Today is Tuesday, February 1, 2011.
CIRCULAR-FLOW DIAGRAM OF THE U.S. ECONOMY
We shall find it convenient to divide the U.S. economy into two sectors.
There are a number of ways that we could do this:
the foreign sector and the
domestic sector; the public sector (government) and the private sector; the
present economy and the future economy.
But for purposes of demonstrating
how the free-market allocates resources in the U.S., we need to divide the
economy into the
The Household Sector is made up of individuals that live in households.
sector is made up of “consumers”.
We do not call the sector the “Consumer
Sector” because we assume that it is the household that makes economic
Households decide whether to purchase a new car or lease one;
what to have for dinner; where to go on summer vacation, and so on.
of you live in one-person households, and you make these decisions on your
Families of four or five individuals, somehow, make these decisions as
well, but pretty much as a group (i.e., the household.)
The reason we need to
separate households from the other sectors of the economy is this:
HOUSEHOLDS OWN ALL (100 PERCENT) OF THE PRODUCTIVE
RESOURCES THAT EXIST IN THE U.S. ECONOMY AND THAT ARE USED
TO PRODUCE ECONOMIC GOODS.
All privately owned productive land is owned by individuals in a household
All the productive capital in use in the economy is owned by
individuals in households.
All labor used in production in the economy is
“owned” by the laborers living in households.
Some public lands, such as
Yellowstone National Park, are “owned” by all the citizens of the U.S.
Sometimes some public lands are used for private production, such as
is “a person who is the legal property of another and is forced to obey them.”
existed throughout the entire history of the human species, somewhere in the world, including today.
Western civilization made slavery illegal, for the most part, in the 1800’s.
The purpose of slavery was
the ownership of the labor resource of one person by another.
Spartacus led a slave revolt
against Rome in 73 B.C. which was put down when he was executed in 71 B.C.
The Apostle Paul, in his
letter to the Colossians
in 60 A.D., said “Servants, obey . . . your masters . . . “, as well as “Masters, give unto
your servants that which is just and equal . . . .”
The Pyramids in Egypt, along with a lot of other things that
people go and visit each year, were made with slave labor.