Types of Economies

All right, we were talking about more economy stuff today. Remember, economy is the institution that deals with money, how it's made spent all that kind of stuff. So when we talk about economy, there's four types that we really talk about, command, and you'll notice that command is all the way to the left where the government has the most control. Okay, so command is the most government control moving a little to the right. You have socialism, moving a little more to the right towards personal freedom is mixed economy and all the way to the right with a personal freedom is capitalism, which is also called free enterprise. Okay? Let's talk about what those are. In a command economy, okay, command economy. The basic idea is that if the government owns everything, the government can make things equal for everyone. And that sounds great that there's going to be a quality for everybody. But that isn't always the case. Government makes all economic decisions. The government owns all businesses, the government owns all property. You don't own your house, right? The government would own your house. You wouldn't own your business. The government would own a business and then tell you that you're going to work there. So like I said, it sounds great that everything is equal, but what if you work harder than your neighbor? Do you think that you should maybe make a higher salary than that neighbor does make more money than your neighbor does? Because you're working hard and he's lazy. Well, in communism, they would say no. Everyone is going to have equal things and everyone's going to kind of work hard together for everybody to be equal. But it doesn't quite work out that way in reality. But in a command economy, the basic idea is that the government owns everything so they can make everything equal. Which means the government makes all the decisions. Okay? Next, moving a little more towards the personal freedom we have socialism. And the basic idea is that if the government makes everyone follow the exact same rules, everything will be equal. So the government makes, I'll work it off a little bit here. There we go. The government makes many economic roles and regulations. The government owns major industries, but citizens can own small businesses, citizens pay high taxes, but receive many services. This is where you're going to see things like universal healthcare. That means everybody can go to the doctor. Which is, again, sounds really good. That if the government owns all doctor's offices, then better doctors can't make more money. So does a doctor have really a reason to be a good doctor. Maybe maybe not. They'll own all major industries. Healthcare is a really big example of that. So the idea behind socialism is that the government makes everyone follow the same rules. Everything will be equal. A big thing is down here, this last one, citizens pay high taxes, receive many services. If the government is providing things like doctor's offices and things like that, they have to pay for it somehow. So citizens pay high taxes. That means if you get paid, let's say, $10 an hour, the government may take 5 or 6 of those dollars in you're left with four. On the one hand, you're lonely left with $4, on the other hand, the government is providing a lot of services that you would normally have to pay for yourself. So it's kind of a tradeoff in you just have to decide whether you like that or not. So that's socialism. Okay, moving all the way to the right personal freedom is capitalism or free enterprise. Capitalism or free enterprise. The basic idea is that the best ideas products and workers can and should make the most profit. The government makes very few roles. The government does not own businesses or factors of production, citizens pay lower taxes, but receive fewer services. This is where you get LeBron James taking a super max free agency contract in the NBA. Why? Well, because he's the best basketball player in the world. So capitalism or free enterprise says he should make the most money out of all the basketball players in the world. Things like that, things like that better doctors should make more money or that are architects should make more money. That's the idea of capitalism, and so if whoever is the best makes the most money in the idea is everyone will be working hard to be the best. And since everyone's working hard to be the best, everyone will be better. Okay? And that's the idea of competition. If you've got Nike and Adidas or Under Armour, let's say not getting Under Armour both trying to make the best sneaker well or the best in issue whatever you want to call it, then both shoes are going to be good because they're both trying to make better ones. Same with Apple and Android. Again, reasons that some of these are American products is because we have an economy that thrives on competition. So you have Apple and Android competing to make the best phones. So the government owns very little. And just kind of lets everybody compete and it's kind of survival of the fittest. If you're the best, you're going to make the most money if you're the best, your business will survive that kind of thing. But the flip side of that is people pay lower taxes and receive fewer services. So whereas you might make $10 an hour, maybe you get to keep 8 of those dollars in the government takes two, but the government isn't going to provide things like healthcare for everyone. And things like that. So that's, again, a tradeoff. You get to keep more of your money, but you have to pay for more stuff with your money too. And again, that's just kind of one of those things where people get to decide what kind of economy they like. And then you have a mixed economy, which is exactly what it sounds like. It's a mix together of the ideas of socialism and free enterprise. The government makes some rules. The government is involved in major business industries, and there are some services provided for citizens. So mixed economy is exactly what it sounds like. It is a mix of the economies. So pop quiz. Which government or which type of economy has the most government control? Command, socialism, mixed economy, or free enterprise. It's going to be command, command control command control, command has the most government control, which one has the most personal freedom. That's going to be capitalism, also known as free enterprise. Free enterprise personal freedom, okay? Which one is closest to command? That's going to be socialism. Socialism, the government still has quite a bit of control, but not total control, like a command. And then mixed economy is there in the middle, a little more towards personal freedom, but it's just kind of a mix of everything. A couple of ways to remember, I noticed that command looks a lot like communism, right, that form a government we talked about where the government decides everything. That's not an accident, communism, and command go together. The government commands everything. The government decides all the laws in a communist government and the command economy, the government is deciding all the economic policies, what goods are being produced, how much they're being produced for, who's going to work and what industry, all that kind of stuff. On the flip side, free enterprise will free equals the most personal freedom. You get to choose what products you want to buy, which products you think is the best. People are free to create new things, start their own businesses, all that kind of stuff, okay? So command, communism, government controls everything. Free enterprise, personal freedom, freedom to choose freedom to create all those kinds of things. So I know that was long, but those are your types of economies.