Discussion:
Introduction
Every Nation must choose the economic system it prefers to use in answering the fundamental questions posed by the economic problem, or wants-means dilemma. (The fundamental questions are: What should we produce? Who should produce the output? How much should we produce? Who should receive the output?) The basic economic systems are: a market economy; a mixed economy; or a command economy. In the market economy the questions are answered by the decisions made purely in the marketplace. In a command economy a group of people construct economic plans that answer the fundamental questions that face the economy. (In the former USSR the GOSPLAN [a group of twelve people] determined what to produce, who should produce, and how much to produce. Those twelve people also decided who should receive the output of the Soviet Union by setting prices.)
While the United States emphasizes reliance on the market as the place where the fundamental questions shall be answered, we actually function within a mixed economy where the market system and government combine, to answer the fundamental questions of our nation. Since the installation of the new President and Congress in 2009, we have seen legislation that transfers even more decision making from the private sector to the public sector.
Initial Post Instructions
Why do those nations that rely more heavily on the market system, combined with government participation, actually generate the bulk of world output? What do you believe is the best economic system for a country to utilize? If you believe the best economy is a mixed economy, which markets should be non-market based? Why in those markets is it wise to ignore or otherwise not allow prices to signal value?
These are extraordinary times, and our Congress and Administration have determined that the bailouts are essential because the firms affected most are too large to fail. Have you ever wondered whether we might have moved away from the middle of the road of a mixed economy with the bailouts? Is there a risk that we might have set a precedent for bail out requests from businesses of other types in the future? If firms begin to expect bailouts, what sorts of behavior would we begin to see? How will that behavior affect the economy?