Survey section three

Chapter 3Chapter 3

Economic Progress and the Role of Government

Economic Progress and the Role of Government

Ten Elements of Clear Thinking about Economic Progress and the Role of Government


1) Government promotes economic progress by protecting the rights of individuals and supplying goods that cannot be provided through markets.

2) Allocation through political voting is fundamentally different from market allocation, and economic analysis indicates that the latter is more consistent with economic progress.

3) The costs of government are not only taxes.4) Unless restrained by constitutional rules, special-

interest groups will use the democratic political process to fleece taxpayers and consumers.

1) Government promotes economic progress by protecting the rights of individuals and supplying goods that cannot be provided through markets.

2) Allocation through political voting is fundamentally different from market allocation, and economic analysis indicates that the latter is more consistent with economic progress.

3) The costs of government are not only taxes.4) Unless restrained by constitutional rules, special-

interest groups will use the democratic political process to fleece taxpayers and consumers.



5) Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively.

6) Government slows economic progress when it becomes heavily involved in trying to help some people at the expense of others.

7) The net gain to those receiving government transfers is less, and often substantially less, than the amount they receive.

5) Unless restrained by constitutional rules, legislators will run budget deficits and spend excessively.

6) Government slows economic progress when it becomes heavily involved in trying to help some people at the expense of others.

7) The net gain to those receiving government transfers is less, and often substantially less, than the amount they receive.



8) Central planning replaces markets with politics, which waste resources and retards economic progress.

9) Competition is just as important in government as in markets.

10) Constitutional rules that bring the political process and sound economics into harmony will promote economic progress.

8) Central planning replaces markets with politics, which waste resources and retards economic progress.

9) Competition is just as important in government as in markets.

10) Constitutional rules that bring the political process and sound economics into harmony will promote economic progress.

Government Promotes Economic Progress by Government Promotes Economic Progress by Protecting the Rights of Individuals and Protecting the Rights of Individuals and

Supplying Goods That Cannot Be Provided Supplying Goods That Cannot Be Provided Through MarketThrough Market

Government Promotes Economic Progress by Government Promotes Economic Progress by Protecting the Rights of Individuals and Protecting the Rights of Individuals and

Supplying Goods That Cannot Be Provided Supplying Goods That Cannot Be Provided Through MarketThrough Market

How does Government promote social cooperation and enhance its citizens’ economic

welfare?

How does Government promote social cooperation and enhance its citizens’ economic

welfare?1) By providing people with protection for their

lives, liberties, and properties (as long as the properties and liberties were acquired without force, fraud, or theft) and

2) By supplying a few select goods that have unusual characteristics that make them difficult to provide through markets.

– The protective and productive functions of government.

1) By providing people with protection for their lives, liberties, and properties (as long as the properties and liberties were acquired without force, fraud, or theft) and

2) By supplying a few select goods that have unusual characteristics that make them difficult to provide through markets.

– The protective and productive functions of government.

Is Government Too Big?Is Government Too Big?Is Government Too Big?Is Government Too Big?

Protective FunctionProtective Function

• Protection of people and their property against aggressors

• The enforcement of contracts• The avoidance of restrictions, regulations, and

discriminatory taxes

• Protection of people and their property against aggressors

• The enforcement of contracts• The avoidance of restrictions, regulations, and

discriminatory taxes

Productive FunctionProductive Function

• Supplying to one, means supplying to others• Hard to restrict their consumption to paying

customers.– Supplying public goods to the country

• Public Defense• Public Parks

• Supplying to one, means supplying to others• Hard to restrict their consumption to paying

customers.– Supplying public goods to the country

• Public Defense• Public Parks

Public GoodPublic Good

• Non-rivalry and non-excludability• Everyone can simultaneously obtain the benefit

from a public good!!• One person’s benefit does not reduce the benefit

available to others.• Because there is an inability to exclude creates a

free-rider problem.

• Non-rivalry and non-excludability• Everyone can simultaneously obtain the benefit

from a public good!!• One person’s benefit does not reduce the benefit

available to others.• Because there is an inability to exclude creates a

free-rider problem.

Free-Rider ProblemFree-Rider Problem

• People can receive benefits from a public good without having to pay for it.

• As a result, public goods tend to be unprofitable for any private firm that decides to produce and sell them.

• People can receive benefits from a public good without having to pay for it.

• As a result, public goods tend to be unprofitable for any private firm that decides to produce and sell them.

