Download ECONOMIC SYSTEMS IN CANADA AND THE UNITED STATES

ECONOMIC SYSTEMS IN CANADA AND THE UNITED STATES
THE PRINCIPLES AND PRACTICES OF MARKET AND MIXED
ECONOMIES
What are the principles (rules or beliefs) of a market economy?
In a market economy decisions about production and prices are based on supply
and demand with very little or no government intervention. Major principles of a
market economy: belief in the importance of competition, private ownership,
efficiency, consumer sovereignty (power and authority) and the pursuit of selfinterest as an incentive for hard work. In this kind of economy, people are
responsible for their own economic and social well-being and cannot depend on
the government to provide services or economic support. Consumers drive the
production and prices of goods by the choices they make when spending their
money. Political parties on the “right” of the spectrum would be more in support
of a market economy. Examples: Conservatives in Canada, Republicans in the
USA.
For what reasons do governments intervene (prevent or alter a course of
events happening without regulation) in a market economy?
Even though government involvement in a market economy is extremely limited,
governments sometimes intervene to protect consumers with laws, such as to
ensure competition in the market or to prevent price fixing (control by agreement
among producers about of the price of a product or resource). Governments might
also intervene to ensure businesses have a minimum of ethical practices such as
labour laws or environmental legislation (laws).
For what reason is Canada seen as having a mixed economy?
In a mixed economy, private ownership and competition are very important, but the
government is more heavily involved in a mixed economy than in a market
economy. In Canada, most of the economy is privately owned, but the government
does have ownership of of some industries that are seen to be essential (absolutely
necessary/extremely important) to the country. E.g. Healthcare, water, etc. The
Canadian government also places more regulations on businesses than would exist
in a market economy. The Canadian government also provides services such as
welfare and old age pension, which do not exist or are very limited in a market
economy.
What is the role of the consumer in market and mixed economies?
In both of these economies, consumers are the largest driving (determining) force
for the production of goods. Because most of the markets are privately owned,
companies only want to produce what they know they can sell. Consumers drive
(determine) production by choosing what they will or will not spend their money
on, which is known as consumer sovereignty (power and authority). Consumers
can affect the quality and price of products by not purchasing something they
believe is too expensive or of low quality. Companies try and find the balance
between making the highest possible profit from a product and also making sure it
is the kind and quality of product that consumers demand. Consumers can also
help shape business practices by refusing to support a company that they know
abuses their labourers, hurts the environment, or other activities they do not
support.
To what extent do consumer actions reflect individual and collective identity?
An individual’s identity can be reflected through the types of products they chose
to buy. E.g. Brand names. Do you buy “Nike” or “No Name”? A consumer’s
choice can reflect his or her values. E.g. A consumer who buys only products from
fair trade companies is openly expressing his or her belief that fair treatment and
payment of labourers is extremely important. A collective (group) identity can be
reflected in the same way if a group of people is making specific choices about
what or what not to purchase (such as in a boycott- when individuals join together
as a group and stop buying/supporting a certain product or company because they
do not agree with their values/means of production. For example, a group may
boycott a pair of runners because they are made in a factory that pays very low
wages, or employs children).
How has the emergence of labour unions impacted market and mixed
economies?
A labour union is a group that operates to protect and promote the rights of its
workers (usually made up of people in a similar industry...e.g. healthcare workers’
union or teachers’ union). Labour unions were first organized in Canada in the late
1800s as a response/solution to difficult working conditions, long hours and poor
pay. Industries in which unions exist must make sure that decisions they make
about working conditions and pay meet the expectations of the unions. In Canada
(and other mixed economies), unions have led to changes in government
legislation (law). This law protects workers who demand changes and make sure
people cannot be fired for trying to, or succeeding in forming a union. Supporters
of market economies usually believe that unions can have a negative effect on the
economy because they demand higher pay for their workers, and some people
believe that those jobs should then be moved to foreign countries without unions or
labour laws where the jobs can be done more cheaply. When unions exercise their
right to strike, the economy can be disrupted, and in some cases, essential services
are put on hold. E.g. During a garbage strike, your garbage can pile up because the
workers are refusing to do their jobs until their contract is settled/both sides must
agree- union and owners.
What are some of the similarities and differences in the way governments in
Canada and the US intervene in market economies?
In the US and Canada, the majority of the economy is privately owned and
operated. Both governments pass laws to protect the consumer and competition in
the market. Both set some standards for labour and environmental protection, and
both provide some form of social services (organized activity to improve the
condition of disadvantaged people in society).
Most of the differences between the two governments are based on the extent
(amount or degree) of government involvement in the economy. In Canada, social
services are more comprehensive (complete) and more people can access them. In
the US, there are fewer social programs and a smaller percentage of the population
qualify for them (rules on who qualifies for them are stricter). In Canada, certain
services which are seen as essential (necessary) to everyone -e.g. healthcare- are
regulated and controlled by governments (federal and provincial).
Canada had more publicly owned companies (called Crown corporations- e.g.
Canadian Broadcasting Company/CBC, Bank of Canada, the Royal Canadian Mint
and Via Rail(way)) than in the USA, but fewer than in the past. These companies
are owned by the government and promote Canada’s economy, sovereignty, and
cultural identity.
