Free Enterprise
ECONOMIC FREEDOM
Individuals can choose what kind of work they want to do and where they want to live. Entrepreneurs have the freedom to launch and expand businesses. Buyers and Sellers also have voluntary exchange which allows them to freely engage in market activities.
GOVERNMENT RESTRICTIONS
Restrictions - zoning laws, ordinances regulating noise, building noise, building safety and sanitation, preservation of historic buildings, price controls (ceilings and floors) Examples: •Eminent domain •Environmental regulations •Zoning laws •Utility easements •Right of ways •Market rise and fall of pricing
PRIVATE PROPERTY
Give people the right to control their possessions and use them as they wish. Property ownership provides an incentive for property owners to use property wisely and conserve resources. To prevent the government from having the power to seize property for its own use, American leaders protected private property under the Bill of Rights.
INVESTMENT OPPORTUNITIES
Businesses can redirect resources from being consumed today in order to create benefits in the future.
RESPONSIVE PRICES
Competition serves to regulate the free market by keeping prices from rising too high and in this way it benefits consumers and producers by encouraging them to come together in the marketplace.
U.S. POLICIES AND ECONOMIC GOALS
Economic growth - the production of more goods, better incomes. Growth is needed so that people can have more goods and services to increase their standard of living. Stability - the government will strive for stable prices. It has policies to deal with inflation, high interest rates and recession. Full employment - the government strives to provide jobs for those who desire one. Economic freedom - people have the freedom to choose their own occupations and use their money as they choose. Businesses have the freedom to choose where, how and what they produce. Security - protection from illness and layoffs. The government has set up funds (Social Security, unemployment compensation) for those who lose their jobs. Equity - The government strives for equity for its citizens, therefore it is illegal to discriminate on the basis of age, religion, race, sex or disability for employment
CREATION OF WEALTH
Entrepreneurs have the ability to create products in competition with one another leading to high value markets. When markets are more valuable it will increase a country's gross domestic product. Gross domestic product is what determines a country's wealth.
INCENTIVES
Lower prices and higher wages are incentives for consumers and workers to act in a certain way. They often involve money, although they can be nonmonetary. Incentives are often positive, in the form of rewards, but they can also be negative.
FREEDOM OF CONSUMERS AND PRODUCERS
The American Free enterprise system makes it possible for people who have ideas and persistence to start businesses and make them successful. Consumers have the freedom to make their own economic choices. Through voluntary exchange, consumers send a signal to businesses telling them what and how much to produce.
COMPETITION
The American economy benefits from the tradition of open opportunity. Competition encourages businesses to improve the quality of their products in order to attract consumers. Competition benefits the economy by ensuring that the most efficient producers of a product will survive, while the least efficient producers will be forced to shut down or try to produce different products.
THE ROLE OF THE GOVERNMENT
The American government keeps order, provides vital services and promotes the general welfare. The marketplace operates with a limited degree of government regulation and some limits government places on business use of private property.
VARIETY OF GOODS
The free enterprise system produces a wide array of products and services in order to respond to consumer demands and make a profit.
