Transcript American Free Enterprise

Bell Ringer
What does it mean to you when America is
described as the “Land of Opportunity”?
Objectives
1.
2.
3.
Define the basic principles of the U.S.
free enterprise system.
Identify the constitutional protections that
underlie free enterprise.
Explain why the government may
intervene in the marketplace.
Intro: What is Free Enterprise?

The United States
considers itself to be a
“land of opportunity.”

The American tradition
of free enterprise has
been a key factor in
supporting this belief.
Principles of Free Enterprise
Profit motive (aka, Self Interest)
 In a free enterprise, businesspeople
make decisions based on what will
increase their profits
 Open opportunity (aka, Competition)
 The American principle of open
opportunity says that anyone can
compete in the marketplace.

Principles, cont.
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Legal equality
 American free enterprise believes in the principle
that everyone has the same legal rights.
Private property
 The free enterprise system allows people to make
their own decisions about their own property.
Freedom to buy and sell
 People can decide what agreements to enter into,
as well as what, when, and how they want to buy
and sell.
Advantages/Benefits

What are the benefits of free enterprise?
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Free enterprise makes it possible for people who
have ideas and persistence to start businesses
and make themselves successful.
Hard work + Opportunity = $$$
Free enterprise also offers a great deal of
economic freedom to the consumer.
Disadvantages/Costs

What are the costs of free enterprise?
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Although free enterprise rewards hard work, it
doesn’t provide everyone with an equal
opportunity.
Free enterprise tends to reward those who
already have wealth
It sacrifices security for freedom
Vote With
Your Feet
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Which is more important:
Freedom or Equality?
“We should all have the same start” or
“We should all cross the finish line
together”?
“Some people are born lucky” or
“People make their own luck”?
Vote With
Your Feet

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Agree/Disagree: People are poor because
they are lazy.
“The government should do more to help
out the poor” or “The government should
stay out of people’s lives”?
Debate

Pro-free enterprise:
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http://www.youtube.com/watch?v=7NfLUCBZ1is
“Don’t Eat Your Dog”
Pro-equal opportunity:
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http://www.youtube.com/watch?v=u2ilK4fe2jo
“Republicans Want Wealth Redistribution”
http://www.youtube.com/watch?v=DsrY0u5Z2fA
“Equal Opportunity is America”
Closure
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Think back to the arguments presented in
the videos.
Determine on your own whether you are
pro-free enterprise or pro-equal
opportunity.
Write a 3-5 sentence defense of your
position.
Bell Ringer
Imagine the country divided into five groups based
on income: the poorest 20%, the second 20%,
the middle 20%, the fourth 20%, and the
richest 20%
How do you think wealth is distributed
among the five groups in the U.S.?
In other words, what percentage of the wealth does
each group have?
Bell Ringer

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http://www.youtube.com/watch?v=QPKKQn
ijnsM
“Wealth Inequality in America”
How do your predictions compare with the
distribution shown in the video?
Income Inequality Questions
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Who are the “1%”?
What are some of the consequences of the
rise of income inequality in the U.S.?
What, if anything, should the government
do to help the “99%”?
Bell Ringer
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Look back at the principles of American
Free Enterprise.
How does the government protect or
enforce the principles? Provide examples.
Bell Ringer
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Self interest
Competition
Legal equality
Private property
Freedom to buy
and sell
The Constitution

The Constitution spells out how
government can tax individuals and
businesses.
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According to Article 1, Congress has the
power to levy taxes.
In addition, the Constitution guarantees
people and businesses the right to make
contracts.
Eminent Domain
One right granted by the Constitution is the
5th Amendment, which protects private
property from being taken from a citizen
without due process.
 However, the government has the right to
take private property for public use (as long
as it pays fair market value). This is known
as eminent domain.

Assignment: Defining Blight
1.
2.
3.
Read the Wall Street Journal article on
eminent domain.
Study the political cartoon on the
reverse side.
Using the political cartoon, complete the
Political Cartoon Analysis Guide
The Role of Gov’t

The role of the government in the
marketplace includes:
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Carrying out the constitutional responsibilities to
protect property rights, contracts, and other business
activities
Making sure that producers provide consumers with
information
Protecting consumers, specifically their health,
safety, and well-being.
“Food Defect Action Levels”
Major
Federal
Regulatory
Agencies
Negative Effects of Regulation
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Possible negative effects
of government regulation
include:
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Rules are costly for
businesses to
implement
Regulations can limit
competition
Increases government
spending
Regulation
Cost/Benefit Analysis
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Select a U.S. federal regulatory agency.
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Create a cost/benefit analysis, including at least
five costs and five benefits, for your chosen
agency.
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Chart is on pg. 54
Consider the impact on businesses and the general
public.
Answer the following question in 3-5 sentences:

“Based on your cost/benefit analysis, is it
worth it to the U.S. to keep your chosen federal
regulatory agency in service? Why/why not?”
Bell Ringer
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What does the government actively do to
keep the economy moving forward?
Examples??
Objectives
1.
2.
Explain why the government tracks and
seeks to influence economic progress.
Analyze the concept of “creative
destruction.”
Introduction
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How does the U.S. government encourage
growth and stability?
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The U.S. government encourages growth and
stability by:
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Tracking economic progress
Promoting a high employment rate
Encouraging the development of new
technologies
Tracking Economic Progress
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One measure of the nation’s economic
well-being is gross domestic product
(GDP).

