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Economic Systems

Economic Systems

America’s Mixed Economy

These days, just about everybody in America has made their peace with the mixed economy. Sure, you might be able to find a true-blue libertarian out there somewhere who truly believes that the government should play no role whatsoever in economic life. And you might even be able to track down a die-hard communist, some old lefty clinging to the discredited dream of a command economy controlled by the dictatorship of the proletariat.

But those guys are way out there on the fringe. The rest of us live in a world in which the mixed economy seems perfectly normal.

Individuals exercise a great deal of personal control over their economic lives; most transactions occur in a marketplace that is relatively free. The lifeblood of the nation's economic life is found in the private sector.

But the government also plays an important role in the economy as well. It referees the marketplace and through a variety of measures influences the ways in which resources are allocated and distributed.

Where we as Americans will often disagree – passionately! – is on precisely what the ideal balance of public and private within the mixed economy should be. Could we use a bit more government regulation to prevent abuses by businesses? Or do we need to pull government back to keep it from getting in the way of private enterprise?

US government spending as share of GDP from 1900-2010

(source)

Why It Matters Today

Been to a Tea Party rally lately? The first years of the Obama Administration have generated a new surge in controversy over the proper role of government in the economy, with conservatives and libertarians taking to the streets to protest what they see as the dangerous big-government tendencies of the new Democratic government.

Meanwhile, Obama has also taken heat from his left flank, with many liberals criticizing him for not using the government aggressively enough to confront the nation's economic problems.

Whether or not you're a Tea Partier, this is a moment of enormous political and economic importance. What kind of economy do you want to live in? What kind of government do you want to be a citizen of? Now is a time for choosing.

Sometimes, a Song Says it Better: American Dream, by Casting Crown

“He's chasing the American dream
 and he's gonna give his family finer things”

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