Contending Economic Visions for a Democracy
A common thread throughout is course the idea of risk. Why would the Founders want risk to be a part of the American experience?
A working definition of risk is, ?The possibility of suffering harm or loss; danger. A factor, thing, element, or course involving uncertain danger; a hazard.?
In the Declaration of Independence, when Jefferson presents the idea of the Natural Rights, ?life, liberty and pursuit of happiness? he is implying risk. Let?s look closely at the word, ?pursuit.? Does ?pursuit? guarantee anyone happiness? Is happiness the promise that Jefferson is referring to? No. He is referring to the right to pursue happiness. The choice of the word pursuit infers that ?you? may or may not achieve happiness. What Jefferson is telling us is that government will get out of the way in order for you to pursue happiness. But there is no promise of happiness. There is a risk that you will, or will not achieve happiness. Notice that there is no inference of what happiness is ? since it differs for each person.
Before we go too much further let?s look at some other examples where risk is inferred.
We also learn about the role of religion in American society. As we learned, for numerous reasons Jefferson did not want the State to use faith as a social glue to bind us together. Instead Jefferson allowed faith to compete in the market place of ideas. The church had to offer something of value in order to survive.
In America we vote three ways;
a.) with our feet,
b.) with our dollars and
c.) in the voting booth.
Since church budgets were not going to be subsidized by the Federal Government, a church needed to provide a good that Americans were willing to ?vote for? with their dollars and presence. Today over 43% of American citizens attend regular worship services. This number actually rose in 2012. This is among the highest averages in the world. Among the lowest are the Scandinavian countries such as Norway and Denmark where only 3% of the population attend religious services each week. Perhaps Jefferson was correct when he allowed religious organization accept the risk for their own existence.
In another example, in Week Two we read that ?All men are created equal.? We learned that our equality is not financial, intellectual or physical. Generally speaking our equality is defined in three ways;
– Equal in our humanness.
o Some say this another way in that we are equal before God.
– We are each equal before the law, and
– We each have ?equality of opportunity.?
It is the word, ?opportunity? we want to focus on. Does the word, opportunity, issue a promise? Yes. You are promised an equal opportunity.
For what purpose are we promised equality of opportunity? We are each given equal access to the opportunity to pursue happiness.
Once again, notice that opportunity is not a promise of achievement. You have the opportunity but whether you accomplish this or not is up to you. Once again we see that risk is inferred. Why?
Risk means that result is determined by your choices; the path you choose, the actions you take, and the preparation you invest in. This is a core value of the American experience: risk motivates success.
How so? Ask yourself these questions,
a.) ?Who is the person you will always be able to rely on?
b.) Who is the person that knows what is best for you and will act in your best interest every time??
You are! No matter how long you live ? there will never be another person that is more invested in your success than you are. Therefore if you have the risk ? you are most motivated to succeed.
In our Economic system risk plays a prominent role. From this belief comes numerous ideals, such as, if you accept the risk and succeed, you have earned the right to reap the rewards. On the same hand, if you fail, you have earned the lessons of failure so that future attempts might result in success. In this week?s reading, ?The Entrepreneur as American Hero? author Walter Williams demonstrates how successful businesses exist to fill a market demand. He writes that ?In a free society, income is earned through pleasing and serving one’s fellow man. ?
Finally, individual success often results in increased opportunities for others to also be successful in their pursuit of happiness. For example, a successful business might result in the creation of jobs. As an employee I am able to feed my family, take vacations and save towards retirement: I have the opportunity to pursue my form of happiness because I have a job. The belief is that when you embark in the pursuit of happiness you are best motivated to succeed.
RISK motivates us to be successful. Richard Ebeling?s article, ?Free Markets, the Rule of Law, and Classical Liberalism? discusses a conservative view of how free markets and liberty or freedom are closely linked when he defines the oft misapplied term, ?liberalism is the political philosophy of individual liberty. It proclaims and insists that the individual is to be free to think, speak, and write as he wishes; to believe and worship as he wishes; and to peacefully live his life as he wishes. Another way of saying this is to quote from Lord Acton?s definition: ?By liberty I mean the assurance that every man shall be protected in doing what he believes his duty against the influence of authority and custom, and opinion.? For this reason, he declared that the securing of liberty ?is the highest political end.?
Our government has a vested interested in the success of its citizens. How are people encouraged to be successful? Government affords us the freedom to pursue happiness with minimal interference and allows the risks, as well as the rewards, to be ours. We each define happiness and success differently and that is okay. It is risk, in part, that helped America achieve the success and standard of living that you and I enjoy today.