Allocation Through Political Voting Allocation Through Political Voting Is Fundamentally Different from Is Fundamentally Different from

Market Allocation, and Economic Market Allocation, and Economic Analysis Indicates That the Latter Is Analysis Indicates That the Latter Is

More Consistent with Economic More Consistent with Economic Progress.Progress.

Allocation Through Political Voting Allocation Through Political Voting Is Fundamentally Different from Is Fundamentally Different from

Market Allocation, and Economic Market Allocation, and Economic Analysis Indicates That the Latter Is Analysis Indicates That the Latter Is

More Consistent with Economic More Consistent with Economic Progress.Progress.

What is the political processWhat is the political process

• It is merely an alternative form of social organization

• It is not a corrective device that can be counted on to provide a sound remedy when problems arise.

• It is merely an alternative form of social organization

• It is not a corrective device that can be counted on to provide a sound remedy when problems arise.

Democratic GovernmentDemocratic Government

• Policies proposed by the government may or may not be productive.

• Policies favored by the voting majority do not necessarily promote economic progress.

• The benefits and costs faced by voters belonging to different interest groups are often disproportionate.

• Policies proposed by the government may or may not be productive.

• Policies favored by the voting majority do not necessarily promote economic progress.

• The benefits and costs faced by voters belonging to different interest groups are often disproportionate.

Source: commonsenseeconomic.com

Unlike Democratic Governments, When Markets Are Competitive Unlike Democratic Governments, When Markets Are Competitive

• Producers can not force consumers to buy their products.

• They have incentives to undertake only productive activities.

• Producers can not force consumers to buy their products.

• They have incentives to undertake only productive activities.


Let’s Compare Democratic Governments and MarketsLet’s Compare Democratic Governments and Markets

1. Majority rule provides the basis for government action, while market activity is base on mutual agreement and voluntary exchange.• The power to tax, makes it possible for the

majority to coerce the minority• However, under the market conditions, the

transaction does not happen unless all parties agree to the transaction

1. Majority rule provides the basis for government action, while market activity is base on mutual agreement and voluntary exchange.• The power to tax, makes it possible for the

majority to coerce the minority• However, under the market conditions, the

transaction does not happen unless all parties agree to the transaction



2. There is little incentive for voters to be well informed about either candidates or issues. In a large number setting, an individual voter will not decide the outcome of an election.

• Rational ignorance effect• In the market, consumers individually decide how

to spend their money, if the choice is poor, then they are wasting their OWN money. The incentive is thus to do your research on the product you are buying!!

2. There is little incentive for voters to be well informed about either candidates or issues. In a large number setting, an individual voter will not decide the outcome of an election.

• Rational ignorance effect• In the market, consumers individually decide how

to spend their money, if the choice is poor, then they are wasting their OWN money. The incentive is thus to do your research on the product you are buying!!



3. The political process imposes the same option on everyone, while markets allow for diverse representation.

• Government allocation fits a “one size fits all”• But markets allow individuals to receive the

desired amount of the product

3. The political process imposes the same option on everyone, while markets allow for diverse representation.

• Government allocation fits a “one size fits all”• But markets allow individuals to receive the

desired amount of the product


What Is Needed to Encourage Democratic Governments To Be Productive?

What Is Needed to Encourage Democratic Governments To Be Productive?

• To reduce the likelihood that people can participate in government projects without paying, it is important to link benefits proportionately to costs.

• A democratic majority vote does not guarantee the passage of productive proposals.

• Supermajority support (75% of the voters) will increase the likelihood of passing productive projects.

• To reduce the likelihood that people can participate in government projects without paying, it is important to link benefits proportionately to costs.

• A democratic majority vote does not guarantee the passage of productive proposals.

• Supermajority support (75% of the voters) will increase the likelihood of passing productive projects.


The Costs of Government The Costs of Government Are Not Only TaxesAre Not Only Taxes

The Costs of Government The Costs of Government Are Not Only TaxesAre Not Only Taxes

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Which of the following is true of taxes?

a. Taxes increase the volume of mutually advantageous exchanges.b. Tax increases are the primary cause of inflation.c. Business taxes generate government revenue without imposing a

burden on consumers and households. d. Taxes drive a wedge between what buyers pay and what sellers

receive.

What are costs?What are costs?

• The cost of any product is not only the monetary costs, but what we are giving up to get the product.• Government is no exception to this!!

• Collective and Enforcement• Time, talent, and money

• The cost of any product is not only the monetary costs, but what we are giving up to get the product.• Government is no exception to this!!

