Unit
Free Enterprise
Guiding question
The evidence seems overwhelming that free enterprise and widespread economic prosperity are more than just connected; the first leads directly to the second, not just in America but around the world.
- 8 Lessons
- 26 Activities
- 6 Essays
A noted economist has claimed, “American prosperity and American free enterprise are both highly unusual in the world, and we should not overlook the possibility that the two are connected.”
Indeed, the evidence seems overwhelming that free enterprise and widespread economic prosperity are more than just connected; the first leads directly to the second, not just in the United States but around the world. Organizations as diverse as the Wall Street Journal, the Heritage Foundation and the World Bank produce annual research documenting the fact that the more enterprising people are free to be, the more businesses they will start, the more people they will employ and the more technologies and innovations they will discover. Free countries feed, clothe and house people at higher levels than unfree countries, by far.
Lessons
When we hear the term “economics,” we tend to think about ups and downs in the economy as well as graphs mysteriously depicting supply and demand. In reality, economics is vitally important subject because it is the study of making choices. More specifically, it is the study and practice of making choices in a world of limited resources (scarcity). You cannot go for a day without making economic decisions. For this reason, an understanding of economic thought makes you a more successful citizen.
Prices are created through interactions between sellers and buyers. Supply (sellers) and demand (buyers) is the first, most recognized model in economics. Demand represents the various numbers of items that consumers are willing and able to purchase at a series of different prices at a particular point in time.
As buyers purchase goods and services, they signal to the producers what ought to be made. If people want to wear pants with farm animal designs, they buy them. Producers have to be observant to anticipate demand. As they see that the stock of cow pants is flying off the shelves, they will create many more of them. Buyers and sellers are able to communicate effectively using just money.
The overall wealth of the United States has been achieved because of the free enterprise system. The U.S. has a limited government, and that feature extends to economic choices; most decisions about what, how, and for whom to produce are left to market forces rather than government dictates.
What strengths does the free market economy have and how does it affects development and production of goods?
In America’s free society, entrepreneurs of many kinds start businesses that create the nation's wealth. The Founders established the federal government in the Constitution, and the American people ratified it to protect the rights and property of its citizens. That meant that national defense, court systems, and political administration all became part of the U.S. government. Therefore, some taxes were necessary to support the limited functions of this new government.
If, as individuals, we spend more than we earn, we can go bankrupt. The same is true with nations. If a nation spends on government services more than it takes in from tax revenue, it runs a deficit, and must borrow at interest to get back to even.
Philanthropy may be defined as the desire to promote the welfare of society by giving your own money to good causes. Philanthropy is not allocating the money of others, whether through taxes or government programs, to the less fortunate in society. Philanthropy is an action of one individual or one family giving to help others.