Leah
Outlines for Chapter 2, Section 1
Economic
01-19-10
經濟制度
Economic System — an organized way of providing for the wants and needs of their people.
Three major types — Traditional, Command, and Market.
Traditional Economies
傳統經濟
- In a society with a traditional economy, the allocation of scarce resources, and nearly all other economics activity, stems from ritual, habit, or custom.
- Individuals are not free to make decisions based on what they want or would like to have. Their roles are defined by the customs of their elders and ancestors.
Example. Inuit parents taught their children how to survive in a harsh climate, make tools, fish, and hunt. Their children, in turn, taught these skills to the next generation. [Hunters get meat in order.]
Advantages
- Everyone knows which role to play.
Disadvantages
- It tends to discourage new ideas and new ways to doing things. The lack of progress leads to a lower standard of living than in other types of economic societies.
【注釋1】
Command Economies
計劃經濟
- Economic decisions are made by the government, which the people have little influence over how the basic economic questions are answered.
Example. [North Korea, Cuba, the communist bloc countries of Eastern Europe, and the Soviet Union.] in the former Soviet Union, the State Planning Commission directed nearly every aspect of Soviet economy, which determined needs, decided goals, and set production quotas for major industries.
Advantages
- It can change direction drastically in a relatively short time.
- There is little uncertainty in this type of economy. Most command economies tend to provide minimum levels of education, health, and other public services at little or no cost to its people.
Disadvantages
- It is not designed to meet the wants of consumers, even though man basic needs are provided.
- The system does not give people the incentive to work hard. [Workers with different skills and responsibilities receive similar wages. And people seldom lose their jobs, regardless of the quality of their work.]
- The command economy requires a lager decision-making bureaucracy. [Most decisions cannot be made until after consulting a number of people and processing a lager amount of paper-work. These procedures slow decision making and raise the costs of productions.
- It does not have the flexibility to deal with minor, day-to-day problems.
- People with new unique ideas find in difficult to get ahead in a command economy.
【注釋2】
Market Economies
市場經濟
- People and firms act in their own best interest to answer the WHAT, HOW, and FOR WHOM questions.
- A market is an arrangement that allows buyers and sellers to come together in order to exchange goods and services.
- In market economy, people’s decisions act as votes. When consumers buy a particular product, they are casting their dollar 「votes」 for that product. The consumers play a key role in determining WHAT to produce.
Examples. Most of the largest and most prosperous economies in the world. [US, Canada, South Korea, Singapore Western Europe]
Advantages
- Over time, it can adjust change.
- Its high degree of individual freedom.
- The relatively small degree of government interference.
- The decision making is decentralized, or not concentrated in the hands of a few.
- The incredible variety of goods and services available to consumers.
- The high degree of consumer satisfaction.
Disadvantages
- It dose not provide for the basic needs of everyone in the society-some members of the society may be too young, too old, or too sick to care for themselves.
- It does not provide enough of the services that people value highly.
- The relatively high degree of uncertainty that workers and business face as the result of change.
- Market economies can fail if three conditions are not meet.
- Markets must be reasonably competitive, allowing producers to compete with one another to offer the best value for the price.
- Resources must be reasonably free to move from one activity to another.
- Consumers need access to adequate information so that they can weight the alternatives and make wise choices.
[When markets fail, some business become too powerful and some individuals receive incomes much larger than justified by their productivity. So that we also have to rely on govern to ensure that sufficient competition, freedom of resource movement, and adequate information exist.]
【注釋3】