Assessment of Economic Systems

To understand the types of economic systems used in the United States we first must understand how an economic system works. Policies are put into place by the government to decide who gets what resources. After this process is complete, the next step is to determine how the resources will be bought and sold. Once the how of the resources is complete, then the resources need to be produced to allow for production of merchandise and services (U.S. Economic System, n.d.).

Mainly, the United States is based off of a capitalistic economic system. In this type of system, anyone who would like to become an entrepreneur, can open a business and do so without the intervention of the government. To determine what type of supply is required in the capitalist system is based off of the demand for the specific product or service. While this system is built on a free-market mentality, pricing is not governed by a certain entity. To stay relevant and maximize profits, research must be completed to be competitive in the market (Anastasia, 2018).

Another economic system being used in the United States is a mixed economic system. Very similar to the capitalistic economy as being free to enter but the pricing is controlled to alleviate social despair and still be relevant to make a profit. Financial inequality is one of the biggest highlights of this system. This is accomplished by the government supporting the public through multiple outlets, leading to a more equal income system (Anastasia, 2018).

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Economic systems between the United States, China, and Russia can be identified by China and Russia having a very heavy state or government involvement with the private sector. The United States economy is 76.8% free without government interference. While China and Russia rank in the 50-60% percent free, a 16% difference (2019 Index of Economic Freedom, (n.d.).

A Political System combines groups of people in power to make decisions for the betterment of society. From my personal experience I haven’t really gained knowledge in regards to the political system. When I was growing up my parents never talked about politics, it never was a point of discussion in the house. Since growing up and being in the military the only real political information I have gained is through other people carrying on conversations in the workplace. I would say that because of my military background, and republicans more than likely are pro military, I would lean more towards republican system.

Political policy from the United States compared to Canada have very distinct differences. Canada and the United States are both democracies but the United States is ran by the president and congress, while Canada is ran by a prime minister and parliament. One of the biggest and most profound differences is the powers between political systems. Clark describes this by stating “The United States was founded on the principle of division of powers. To prevent any branch of the government from becoming too powerful, the United States Constitution divides the government into three equally powerful branches, each serving as a check against the other two. The Canadian system, in contrast, is founded on the concept of consolidation of power. The prime minister is always a member of Parliament and has the authority to override majority opinion and personally decide government policy” (Clark, 2017).

Looking at a free market economy with little involvement from the government, a capitalistic economy itself is virtuous. Individuals who enter a free market intending to be successful thrive on other people that come to them for their business. The virtues they must display to be successful are common sense and time management. Although there are many virtues to list when it comes to capitalism, the most important one is time management. I read an article discussing virtues and one of the paragraphs explains how we should view time as an asset, Holladay states “Rather than interpreting this maxim as insensitive, Novak praises capitalism for teaching us to view time as an asset. This shift in perspective encourages a future-oriented culture, intent on using time wisely. As a result, companies become more innovative; religions become more active; and people become more prudent” (Holladay, 2012).

When looking at the vices of capitalism it can certainly be viewed that people in power that control the money can manipulate the economy in their favor. In turn, this can also lead into using that money for political power. Albertson highlighted this by stating “This tendency arises from the nature of the system. The rewards of capitalism flow disproportionally to those who have ventured capital, therefore those with greater access to capital, the affluent, can expect to benefit most in absolute terms. Further, those with economic power also have greater means to influencepolicy and markets in their favour” (Albertson, 2019).

Political systems are designed to protect citizens, while economic systems provide the goods and services for citizens. Economic policies are analyzed based off of the economy and performance to adjust policies as needed. These three systems are designed to work hand-in-hand with one another to create the free market economy. These three systems don’t always play nice with each other and can end up in turmoil.  Keeping the balance of all three systems is the ultimate goal.

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References

• 2019 Index of Economic Freedom. (n.d.). Retrieved from https://www.heritage.org/index/visualize?cnts=china|unitedstates&src=country
• Albertson, K. (2019, August 15). The inherent vice of capitalism underpins the value of Piketty.  Retrieved from http://theconversation.com/the-inherent-vice-of-capitalism-underpins-the-value-of-piketty-27249
• Anastasia. (2018, May 7). The Four Types of Economic Systems. Retrieved from https://www.cleverism.com/types-of-economic-systems/
• Clark, A. (2017, March 31). What Are the Differences in Canada & America’s Political System? Retrieved from https://classroom.synonym.com/differences-canada-americas-political-system-11085.html
• Holladay, L. (2012). The Virtues of Capitalism. Retrieved from http://www.valuesandcapitalism.com/the-virtues-of-capitalism/
• Nation Master. (n.d.). Retrieved from https://www.nationmaster.com/country-info/compare/China/United-States/Economy
• U.S. Economic System. (n.d.). Retrieved from https://www.theusaonline.com/economy/economic-system.htm