Free Enterprise in America
People can start with an idea and through persistence, vision, and effort build that idea into a huge business success. America has been such an economic success because of its open land, natural resources, and uninterrupted flow of immigrants with different backgrounds and experiences to contribute. Another key factor is the American tradition of free enterprise. Free Enterprise is to social and political allegiance to giving people the independence and flexibility to try out their business ideas and compete in the marketplace. For centuries, people have considered America to be a "land of opportunity" a place where anyone from any race or nationality could attain success through hard work. Basic Principles of Free Enterprise The U.S. free enterprise economy has several key characteristics. These include profit motive, open opportunity, legal equality, private property rights, free contract, voluntary exchange, and competition. Profit Motive The American economy relies on the importance of profit motive. Its the force that encourages people and organizations to improve their material well-being. With free enterprise systems business owners and managers make these decisions themselves, working in ways they believe will maximize their profits. This approach forces management to use financial discipline because it makes people economically accountable for their own success or failure. It rewards innovation by letting creative companies grow, and it improves productivity by letting more efficient companies make more money. Open Opportunity The U.S economy also benefits from a strong tradition of open opportunity. Its the idea that everyone can participate in the marketplace. We accept that different people and different companies will have different economic results, determined by their success in the market place. This permits economic mobility up or down : no matter how much money you begin with, you can end up wealthier or poorer depending on how well your business performs. Economic Rights We also have and allegiance to legal equality. Legal equality is giving all people the same legal rights, we allow everyone to take part in the economic marketplace. Countries that limit the legal rights of women or minorities lose the productive potential of a large portion of their society. Legal equality increases a country's use of its human capital. Another crucial component of the American Free Enterprise System are private property rights. Its the idea that people have the right and privilege to control their possessions as they wish. The free enterprise system authorizes people to make their own resolutions about their property. The right of free contract allows people to decide what agreements they want to enter into. The right of voluntary exchange allows people to decide what and when they want to buy and sell, rather than forcing them to buy or sell at particular times or at specific prices. Because of all these rights we have extensive competition, the battle among sellers to attract customers while lowering costs. The Role of the Consumer The underlying purpose of a free enterprise system is to give consumers the freedom to make their own economic choices. Consumers make their wishes known through their economic dealings with producers. When consumers buy products, they signal to producers what to produce and how much to make. Consumers can also make their desires known by joining and interest group. An interest group is a private organization that tries to convince public officials to act or vote according to the interests of the group's members. Interest groups have evolved around multiple economic issues, such as taxation, aid for farmers, and land use. The Role of the Government We anticipate that the government is to carry out its constitutional responsibilities to defend property rights, contracts, and other business activities in our free enterprise system. These protections are not in the Constitution, but many Americans expect protection from difficulties that affect us all. |