CHARACTERISTICS OF A MIXED MARKET ECONOMY

PRIVATE PROPERTY

Labor resources, natural resources, capital resources (e.g., equipment and buildings), and the goods and services produced in the economy are largely owned by private individuals and private institutions rather than by government. This private ownership combined with the freedom to negotiate legally binding contracts permits people, within very broad limits, to obtain and use resources as they choose.

FREEDOM OF ENTERPRISE AND CHOICE

Private entrepreneurs are free to obtain and organize resources in the production of goods and services and to sell them in markets of their choices. Consumers are at liberty to buy that collection of goods and services that best satisfies their economic wants. Workers are free to seek any jobs for which they are qualified.

MOTIVE OF SELF-INTEREST

The "Invisible Hand" that is the driving force in a market economy is each individual promoting his or her self-interest. Consumers aim to get the greatest satisfaction from their budgets; entrepreneurs try to achieve the highest profits for their firms; workers want the highest possible wages and salaries; and owners of property resources attempt to get the highest possible prices from the rent and sale of their resources.

COMPETITION

Economic rivalry means that buyers and sellers are free to enter or leave any market and that there are buyers and sellers acting independently in the marketplace. It is competition, not government regulation, that diffuses economic power and limits the potential abuse of that power by one economic unit against another as each attempts to further its own self-interest.

SYSTEM OF MARKETS AND PRICES

Markets are the basic coordinating mechanisms in our type of economy, not central planning by government. A market brings buyers and sellers of a particular good or service into contact with one another. The preferences of sellers and buyers are registered on the supply and demand sides of various markets, and the outcome of these choices is a system of product and resource prices. These prices are guideposts on which participants in markets make and revise their free choices in furthering their self-interests.

LIMITED GOVERNMENT

A competitive market economy promotes the efficient use of its resources. As a self-regulating and self-adjusting economy, no significant economic role for government is necessary. However, a number of limitations and undesirable outcomes associated with the market system result in an active, but limited economic role for government.

Article I section 8 #1 Taxing and General Welfare Clause

To lay and collect taxes, duties, imposts and excises to pay the debts and provide for the common defense and general welfare of the United States, all duties, impost and excises, shall be uniform throughout the United States

Article 1 Section 8 # 2

To Borrow Money on the Credit of the United States

COMMERCE CLAUSEArticle I, Section 8 states that Congress shall have the power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;..."

COINAGE CLAUSESArticle I, Section 8 states that Congress shall have the power "To coin Money, regulate the value thereof, ..." and "To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;..." Article I, Section 10 gives Congress this power exclusively by stating that "No State shall...coin Money;..."

COPYRIGHT CLAUSESArticle I, Section 8 states that Congress shall have the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writing and Discoveries;..."

CONTRACT CLAUSESArticle I, Section 9 states that "No Bill of Attainder or ex post facto Law shall be passed..." by Congress. Article I, Section 10 states that "No state shall...pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligations of Contracts,..."

EXPORT CLAUSESArticle I, Section 9 states that "No Tax or Duty shall be laid on Articles exported from any State...", and Article I, Section 10 states that " No State shall without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports,..."

SEARCHES AND SEIZURESAmendment IV states that "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated,..."

DUE PROCESS and rights of citizensAmendment V states that "No person shall...be deprived of life, liberty, or property, without due process of the law; nor shall private property be taken for public use, without just compensation" and Amendment XIV, Section 1 states "nor shall any State deprive any person of life, liberty, or property, without due process of law;... nor deny to any person within its jurisdiction the equal protection of the laws"

RESERVED RIGHTS AND POWERSAmendment IX states that "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people." And Amendment X states "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

14th Amendment Right of Citizens and Equal Protection ClauseNor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

14th Amendment Section 4. Validity of Public Debt

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void

Maintaining Legal and Social FrameworkExample: Create laws and provide courts, provide information and services to help economy function better, establish a monetary system, define and enforce property rights.

Maintaining CompetitionExample: Create and enforce antitrust laws; regulate natural monopolies.

Providing Public Goods and ServicesExample: Provide goods and services that markets are unable or unwilling to provide, such as national defense.

Redistributing IncomeExample: Higher income tax rates for rich than for poor, provide social security, and aid to dependent children, Medicare, Medicaid.

Correcting for ExternalitiesExample: Taxes to reduce negative externalities, such as environmental pollution; subsidies to encourage positive externalities, such as education. Externalities exist when some of the costs or benefits associated with the production or consumption of a product "spill over" to third parties other than the direct producer or consumer of the product.

Stabilizing the EconomyExample: Use government budgets and/or the money supply to promote economic growth, control inflation, and reduce unemployment.

PRIVATE PROPERTY

PRIVATE PROPERTY

Labor resources, natural resources, capital resources (e.g., equipment and buildings), and the goods and services produced in the economy are largely owned by private individuals and private institutions rather than by government. This private ownership combined with the freedom to negotiate legally binding contracts permits people, within very broad limits, to obtain and use resources as they choose.

Government Role in Economy

What does/did the Constitution/Founder Fathers

say?

Principles of the Constitution

Limited Government

Popular Sovereignty

Federalism

Separation of Powers

Checks and Balances

Game Theory/Lessons Readings

v v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

Property Rights The Concise Encyclopedia of Economics Library of Economics and Liberty.mhtThe Economic Principles of America private property.docx

Games

Gov’t Today/Interaction

Self Interest and Worth

Public vs Private Property Eminent Domain: Should Private Property be take taken for Public use?

