Explain what this quote means Taxes are what

Explain what this quote means “Taxes are what we pay for civilized society” Oliver Wendell Holmes Jr. , 1904

Ch. 3 American Free Enterprise How do the public & private sectors interact to maintain a stable, efficient, and growing economy?

You will learn… n n the foundational principles of American free enterprise, The government’s role in our mixed economy

Economic Goals: 3 MAIN U. S. GOALS: n Economic Growth n Full Employment n Price Stability n

Secondary Goals: Economic Efficiency n Economic Freedom n Equitable Income Distribution n Economic Security n Balance of Trade n

Terms You Should Know… n n Public Sector: n The part of the economy that involves the transactions of the government Private Sector: n The part of the economy that involves the transactions of individuals and businesses

Specialization and Adam Smith n https: //www. youtube. com/watch? v=NI 9 TLDIPVcs&index=2&list=PL 8 d. Puua. Lj. Xt PNZwz 5_o_5 uir. J 8 g. QXnh. EO

Economic Freedom Individuals work wherever they choose n Businesses hire whomever they choose n Minimal govt. intervention n

Government’s Role… Meet 3 primary economic goals n Regulate the economy n Provide public goods n Solve market failures n Provide “safety nets” n

What is American Free Enterprise? Pg 12 Profit Motive— force to improve material wellbeing Competition— rivalry to attract customers & lower costs Private Property Rights —you own your possessions Voluntary Exchange—you may decide what & when to buy & sell Open Opportunity— everyone can compete Free Contract— you decide what agreements to enter into Legal Equality —everyone has the same legal rights Public Disclosure Laws—companies provide full information

Competition: Think of one way that each fast food provider has tried to beat the competition? Producers have an incentive to ‘beat the competition’ Consumers benefit as a result

Private Property n n n Individuals & businesses can buy & sell property & limit its use. What is significant about this picture What does it tell you about private property?

Contracts n n Individuals & Businesses form written agreements that are legally binding. You decide what agreements to enter into based on your needs & wants/ perceived benefits

Self-Interest n n Consumers & businesses operate to their own benefit. Their decisions don’t have to please the govt, other consumers, or other producers.

Voluntary Exchange n Both consumers & producers gain from voluntary exchange of goods/services.

n Profit Motive Profit is a powerful incentive that leads entrepreneurs to accept the risk of failure.

Solving Market Failures n Definition: when the “free market” does not provide a g/s that consumers need at a price they can afford. Essentially, when the market does not distribute resources efficiently. n n n Highways Rural electrification Others?

Providing Public Goods n (pg 2) Anything that is shared by us all n Why? Because we won’t or can’t pay for it individually and it would be difficult or impossible to exclude nonpayers. Brainstorm examples… n Comes down to cost/benefit analysis n

Public Goods Example

The "free-rider" problem Why don’t towns charge admission for 4 th of July fireworks displays?

Public goods eliminate “free-riders, ” or peop who do not pay for a g/s, but would receive benefits anyway n Fireworks common example b/c are both non rival & non-excludable. Makes it easy for individuals to free ride, utilizing public good without contributing to its production Non-Rival good –consumption by one consumer doesn’t prevent simultaneous consumption by other consumers Non-excludable -can’t prevent others from obtaining it n

MR. CLIFFORD EXPLAINS: n https: //www. youtub e. com/watch? v=ns Wuz. S_d. EM 8

Broken Windows Theory "One unrepaired broken window is a signal that no one cares, and so breaking more windows costs nothing. "

Broken Window Theory n n Broken windows policing assumes that serious crime can be reduced by strongly enforcing minor crimes. The "broken window" theory suggests that neighborhood order strategies such as those listed below help to deter and reduce crime. n Quick replacement of broken windows n Prompt removal of abandoned vehicles n Fast clean up of illegally dumped items, litter and spilled garbage n Quick paint out of graffiti n Finding (or building) better places for teens to gather than street corners n Fresh paint on buildings n Clean sidewalks and street gutters

Poverty Terms Poverty Threshold: n income level below which income (Dollar amount) is insufficient to support a family or household. n n n Vary according to size of family and ages of members in household. Updated annual for inflation using the Consumer Price Index (CPI) Focus on the dollar amount families need to live. The Poverty Rate n The poverty rate is the percentage of people in a particular group who live in households below the official poverty line.

Poverty Rate 2016 n The official poverty rate in 2016 was 12. 7 percent, down 0. 8 percentage points from 13. 5 percent in 2015. This is the second consecutive annual decline in poverty. Since 2014, the poverty rate has fallen 2. 1 percentage points from 14. 8 percent to 12. 7 percent. n www. census. gov

2017 POVERTY GUIDELINES FOR THE 48 CONTIGUOUS STATES AND THE DISTRICT OF COLUMBIA Persons in family/household Poverty guideline 1 $12, 060 2 $16, 240 3 $20, 420 4 $24, 600 5 $28, 780 6 $32, 960 7 $37, 140 8 $41, 320 For families/households with more than 8 persons, add $4, 180 for each additional person. www. census. gov

Current Poverty Rate n n Talk to the person next to you. What percent of people in the U. S. live below the poverty threshold? 12. 7% of people in the United States live below the poverty threshold

Free/Reduced Lunches in Rochester City School District n n https: //data. nysed. gov/reportcard. php? instid= 800000050065&year=2013&createreport=1&f reelunch=1 Take a guess. What percent of children in the Rochester City School District are eligible for free lunches? What about reduced lunch? (this is one measure of poverty when looking at school districts)

How much $ do people make?

What Poverty Looks Like in America https: //www. youtube. com/watch? v=qytbh. Ml. Xlt. I