How do the economic systems of Canada and the USA differ in answering the
basic economic question of scarcity?
Scarcity is an economic concept that states that people and society have unlimited
wants and needs, but that there are limited resources to fill those needs(land,
labour, capital (wealth)). All governments have to deal with scarcity and they way
they answer the questions of scarcity dictates the kind of economy (market, mixed,
or planned) that exists in the country.
What should be produced?
How should it be produced?
Who should have access to the products?
Usually, in Canada and the US, the questions associated with scarcity are decided
through supply and demand. Products and services that are in demand will be
provided through private enterprise (by the most efficient means so they can make
the most profit), and those people that can pay for them will have access. In
Canada though, more allowance (regulation) is given to products or services that
are seen as essential. The Canadian government might regulate or control the
production and distribution of products and services that are seen as essential so
that all people can have access, whether or not they can afford to pay.
What are the indicators of quality of life?
Quality of life is a measure of the extent (degree- how much) to which a person or
group is able to achieve well-being. This includes the extent to which basic needs
are met, such as food, clothing and shelter, and other factors as well. Some of the
other factors that are considered in measuring quality of life are social or spiritual
well-being, such as the ability to speak your own language or practice your
religion. It is also a measure of whether or not a person has access to healthcare,
education, clean water or even parks. Political and economic situations in a
country, such as the right to vote or a strong or weak economy (e.g. how many
people are out of work), can also be indicators of quality of life.
How does individual consumer behaviour impact quality of life?
Consumer behaviour can have an effect on quality of life through the choices that
consumers make. One example has been the fact that environmental issues have
become a lot more important in recent times. Consumers have started demanding
and purchasing products that are more friendly to the environment- such as
products using less plastic or that are made out of materials that can be recycledproducts that reduce waste. This has improved quality of life because there is less
waste in landfills, and companies have have tried to reduce their environmental
impact by taking steps to lower their emissions (pollution) from factories, which
helps to improve air quality.
How does marketing impact consumerism?
Marketing is the way in which companies try and promote their products to people
and influence consumers to buy them. Consumers are exposed to advertising on
billboards, in print, on tv and radio, and on the internet. Marketing can have a
huge impact on consumerism- companies try and appeal to consumers in many
ways and convince consumers that they should have or use a particular product.
Advertisers try and appeal to people’s ethical values, emotions, or fears to suggest
that a product will improve their quality of life, or to suggest that to be accepted in
society, a person must purchase a particular product. Marketing is a very effective
tool for manipulating (controlling or changing) the behaviour of consumers.
How is consumerism used as a power of a collective?
Sometimes groups of people will use boycotts (encouraging the public not to buy
certain products) in order to draw attention to issues they are concerned about.
Collective consumerism can be an effective way for consumers to influence the
production, sale or distribution of a product. E.g. PETA (People for the ethical
treatment of animals) encourages people not to buy/wear fur or animal products
(leather). Other groups concerned with human rights or the environment try and
convince consumers not to buy products from companies that have factories set up
in countries that have human rights violations. Through boycotts, people hope to
put enough economic pressure on businesses to change their practices/policies.
To what extent do perspectives regarding consumerism, economic growth, and
quality of life differ regionally (in certain defined areas) in North America?
North America is made up of Canada, the United States, and Mexico. The
economies of all three countries are very different, but they are connected through
trade agreements and the movements of goods across boarders. Poverty exists in
all three countries, but most citizens in Canada and the US are generally wealthier
than in Mexico. As a result of the differences between the three countries,
perspectives (thinking) on consumerism, economic growth, and quality of life are
different in each country. The ability to purchase products that people need and
want effects their belief about the positive benefits of economic growth and quality
of life.
What social values underlie (are the cause or basis of) social programs in
Canada and the United States?
Values show what a person or society believes to be important. The different
economic structures in Canada and the US, demonstrate the differing values of
each country- different values are apparent through the ways in which social
programs are provided in each country. Government social programs try and even
out the inequities (lack of fairness or justice) between people and groups.
In Canada, there is a belief that all people should have equal access to some
services that are seen as essential (necessary) to the population (such as
healthcare), and that the government should be responsible to provide for certain
groups that might not be able to provide for themselves (for example, low income
Canadians can apply for further coverage on services that are not publicly fundede.g. dental services). In Canada, healthcare is universal (provided for everyone)all Canadians can access specific areas of health care without paying out of pocket.
Canada also has a pension (regular monthly retirement payment) program for all
senior citizens who have lived in Canada for at least ten years, and programs to
support individuals with physical and mental disabilities.
In the US, only very low-income earners quality for public health care (This is
changing a bit- e.g. “Obama Care”- more public healthcare options. This would be
a shift to the left on the political/economic spectrum; more government
involvement/regulations, more social programs and higher taxes. All others are
required to pay for their own health care needs or purchase insurance to help with
these costs. They do not have an automatic pension program for seniors, and
programs for those with disabilities are more limited than in Canada.
These examples of social programs show that there is more of a value placed on
collectivism (the belief that providing for society as a whole or group is important)
in Canada and on individualism (the belief that people should provide for
themselves) in the US. A shift to less government intervention/regulation, freer
markets (capitalism), lower taxes is a shift to the right of the economic/political
spectrum.