CHAPTER 4: ECONOMY

US

READING 1: THE US ECONOMY

1.      FREE ENTERPRISE: Theoretical and historical background

-         The American economy is described as a free enterprise system:

+ Allow private business the freedom to operate for profit with minimum Government regulation.

-         The theoretical foundation of the American economic system -> was provided by Adam Smith:

+ When individuals are allowed to pursue profit freely -> the result is good for all society.

+ Market forces (the invisible hand) control the efficient allocation of goods.

2.      ROLE OF GOVERNMENT

-         Throughout 19th century: Market forces operated with a minimum of Government intervention.

-         Since 1930: Government regulations has existed in many areas of business.

-         Conservatives => complain of too much government regulation

-         Liberals => more willing to accept Gov’s roles in the economy.

3.      HIGH LIVING STANDARD

-     America is a affluent society (rich, has lost of $...)

-         In 1985: + The average annual  income of American families was $27,700

                    + Only about 14% of the population lived below he official poverty level.

-         60% of the population are in the middle-income or high income ranks.

4.      WORLD’S LEADING PRODUCER

-         The U.S remains the world’s leading producer of goods and services.

-         The US is the world’s leading producer of electrical energy, aluminum, copper, sulphur, paper, gas and automobiles.

-         Industrial and technological production is high. No other nations export as much high technology as the US

-         Technological advancement has accelerated changes in agriculture:

         + Farming is highly mechanized and commercialized.

         + US farmers produce enough food for domestic consumption and supply15% of the world’s food need.

5.      ENTREPRENEURS

-         Have a significant impact on the American economy.

+ In1984: 700,000 small biz were started.

+ Since 1970s:  businessed started by entrepreneurs have provided more employment than larger corporations.

-         1977: Apple Computer Corporation was started and became 1 of the largest computer makers in the Us in 1984.

6.      YUPPIES

-         Americans are known for being highly success-oriented and dedicated to hard work and material success.

-         Yuppies:young upwardly-mobile professional -> describe people between the ages of 25 and 45 who devote themselves to careers and status.

READING 2: THE CHARACTERISTICS OF AMERICAN BUSINESS

1.      THE IDEAL OF COMPETITION

-         Americans view business as being more firmly based on the ideal of competition than other institutions in society.

-         Competition is the major source of progress and prosperity by most Americans.

·        Competition protects the American values such as individual freedom, equality of opportunity, and hard work:

- Competition protects the freedom of the individual:

+ By ensuring that there is no monopoly of power.

+ Business is competitive >< Government is a monopoly. Competition is even more important than democracy in preserving freedom.

è   “Free Enterprise” is most often used to describe the American business system rather than “Capitalism”

-         Competition strengthens the ideal of equality of opportunity:

+ Americans compare business competition to a race open to all -> everyone can have equal chances to gain success and status.

-         Competition is also seen as encouraging hard work:

+ If 2 business people are competing against each otherm the one who works harder is likely to win.

+ People must develop the habit of hard work in order not to fail.

2.      TWO KIND OF AMERICAN BUSINESS HEROES

  People who are successful in business have sometimes become heroes to American people. 2 kinds of business heroes :

·        1.The Entrepreneur as heroes:

-         They are the purest kind of business heroes, because of the reasons:

+ They succees in building something great out of nothing.

   # they start with very little money or power and ended up as the heads of huge companies.

   # they were perfect examples of American ideal of equality of opportunity in action.

+ They conduct their business and their lives without taking orders from anyone above them -> Americans have great respect for those who can say “I am my own boss”.

·        2.The Organization man/ woman as hero:

Huge business organizations established by entrepreneurs needed a new generation of biz leaders to run => the leader are called organixation man / woman.

-         They are role models of success in American society.

-         Do not have a strong hero image as entrepreneur.

-         Example of organization man admired by the public:

Lee Iacocca: + took over the Chrysler coporatio when it was almost bankrupt in 1979

                     + have the loan from Gov, he turn the company around and made it profitable