GDP = the total value of all final goods
and services produced in a country in a
given year

Current U.S. GDP = $16.8 trillion
How much did the GDP grow
between 1910 and 2010?
About $8 trillion
Employment
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Employment
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The government strives to make sure there are
enough jobs for everyone who is able
to work.
An unemployment rate between 4 percent and
6 percent is considered healthy.
What is it today?
5.0 percent as of December 2015
4.4 percent in May ‘07; 10.0 percent in Oct. ‘09
The Government’s Role
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The government promotes innovation and
invention to help maintain the country’s
technological advantage by:
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Funding research and development projects at
universities
Establishing their own research institutions, like
NASA
Granting patents and copyrights, which are an
incentive to innovation
Technological Progress
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Technological progress has enabled the U.S. economy
to operate more efficiently.
Many inventions have improved productivity in the
United States, including:
 The light bulb, which made a longer workday
possible
 The assembly line, which led to mass production at
affordable costs
List at least three more technological innovations that
improve productivity.
“Creative Destruction”
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Think about all of the
inventions that have been
replaced by the smart phone.
Draw a timeline, visual,
comic, or graphic that
represents the “creative
destruction” process by which
the smart phone replaced
older technologies.
Key Terms
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gross domestic product (GDP): the total value
of all final goods and services produced in a
country in a given year
patent: a government license that gives the
inventor of a new product the exclusive right to
produce and sell it
copyright: a government license that grants an
author exclusive rights to publish and sell
creative works
Bell Ringer
What is “poverty”?
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Google  “the state of being extremely poor”
US Dept of Health and Human Services: “The
set minimum amount of gross income that a
family needs for food, clothing, transportation,
shelter and other necessities.”
In 2011, the gross yearly FPL was $22,350 for a
family of four.
Objectives
1.
2.
3.
Describe how the government provides
public goods to all citizens.
Explain the U.S. political debate on ways
to fight poverty.
Identify the main programs through which
the government redistributes income.
Public Goods
In the case of most public goods it is
simply not practical for a private business
(the private sector) to provide the
service, charge those who benefit, and
exclude non-payers from using the
source.
 Public goods are financed by the
public sector.
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Public Goods
EXAMPLES?
The Poverty Problem
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In a free market, the wealth is spread unevenly
throughout society, which leaves some people below
the poverty threshold (the “Haves” and “Have-Nots”).
The U.S. Bureau of the Census sets the poverty
threshold based on the cost of the goods a family
needs to buy.
The Poverty Problem
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Some experts think the threshold is set far too low
(currently, $22,350 for a family of four).
“Poverty in America isn’t a choice” http://www.youtube.com/watch?v=qNpLm0Lk0UA
“Half of America in Poverty”
The gov’t and the poor
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How does government help the poor?
Government programs take money from
some people and redistribute it to others.
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Such programs include:
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The welfare system
Cash transfers
In-kind benefits
Medical and educational benefits
The Government’s Role
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The government provides a safety net to
groups like the very young, the very old,
the sick, the poor, and the disabled
through various federal, state, and local
government programs.
Redistribution Programs
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Cash transfer programs
 Temporary Assistance for Needy Families
(TANF) - sends welfare payments directly to
the states, which design and run their own
welfare programs
 Social Security - collects money from
current workers and redistributes funds to
retired and disabled persons
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Currently: 66 years old; avg. $1,328 per month
Redistribution Programs
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Cash transfer programs
 Unemployment Insurance - Provides money
to workers who have lost their jobs as long as
recipients offer proof that they have made
efforts to get work.
 Worker’s Compensation - Provides state
funds to workers injured on the job.
In-Kind Benefits
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In-kind benefits
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Food stamps - Qualified people receive
assistance with their monthly food purchases
Subsidized housing - Qualified people are
allowed to rent housing for less than the
regular rent (Section 8)
Legal aid - Qualified people receive legal
advice at no charge
Medical and Educational Benefits
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The government provides health care to the
elderly (Medicare), the disabled, the poor
(Medicaid), and children who are uninsured.
The government also funds educational programs
from preschool to college.
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College grants & Stanford loans
Key Terms
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welfare: government aid to the poor
cash transfers: direct payment of money by the
government to the poor, disabled, or retired
people
in-kind benefits: goods and services provided for
free or greatly reduced prices