Mixed Economies

The Rise of Mixed EconomiesLaissez 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. EducationHealthcareMass transit

Private Property- Property that is owned by individuals or companies, not by the govnt or people as a wholeConstitution protects this fundamental right

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?

GOVERNMENT

EXPENDITURES

EXPENDITURES

Households Firms

Monetary FlowTAXE

S

TAXES

PHYSICAL FLOW

Monetary Flow

PHYSICAL FLOW

Govnt

Owne

d

Fact

orie

s

Gov

nt

Purc

hase

s

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 DominatesHong 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 interventionForeign investment encouragedFree 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.

NORTH KOREA

CUBA

IRAN

CHINA

RUSSIA

MEXICO

SOUTH AFRICA

POLAND

FRANCE

JAPAN

UNITED KINGDOM

CANADA

UNITED STATES

HONG KONG

SINGAPORE

CONTINUUM- a range with no clear divisions

CONTINUUM OF MIXED ECONOMIES