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.