Today’s Warm Up

Answer on your warm up/exit ticket sheet (additional sheets are by the turn-in tray if needed)

How do you think the U.S. Constitution compares to North Korea’s?

American Free Enterprise

Today’s LEQ: How do governments in market economies support the characteristics of markets?

Main Idea

A key factor in America’s economic success is our tradition of free enterprise – the freedom & flexibility to try out business ideas and compete in the marketplace

The Constitution guarantees important economic rights

Features of Free Enterprise

The Constitution helps to guarantee: Profit Motive Open Opportunity Legal Equality Private Property Rights Free Contract Voluntary Exchange Competition

Profit Motive

Our gov’t does not control business activities – business owners and managers make their own choices

They operate in ways they believe will maximize their profits & are responsible for their own economic success or failure

Open Opportunity

We have legal equality & everyone can compete in the marketplace This maximizes a country’s use of its human capital

Economic mobility is possible, BUT equal opportunity does not mean equal outcome!

Property Rights

Our constitution protects private property rights – people can control their possessions as they wish

Gov’t can only take land away when there is a public reason and must pay the person fair value

No person shall “be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation.”

Contracts

The right of free contract allows people to decide what agreements they want to enter into

The Constitution guarantees people and businesses the right to make binding contracts – no laws can be passed to change the terms of someone’s business agreement Article I, Section 10 prohibits states from

passing any “Law impairing the Obligation of Contracts.”

Voluntary Exchange

Allows people to decide what and when they want to buy and sell

Competition

Because of all these rights, we have extensive competition

This helps to lower prices and increase the quality and variety of g/s

Taxation

The Constitution also outlines basic rules for gov’t’s taxation of indl’s & businesses 16th Amendment gave Congress clear right to set taxes based on income

Today’s Exit Ticket

In what ways do the benefits of free enterprise affect your daily life? List as many examples as you can. Consider neighborhood businesses, jobs you’ve held, and other ways in which you benefit from our nation’s prosperity.