Economics

social democracy

State takes possession of industries that are cornerstones of the economy. Exp: transportation, communication, energy, healthcare, financial markets, etc. Allows private ownership of smaller, nonessential businesses but highly regulates them.

Adam Smith

- "invisible hand" He wrote the Wealth of Nations. Father of Modern Economics.

Capitalism

- Emphasizes private ownership. The owner has full control of the means of production with the goal of making a profit. Production, prices, and distribution is determined by the free market.

Macroeconomics

- Is focused on the economy as a whole and large units, such as governments. It studies economy wide issues, such as inflation, price levels, rate of economic growth, national income, and changes in unemployment.

Microeconomics

- it deals with the behavior and decision making of smaller units such as individuals and firms. It studies how the allocate resources of production exchange and consumption.

3 primary functions of government

1. Protection from foreign aggression 2. Protection of rights from infringement by others. 3. Should provide public goods. Exp. Highways, power plants, schools, military, etc

Why are more people are following socialism?

1. The first reason is because younger people have seen their parents struggle, and they wish to alleviate it using socialism. 2. The second reason is that many young people are under huge amounts of debt, and think that socialism will make it so they could use their money for other things instead of paying for housing, college, and medical bills.3.The third reason is that many people don't know what socialism actually entails, so they only hear the most basic parts of it, and think that sounds good, without actually looking into it. 4. The fourth reason is that some Americans are bitter that the country seems to only favor the rich and famous, giving things like tax breaks and more to them, which doesn't seem fair to them.5. The fifth reason is because it is gaining social acceptance, people want to hop on the bandwagon. It's a trend. Besides, it's been painted as kinder than capitalism.

John Maynard Keynes

=He thought that the government should interfere the economy, especially during recessions, so the economy would be stable. He thought it was the government's job to bring down unemployment. Keynesian Economics

Economics

A social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants.

Mercantilism

An economic policy under which nations sought to increase their wealth and power by obtaining large amounts of gold and silver and by selling more goods than they bought

Traditional Economy

An economy in which production is based on customs and traditions and economic roles are typically passed down from one generation to the next.

Why does pure communism only exist in theory?

Because people won't work to support each other. They won't take the bare minimum of what they need. People are greedy. Communism hasn't worked because people are sinful, and will never live in harmony together like that. A government could force them, but that wouldn't be true communism, that would just be an oppressive socialism. Romans 7 talks about people being sinful, even if they want to do good, they cannot carry it out. It will always end up a twisted form of the good intentions to preceded it.

Classical Capitalism

Came from Adam Smith's Wealth of Nations. Accepts the existence of government but only allows minimal ownership of resources and decision-making power. Said government should be limited to performing 3 basic duties. 1. Protection from foreign aggression 2. Protection of rights from infringement by others. 3. Should provide public goods. Exp. Highways, power plants, schools, military, etc.

What the flaws of centralized socialism?

Destroys incentive for entrepreneurs to take risks necessary to develop new products and services. This leads to outdated or stolen technology. ▪ By equalizing wages workers do not have any incentive to produce more and better goods. Lead to inferior products. ▪ By controlling prices to an unreasonably low rate causes shortages and the development of a black market.

centralized socialism

Government should be owner and decision maker in all economic activities of the state. Karl Marx-Communist Manifesto- taught that an employee in a capitalist economy is the equivalent to a slave. Profits should go to people making goods instead of business owners. State owns all factories and equipment. Nations economy seen as one big company.

Friedrich Hayek

He thought that government interference would always be bad. Government tinkering in economics only brings about greater problems, not solutions. The economy is too hard to manipulate. "free market"

Adam Smith's concept that money does not equal wealth

If the quality of life of the people is bad, then the country is poor. Argued that it was not the accumulation of gold and silver that makes a nation wealthy, but instead it is the economic prosperity of its people. Taught that money is not wealth, it just allows people to purchase wealth. Wealth is having items that are of use, such as food, clothing, homes, etc.

What are the changes being made in Cuba, China, and NK?

In China and Cuba, free market policies are being implemented (tourism and markets) so people are living at a higher standard then they were before. People still favor comminism, but free market policies are making them live better. NK is a very backwards, dictactoral country. It's like it's frozen in time. New technology is not being created, etc. The most astonishing change is that it isn't being changed.

Karl Marx

Karl Marx-Communist Manifesto- taught that an employee in a capitalist economy is the equivalent to a slave.

Lassiez Faire economics

Laissez-faire is an economic theory from the 18th century that opposed any government intervention in business affairs. The driving principle behind laissez-faire, a French term that translates as "leave alone" (literally, "let you do"), is that the less the government is involved in the economy, the better off business will be—and by extension, society as a whole. Laissez-faire economics are a key part of free market capitalism.

radical capitalism

Only exists in theory Identified by the following characteristics ▪ A. Private Citizens own all factors of production ▪ B. Private Citizens make all decisions about the 3 questions. ▪ C. There would be NO need for government. ▪ D. Market would be free to operate without outside regulations.

Pick a system and be able to be able to support it.

