Bell Ringer
What does it mean to
you when America is
described as the
“Land of Opportunity”?
Objectives
1. Define the basic principles of the U.S.
free enterprise system.
2. Identify the benefits (advantages) and
costs (disadvantages) of the U.S.
economic system.
Intro: What is Free Enterprise?
The American tradition of
free enterprise has been
a key factor in supporting
the belief that it is the
“land of opportunity.”
Free enterprise is a more
accurate and up-to-date
name for capitalism.
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.
Benefits/Advantages
What are the benefits of free enterprise?
Hard work + Opportunity = $$$
Free enterprise makes it possible for people who
have ideas and persistence to start businesses
and make themselves successful.
It also offers a great deal of economic freedom
and provides economic growth.
Costs/Disadvantages
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 equality for freedom
Vote With Your Feet
Rules of Engagement:
You must choose.
Summarize before speaking.
“Three before me.”
Address ideas, not people.
Move if you change your mind.
Vote With Your Feet
“Some people are born lucky” or
“People make their own luck”
Agree/Disagree: People are poor because
they are lazy.
Vote With Your Feet
“The government should do more to help
people” or “The best thing government can
do is to stay out of people’s lives”
Agree/Disagree: Most rich people don’t
deserve to be as wealthy as they are.
Closure
Complete the Free
Enterprise vs. Equal
Opportunity
evaluation sheet
Bell Ringer
How does America slice its “economic pie”? (aka, economic equity)
How do you think wealth is
distributed in the U.S.?
In other words… How much more wealthy do you think the richest people
are than the poorest people? 10 times? 100? 1000?
Bell Ringer
http://www.youtube.com/watch?v=QPKKQn
ijnsM - “Wealth Inequality in America”
Who are the “1%”?
What are some of the consequences of
the rise of income inequality in the U.S.?
Objectives
1. Identify the role of the U.S. federal
government in the free enterprise system.
2. Define “regulation” and they ways in which
government may intervene in the marketplace.
3. Analyze the concept of “automation.”
Self interest
Competition
Legal equality
Private property
Freedom to buy/sell
Role of the U.S. Government
The Role of Govt.
The role of the government in the marketplace includes:
Carrying out the constitutional responsibilities to protect
property rights, contracts, and other business activities
Making sure that businesses provide consumers with
accurate information
Enforcing regulations, or the rules/laws that control the
way that businesses can operate.
“Food Defect Action Levels”
Innovation & Invention
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 and DARPA (Defense Advanced Research Projects Agency)
Granting patents and copyrights, which are an incentive to innovation
Automation
The process of automatically producing goods through the use of robots, artificial intelligence (AI), or other control systems with minimal direct human operation.
Automation
What occupations are most at-risk for replacement by automation?
Food service, construction, transportation, office administration, custodial services, and more…
What do almost all of these occupations have in common?
Low wages, low skills, low education
https://www.cnbc.com/2019/01/25/these-workers-face-the-highest-risk-of-losing-their-jobs-to-automation.html
Key Terms
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
automation: the process of automatically producing goods through the use of robots, control systems, and other appliances with minimal direct human operation
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 2019, the gross yearly Federal Poverty Line is $25,750
for a family of four.
Objectives
1. Explain how “poverty” is defined by the
federal government.
2. Identify the main programs through which the
government redistributes income to address
poverty.
Introduction
In a free market, the wealth is spread unevenly throughout society, which leaves some people below the poverty threshold (the “Haves” and “Have-Nots”).
In 2017, an estimated 39.7 million Americans lived in poverty according to the official measure (13.9 percent).
The Poverty Problem
The current Federal Poverty Line (FPL) is set at $25,750 for a family of four.
This number is determined by multiplying the cost of a minimum food diet by three and annually adjusting for inflation.
Because of this, many people consider the FPL to be set far too low.
The Government’s Role
How does government help the poor?
By providing 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 programs.
