Nations have values, and they set goals for themselves based on those values. The United States is no exception. Its goals are evident in the supreme law of the land—the Constitution—as well as in its government policies and in the actions of people like you. In this section, you’ll learn how the nation strives both to reach its economic goals and treat its citizens fairly.
Goals of Free Enterprise
The economic goals of free enterprise are freedom, efficiency, equity, security, stability, and growth.
Economics & You Take a moment to think about the values of the United States that are most important to you. Then read on to learn about the economic values of the American free-enterprise system.
The United States has a free-enterprise, or capitalist, system. Therefore, the major characteristics of a market economy should be evident in its goals. Among the national goals of Americans are freedom, efficiency, equity, security, stability, and growth. Although these goals have ethical, social, and religious elements, let’s focus on their economic implications instead.
The goal of economic freedom is to allow each member of society to make choices. Americans have one of the highest degrees of freedom in the world to start their own businesses, to own private property, to make decisions in the marketplace, and to pursue other economic choices. Residents of the United States may choose to work nights or part-time, to have several jobs, and to move from place to place in search of work.
In particular, individuals must normally accept the consequences of their decisions in our free-enterprise system . If an entrepreneur starts a business that fails, for example, the government usually won’t help out.
Using our limited resources wisely is the goal of economic efficiency. Because of scarcity, if the factors of production are wasted, fewer goods and services overall will be produced. We must always be watchful to use the lowest-cost way to produce any given amount of output.
The issue of fairness underscores the goal of economic equity. Americans want their economic system to be fair and just. That’s why we encourage our policy makers to pass laws such as those dealing with equal pay for equal work, fairness in hiring practices, and help for disabled workers. Another goal is economic security. Americans want protection against risks beyond our control—accidents on the job, natural disasters, business and bank failures, poverty in old age. Our economic system provides such security through a number of government social programs.
The goal of economic stability seeks to reduce extreme ups and downs in the standard of living—the material well-being of an individual, group, or nation. The standard of living is measured by the average value of goods and services used by the average citizen during a given period of time. The United States has more individuals enjoying a high standard of living than almost anywhere else in the world. Finally, economic growth means producing increasing amounts of goods and services over the long term. As the population increases, the economy must also expand in order to provide for additional needs and wants. All nations have economic growth as a goal because it helps meet other goals.
Rights and Responsibilities
Individuals have both rights and responsibilities within a free-enterprise system.
Economics & You Think about a time in your life when you received greater rights, such as the right to stay out later at night. Did you also experience greater responsibilities as a result? Read on to learn about the
rights and responsibilities of Americans in the free-enterprise system.
The American free-enterprise system bestows numerous economic rights and protections on individuals like you. You have the right to enter into just about any profession or business you want. You have the right to work very little or to become a “workaholic.” You have the right to buy those products and brands that you like and to reject all others.
A free-enterprise system will not work, however, if individuals do not take on certain responsibilities. The first is to be able to support yourself and your family. You have a responsibility to use your education in a way that helps you become a productive member of the free-enterprise system.
Also, because government has become such an important part of our economy, individuals in our system have the responsibility of electing responsible government officials. This requires both the knowledge of government policies and the ability to analyze the consequences of those policies.
- economic efficiency: wise use of available resources so as to obtain the greatest benefits possible
- economic equity: the attempt to balance an economic policy so that everyone benefits fairly
- standard of living: the material well-being of an individual, group, or nation, measured by how well their necessities and luxuries are satisfied
- economic growth: expansion of the economy