Vocabulary & Ideas Flashcards
Free enterprise
It is the system of values and laws that respect private property and limits government
Encourages competition and industry
Celebrates achievement based on merit and creates individual opportunity.
Under free enterprise, people can pursue their own ends, people can reap the rewards and consequences of their own actions.
Statism
The belief that government is generally the best, fairest, and most trustworthy entity to distribute resources and coordinate our economic lives.
History of Government Spending
1940-15% of GDP
1980-30% of GDP
1990-32% of GDP
2011-36% of GDP
2038 estimated-50% of GDP.
Problems
with
Federal Government
Two large,
too much power,
tries too hard to do too much, terribly inefficient,
terribly ineffective.
Government should keep us safe from foreign threats,
keep us safe from the Domestic threats,
create a level playing field, and
create opportunity.
Countries that have become unsustainable as a result of years of deficit spending.
Greece, Spain, Portugal, and Ireland.
In Greece, the unemployment rate is 17% and the debt is projected to hit 190% of GDP
Losing Ground
And influential book by social scientist Charles Murray published in 1984. Murray made the argument that the problem with the welfare system was not primarily in economics. The problem was more.
Mary said the system had to negative effects: effectively help people in miserable conditions, harming those it was supposed to help. This was immoral. Second, the system created dependency on the state, stripping people of the dignity that comes from earning their own way.
Welfare reform
Enacted under the Clinton administration in 1996.
Required those who received welfare to either prepare for employment or seek employment as a condition to receiving welfare.
The success of welfare reform
According to the US government, it helped to move 4.7 million Americans from welfare dependency to self-sufficiency within three years of enactment and the welfare caseload decline by 54% between 1996 and 2004.
Even more importantly, there is evidence that it improved the lives of those who moved off of welfare as a result.
Entrepreneurs versus government workers
Small business owners actually make 19% less money per year than government managers.
49% of self-employed people work more than 44 hours per week versus 39% of all workers.
The key to happiness
Earned Success.
This is why entrepreneurs are happier than those work less and make more money than they do.
Easterlin Paradox
In 1974, University of Pennsylvania economist, Richard Easterlin studied this question and concluded that people in rich countries are generally not happier than people in Poorer ones.
Hedonic Treadmill
One reason money doesn’t buy happiness is that people adapt to new economic circumstances incredibly quickly.
Getting richer is like speeding up a treadmill: there’s more activity, but you never get any closer to a goal.
According to Adam Smith, “The mind of every man, in a longer or shorter time, returns to its natural and usual state of tranquility. In prosperity, after a certain time, it falls back to that state; in adversity, after a certain time, it rises up to it.”
Earned Success
The ability to create value with your life or in the lives of others.
To earn your success is to define and pursue your happiness as you see fit.
Constructor of Happiness
This is what Soviet propaganda called Joseph Stalin on his way to murdering tens of millions of people.
The role of government
To create the conditions of liberty and opportunity so that each of us can define success as we see fit and then work with all our might to attain it.
The founders knew that allowing us to earn our success is precisely what gives each of us the best chance at achieving happiness.