Redistribution Programs
Cash transfer programs
Temporary Assistance for Needy Families (TANF) - welfare payments sent to the states Congress 87% white, 86% male, avg. age 55
Recipients 68% nonwhite, 90% female, avg. age 31
Social Security - collects money from current workers and redistributes funds to retired and disabled persons Currently: 66 years old; avg. $1,461 per month
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 (SNAP)
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 Benefits
The government provides health care to the elderly (Medicare), the poor (Medicaid), and children who are uninsured (CHIP).
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: public spending to help specific populations by providing goods and services at a free or at a reduced rate
Bell Ringer
Who do you think benefits from an
increase in the minimum wage?
Who is by an increase in the
minimum wage?
Objectives
1. Identify two ways that the government
intervenes in markets to control prices.
2. Analyze the debate surrounding the federal
minimum wage.
Price Ceiling
Price ceilings - the maximum price that can legally be charged for a good or service
EXAMPLE: Tortillas in Mexico “Tortilla Price Stabilization Pact”
In 2007, President Calderon created an agreement between the Mexican Federal Govt. and several tortilla companies in Mexico to set a price ceiling for corn tortillas at 8.50 pesos/kg ($0.21/lb)
Price Floors
A price floor is a minimum
price set by the
government.
The minimum wage is an
example of a price floor.
Minimum wage affects the
demand and the supply of
workers.
Minimum Wage
What is the current federal minimum wage?
$7.25
What is the minimum wage in Arizona?
$11.00
The minimum wage can be different at the federal,
state, city, and even company level.
Minimum Wage Argument
“Is Raising the Minimum Wage a Bad Idea?”
“Raise the Minimum Wage to $15/Hour”
Bernie Sanders has built much of his 2020
presidential campaign on the promise to raise minimum
wage to $15/hour
Minimum Wage Argument
How does a minimum wage increase
businesses?
Increased labor costs
Fewer employees
Increased prices (less competitive)
Less training/benefits offered
Fewer profits… yeah, right!
Minimum Wage Argument
How does a minimum wage increase help
businesses?
More competitive workforce
More productive workers
More skilled/educated workers
Increased wages = increased spending
Four Corners
• The minimum wage should be increased to at
least $15/hour for all workers.
• Businesses, not the government, should be
responsible to increasing the minimum wage for
American workers.
• Increasing the minimum wage is the one of the
best ways to reduce poverty in America.
Strongly Disagree Disagree
Agree Strongly Agree
Minimum Wage Questions
What is the purpose of a minimum wage?
Should there even be a minimum wage?
Assume the minimum wage raises prices but
also raises productivity. Is this an acceptable
trade-off?
Should the federal minimum wage be
increased? If so, to what? If not, why not?
What ideas / images / thoughts do
you associate with unemployment?
The current unemployment rate is
3.7 percent. How long do you think
the average person remains
unemployed?
A: 20.5 weeks (>4 months)
Bell Ringer
Define unemployment and the labor
force
Describe how the government
measures the economy’s rate of
unemployment
Identify the problems in interpreting
unemployment data
Objectives
Natural Rate of Unemployment (Long Term)
The amount of unemployment that the economy normally experiences and does not go away on its own even in the long run.
Cyclical Unemployment (Short Term)
Associated with short-term ups and downs of the business cycle and refers to the year-to-year fluctuations in unemployment around its natural rate.
Identifying Unemployment
Employed: A person is considered employed if he or she has spent some of the previous week working at a paid job.
Unemployed: A person is unemployed if he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job.
Not in the Labor Force: A person who fits neither of these categories, such as a full-time student, homemaker, disabled person, retiree, etc., is not in the labor force.
Labor
force
Employment Definitions
Discouraged workers (people who
have given up looking for a job) don’t
show up in unemployment statistics.
Underemployed workers are counted
as fully employed.
People figure out ways to falsely
claim to be unemployed in order to
receive financial assistance.
Issues in Measuring Unemployment
“America’s Increasingly Irrelevant ‘Unemployment Rate’”
Work with a partner to complete a Marking the
Text and answer questions 1-4.