Comparative Economic Systems

2.1

kduncan.wikispaces.com

Command vs MarketWhich is the best system?

Why?

FREEDOM V. EQUALITY

If you were education minister within a command economy, what type of education would you mandate?

‘We make good the difference in 10 years or they crush us’.

 

1927 1933 1937

Electricity ('000 million kw)

5 13 36

Coal (million tons)

35 64 128

Oil (million tons)

12 21 47

Steel (million tons)

4 6 18

Evaluating Economic Performance

2.2

Economic and Social Goals of the US

• Economic Freedom

• Economic Efficiency

• Economic Equity

• Economic Security

• Full Employment

• Price Stability

• Economic Growth

Equity• Justice, impartiality, fairness• For employment, it is illegal to discriminate on the

basis of age, sex, race, religion, or disability.

Security• Protection from adverse economic events:

– Unemployment, layoffs, illnesses, disability, old age

• Social Security – federal program of disability and retirement benefits that covers most working people

http://www.china-europe-usa.com/level_4_data/hum/ani/ani_usa_2L.gif

TRADE-OFFS AMONG GOALS• Full-employment vs. individual freedom

– Policy that keeps foreign-made shoes out

• Economic growth vs. stability y security– A new shopping center built near a highway

•Could help stimulate economic growth in one area of a community while threatening merchants who run stores in a downtown area

• Equity vs. freedom– Minimum wage

Price Stability• Stable prices• Inflation – a rise in the general level of prices

– Hurts people with fixed incomes – an income that does not increase even though prices go up

• The federal reserve increases interest rates to discourage businesses from borrowing and spending

INFLATION• What is a dollar worth?

http://woodrow.mpls.frb.fed.us/research/data/us/calc/

• Consumer Price Index, 1913-present – http://www.minneapolisfed.org/community_education/

teacher/calc/hist1913.cfm

• Not Everything is More Expensive– http://www.nytimes.com/imagepages/2008/05/07/

business/20080507_LEONHARDT_GRAPHIC.html

• WHY???

• Let’s look @ the wiki!