• Collective and Enforcement• Time, talent, and money

Three types of costs incurred when government levy taxes and provide goods

and services

Three types of costs incurred when government levy taxes and provide goods

and services1. The loss of private sector output that

could otherwise be produced2. The cost of resources expended in tax

collection and enforcement of government mandates

3. The cost of price distortions caused by taxes and borrowing

1. The loss of private sector output that could otherwise be produced

2. The cost of resources expended in tax collection and enforcement of government mandates

3. The cost of price distortions caused by taxes and borrowing

http://knowledgecenter.csg.org/drupal/content/obama-renews-call-infrastructure-spending

What is the cost of this???



How does taxes distort prices??How does taxes distort prices??

• Taxes alter consumption and production incentives.

• Consider supply and demand. Taxes increase what consumers pay and reduce what sellers receive. They reduce the volume of exchanges and squeeze out some of the gains from trade.

• Some exchanges will not occur because the tax wedge makes them disadvantageous.

• Deadweight loss of taxation adds 9-16% above the costs of compliance and regulation.

• Taxes alter consumption and production incentives.

• Consider supply and demand. Taxes increase what consumers pay and reduce what sellers receive. They reduce the volume of exchanges and squeeze out some of the gains from trade.

• Some exchanges will not occur because the tax wedge makes them disadvantageous.

• Deadweight loss of taxation adds 9-16% above the costs of compliance and regulation.

Summary of TaxesSummary of Taxes

• Taxes distort prices.• Taxes transfer income from individuals to the government.

– Businesses do not pay taxes. Instead, they collect taxes from customers, employees and shareholders.

• Politicians want to conceal the tax costs of their programs and make you “think” businesses are paying

• Taxes distort prices.• Taxes transfer income from individuals to the government.

– Businesses do not pay taxes. Instead, they collect taxes from customers, employees and shareholders.

• Politicians want to conceal the tax costs of their programs and make you “think” businesses are paying

Special-interest groups will Special-interest groups will use the democratic political use the democratic political process to fleece taxpayers process to fleece taxpayers

and consumersand consumers

Special-interest groups will Special-interest groups will use the democratic political use the democratic political process to fleece taxpayers process to fleece taxpayers

and consumersand consumers

A Democratic GovernmentA Democratic Government

• Can contribute to economic progress when it fills its protective and productive roles.

• However, more than a majority rule and popular vote is needed to assure that it restricts itself to those roles.

• Why? Incentives matter! Consider the following three examples.

• Can contribute to economic progress when it fills its protective and productive roles.

• However, more than a majority rule and popular vote is needed to assure that it restricts itself to those roles.

• Why? Incentives matter! Consider the following three examples.

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The Power of Special Interests• Special interest groups will

help politicians get elected through donations and getting workers to vote.

• While the majority of unorganized voters is harmed, there is little incentive to act in opposition.

• In varying degrees, all politicians cater to special interests.

Example 2:Example 2:

• “If a small but organized group cares a great deal about a certain government policy, while the majority is unorganized and apathetic, then the special interest often prevail.”*

• “If a small but organized group cares a great deal about a certain government policy, while the majority is unorganized and apathetic, then the special interest often prevail.”*

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Consider This “Sweet” Example

• In 2000, the sugar lobby contributed $13 million to politicians.

• The government restricts sugar imports into the U.S. through quotas.

• The average U.S. consumer pays $20 per year in higher sugar prices while sugar growers gain about $1.9 billion.

• IS THIS A SOUND GOVERNMENT PROGRAM? DISCUSS.

Example 3: Government IncentivesExample 3: Government Incentives

• Log-rolling: implicit vote trading among legislators

• They vote for programs that benefit the districts of other legislators in exchange for votes for their pet projects.

• Federally funded dams, highways, housing projects, Veterans Administration hospitals, and job-training centers are often reflective of logrolling.

• Log-rolling: implicit vote trading among legislators

• They vote for programs that benefit the districts of other legislators in exchange for votes for their pet projects.

• Federally funded dams, highways, housing projects, Veterans Administration hospitals, and job-training centers are often reflective of logrolling.

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Question: Restrictions that limit sugar imports, subsidies for the construction of sports stadiums,

and federal spending on programs like the construction of an indoor rain forest in Iowa all

provide examples of government programs that,

a. Are based on careful analysis of benefits relative to costs.

b. Are designed to redistribute income from the rich to the poor.

c. Reflect the political attractiveness of special-interest issues.

d. Promote the general welfare.