Theory and life do not always align. People fail. What do we do? We have discussed ?equality of opportunity.? Some argue that a government that is too big, that affords too much of a social safety net, affords, ?equality of outcome.? The idea behind this phrase is that the outcome of the effort is guaranteed by government. Affirmative Action is an example of this discussion that most of us are probably familiar with. AA does not offer the ?best person? the job necessarily; AA action will use other parameters to determine who get the opportunity such as race, age, geography, and gender.
Is this equal? No. But is there a value of assuring that a wider range of people get access to an opportunity? That is a decision you are going to have to decide.
In this week?s article, ?Is Capitalism on Trial? Peter Drier examines the shifting impression among Americans of Capitalism versus Socialism as he examines the ?Occupy Movement.? At the turn of the 20th Century, a period of economic decline, under the leadership of V. Lenin, Russian?s formed a pseudo-Communist State known at the U.S.S.R. while American Progressives tweaked our government to be an instrument of social change. Today, amid similarly challenging economic times, Drier suggests some Americans are wondering if capitalism is still the best economic system.
In a video this week noted American economist Milton Friedman suggests that capitalism is not perfect but tells us it is the best economic system known to man. Upon his acceptance of Time Magazine?s Man of the Year award, Bill Gates discussed a failure of capitalism. Gates told viewers that the needs of the extremely poor are often not addressed by capitalism since the profit motive necessary to motivate entrepreneurs cannot be met by groups with little to no wealth.
Imagine that on the first day of class you are told, ?Everyone enrolled in this course will receive a grade of A.? How much effort would you put into learning the material? Whether you read the assignments or wrote the papers your grade is assured. Nothing you do, or don?t do, affects the outcome of your grade. Would you be as motivated to do the work that an A normally requires? This is an example of equality of outcome.
But let?s look further down this scenario; if the outcome is assured, and your effort has no effect on the outcome, you are not motivated to learn. At the end of the course you will not have any of the intellectual skills that this course should give a student. Then, when you are in a ?real world? situation of competing with others that have earned these skills, what are the chances you will be able to compete successful? Was the ?whole person? bettered by the experience? What was the gain of society? These are and should be difficult questions to answer.
In our readings this week we are going to examine what author Robert Reich and others refer to as ?democratic capitalism.? There are four fundamental components to capitalism;
a.) The right to agree to enforceable contracts,
b.) The right to private property,
c.) Competition, (markets) and
d.) The profit motive.
Historically just two of these four have been protected by government; enforceable contracts and ownership of private property. In Reich?s article, ?Supercapitalism and its Discontents? the author suggests that the intensity of competition has warped the system and that this warping contributes to an unfair distribution of wealth within our economic system today. We have seen government address unfair competition (monopolies, oligopolies) including Teddy Roosevelt?s pursuit of Standard Oil to more modern examples including the break-up of Bell Telephone in the 1980?s and European Union fines on Bill Gates? Microsoft in the 2000?s.
A fundamental question of this course is, ?What is the role of government?? There is no doubt that government can be a powerful leverage to change society. Students this week will examine the ideas behind, ?equality of opportunity? versus ?equality of outcome.? This debate is at the core of American ideals including; freedom from government versus the ability of all citizens to be able to engage in the pursuit of happiness.
At the heart of this question is the role of business. Of the three sectors in the economy, only the business sector can create wealth (households, Government). Throughout the course we have examined another fundamental question of the course, ?What is the nature of man?? If we apply this question to the topic of economics, is the nature of man such that business will ?do the right thing? or is some degree of regulation necessary? If regulation is necessary, how much regulation and laws are needed? Can there be too much regulation and too many laws, thus inhibiting the business sector? These are very hard questions that are actively debate across our media every day.
Discussion Board Assignment 11.1:
Post to the Week 11 forum of the Discussion Board by 11:59 p.m. Central Time of the Sunday that ends Week 11. Please write only the following in the subject line: 11.1 and your last name.
Compose a brief essay of at least 400 words but no more than 600 words (not including your references list) in which you present what you believe are the costs and benefits of both capitalist and socialist economies. Be sure to support your opinions with ideas drawn from this week?s readings.
Write in essay form (that is, in paragraphs, not in bullet points). Be as specific and precise as you can be.
Use the Discussion Board Grading Rubric in the Assignments area to guide your thoughts on what constitutes a high-quality essay.
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