Capitalism: Why it works: Competition for profit leads to the lowest price possible and product improvement. (Unless you have a monopoly, that’s why they are illegal). With incentives (motivation) from wages, worker productivity increases and the quality of the produce improves. This is because workers have an interest in seeing their company, and hence their jobs, stay in business and be profitable. So they work hard, even in Indonesia.

Capitalism: Why it doesn’t Supply and demand forces wages down, just like prices If demand falls, supply will fall and workers lose their jobs The owners of production get rich while the workers get poor Because the owners are rich, they have more political control, and laws are written so that they stay rich

Socialism – Why it works Part 1 The government regulates/controls the capitalists’ businesses Or the government owns all the businesses, period This last one is called “communism” Therefore the production of supply is controlled by the government Prices are also controlled. Wages are regulated or controlled.

Socialism – Why it works part 2 Because the government runs/owns the businesses, workers are not laid off or have their wages cut as demand drops. The workers for these government companies are voters the politicians vote increasing benefits for these voter\workers. Because all politicians want to keep THEIR jobs!

Socialism Why it doesn’t part 1 Government control decreases the efficiency of the economy. Because government people are not businessmen, they don’t really know how to run a business Government people make decisions on what shall be made regardless of demand Government employs workers regardless if they are needed or not

Socialism Why it doesn’t part 2 This leads to: Higher prices that consumers have to pay Lower demand as people cannot afford the product But the government cannot fire workers to adjust supply to demand outrageously high (60 to 80 %) taxes to support the non-productive workers

Example Given: In 2010, the United States Postal Service lost $9.8 Billion dollars As people use less mail, the USPS employs more people then they need. Average postal worker earns $48,000 per year In contrast, FedEX earned $39.3 Billion in 2011 More people are using FedEx for package delivery Average deliverymen make $49,000 per year