BUS 1000 Lecture Notes - Lecture 4: Free Education, Social Equality, Janet Yellen

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SOCIALISM
o Socialism -- An economic system based on the premise that some basic businesses, like
utilities, should be owned by the government in order to more evenly distribute profits
among the people.
o Entrepreneurs run smaller businesses
o Citizens are highly taxed (often up to 80%)
o Government is more involved in protecting the environment and the poor (free medical,
free transportation, free schools, etc.)
BENEFITS OF SOCIALISM
o Social equality
o Free education
o Free healthcare
o Free childcare
o Longer vacations
o Shorter work weeks
o Generous sick leave
The NEGATIVES of SOCIALISM
o Few incentives for businesspeople to take risks.
o Extremely high taxes on personal income.
o Brain Drain: Some of a countries best and brightest workers (i.e. doctors, lawyers and
business owners) move to capitalistic countries to avoid excessive tax.
o Fewer inventions and innovations because the personal rewards is not as great as in
capitalistic countries.
COMMUNISM
o Communism -- An economic and political system in which the government makes almost
all economic decisions and owns almost all the major factors of production. (North
Korea, Cuba, others)
o Pries do’t reflet dead hih ay lead to shortages of ites, iludig food ad
clothing.
o Most communist countries today suffer severe economic depression and citizens fear
the government.
TWO MAJOR ECONOMIC SYSTEMS
o Free-Market Economies -- The market largely determines what goods and services are
produced, who gets them, and how the economy grows.
o Command Economies -- The government largely determines what goods and services
are produced, who gets them, and how the economy will grow.
MIXED ECONOMIES
o Mixed Economies -- Some allocation of resources is made by the market and some by
the government.
o The United States is a mixed economy like most other nations. NOTE: the public sector
(levels of government) have now become the largest employer in the country. Walmart
is the largest private employer.
o Neither free-market nor command economies have created sound economic conditions
so countries use a mix of the two economic systems.
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