Market and mixed economies?

[Randi]

Debate the benefits and drawbacks of both market and mixed economies
It's not a homework question. I have to give a presentation at work about this information.

[dtshaff]

Why does this sound like a homework question?

[Robert K]

This is a question out of macro economics (national economics) and this is discussed since 300 years.

Imagine a market as a square, on every corner you have one participant, they are: consumer/individuals, goverment/state/towns, companies, foreign trade (import and export of goods). Between this 4 corners is a flow of money: e.g. paid money for purchases, income for work, taxes and a "physical" stream (work hours, goods and services), so called "transfers" e.g. social security/welfare/, infrastructure (streets/schools/universities) and others. Try to write this on a paper.

In a perfect market economy (Adam Smith: Wealth of Nations) there is no regulation between the four corners, the market is called " the invisible hand" and on the longterm takes care of all and everything. This would be the perfect market economy. This is only a model, there are some conditions that this would work: Every aprticipants has perfect knowledge of the market conditions and all alternatives (you want the dress now not in 20 years) , would be able to shift demands depending on market conditions (but when you are hungry you have to eat), and and and ....

The other extreme is: all transactions are perfectly coordinated by one authority (with perfect knwoledge of everything at everytime): also not possible.

Both are "models" which do not exist in reality, all national economies are "mixed": they contain certain regulations. In a democracy this regulations are by law and law is made by the elected representatives (House and Senat). So the question is: howmuch regulation you create and what are the intentions and values behind your decision.

If you understand this you can play with the possible regulations and find pro's and con's.

Here some regulations in the US:

Minumum wage paid to workers
Welfare/Negative Income Tax
Anti-Trust Laws
Building of streets
Social Security (paid from a certain age)
Unemployment
Affirmative action/Anti discrimination laws
Subsidizing of e.g. certain areas of research (e.g. military)

(The above list does not express any statement what my perosonal opinion about this is.)