Unless restrained, legislators Unless restrained, legislators will run budget deficits and will run budget deficits and

spend excessivelyspend excessively

Unless restrained, legislators Unless restrained, legislators will run budget deficits and will run budget deficits and

spend excessivelyspend excessively

The Attractiveness of Deficit Spending to Legislators

The Attractiveness of Deficit Spending to Legislators

• Budget Deficit: Government spending that exceeds revenues. Deficits are financed by borrowing.

• Spending is attractive to legislators because it allows them to take credit for programs that benefit voters.

• Taxes are unattractive because they impose visible costs on voters.

• Thus, legislators tend to spend more than they are willing to tax.

• Budget Deficit: Government spending that exceeds revenues. Deficits are financed by borrowing.

• Spending is attractive to legislators because it allows them to take credit for programs that benefit voters.

• Taxes are unattractive because they impose visible costs on voters.

• Thus, legislators tend to spend more than they are willing to tax.

The National DebtThe National Debt

• The cumulative effect of all past budget deficits and surpluses of the federal government.

• Check out the U.S. Debt. • The U.S. Treasury borrows funds by selling

securities like U.S. Treasury Bills, Notes, and Bonds.

• Borrowing makes the current cost of running the government less visible.

• The cumulative effect of all past budget deficits and surpluses of the federal government.

• Check out the U.S. Debt. • The U.S. Treasury borrows funds by selling

securities like U.S. Treasury Bills, Notes, and Bonds.

• Borrowing makes the current cost of running the government less visible.

http://www.treasurydirect.gov/NP/BPDLogin?application=np

http://www.treasurydirect.gov/NP/BPDLogin?application=np

Is that all the debt?Is that all the debt?

Deficit Spending and the National DebtDeficit Spending and the National Debt

• Borrowing pushes the visible cost of running the government and policies into the future.

• Bottom line. – Why continue spending when in a deficit?

• Immediate benefits with deferred costs are politically attractive!

• Deficit spending and public debt appear to transfer costs into the future when current politicians are no longer office.

• Borrowing pushes the visible cost of running the government and policies into the future.

• Bottom line. – Why continue spending when in a deficit?

• Immediate benefits with deferred costs are politically attractive!

• Deficit spending and public debt appear to transfer costs into the future when current politicians are no longer office.

Constitutional Changes That May Restrain Legislators

Constitutional Changes That May Restrain Legislators

• Require the federal government to balance its budget like most states.

• Require a 2/3 or ¾ majority vote in both branches of Congress to fund deficit spending or increase its borrowing power.

• Require that Congress only spends an amount equal to last year’s tax revenue.

• Require the federal government to balance its budget like most states.

• Require a 2/3 or ¾ majority vote in both branches of Congress to fund deficit spending or increase its borrowing power.

• Require that Congress only spends an amount equal to last year’s tax revenue.

Government Slows Economic Government Slows Economic Progress When It Becomes Progress When It Becomes

Heavily Involved providing favors Heavily Involved providing favors to some at the expense of othersto some at the expense of others

Government Slows Economic Government Slows Economic Progress When It Becomes Progress When It Becomes

Heavily Involved providing favors Heavily Involved providing favors to some at the expense of othersto some at the expense of others

Two ways individuals can acquire wealth

Two ways individuals can acquire wealth

• Production• Plunder

• Production• Plunder

ProductionProduction

• Production is when people get ahead by producing goods and service and earn income from it

• Production is when people get ahead by producing goods and service and earn income from it

PlunderingPlundering

• Plunder what others have produced.• It fails to generate additional income• It also consumes resources- decreasing the wealth

to society• The gain of one is a loss to another

• Plunder what others have produced.• It fails to generate additional income• It also consumes resources- decreasing the wealth

to society• The gain of one is a loss to another

Should government help family farms?

Should government help family farms?

What about sport teams?What about sport teams?

How does the government get involved in these actions?

How does the government get involved in these actions?

• A government can act as a neutral force• Protect property rights• Enforce contracts

• A government can act as a neutral force• Protect property rights• Enforce contracts

The Net Gain to Those Receiving Government Transfers Is Less,

and Often Substantially Less, than the Amount They Receive

The Net Gain to Those Receiving Government Transfers Is Less,

and Often Substantially Less, than the Amount They Receive

Income TransfersIncome Transfers

• It is difficult to improve people’s well-being through income transfers when benefits are not attached to costs.

• The unintended consequences of secondary effects can get in the way.

