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Bell Ringer

What does it mean to you when America is described as the “Land of OpportunityLand of Opportunity”?

Objectives

1. Define the basic principles of the U.S. free enterprise system.

2. Identify the constitutional protections that underlie free enterprise.

3. 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.

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?

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?

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

Which is more important: FreedomFreedom or EqualityEquality?

“We should all have the same startWe should all have the same start” or “We should all cross the finish line We should all cross the finish line togethertogether”?

“Some people are born luckySome people are born lucky” or “People make their own luckPeople make their own luck”?

Vote With Your Feet

Agree/Disagree: People are poor because People are poor because they are lazy.they are lazy.

“The government should do more to help The government should do more to help out the poorout the poor” or “The government should The government should stay out of people’s livesstay out of people’s lives”?

Debate

Pro-free enterprise: http://www.youtube.com/watch?v=7NfLUCBZ1is “Don’t Eat Your Dog”

Pro-equal opportunity: http://www.youtube.com/watch?v=u2ilK4fe2jo “Republicans Want Wealth Redistribution” http://www.youtube.com/watch?v=DsrY0u5Z2fA “Equal Opportunity is America”

Closure

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 bottom 20%, the second 20%, the middle 20%, the fourth 20%, and the top 20%

Make two copies of following bar graph into your notes…

Bottom 20%Fourth 20%

Middle 20%Second 20%

Top 20%

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IDEAL vs. REALIDEAL vs. REAL

Bell Ringer http://www.youtube.com/watch?

v=QPKKQnijnsM “Wealth Inequality in America” How did your graphs compare with those

shown in the video?

The Constitution

Free enterprise in the United States is written into the framework of the U.S. Constitution.

The Constitution, cont.

The Constitution also spells out how government can tax individuals and businesses. 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.

The Role of Gov’t

The role of the governmentt in the in the marketplace includes: Carrying out the constitutional responsibilities to

protect property rights, contracts, and other business activities

Making sure that producers provide consumers with information

Protecting the health, safety, and well-being of consumers.

“Food Defect Action Levels”

Major Federal

Regulatory Agencies

Negative Effects of Regulation

Possible negative effects of government regulation include:

Rules are costly for businesses to implement

Regulations can limit competition

Increases government spending

Regulation Cost/Benefit Analysis

Select a U.S. federal regulatory agency. Chart is on pg. 54

Create a simple t-chart. Label one side “Cost” and the other “Benefit”.

List at least five costs and five benefits that your chosen agency has to business and to 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?”

Assignment: Defining Blight

1. Read the Wall Street Journal article on eminent domain.

2. Study the political cartoon on the reverse side.

3. Using the political cartoon, complete the Political Cartoon Analysis Guide

Bell Ringer What does the government actively do to

keep the economy moving forward? Examples??

Objectives

1. Explain why the government tracks and seeks to influence economic progress.

2. Analyze the concept of “creative destruction.”

Introduction

How does the U.S. government encourage growth and stability? The U.S. government encourages growth and

stability by: Tracking economic progress Promoting a high employment rate Encouraging the development of new technologies

Tracking Economic Progress

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

Employment 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?

5.5 percent as of May 2015 4.4 percent in May ‘07; 10.0 percent in Oct. ‘09

Technological Progress

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.

The Government’s Role

The government promotes innovation and invention to help maintain the country’s technological advantage by:

Funding research and development projects at universities

Establishing their own research institutions, like NASA

Granting patents and copyrights, which are an incentive to innovation

Key Terms

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

“Paradox of Progress”

List three advantages and three disadvantages of technological progress.

Pick one innovative product/service. Draw a timeline of the products/services that led up to your chosen item. Last, imagine some possible steps in the item’s future development.

Bell Ringer

What is “poverty”? 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. Describe how the government provides public goods to all citizens.

2. Explain the U.S. political debate on ways to fight poverty.

3. 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.

Public Goods

EXAMPLES?EXAMPLES?

The Poverty Problem 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 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 How does government help the poor? Government programs take money from

some people and redistribute it to others. Such programs include:

The welfare system Cash transfers In-kind benefits Medical and educational benefits

The Government’s Role 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 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

Redistribution Programs 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 In-kind benefits

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 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. College grants & Stanford loans

Key Terms 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