1. Economic / Social Goals
Which economic system is best at achieving which social goals?

2. Review: Who answers the 3 questions?
100% Centrally-planned system
100% Market-based system
What gets produced?
Government (“central planners”) decides based on perceived needs and wants of their people
The market decides. Producers produce goods and services based on demand of the consumers. They have a “profit motive”.
2. How does it get produced?
Gov’t decides based on their social goals
Producers decide, usually based on minimizing costs to maximize profits.
3. How is it distributed?
Gov’t decides based on the goal of “economic equity”: everyone has the same goods and services
Consumers decide. If they want something and they have the money, they buy it.
100% Centrally planned system
100% Market based system
What gets produced?
Government (“central planners”) decides based on perceived needs and wants of their people
The market decides. Producers produce goods and services based on demand of the consumers. They have a “profit motive”.
2. How does it get produced?
Gov’t decides based on their social goals
Producers decide, usually based on minimizing costs to maximize profits.
3. How is it distributed?
Gov’t decides based on the goal of “economic equity”: everyone has the same goods and services
???
100% Centrally planned system
100% Market based system
What gets produced?
Government (“central planners”) decides based on perceived needs and wants of their people
The market decides. Producers produce goods and services based on demand of the consumers. They have a “profit motive”.
2. How does it get produced?
Gov’t decides based on their social goals
Producers decide, usually based on ???
3. How is it distributed?
Gov’t decides based on the goal of “economic equity”: everyone has the same goods and services
???
100% Centrally planned system
100% Market based system
What gets produced?
Government (“central planners”) decides based on perceived needs and wants of their people
The market decides. Producers produce goods and services based on ???
2. How does it get produced?
Gov’t decides based on their social goals
Producers decide, usually based on ???
3. How is it distributed?
Gov’t decides based on the goal of “economic equity”: everyone has the same goods and services
???

3. No! Every country is a mix of the two approaches!
More Review: Is there any country that is 100% Command or 100% Free Market?
No! Every country is a mix of the two approaches!

4. Centrally-planned system More gov’t control over the economy
Draw this on your notes page!
Market-based system
Less gov’t control over the economy
North Korea Cuba China France USA Singapore

5. Consider: How does a country’s economic system develop?
Based on the economic, social, and political goals of the leaders of the country. Also, rooted in the country’s history and, therefore, values.

6. Economic / Social Goals
Economic Efficiency
Maximize resources, profits. Make the most with the least waste. Get people what they want and need.
Economic Freedom
Let people make their own economic choices: what job to have, what to make, what business to start, what people to hire
Economic Security / Stability
Prevent ups and downs of the economy, create or keep jobs, keep prices stable

7. Economic / Social Goals
Economic Equity / Fairness
Let people have equal amounts of wealth, goods/services; limiting income inequality
Economic Growth and Innovation
New ideas and products, making more products, hiring more people

8. Centrally-planned system More gov’t control over the economy
Again, draw this on your notes page!
Market-based system
Less gov’t control over the economy
North Korea Cuba China France USA Singapore
This side emphasizes:
Economic stability, security
Economic equity
This side has problems with:
Economic efficiency
Economic growth and innovation
Economic freedom
This side emphasizes:
Economic efficiency
Economic growth and innovation
Economic freedom
This side has problems with:
Economic stability, security
Economic equity

9. Consider: What “goals” might the below economy value?

10. So Which System Is Best?
Recent history suggests that a more market driven economies have better outcomes for their citizens.
Market economies offer freedom of choice, efficiency, and the quest for improvement of goods and services by firms.

11. Trade Offs? But, there are trade offs!
In Command and Traditional economies, citizens are more secure, and there is greater equality for its citizens (and lack of choices).
In Command economies, services are often provided as a basic right, not to be determined by price (paid for by high taxes).

12. Socialism A type of mixed economic system.
A system of social origanization in which private property and the distribution of income are subject to social control (**mostly by the government**).
Usually a much freer political system than communism.