Chapter 5 (The Market Economy and Social Justice) Flashcards
How is the market economy defined in the United States?
A new economic system emerged known as the market economy, where goods would be produced and allocated not according to government design or control but according to the operations of the free market, or the market economy. Market economy decisions about production and allocation of resources are determined by supply and demand for goods and services.
What are the perceived benefits or problems of the market economy in the United States?
The market economy allows goods and services to be produced or made available according to what most people want; their prices will not be more than most people can afford; and producers will reap a fair profit. This situation is described as a self-regulating market, constantly readjusting to reach equilibrium in supply and demand. Many markets in the United States today, however, operate in a condition of imperfect competition. The most egregious instances are markets dominated by oligopolies or monopolies, although a variety of state and federal antitrust laws target such excesses. In the market for human labor (labor market), economists know that discrimination is a factor in wage differentials that create income inequality; some call the impact of discrimination an “imperfection in the market.”
Is poverty a necessary component of a market economy and, if yes, why?
Poverty is not a necessary component of the market economy as for economically marginalized workers as well as those concerned about poverty for moral reasons, nagging unemployment can be disruptive to smooth market functioning. Economists acknowledge the existence of poverty but may argue that the market usually solves the problem.
Why is there ongoing poverty in the United States in spite of the fact that this is the most prosperous country in the world?
Why does the United States have increasing income and wealth inequality?
If a group of employees faces broad-based discrimination from coworkers in one industry segment, those aggrieved workers are likely to look for work elsewhere. That would increase the supply of labor in that second company or industry. But for workers at the initial employer, the result would be a smaller labor pool and consequently higher wages for themselves. Economists tend to argue that this type of broad-based (as opposed to employer-based) discrimination contributes heavily to income inequality.
What are the consequences of the concentration of wealth and corporate power in the United States?
What role does tax policy play in social and economic justice?
How has supply side economics limited the development of economic programs?
What is the interrelationship between labor markets, the social welfare system, immigration, outsourcing, and globalization?
Economic Policies
Socially constructed ways of developing and distributing the essential resources that people need.
Primary labor market
Primary labor market, jobs are characterized by relatively high wages, job security, good working conditions, and opportunities for advancement. Many of these jobs have benefits, such as health insurance.
Secondary Labor Market
Secondary labor market jobs, on the other hand, feature low wages, no benefits, poor working conditions, no opportunity for advancement, and lack of stability. Indeed, these are often temporary jobs.