• It is difficult to improve people’s well-being through income transfers when benefits are not attached to costs.

• The unintended consequences of secondary effects can get in the way.

Why weren’t the income transfers more effective?

Why weren’t the income transfers more effective?

Another exampleAnother example

Is income something that people produce and earn?

Is income something that people produce and earn?

Unintended Consequences of income transfers


1. Reduce incentives of both taxpayer and transfer recipient to earn income• “Free” income reduces work effort and innovation

among transfer beneficiaries.• Increased tax burdens stifle incentives to produce and

earn more among persons earning income and paying taxes.

2. Competition for transfers erodes most of the long-term gain of the targeted beneficiaries.• When qualification requirements must be met,

resources and potential production are wasted as individuals seek to qualify for the transfers.

1. Reduce incentives of both taxpayer and transfer recipient to earn income• “Free” income reduces work effort and innovation

among transfer beneficiaries.• Increased tax burdens stifle incentives to produce and

earn more among persons earning income and paying taxes.

2. Competition for transfers erodes most of the long-term gain of the targeted beneficiaries.• When qualification requirements must be met,

resources and potential production are wasted as individuals seek to qualify for the transfers.



3. Protection from adversity arising from imprudent decisions makes people more likely to increase the likelihood of that adversity.• Consequences of adversity become less severe.• Potential recipients have less incentive to avoid

adversity.

3. Protection from adversity arising from imprudent decisions makes people more likely to increase the likelihood of that adversity.• Consequences of adversity become less severe.• Potential recipients have less incentive to avoid

adversity.

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The “War on Poverty” IllustratesThese Points

0%

5%

10%

15%

20%

25%

30%

35%

1947 1959 1965 1975 1985 1995 2005

“War”

Can we apply this to the bank bailout? Can we apply this to the bank bailout?

Central planning replaces markets with politics, which wastes

resources and retards economic progress.

Central planning replaces markets with politics, which wastes

resources and retards economic progress.

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The “Man of System”“The man of system is apt to be very wise to his own conceit.

He seems to imagine that he can arrange the different members of a great society with as much ease as the

hand arranges the different pieces upon a chess-board.”

-Adam Smith

Aren’t elected officials and government experts more likely to represent the “general

welfare” of the people than business entrepreneurs?

Aren’t elected officials and government experts more likely to represent the “general

welfare” of the people than business entrepreneurs?

Five Major reasons why central planning will almost surely do more damage than

good


good1) Central planning merely substitutes politics

for market verdicts2) The incentive of government-operated firms

to keep costs low, be innovative, and efficiently supply goods is weak.

3) There is every reason to believe that investors risking their own money will make better investment choices than central planners spending the money of taxpayers

1) Central planning merely substitutes politics for market verdicts

2) The incentive of government-operated firms to keep costs low, be innovative, and efficiently supply goods is weak.

3) There is every reason to believe that investors risking their own money will make better investment choices than central planners spending the money of taxpayers


good


good4) The efficiency of government spending will

also be undermined because the budget of an unconstrained government is something like a common pool resource.

5) There is no way that central planners can acquire enough information to create, maintain, and constantly update a plan that makes sense.

4) The efficiency of government spending will also be undermined because the budget of an unconstrained government is something like a common pool resource.

5) There is no way that central planners can acquire enough information to create, maintain, and constantly update a plan that makes sense.

Central planning merely substitutes politics for market verdicts

Central planning merely substitutes politics for market verdicts

• Subsidies and investment funds disbursed by planners are influenced by political considerations.

• “Old” firms tend to be favored over “new”, growth-oriented firms.

• “Pork barrel” projects are still pursued.

• Subsidies and investment funds disbursed by planners are influenced by political considerations.

• “Old” firms tend to be favored over “new”, growth-oriented firms.

• “Pork barrel” projects are still pursued.

Example of Pork Barrel SpendingExample of Pork Barrel Spending

The incentive of government-operated firms to keep costs low, be innovative, and supply goods

efficiently is weak.

The incentive of government-operated firms to keep costs low, be innovative, and supply goods

efficiently is weak.

• Boosting efficiency or lowering costs generate little political gain.• They will be motivated to pursue a larger budget.

• Per-unit costs rise as increased inefficiencies get built into the political allocation.

• Boosting efficiency or lowering costs generate little political gain.• They will be motivated to pursue a larger budget.

• Per-unit costs rise as increased inefficiencies get built into the political allocation.