Article I section 8 #1 Taxing and General Welfare Clause

Article I section 8 COPYRIGHT CLAUSES

SEARCHES AND SEIZURESAmendment IV

Amendment V

Eminent Domain- Kelo v New London

Federal Income Tax

FREEDOM OF ENTERPRISE AND CHOICE

FREEDOM OF ENTERPRISE AND CHOICE

Private entrepreneurs are free to obtain and organize resources in the production of goods and services and to sell them in markets of their choices. Consumers are at liberty to buy that collection of goods and services that best satisfies their economic wants. Workers are free to seek any jobs for which they are qualified.

Government Role in Economy

What does/did the Constitution/Founder Fathers

say?

Principles of the Constitution

Limited Government

Popular Sovereignty

Federalism

Separation of Powers

Checks and Balances

Game Theory/Lessons Gov’t Today/Interaction Readings

v v v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

Freedom Of Individual Enterprise.mht

free enterprise and farms.pdf

Limited Government and Individual Enterprise and the Profit Motive.mht

Activities

American Free Enterprise

Games

Rational Decisions

Motive of Self Interest

MOTIVE OF SELF-INTEREST

The "Invisible Hand" that is the driving force in a market economy is each individual promoting his or her self-interest. Consumers aim to get the greatest satisfaction from their budgets; entrepreneurs try to achieve the highest profits for their firms; workers want the highest possible wages and salaries; and owners of property resources attempt to get the highest possible prices from the rent and sale of their resources.

v

Government Role in Economy

What does/did the Constitution/Founder Fathers

say?

Principles of the Constitution

Limited Government

Popular Sovereignty

Federalism

Separation of Powers

Checks and Balances

Game Theory/Lessons Readings

v v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

Limited Government and Individual Enterprise and the Profit Motive.mht

Dollar Auction

Prisoner’s Dilemma

Games

Self Interest

Gov’t Today/Interaction

Competition

COMPETITION

Economic rivalry means that buyers and sellers are free to enter or leave any market and that there are buyers and sellers acting independently in the marketplace. It is competition, not government regulation, that diffuses economic power and limits the potential abuse of that power by one economic unit against another as each attempts to further its own self-interest.

v

Government Role in Economy

What does/did the Constitution/Founder Fathers

say?

Principles of the Constitution

Limited Government

Popular Sovereignty

Federalism

Separation of Powers

Checks and Balances

Game Theory/Lessons Readings

v v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

the two worlds of business.pdf tragedy of the commons.pdf

Market Failures, Externalities and Public Goods.mht

Public Good

The Oligopoly Game

The Collusion Game

Games

Gov’t Today/InteractionProtecting competition or competitors?

Licenses, test, and other ways of preventing entrance into markets

Preventing monopolies

System of Markets and

Prices

SYSTEM OF MARKETS AND PRICESMarkets are the basic coordinating mechanisms in our type of economy, not central planning by government. A market brings buyers and sellers of a particular good or service into contact with one another. The preferences of sellers and buyers are registered on the supply and demand sides of various markets, and the outcome of these choices is a system of product and resource prices. These prices are guideposts on which participants in markets make and revise their free choices in furthering their self-interests.

v

Government Role in Economy

What does/did the Constitution/Founder Fathers

say?

Principles of the Constitution

Limited Government

Popular Sovereignty

Federalism

Separation of Powers

Checks and Balances

Game Theory/Lessons Readings

v v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

Politics versus Economics.pdf How markets work and Where markets fail.pdf government price fixing and min wage laws.pdf

The Wage is right

Lemons

Pit Market

A Mixed Economy The Role of the Market.mht

The power of the Market- The Pencil

Supply and Demand PPT

Labor MarketsGames

Supply and Demand Shifters

Supply and Demand PPT

Gov’t Today/InteractionPrice Controls- Ceilings, Floors, Excise Tax, Subsidies

Equilibrium

Limited Government

LIMITED GOVERNMENT

A competitive market economy promotes the efficient use of its resources. As a self-regulating and self-adjusting economy, no significant economic role for government is necessary. However, a number of limitations and undesirable outcomes associated with the market system result in an active, but limited economic role for government.

v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

Government Role in Economy

What does/did the Constitution/Founder Fathers

say?

Principles of the Constitution

Limited Government

Popular Sovereignty

Federalism

Separation of Powers

Checks and Balances

Game Theory/Lessons Readings

v v

Maintaining Legal and Social Framework

Maintaining Competition

Providing Public Goods and Services

Redistributing Income

Correcting for Externalities

Stabilizing the Economy

Limited Government and Individual Enterprise and the Profit Motive.mhtA Mixed Economy The Role of the Market.mht

Stag Hunt

Prisoner’s Dilemma

Income Distribution game

Dinner PartyPolitics versus Economics.pdf

Games

Gov’t Today/Interaction

Supreme Court case that dealt with the EconomyVA vs. Obama and the health care bill

One on One debates

Supply and Demand and the debate on government interaction and price

Productionscarcity

Health careDebt ceiling

Develop unit planDevelop unit readingsDevelop lesson plansDevelop game theory lessonsCreate unit 3 questions

Supply and demand

Price controls and price floors and price ceilings, subsidies, excise tax

- min wage (william)- rent control (sowell)

Price in production- economics of scale, dis economies of scale

Prisoners dilemma

Demand of buyer - marginal utitlity

Pizza example

Competition Pure all the way to monopolies

Government regulation and control of monopolies

Market failures an correcting the market through regulation

Competition with buyers and sellers

Private property the debate of tax and eminant domain

The market itselfHealthy marketsInformations - imperfect information and it's impacts of rational decisions- 20 dollar auction

Externalities- stag hunt

Public goods - free riders- politics- debt - taxRedistributing the wealth

Free rider syndromeFree rider dilemmaDinner party Tragedy of the commons

Pork barrel legislation and earmarks

Motive of self interest and profit motive

Freedom of enterprise and choice

Private property