2/5 – Economic Systems
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Transcript of 2/5 – Economic Systems
2/5 – Economic Systems
• AIM: To examine CEO pay as a factor payment.
• Factor Payment: The income people receive for supplying factors of production – land, labor, capital, or entrepreneurship.
• The class will be split into four teams. (2 per side)
• Tonight, read through the resources on the web. Take notes for BOTH side.
• Tomorrow your side will be determined by a coin toss. You will have 15 minutes to prepare once your side is determined.
CEO Pay Debate
2/6 – CEO Pay
• AIM: Are American CEO’s overpaid?
• Opener: What factors might go into determining somebody’s salary?
2/11 – Wealth of Nations
• AIM: What were Adam Smith’s contributions to economics?
• Opener: Download the reading from the weekend (online at THHS website). Then, write:– Two interesting facts you learned.– One question you have about the reading.
• How does Adam Smith answer these questions?
Competition & Self-Interest
• What roles do competition and self-interest play in Adam Smith’s economic vision?
Scenarios:
• Explain the following scenarios from the viewpoint of Adam Smith:
• The rise of the phone companies BoostMobile and MetroPCS
• The popularity of Apple computer products
“Monopoly” as the Enemy
• Explain the following quote from the reading:
• “The great enemy to Adam Smith’s system is… monopoly in any form”.
Law of Accumulation vs. Law of Population
• How do these two “laws” balance each other out?
http://www.slate.com/blogs/moneybox/2013/02/07/david_einhorn_sues_apple_over_its_cash_stockpile.html
The Role of Government
What roles of government might be missing from Smith’s view? Explain.
2/13 – Command Economies• AIM: What
does life look like in a command economy?
• Opener: Can you explain this political cartoon?
• Economic System: The method used by a society to produce and distribute goods and services.
• There are four different economic systems:– Traditional economy
• Relies on habit, custom, or ritual– Market Economy (capitalism)
• Decisions made by individuals– Command Economy (associated with
communism/socialism)• Decisions made by central government
– Mixed Economy• Combination of market and command economies
Introduction to Command Economies
• Socialism vs Communism – what’s the difference?
Introduction to Command Economies
• Socialism vs Communism – what’s the difference?– Socialism is a social and political philosophy based
on the belief that democratic means should be used to distribute wealth evenly throughout a society.
Introduction to Command Economies
• Socialism vs Communism – what’s the difference?– Socialism is a social and political philosophy based
on the belief that democratic means should be used to distribute wealth evenly throughout a society.
– Communism is a political system that arose out of the philosophy of socialism. It is an authoritarian system where all economic and political power rest in the hands of a central government.
East Germany as an example of a communist society
• East Germany arose out of the defeated Nazi Germany of World War 2.
• In 1945, the Allied powers divided up Germany into four sections. The sections controlled by the USA, Great Britain, and France combined to form West Germany, a free-market democracy.
• The section controlled by the USSR became East Germany, a communist state.
• Looking at a divided society like East & West Germany is an interesting way to examine how competing philosophies of democracy and communism worked out.
• In the end, it didn’t work out. On the 9th of November, 1989, protests forced the end of the East German government. East and West Germany were reunited in 1990 as a free-market democracy.
East Germany as an example of a communist society
• SED = Sozialistische Einheitspartei Deutschlands (Socialist Unity Party of Germany)
• GDR / DDR = German Democratic Republic / Deutsche Demokratische Republik (East Germany)
Group Reading and Presentations
• Assignment: – Prepare a brief presentation to the class how life
in East Germany reflects the ideals of a centrally planned economy.
– Contrast the East German lifestyle with that of a free-market economy.
– What are both the benefits and disadvantages of the East German lifestyle?
Group Research and Presentations
• “The dream of full employment” + “planned economy without a plan”
• “Sold-out” + “State Owned Product Worlds”
• “Home sweet home”
• “Sibylle fashion dreams”
Chapter 2 Homework Review
• Page 27– 2: Each system answers production and distribution
questions differently– 6: Military and a decent quality of living for its
citizens– 7: • Traditional values custom• Market values individual freedom and growth• Central values economic equity & security• Mixed values economic freedom and limits on gov’t
Chapter 2 Homework Review
• Page 32– 6: Combination of self-interest and competition
would lead to an economy offering desirable products at reasonable prices
– 8: Economic equity is difficult to achieve in a free market economy because not every person functions in the market with the same skills and abilities & therefore differences in compensation arise.
Chapter 2 Homework Review
• Page 38– 1: In both socialist and communist nations, the
gov’t often owns major industries. But socialism is achieved peacefully through democracy. Communist gov’ts control both political and economic power; they are authoritarian.
– 5: Centrally planned economies eliminate competition, giving businesses no incentive to produce goods of high quality. Also the bureaucracy is slow to respond to consumer wants/needs.
Chapter 2 Homework Review
• Page 44– 1: Laissez-faire is the doctrine that states that
gov’t should not intervene in the marketplace– 4: Your answer should discuss individual vs gov’t
role in the marketplace.