Government and Economic Systems

What purpose does government serve?

• Maintains social order

• Provides public services

• Ensures national security

• Supports country’s economic well-being

What makes up a government?

• Make and enforce policies and laws

• Large governments are usually organized into levels (State, county, cities, towns, etc.)

• Unitary or Federal

Unitary System

• All powers to the national or central government

• Regional entities are administrative only

• Examples: Belgium, Bulgaria, France, Great Britain, The Netherlands, Japan, Poland, Romania, the Scandinavian countries, Spain, and many of the Latin-American and African countries

Federal System or Federalism

• Power is divided between the federal (national) government and state governments

• Each level has sovereign rights…What is sovereignty???? (independent powers)

• Examples: Germany, United States, Pakistan, Netherlands, India, Canada, Argentina

Types of Governments

• Limited Government – – Everyone must obey the laws.– Constitutions, statements of rights, and

other laws define the limits of power– Those in power can not take advantage of

their elected, appointed, or inherited positions

Types of Governments – Limited Governments

• Democracy - several forms– Majority Rule in free and fair elections– Leaders rule with the consent of the

citizens– The people hold sovereign power– Individual rights and political minorities

are protected– Due Process– Examples: Costa Rica, Colombia, Panama,

Philippines, and Greece

Types of Governments – Limited Governments

• Republic – “They define a republic to be a government of laws, and not of men.” John Adams

– Protects liberty, especially by incorporating rule of law that can not be arbitrarily ignored by the government

– emphasis on widespread citizen participation, civic virtue, and opposition to corruption

– Not every democracy is a republic…Why?? Example???

Types of Governments – Limited Governments

• Constitutional Monarchy – – a constitutional system which acknowledges an

elected or hereditary monarch (king or queen) as head of state, a king or queen reigns with limits to their power along with a governing body (i.e. Parliament)

– the prime minister, whose power derives directly or indirectly from elections, is head of government

– Examples: The Netherlands, Belgium, Norway, Denmark, Spain, Luxembourg, Monaco, Liechtenstein and Sweden

Types of Government

• Unlimited Government – – Control is placed solely with the ruler and

his/her appointees– No limits on authority– Rulers can not be removed by peaceful, legal

means– NO PROTECTED INDIVIDUAL RIGHTS

Types of Governments – Unlimited Governments

• Autocracy (several forms) – – all power and authority to rule belong to a

single person– Power is achieved and maintained through

inheritance or by use of military or police power

– No individual rights

Types of Governments – Unlimited Governments –

Autocracy• Totalitarianism –

– dictator controls all aspects of people’s lives– A single leader determines all government policies – a system of terror; a monopoly of the means of

communication and physical force – Individual rights do not exist, government is not

responsible to the people and the people have no power

– Examples: Joseph Stalin in Soviet Union, Adolf Hitler in Germany, and Benito Mussolini in Italy

Types of Governments – Unlimited Governments –

Autocracy• Monarchy (absolute) –

– king or queen exercises the supreme powers of a government, complete and unlimited powers

– Position is usually inherited– No individual rights– Examples: Brunei, Oman, Saudi Arabia and

Vatican City

Types of Governments – Unlimited Governments

• Oligarchy – – Small group controls government decision-

making– Power from wealth, military power, social

position, or combination– Aristocracy - powerful families whose

children were raised and mentored to be heirs of the power

Types of Governments – Unlimited Governments –

Oligarchy• Communist –

– seeks to establish a classless, stateless social organization based on common ownership of the means of production

– Government owns all property and makes all decisions

– Government controls the economy (Command Economy)

– Communist Party is the ruling party– Examples: People’s Republic of China, Republic of

Cuba, Socialist Republic of Vietnam, and Democratic People’s Republic of Korea

Types of Governments – Unlimited Governments –

Oligarchy• Socialism –

– property and the distribution of wealth are subject to control by the community for the purposes of increasing social and economic equality and cooperation

– “worker’s councils” or the state all decisions for citizens

– Means of production are collectively owned

• What type of government is the United States?

• Why?

Economic Systems

Economic System determines….

1. What and how many goods and services should be produced?

2. How should they be produced?

3. Who gets the goods and services that are produced?

Traditional Economy

• Habit and custom determine economic activity

• Resources are allocated by inheritance

• Strongly connected to subsistence farming

• Found today in underdeveloped, agricultural areas

Market Economy

• Individuals and private groups make decisions about what to produce

• Free Enterprise – idea that private individuals or groups have the right to own property or businesses and make a profit w/ limited government interference

• The producer gets to decide what to produce, how much to produce, what to charge to customers for those goods, what to pay employees, etc., and not the government

• Influenced by competition, supply, and demand • No pure market economy exists

Command Economy

• The state or government controls all decisions about production, distribution, and pricing

• Government owns all means of production – land, labor, capital (machinery, factories), and business managers

• Decisions are made to benefit all of society, goods and services are distributed to all citizens equally

Economic Activities

• Primary – – taking or using natural resources directly from

the earth

• Examples: farming, grazing, fishing, mining, forestry

• Secondary – – using raw materials to produce something

new and more valuable

• Examples: manufacturing automobiles, assembling electronic goods, producing electrical power, and making pottery

• Tertiary – – provide services to people or businesses

• Examples: doctors, teachers, lawyers, truckers, and store clerks

• Quaternary – – processing, management, and distribution of

information

• Examples: “white collar” professionals working in education, government, business, information processing, and research