21220 WedEcon BW Take out last periods packet

2/12/20 (Wed)--Econ BW: Take out last period’s packet so we can finish it. Pick up a new packet. Write down LO and be prepared to answer verbally the question: Who would you like to be your Valentine? (friend, family, etc) LO: I can compare/contrast the economic systems IN-CLASS: BW—LO—ppt & notes

2/14/20 (Fri)--Econ BW: Take out last period’s packet so we can finish it. Pick up a new packet. Write down LO and be prepared to answer verbally the question: Who would you like to be your Valentine? (friend, family, etc) LO: I can compare/contrast the economic systems IN-CLASS: BW—LO—ppt & notes

Command Economies n n Command – central authority owns and operates the Factors of Production Centrally Planned Economy – central government answers the three economic questions; WHAT to produce, HOW to produce, and FOR WHOM to produce n Oppose private property, free market pricing, economic freedom

Socialism • Socialism = govt owns some of the factors of production • Democratic socialism established under democratic political process • Govt owns basic industries (transportation, news)— others are private • Central planner make decisions for govt industries • Central planners might control other sectors—health care

Command Economy • GOAL = accumulate wealth & goods for ruling class & preserve economic stability • Determines businesses to operate, amount produced each mos. • Determines who is employed, work hrs, pay scales • Individual consumer not considered • No pure command economies today

Communism Karl Marx – German social philosopher that studied economic systems in Europe Communist Manifesto – written by Marx and Frederick Engels became basis for modern-day command economies Thought capitalism would fail because it put too much wealth in the hands of few and left everyone else poor Believed in a “no-class” system, where all share in wealth/power

Example = North Korea • Communist North Korea used resources for military, not necessities • Built large army; nuclear weapons program • In 1990 s and early 2000 s, millions died of hunger, malnutrition • In 1990 s, production decreased and economy shrank • Since 2003, some market activity allowed

Demise of command systems USSR Yugoslavi a East Germany Two Insurmountable Problems • The Coordination Problem—How can the government possibly organize the entire economy? The Incentive Problem • There is little or no incentive to excel • No reward for doing well, no punishment for doing poorly

Advantages 1. More equal distribution of resources, money, products 2. Employment guaranteed 3. Basics provided to all Disadvantages 1. Lower Quality 2. Less variety 3. Serious environmental damage (air & water pollution, land conversion, habitat loss, plant & animal variety & numbers decreased)