Investors risking their own money will make better investment choices than central planners spending the

money of taxpayers.

Investors risking their own money will make better investment choices than central planners spending the

money of taxpayers.

• Private investors bear the consequences of poor decisions directly but central planners do not.

• Private investors have a strong incentive to increase productivity and keep costs low. In contrast, political rather economic considerations are more important for central planners.

• Private investors bear the consequences of poor decisions directly but central planners do not.

• Private investors have a strong incentive to increase productivity and keep costs low. In contrast, political rather economic considerations are more important for central planners.

There is no way that central planners can acquire enough information to create, maintain, and constantly

update a plan that makes sense.

There is no way that central planners can acquire enough information to create, maintain, and constantly

update a plan that makes sense.• Market prices generally channel information quickly

and accurately to both producers and consumers. On the other hand a political process, particularly one with checks and balances like those found in the U.S., will respond slowly and often in a contradictory manner.

• Market prices generally channel information quickly and accurately to both producers and consumers. On the other hand a political process, particularly one with checks and balances like those found in the U.S., will respond slowly and often in a contradictory manner.

Competition Is Just As Important in Government As in Markets

Competition Is Just As Important in Government As in Markets

Government & CompetitionGovernment & Competition1. Leaders of public sector firms have little incentive to cut costs or boost

performance when there is little competition.a. Inefficient programs are permitted to linger.b. Failure to achieve goals is often rewarded by increased funding.

Consider increased funding in police departments with higher crime rates.

2. In the market economy, profits and losses register performance. Inefficient producers are weeded out and efficient ones are rewarded. There is no parallel in the centralized government.

1. Leaders of public sector firms have little incentive to cut costs or boost performance when there is little competition.a. Inefficient programs are permitted to linger.b. Failure to achieve goals is often rewarded by increased funding.

Consider increased funding in police departments with higher crime rates.

2. In the market economy, profits and losses register performance. Inefficient producers are weeded out and efficient ones are rewarded. There is no parallel in the centralized government.

Government & CompetitionGovernment & Competition

3.Increased competition among decentralized government units or between the government and private sector creates incentives for government officials to work productively, seek efficiency, cut costs and innovate.

4. Citizens with differing preferences and views about government activities can vote with their feet in a decentralized system; a centralized system does not permit this.

3.Increased competition among decentralized government units or between the government and private sector creates incentives for government officials to work productively, seek efficiency, cut costs and innovate.

4. Citizens with differing preferences and views about government activities can vote with their feet in a decentralized system; a centralized system does not permit this.

Constitutional Rules That Bring the Political Process and Sound Economics into Harmony Will Promote Economic

Progress

Constitutional Rules That Bring the Political Process and Sound Economics into Harmony Will Promote Economic

Progress

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Constitutional ChecksConstitutional Checks• The scope of government must

be limited.• An unrestrained government

results in the fleecing of citizens.

• Constitutional checks:– 10th Amendment

– 5th Amendment

– http://score.rims.k12.ca.us/score_lessons/bill_of_rights/media/five.htm

http://www.gpoaccess.gov/constitution/pdf/con021.pdf



http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=105_cong_documents&docid=f:sd011.105.pdf



http://score.rims.k12.ca.us/score_lessons/bill_of_rights/media/five.htm



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A Positive Program for Prosperity: 7 Constitutional Suggestions

1. No government shall use its regulatory powers to take private property, either partially or in its entirety, for public use without paying the owner the full market value of the property taken.

http://www.usconstitution.net/xconst_Am5.html



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2. The right of individuals to compete in a business or profession and/or buy and sell legally tradable goods and services at mutually acceptable terms shall not be infringed by Congress or any of the States.[i]

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3. Congress shall not levy taxes or impose quotas on either imports or exports.

4. A three-fourths approval of both Houses of Congress shall be required for all expenditure programs of the federal government. At least two-thirds approval of the legislative branches of state government shall be required for the approval of expenditures by state governments.

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5. A three-fourths approval of both Houses of Congress shall be required before the federal government is permitted to borrow any funds to finance a deficit in its annual budget.

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6. A three-fourths approval of both Houses of Congress shall be required for the federal government to mandate any expenditures by either state governments or private business firms.

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7. The function of the Federal Reserve System (Fed) is to maintain the value of the currency and establish a stable price level. If the price level either increases or decreases by more than 4 percent annually during two consecutive years, all Governors of the Federal Reserve System shall be required to submit their resignations.

Survey section three

Economy & Finance

Transcript of Survey section three