY CULTURE ( ADAPTING , GROWING , RAISING THE STANDARD OF LIVING , AND WITH UNEMPLOYMENT NOT OVER 5 % ) THEY WILL BE CREATING OVER 90 % OF THE JOBS

VERY IMPORTANT THINGS TO KEEP IN MIND !!

ECONOMIC SYSTEMS

CAPITALISM =

SOCIALISM

COMMUNISM

HERE IS THE “ BOTTOM LINE ”

=

=

ECONOMIC SYSTEMS

GOALS

ECONOMIC SYSTEMS

• EFFICENCY > MAXIMIZE THE RESOURCES

• ECONOMIC FREEDOM > FREEDOM FROM GOVERNMENT INTERVENTIONIN THE PRODUCTION AND DISTRI -BUTION OF GOODS AND SERVICES

• SECURITY AND PREDICTABILITY > RE -WARD AND PUNISHMENT FOR PERFORMANCE

5 GOALS :

Intervene / Intervention > Verb . To come between so as to hinder , modify , or restrict .

Synonym Related AntonymInterfere Divide Avoid

The police officer intervened to stop the fight .

ECONOMIC SYSTEMS

• EQUITY > EQUAL OPPORTUNITY AND TREATMENT

• GROWTH AND INNOVATION > THE ONLY WAY TO BOOST THE OVERALL STANDARD OF LIVING

5 GOALS :

WHICH SYSTEM DO YOU WANT TO LIVE UNDER ????

CAPITALISM OF COURSE !!!!

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CAPITALISM SOCIALISM

ECONOMIC SYSTEMS

• WHAT IS AN ECONOMIC SYSTEM ?• WHAT ARE THE MICRO AND MACRO

ECONOMIC QUESTIONS THAT MUST BE ANSWERED BY EVERY SOCIETY ?

• WHAT ARE THE KEYS TO UNDERSTANDING CONSUMPTION ?

• NAME THE TYPES OF ECONOMIC SYSTEMS

SUMMARY

ECONOMIC SYSTEMS

• WHAT ARE THE BELIEFS BEHIND , THE CHARACTERISTICS OF , AND THE ADVANTAGES / DISADVANTAGES OF EACH ECONOMIC SYSTEM

• WHAT HAS ALWAYS CAUSED THE FAILURE OF COMMUNISM ?

• NAME THE 5 ECONOMIC GOALS FOR A SOCIETY

SUMMARY

GOVERNMENT PROGRAMS

• MINIMIUM WAGE?• NSA?• SHERMAN ANTI-TRUST ACT?• PUBLIC SCHOOLS?• FANNIE MAE AND FREDDIE MAC?