Private property under free enterprise private

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Unformatted text preview: e allowed to “buy” or “sell” unskilled labor for less than $6 an hour. Private Property Under free enterprise, private property is sacred. The proponents of free enterprise believe that if you own something yourself— if, say, your house is your private property— you are more likely to take care of it than if it were owned communally by you and others or owned by the government. The proponents also believe that having private property encourages individuals to use their resources in a way that benefits others. For example, suppose Johnson owns a factory that is her private property. If Johnson wants to maximize her income, she will have to use her factory to produce goods that people are willing and able to buy. If she did otherwise and produced something that people were unwilling and unable to buy, she would not benefit the people nor earn an income. The sot view of things is different. Sots believe that those who own property will end up having more political power than those who do not own it. Furthermore, they will use their greater political power to their advantage and to the disadvantage of others. According to sots, it would be better for government to own most of the nonlabor property in the economy (such things as factories, raw materials, and machinery). Government would be more likely than private individuals to make sure this property was used to benefit the many instead of the few. Mixed Economies These quality-control inspectors work at a Toyota plant in the United States. What are the advantages and disadvantages of such factories being owned by individuals or companies, as opposed to being owned by a government? 36 Chapter 2 Economic Systems and the Global Economy You might be wondering whether we can easily place each country’s economy in either the free enterprise or som camp. The answer is no. In reality, a country’s economic system may contain some ingredients of free enterprise and some ingredients of som too. For example, the United States is considered to have a free enterprise economic system. After all, most of the resources are owned by private individuals, and no overall economic plans determine the use of those resources. However, the U.S. government plays a larger role in the economy than it would play in a pure free enterprise system, and some prices are controlled. Thus, while the United States is considered a free enterprise nation, it has a few features of som. A similar point can be made for other nations. For example, China is considered to be a communist country. However, since 1978, China has experimented with numerous market, or free enterprise, practices; so 02 (030-053) EMC Chap 02 11/17/05 4:13 PM Page 37 to say that China is 100 percent sot would be incorrect. Economies with features of both free enterprise and som are called mixed economies. If we were to adopt this terminology, we would have to say that both the U.S. and Chinese economies are mi...
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This document was uploaded on 01/16/2014.

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