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Social Notes. A “nutshell look” at what we did April 23 rd to 27 th . What to do about Scarcity?. Ultimately, a nation’s economy has to answer the question: What do we do about a limited supply of Land, Labour, and/ or Capital?
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Social Notes A “nutshell look” at what we did April 23rd to 27th...
What to do about Scarcity? • Ultimately, a nation’s economy has to answer the question: What do we do about a limited supply of Land, Labour, and/ or Capital? • Land: The physical geography or space, and available natural resources to create goods and services • Labour: The available human resources to make goods and services • Capital: The available money and other “assets” available to make goods and services.
Market Economies • Markets address this question by allowing individuals make those decisions based solely on what they choose to buy: Supply & Demand based on competition. • Demand: perceived consumer desire for a good or service • Supply: the amount of a good or service a company makes • Price: dictated by how badly a consumer want the product or how badly the company wants to sell it.
Planned Economies • Planned economies address this question by allowing government to dictate the price and availability of a product. • Almost no one uses a pure version of a planned economy in today’s world, because it is proven not to work. This leads us to...
Mixed Economies • Mixed economies are based on the market system, but use some selective parts of a planned system to try and balance the benefits of each system • Mixed systems use types of government intervention like competition laws, workplace safety regulation, Crown Corporations, government grants, labour unions, and programs to help the unemployed like EI, welfare, pensions, maternity leave, and disability.
Crown Corporations • A corporation that is publicly owned and run, and is closely affiliated with the government. The serve an important purpose in a mixed economy. • Allows a corporation that is essential to economy, but loses money, to exist when no one in business would want to own or operate it • Ex. CN Railway, Canada Post, CBC, • Provides competition in the market when is only one (or very few) privately owned competitor, and it is prohibitively difficult for others to join the market.
Unemployment • Markets deal with unemployment by putting the onus on the individual to be responsible for their work • If they got fired/went bankrupt/had a failed business idea, then they must be lazy/mismanaged their money/had an unpopular business idea, and the market decided that they needed to change, so deal with it. This drives people to be better. • Mixed economies still expect the individual to be responsible, but recognize that unemployment is often out of peoples’ control so provide short-term government assistance to ease the difficulty of the situation through taxed-funded programs: welfare, Employment Insurance, maternity leave, disability, pensions
Labour Unions • Labour unions were a result of wealthy business owners taking advantage of their workers, and are a left-side solution defending workers’ rights. • There are laws and regulations surrounding labour unions, and labour unions tend to have a love/hate relationship with both their members and the general public. Labour unions ALWAYS work for the best interest of the worker. • Labour unions provide workers the ability to strike (legally stop working as a group) as a way to negotiate and protest against unfair working conditions.
Pros: • Allow workers to collectively bargain. This means that a business owner can’t take advantage of workers by providing different working conditions for each person, and provides a strong bargaining position for workers when signing contracts. The union members elect one representative to negotiate for them. • Provide guaranteed working conditions. When labour agreements are signed between unions and companies, they are very specific and hard to change, meaning that for the length of the contract things like wages, benefits, raises, and number of available jobs don’t change, and there are often very specific terms regarding when the employer is allowed to fire you.
Cons: • Unions can become very powerful, and sometimes use that position of power to bully companies by striking unnecessarily. • Since the representative is elected, you are stuck with what they negotiate. If the majority of people in your union want something that you don’t, you’re stuck with it. • Union agreements are hard to change, which means if you sign a bad deal, or something in the economy changes part way into an agreement, and you want to change it/re-negotiate your contract, you can’t. • Sometimes membership in a union is mandatory to enter certain job fields, even if you don’t want to • Ex. Teachers, many trades, most government jobs.
Government Grants • In a market system, it is up to the individual to provide the capital to start up a business. In a mixed system, sometimes the government will provide some of that capital if you apply for it and are approved. • Government grants are often available for projects that are deemed “necessary” or “beneficial”, but are prohibitively expensive to start up or don’t really have a true source of revenue to make the money back. • Ex. Scientific research, public art projects, cultural projects. • A market system would argue that if individuals aren’t willing to buy into or financially support a project, then the project isn’t really necessary, shown through low demand.