Personally, I think Capitalism (not radical, but classical or state) is the system that fits best Biblically. Capitalism, because God talks about personal ownership of items (Ten Commandments, about stealing (property has to exist for you to steal it) and covetousness (other people have to own something in order for you to be envious towards it) and I think the bible sort of acts like that is how the world works, I don't think God really condemns private property. Proverbs 10 encourages working to accumulate property, saying that brings out our diligence. Also, the parable of the talents means that people are given different resources, but everyone is supposed to make the best investment on their resources.) Romans 13 also talks about the necessity of Government, so we need government in their somewhere, to what extent is up for debate. I also think Capitalism works how the world is now, but not later. People are selfish, so a system where people are required to be unselfish and live in harmony will never work as long as people are totally depraved.

state captialism

Private Citizens own a vast majority of natural resources, capital, and labor but the government freely intervenes to carry out its own economic and social goals. ▪ Exp: Americans own houses and factories, but the government creates policies to regulate which construction firms can build them, how they can build them, and where they can be located. The government also has policies dictating how much the factory owner must pay their workers and how many hours they can require them to work. The extreme form of this is known as a welfare state. In this type taxes are very high, and funds are redistributed in such a way that government claims to care from "cradle to the grave."

7 principles of economic thinking.

Scarcity forces tradeoffs, costs vs benefits, thinking at the margin, incentives matter, trade makes people better off, markets coordinate trade, future consequences count.

Communism

Socialism in most extreme form. Pure communism only exists in theory. Marx wrote that centralized socialism is a transition between capitalism and communism. In theory, after getting rid of capitalism the government would turn management of factors of production over to everyone in common. ▪ Everyone in society would selflessly concern themselves with welfare of all other members. ▪ Each person would voluntarily contribute as much as he could and only demand what was absolutely needed. In Cuba, North Korea, Former U.S.S.R., and China "communist" systems have resulted in poverty, shortages of goods, and political and religious oppression.

Socialism

Socialism- an economic theory or system in which the means of production, distribution, and exchange are owned by the community collectively, usually through the state. It is characterized by production for use rather than profit, by equality of individual wealth, by the absence of competitive economic activity, and, usually, by government determination of investment, prices, and production levels.

Which one is the United States?

State Capitalism

Command economy

The central authority, such as a king, dictator, or even a government makes all or most of the economic decisions.

Welfare State

The extreme form of this is known as a welfare state. In this type taxes are very high, and funds are redistributed in such a way that government claims to care from "cradle to the grave."

invisable hand

The invisible hand is a metaphor for the unseen forces that move the free market economy. Through individual self-interest and freedom of production as well as consumption, the best interest of society, as a whole, are fulfilled. The constant interplay of individual pressures on market supply and demand causes the natural movement of prices and the flow of trade.

normative economics

The part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented; policy economics. What ought to be.

3 critical questions

What goods and services should be produced? How are goods and services to be produced? Who will consume the goods and services?

Unlimited wants and limited resources

choices

Market Economy

economic system in which decisions on production and consumption of goods and services are based on voluntary exchange in markets

postive economics

focuses on facts and cause-and-effect relationships. Is about, "what is"

Pros and cons of command economy

•The advantages are that a country with a command economy can develop rapidly compared to countries with other economic systems. It also allows for most citizens to receive amenities and public services which they normally couldn't pay for. Generally the services are free, or low cost. •Corruption is very real in this sort of economy, and many times the leaders are provided for at the expense of the people. Also, many decisions are made for the people and take away much of their autonomy. People with limited autonomy don't always make the best workers, so products can be low quality. Another reason why job results aren't always the best is because people lack incentives to do better at their job, since everyone has the same pay. People also don't have the freedom to choose entertainment, and most of the entertainment and news is propaganda.

pros and cons of a traditional economy

•The advantages are that economic stability is guaranteed because everyone has their job decided for them by the community. Also, since families have always done that job, then the quality and reliability of work is high. The disadvantages are that progress is heavily looked down upon. So communities that follow this suffer from economic stagnation. Also, it does not account for people who don't fit the specific mold. Lastly, the quality of life is lower than other societies because ways to make life easier are not adopted

Pros and cons of a market economy

•The advantages are that everyone gets to make their own decisions. People have a wide variety of choices, for jobs, products, and pretty much anything. Another advantage is the economy is flexible, since it is run by the people and not the government. Also, everyone gets a say on how they wish the economy to go, by spending money, instead of the government making all of these choices. And people can buy pretty much whatever they want, and they will value it as well. •Disadvantages are that people who cannot provide for themselves are often left by the wayside. In sort of a Darwinian way. Also, companies care mostly about profit, so some basic needs (such as health care, education, and transportation) are often ridiculously expensive. Also, the economy can be unstable, since both buyers and sellers are looking to get the best deals and to spend the least amount of money.

What are the flaws of Radical Capitalism?

▪ Unscriptural: Denies the legitimacy of government. All decisions were in the hands of private individuals making government unnecessary.▪ Impractical: Free markets need government to maintain property laws and provide essential services for economic activity such as roads, bridges, and defense. Plus big businesses would take advantage of smaller ones such as infringing on copyrights and patents and the monopolization of resources.