Journal #10 What has government done for you lately? Think of any way the government has done something for you, your family, or someone you know. This could be something directly or indirectly. ½ page min. response.

Unit 1.4 Role of Government Lesson 14 – 9a – Promoting the General Welfare

Economics of U.S. Constitution Constitution set up “rules of the game” the foundation of the market economy in the U.S. Rules define many basic rights – right to property ownership, right to free trade across state lines, contract rights, etc... Rights build on the principles of Declaration of Independence – ind. liberty & ind. Choice Encourages competition

Rules of Commerce Constitution guarantees property rights, free trade between states, copyright & patent protection, & enforceability of contracts Rights act as incentives & encourage people to be productive Guarantees that people can profit from their labor & assets, that there will be a broad market for products, & judicial system will enforce business agreements

Property rights – rights of the ind. to own property & keep the income earned from it Property can be land, objects, share of a stock, a patent, or even a IOU Free trade – is trade without tariffs which are fees charged for goods brought from one state or country to another Contract – is an agreement between two or more parties Ex. Lease on apartment, warranty on a TV, pro athletes salary

Copyright – gives the exclusive legal right to a literary, dramatic, musical, or artistic work to person who created it Patent – is a legal registration of an invention or a process Patents give the inventor an exclusive right to keep that invention or process as private property Both copyrights & patents protect an ind. work from being reproduced under someone else’s name

Governing Authorities According to Constitution govt exists to “promote the general welfare” Protections established 1.separation of powers between federal & state governments 2.3 branches of govt with system of checks and balances among branches – legislative, executive, judicial

Government’s Economic Functions Govt. leaders face scarcity and must make choices – but to promote public welfare & encourage competition – not for ind. gain Govt. officials – regulate business and labor, provide public goods, redistribute income, & provide corrections for undesirable side effects of market activity

Government Regulation Creates rules & regulations that not only restrict what business can do but also protect them and their employees Ex. Labor laws set min. wage, EPA regulations protect public health, FCC sets rules on media programming Many disagree over how much regulation there should be due to cost and effect on the market

Public goods Federal, state, and local govt. provide public goods – which are products or services that, once supplied to anyone, can be obtained w/out payment by others Ex. National defense, weather warning systems, education, parks, etc...

Corrections for Externalities Externalities – cost & benefits of production that are external to the buyers & producers of a good or services Ex. Pollution from a manufacturing company – effects on local community not on buyers & producers Other examples – noise, traffic congestions, destruction of forests, erosion Govt. attempts to limit these w/incentives

Income Redistribution Govt redistributes income in order to correct social problems Ex. Include bridge cards, unemployment insurance, Social Security, subsidies to farmers Although our economic system is a market economy these programs are more representative of socialism